Lords Sitting of 11 March 1998

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

Lord Hamlyn
Paul Bertrand Hamlyn, Esquire, CBE, having been created Baron Hamlyn, of Edgeworth in the County of Gloucestershire, for life—Was, in his robes, introduced between the Baroness Blackstone and the Lord Walton of Detchant.
Viscount Eccles—Took the Oath.

Banana Producers: EU Support
2.50 p.m.
Lord Judd Lord Judd asked Her Majesty's Government:
What is their policy for protecting the well-being of the peoples of those countries whose economies largely depend on banana exports to the European Union as guaranteed by the Lomé Convention.
Lord Whitty: My Lords, the Government are working hard to ensure that the interests of those countries most dependent on banana exports are taken fully into account in the revision of the EU's current banana regime as we have to do in the light of the ruling from the WTO. In addition, we are also providing support—through the EC and bilaterally—for the banana industry through restructuring and help to improve efficiency; for economic diversification; and for general economic and social development.
Lord Judd: My Lords, does not my noble friend agree that this issue comes close to the heart of the Government's commitment to fight world poverty? Does he agree also that the difficulty with the proposal by the European Commission for a global quota is that the small farmers in the Caribbean will be unable to compete? Is it not therefore essential to have a country-specific quota system? At the same time, can my noble friend assure the House that the Government will be doing everything possible, together with their European Union partners, to persuade the World Trade Organisation to protect the traditional market share of vulnerable, single commodity, dependent countries until at least they have a chance to diversify?
Lord Whitty: My Lords, as my noble friend and other noble Lords are undoubtedly aware, the WTO rules allow preferential treatment, but regrettably not preferential treatment under the Lomé Convention for the banana regime of the EU. The Commission's new proposal must therefore be WTO compatible. It is the Commission's view that a country-allocated quota to traditional ACP producers may not be in conformity
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with the WTO ruling. There are different legal views on that, and some countries—indeed, the United States—are already challenging the Commission's proposal. It is therefore an extremely complex area, but I agree that the interests of the small producers must he safeguarded.
Lord Redesdale: My Lords, are the Government prepared to support the European Commission's proposals that £340 million should be set aside for technical assistance to help ACP countries to diversify? Do the Government consider that to be an adequate figure?
Lord Whitty: My Lords, we support the proposal from the Commission and are looking at a proposal for 45 million ecu a year to be allocated to help those traditional banana producers not only to improve the efficiency of their banana industry, but also to diversify. They need help to meet the global challenges.
Baroness Young: My Lords, I hear the views expressed by the noble Lord, Lord Judd, on this extremely serious issue for small economies in the Caribbean. However, do the Government recognise that if the banana regime collapses, it is difficult to see what alternative crop can be produced on those islands? Will the Minister not only pursue the suggestions that have already been made, but also recognise that the private sector has a role to play in helping to look for diversification?
Lord Whitty: My Lords, I accept much of what the noble Baroness says. In any medium-term plan for diversification, investment in other areas besides the banana industry is important for the Caribbean producers. We intend to try to mobilise private investment as well as help from the European and British Governments. It is a difficult situation for those economies and we hope to come out on the other side with a better regime to carry them over the immediate period.
Lord Cocks of Hartcliffe: My Lords, will the Minister remind our European allies that had many people not come from the Caribbean during the war, and in many cases died in the war against the Axis powers, they would not now be in a position to make this sort of decision?
Lord Whitty: My Lords, I accept the general point being made by my noble friend that this country owes a lot to our former Caribbean colonies over a long period. We shall certainly not desert them now.
Baroness Oppenheim-Barnes: My Lords, will the Minister also bear in mind when negotiations are taking place that, quite apart from the excellent points that have been made, the result of this piece of Euro-farce—as it is at present—is that consumers in this country will have to pay higher prices and have less choice? As far as I know, there is not a single banana grown in the Community.
Lord Whitty: My Lords, the last point depends on whether we regard the Canary Islands, Guadeloupe and

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Martinique as being part of the Community. The problem is not primarily a "Euro-farce"; it is a ruling of the WTO panel, whose general principles we accept and support, that the banana regime previously established by Europe is not compatible with those principles. We now have to find between us, on a joint European basis agreed in consultation with the ACP countries, a new regime which protects those vulnerable economies. It is a difficult task, both legally and economically.
Viscount Waverley: My Lords, what is the reaction of the Minister to the contradiction in US policy when President Clinton's adviser on Africa briefed the Addis Forum this past weekend that the president is considering preferential access for African goods to enter the United States against the successful and upheld judicial review of the Lomé Convention brought by the American Government on behalf of a US banana company?
Lord Whitty: My Lords, I shall need to study whether that is in direct contradiction. As the noble Viscount says, the action by the US Government and others on behalf of large producers was not friendly towards countries which have always been friendly, not only towards Great Britain, but also to the United States. However, we are now in this situation and must find a way out.
Lord Peston: My Lords, I am reassured by the excellent answers given by my noble friend. Can he repeat in terms that Her Majesty's Government accept a special responsibility for what were colonies and what are now part of the Commonwealth in this extremely difficult situation of a single product special economy, subject to intense competition from countries which often have other axes to grind when more generally it comes to free trade? Her Majesty's Government have a special responsibility in addition to the responsibility of the EU.
Lord Whitty: My Lords, I accept that the British Government have that responsibility. But we must exert that responsibility both through negotiations with our EU and WTO partners and also through bilateral and multilateral aid to allow the economies to improve their efficiency and, so far as possible, to diversify. I hope that assures the House that we accept the responsibility.
Baroness Hooper: My Lords, can the Minister clarify a point for me? My understanding of the European Union proposal was that it was intended to give financial assistance to banana producers rather than a preferential quota. Does the Minister agree that that principle could well be applied to the tobacco industry also where, instead of giving a quota arrangement to encourage tobacco production, it would be better to give financial assistance for social reasons?
Lord Whitty: My Lords, the tobacco regime is an entirely different matter largely based on production
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within the European Union. The Government have made their views clear that it needs radical revision, if not effectively abolition.
In relation to the banana regime, the Commission put forward two proposals. The first related to introducing a new regime which is WTO compatible, and the second is a proposal for aid. They are designed to both help the banana industry and diversification into other aspects of the Caribbean economies. Both proposals are important if these small countries are to survive. General principles are not necessarily the best in relation to vulnerable economies.

Mentally Disordered Prisoners
2.59 p.m.
Lord Hooson Lord Hooson asked Her Majesty's Government:
How many sentenced prisoners are mentally disordered; what percentage of sentenced prisoners this represents; and what are the equivalent figures for remand prisoners.
The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn): My Lords, we cannot state precisely how many prisoners suffer from mental disorder. Studies conducted for the Prison Service by the Institute of Psychiatry have indicated that a psychiatric diagnosis, including substance dependence or abuse, could be given to nearly 40 per cent. of the sentenced prison population of England and Wales and some 66 per cent. of remand prisoners. This would suggest that around 20,000 sentenced prisoners and 8,300 remand prisoners have some kind of mental disorder.
Lord Hooson: My Lords, I thank the Minister for that reply. Does it not indicate the huge problem facing this country? Everyone will agree that it is highly undesirable for mentally disturbed prisoners to be in the same establishment as people who are not mentally disturbed, for the sake of both categories. What realistically is the chance of progress on this front? For example, have the Government considered the use of some disused mental hospitals, because the establishments have to be secure, so that some of these mentally disturbed prisoners can at least have treatment?
Lord Williams of Mostyn: My Lords, it is undoubtedly a serious problem. We are making funds available to assist mental health assessment schemes at magistrates' courts, we are funding NACRO to the extent of £146,000 in the coming year to carry out development work and we are encouraging the transfer of mentally disordered prisoners, whether remand or sentenced, who need hospital treatment from prison to hospital. That figure has risen from 180 in 1987 to a provisional figure of 750 last year. The number of secure psychiatric beds outside the special hospital regime has now gone up to 1,509 and low level secure beds to about 1,100. We are also looking to developing prisons on the Grendon model which would have

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therapeutic community places within them. But I accept what the noble Lord indicates—there is a long way to go.
Baroness Masham of Ilton: My Lords, what advice are prisoners given if they are put in a cell with a mentally ill prisoner? What training are prison staff given in handling mentally disordered prisoners?
Lord Williams of Mostyn: My Lords, prison staff are trained in order that they can recognise the signs of disorder and how to deal with them. About two-thirds of prisons have prisoner support and listening groups, most of which are supported by the Samaritans, who do very good work. But I readily accept, as I said earlier, that there is a good deal still to be done.
Lord Hylton: My Lords, the whole House will be grateful to the Minister for disclosing the scale of the problem facing the Prison Service. Can he say what progress is being made in making available the resources of the National Health Service to prisoners, beginning perhaps first of all with those suffering from mental illnesses?
Lord Williams of Mostyn: My Lords, the Chief Inspector of Prisons has recommended that the National Health Service should assume responsibility for the delivery of healthcare services to prisoners. Having had that recommendation, the Prison Service and the NHS have set up a joint working group to advise Ministers on options for improving prisoners' healthcare; in particular, to what extent and whether healthcare as an overall responsibility ought to be transferred to the National Health Service.
Lord Renton: My Lords, will the Government bear in mind that mentally disordered people are of two quite distinct kinds? There are those who are mentally ill, many of whom are curable, and those who are mentally handicapped, which is an incurable condition. Those who are severely handicapped mentally have not a clue about what they are doing and need to be dealt with quite differently from others.
Lord Williams of Mostyn: My Lords, I entirely accept that proposition. One would have thought that those in the category of serious mental illness identified by the noble Lord have no place in prison in the first place. I am very conscious of that. One needs to bear in mind that the figure I gave to the noble Lord, Lord Hooson, includes psychiatric diagnosis relating to substance dependency or abuse. So the spectrum we are looking at, as the noble Lord, Lord Renton, indicated, is a very wide one indeed.
Lord Pearson of Rannoch: My Lords, does the Minister accept that a large part of this problem is that the pendulum has swung too far in favour of care in the community and too far away from the long-stay institutions referred to in the supplementary question of the noble Lord, Lord Hooson? If that is so, as seems indisputable, will the Government consider giving
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greater encouragement to village community-type institutions for both mentally ill and mentally handicapped offenders instead of allowing local services to pursue their abolition?
Lord Williams of Mostyn: My Lords, the noble Lord's point is well made. Indeed, before the general election many of us on all sides of the House were on occasions bitterly critical of care in the community, when there seemed to be little community and precious little care for those who needed both. I shall certainly transmit the noble Lord's suggestion to the joint working group.
Lord Hutchinson of Lullington: My Lords, does the Minister agree that the background to this Question is that there are more persons in prison in this country awaiting trial in proportion to the total population than in any other country in Western Europe? As we have heard, 40 per cent. of them are not there because they are dangerous or because they have allegedly committed serious offences but because they are in need of psychiatric help or because they are homeless. Is it not true that the Home Office has established in its research that the use of prisons as assessment centres in this way is inhumane, expensive and ineffective? Can the Government do something about this now, as it does not require legislation and it does not require money? All it requires is some political effort.
Lord Williams of Mostyn: My Lords, I do not think the solutions the noble Lord points to are without demand on resources. This requires more than political determination and imagination. Certainly, the deeply troubling question of prisoners on remand is one that the Home Secretary is addressing urgently, because he is intent on reducing delays in the system. That is not a total answer to the noble Lord's question, the thrust of which I largely endorse.

Commercial Broadcasters: Financial Levies
3.8 p.m.
Lord Thomson of Monifieth Lord Thomson of Monifieth asked Her Majesty's Government:
Whether they will make proposals for alternative financial levies on commercial broadcasters.
Lord McIntosh of Haringey: My Lords, the Government have no plans to change the current arrangements for Exchequer payments under the Broadcasting Act 1990. We are considering the future regulation of broadcasting and telecommunications and intend to publish a Green Paper on convergence during 1998. The licensing regime for broadcasting, including Exchequer payments, is part of that overall framework and may well fall to be considered in that context.
Lord Thomson of Monifieth: My Lords, is the Minister aware that I take some consolation from the second half of his Answer to me? Is he further aware

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that the previous Conservative administration left behind a special tax system for commercial broadcasters which is thoroughly inequitable? The ITV companies pay more than £400 million a year over and above the normal business taxes and there are grotesque anomalies between one company and another as to what payments they make, while BSkyB, with its dominating position in satellite broadcasting, escapes that taxation. The commercial radio companies are similarly conscious of the unfairness of the present system. Is the Minister aware that we hope that the Green Paper will result in a serious attempt by a new government to create a new and fairer tax system for these commercial broadcasters?
Lord McIntosh of Haringey: My Lords, I am aware of the criticism which has been made of the regime which was established by the 1990 Act. As regards the Channel 3 companies, some change will take place in the process of the renewal of licences from 1st January next year. But I share the noble Lord's hope that in the longer term what we do about convergence will deal with some other possible anomalies.

Organophosphates: Independent Review
3.9 p.m.
The Countess of Mar The Countess of Mar asked Her Majesty's Government:
Whether they will convene a committee of scientists, medical practitioners and lay people who have no record of previous service on any of their advisory committees for pesticides or veterinary medicines and no links with the manufacturers to examine urgently all of the current evidence on the human health effects of exposure to organophosphates; and to report their findings publicly.
The Minister of State, Department of Health (Baroness Jay of Paddington): My Lords, I am pleased to tell the noble Countess that the Department of Health has recently commissioned and funded a review of the putative effects of organophosphates on humans by the Medical Research Council's Institute of Environment and Health. The report of this review is expected to be published in the summer. The Advisory Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (COT) has already given initial consideration to some of the issues raised by the report. It has decided to set up a working group to consider the report in greater detail. Its findings will be made public. I would like to assure the noble Countess and the whole House that Ministers take this process extremely seriously.
The Countess of Mar: My Lords, I am very grateful to the Minister for that reply. Does she appreciate that I have been battling for six years against people who have a mantra that OPs are safe provided that they are used in the manner directed on the labels? Is she aware that they have not stepped back from that and looked at the enormous amount of ill health that has been caused
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by organophosphates? I shall be only too delighted if I can be proved wrong on this matter. Will the Minister please make sure that there is absolutely no overt or hidden bias among the people who are looking at OPs?
Baroness Jay of Paddington: My Lords, of course I am ready, as always, to acknowledge the noble Countess's role in drawing to the attention of your Lordships, and indeed of many people beyond your Lordships' House, the matter to which this Question refers. We are very concerned to look broadly at the impact of organophosphates on human health. That is why the Government decided that it was sensible to refer the findings of the Institute of Environment and Health's review of the published literature to COT in order that it should give an overall view. We shall seek to ensure that those who take part in the special sub-group looking at this matter will not be people who have already identified with a particular view on the subject.
Lord Peyton of Yeovil: My Lords, will the noble Baroness kindly bear in mind that the noble Countess is absolutely right—and has been for a long time—and is beginning to attract support to her cause? Will she also bear in mind that, in arranging for any further inquiries, unswerving loyalty to previously expressed opinions is not the highest of virtues? They could be wrong.
Baroness Jay of Paddington: My Lords, I am very grateful to the noble Lord for his wise advice. As I said in answer to the previous question from the noble Countess, we are anxious to ensure that those looking in detail at the review of the published literature should not be people identified with an unswerving view on either side. My honourable friend the Minister for Public Health and I have already asked the noble Countess if she will meet us to talk about this potential exploration of the subject.
Lord Jenkins of Putney: My Lords, in the Minister's responses I did not hear any reference to publication of the findings. Does she agree that that is most important?
Baroness Jay of Paddington: My Lords, I believe that my noble friend missed what I said. In my original Answer to the noble Countess I said that the report of the original review on which COT is now proceeding is expected to be published in the summer. The report of COT and its sub-group on this review will also be published.
Earl Baldwin of Bewdley: My Lords, does the noble Baroness agree that it can be very difficult to change one's opinion in public on a matter like this, especially if one is part of a closely-knit group of scientists, most of whom come from the same background and have the same kinds of links with the chemical industry?
Baroness Jay of Paddington: My Lords, I am aware of the noble Earl's concern about the independence of

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these advisory committees. Perhaps I may point out to him that if he is concerned about overlapping membership of COT compared with other advisory committees who may have looked at this situation in the past, as I understand it none of the current members of COT served, for example, on the Veterinary Products Committee. There is only one member of COT who is also a member of the Advisory Committee on Pesticides. I can only repeat what I said in answer to the previous question; namely, that that is why the Government decided that an overall perspective of this matter was advisable.
The Earl of Clanwilliam: My Lords, does the noble Baroness accept that many practitioners in alternative and complementary medicine would also very much welcome the institution of such a committee as she has proposed? Is the Minister aware that these practitioners suffer considerably from having the efficiency of their products dumbed down, if I may use that phrase, by the orthodox, professional view on toxicity, particularly as evidenced by the committee on that subject to which the noble Baroness has just referred?
Baroness Jay of Paddington: My Lords, I am sure that the views of people who represent complementary medicine will be welcomed by the advisory committee. As I understand it, what the sub-group intends to do once it has established its membership is to advertise for example in the British Medical Journal, asking people to submit their views to the working party.
The Countess of Mar: My Lords, will the noble Baroness ask the committees looking at these papers to pay particular attention to the effects of organophosphates on children? Is she aware that they were originally tested on healthy six-foot marines? Is she further aware that children, pregnant women and elderly people are particularly susceptible and that that is acknowledged? Is she also aware of a major report which has just come from America about the residues of OPs in fruit and vegetables and of the concerns expressed today by the National Consumer Council about residues of organophosphates in vegetables? Will she also look at Department of Health's recommendations about eating five pieces of fruit and vegetable every day?
Baroness Jay of Paddington: My Lords, I am very grateful to the noble Countess for those specific suggestions. I hope that she and I may be able to pursue them in a subsequent meeting which, as I say, my honourable friend the Minister for Public Health and I are anxious to have with her on the subject of the working group. Perhaps it will be helpful to your Lordships if I give the terms of reference for COT on this subject. It has been asked to advise in general whether the evidence indicates that prolonged low-level exposure to OPs can cause long-term health effects in people.
Lord Pearson of Rannoch: My Lords, further to the answer which the noble Baroness gave to my noble
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friend Lord Clanwilliam, and in view of her very encouraging and helpful remarks so far, does she agree that it might be helpful to have, say, two respectable alternative practitioners on the committee looking into the matter?
Baroness Jay of Paddington: My Lords, it is certainly under consideration that lay observers will be included, but the exact membership has not yet been agreed.

Business of the House: Standing Order No. 30
3.17 p.m.
The Lord Privy Seal (Lord Richard): My Lords, as many of your Lordships will no doubt be aware, a Motion was moved in the House last night that the Clerk reads Standing Order No. 30 on asperity of speech. This standing order dates from 1626. It has been read only three times this century. I believe that on one of those occasions the Peer moving the Motion came to the House the day after and apologised for having moved it.
The proceedings last night were thus somewhat unusual, to say the least. I hope that the House will feel that it deserves some comment from me today. I have this morning read Hansard to see what was said last night on the debate that preceded the Motion. I do not myself see that anything personal or offensive was said that would justify invoking that standing order. Strong things are said in Parliament and even in your Lordships' House. I am reliably informed that the grandfather of the noble Viscount the Leader of the Opposition once referred to a Labour Peer as being, "redolent of oleaginous hypocrisy". However, he went on to say, "without any desire to be personally offensive to the noble Lord for whom I have such high respect".
The House will be aware that many of those who voted last night, including myself, had not heard what had been said and therefore, by definition, could not have taken offence. But having said all that, the House clearly decided last night that something untoward had occurred and that our procedures should be invoked.
In the light of those events, however, it seems to me that there is an argument that this procedure might not be the most efficacious way of dealing with the cases it is intended to address; namely, unparliamentary language and behaviour. The House might like to be made aware, therefore, that I am actively considering whether the Procedure Committee should be asked to look at Standing Order No. 30. The fact that it has been used so rarely tends to support the point of view that it is perhaps worth looking at. I hope the House will agree that discussions through the usual channels to this effect will now be appropriate.
Viscount Cranborne: My Lords, it is an agreeable and an extremely sensible convention in your Lordships' House that the House as a whole should follow the advice of the Leader of the House in matters which affect not legitimate political debate, but the

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management of your Lordships' affairs and the keeping of order and, as and when necessary, the lowering of the political temperature so that this House can proceed with its business. I am sure that noble Lords on all sides of the House would expect me this afternoon to endorse that convention and from that point of view—as always, I hope—I shall certainly advise the House to follow the advice which the Lord Privy Seal has just given us.
I hope, too, that the House will feel that it is the business of both Front Benches at all times to be mindful that one of the reasons that this House works so well is, paradoxically, that there is no Speaker as in the other place. That means that it is very much the responsibility of both Front Benches to ensure that the House is reminded that it proceeds by agreement and that due decorum should be observed.
It is for that reason that I was so particularly admiring of the noble Lord, Lord Whitty, last night. Like the noble Lord the Leader of the House, I was not in the Chamber so I have had to rely entirely on the invariably accurate reflections in Hansard. Although that deprived me of the opportunity to drink in the atmosphere that prevailed at the time, it was clear that the noble Lord, Lord Whitty, felt that he was right to stand his ground. In view of what I have just said, if I may say so, I thought that it was typical of the noble Lord that he was able to hold his nose and say what he did in pursuance of ensuring that the House could get on with its business with the minimum of difficulty. I am sure that the whole House appreciated that. That is why I am sure that the noble Lord will want to persist in the view expressed then that there was nothing personal in what he said.
As your Lordships will have observed, one of the agreeable features of your Lordships' House is that although we may disagree politically, it is extremely gratifying how many of us get on personally in private. We do not cast aspersions on the personal motives of any Member of your Lordships' House. If I may say so, I thought the tenor of the noble Lord's remarks entirely sensible and appropriate. I hope that he will not take this as a patronising remark, but I have genuine admiration for the way in which he handled the matter.
I strongly advise the House to follow the advice of the noble Lord the Leader of the House. If the noble Lord wishes to consider referring Standing Order No. 30 to the Select Committee on Procedure, I am sure that that will be raised through the usual channels when it will receive a sympathetic hearing from this side.
Lord Rodgers of Quarry Bank: My Lords, I hope that the Lord Privy Seal and the House will not make too much of last night's events. My own experience of them was that they were very good tempered. The fact that it was only the third time this century that that particular procedure had been invoked might be a very good argument for not bothering to take matters further.
I fully understand how my noble friend Lord Russell felt offended by the attribution of hypocrisy to Members of your Lordships' House. I take the view that the noble Lord, Lord Whitty, who is very skilful in these matters,
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might have issued a few emollient words and put the matter to rest. That did not happen. I do not think that we need to be too fussed about it and I do not think that it reflects on your Lordships' House, but if the Lord Privy Seal wants to refer the matter to the Select Committee on Procedure, we on these Benches would certainly not oppose that.

Data Protection Bill [H.L.]
3.24 p.m.
Lord Williams of Mostyn: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 4,

Schedules 1 to 4,

Clauses 5 and 6,

Schedule 5,

Clauses 7 to 36,

Schedule 7,

Clauses 37 to 46,

Schedule 6,

Clauses 47 and 48,

Schedule 8,

Clauses 49 and 50,

Schedule 9,

Clauses 51 to 63,

Schedules 10 and 11,

Clause 64.—(Lord Williams of Mostyn.)

Lord Renton: My Lords, having criticised the Government on a previous occasion on a similar Motion on the Crime and Disorder Bill, perhaps I might invite your Lordships to rejoice in the fact that on this occasion the clauses will be taken in numerical order, as will the schedules attached to them. Perhaps we might take this as a good precedent for the years to come.
On Question, Motion agreed to.

Farming in Wales
3.25 p.m.
Lord Hooson Lord Hooson rose to call attention to the report of the Institute of Welsh Affairs, The Farming Crisis in Rural Wales, and to the consequences of that crisis including public order problems; and to move for Papers.
The noble Lord said: My Lords, I put down this Motion for possible debate when my noble friend Lord Thomas of Gresford drew my attention to the publication in January of the report of the Institute of Welsh Affairs, compiled by four distinguished academics in Wales with expertise on rural affairs. To my astonishment, I was successful in the ballot—and that is how this debate comes before your Lordships today.
The four experts concluded their report with the proposal that 10 steps should be taken for a rural development strategy, which will no doubt attract a

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good deal of debate in the future. Incidentally, that report, which was not very lengthy, was a follow-up to an earlier report published at the time of the Royal Welsh Show last year, entitled Making the CAP Fit: An Integrated Development Strategy for Rural Wales. The experts emphasised that those were long-term considerations, but also pointed to the need for short-term action, and it is on that aspect that I wish to concentrate today.
On 21st January, on a Motion moved by the noble Earl, Lord Ferrers, we debated the state of agriculture in the United Kingdom generally. Today we are concentrating on the state of agriculture in rural Wales because what amount to really serious problems in more favoured parts of the country have become in rural Wales, and I am sure in similar areas in England and in Scotland, a true economic and social crisis. At the moment it bears all the signs of an agricultural slump. By the use of the word "crisis", I mean that this is a time of real danger for the rural community. I am talking about an area which is the backbone of Welsh cultural and social life. Therefore, there is a great social implication to the present state of affairs in rural Wales.
What I hope to achieve from the Government in this debate is a more understanding and sympathetic response than has been manifested hitherto and that they show some signs that they really appreciate the depth of the crisis and indicate that it is their intention to take really serious, urgent measures to alleviate the position. I hope to show the Government that there is every justification for that.
Eighty per cent. of the land in Wales is characterised as being a "less favoured area" under Objective 5B of the European Union, which means that it is earmarked for special treatment. Figures published by the Government reveal that in 1994–95, 69 per cent. of farms in Wales in less favoured areas had incomes of less than £10,000 per annum—and that was a very good year in agriculture. The figure increased by 17 per cent. in the following year, but reduced by 21·7 per cent. in 1996–97 and the forecast reduction for 1997–98 is another 27·2 per cent. We must bear in mind that farm incomes in 1995 (a good year) were less than the average industrial wage in this country and that they have now reduced by a further 50 per cent.
All of this happens at a time when farm income is rising in Germany, the Netherlands, France and Belgium. There is an even, steady spread of earnings throughout the European Community, except in Portugal, where I believe incomes have reduced by 13·2 per cent., and in this country. The fall in prices for sheep and cattle has been catastrophic. Farmers are faced with very serious cash shortages.
I take as an illustration my own area of Montgomery. I have declared an interest in this regard many times. I have farmed there for over 30 years and represented Montgomery in another place for 17 years. One of the oldest animal feed firms in Wales, D.C. Evans of Newtown, recently called in receivers. It employed between 30 and 40 people. It had been run as a family firm for years. I do not have the slightest doubt that the real cause of its difficulty was that it had extended credit
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to farmers who were unable to pay for the feedstuffs they required to feed their stock. That is only one example of the knock-on effect.
I should like to give an example of today's prices in the market. Old ewes which a year ago—that was also a time of depression—sold for about £20 to £25 a head now sell for between £3 and £7. That is because of government action that requires certain things to be done to old sheep. I refer to the removal of intestines from any animal over 12 months. The maximum price one can obtain for a cast cow, valued at £750 two years ago, is £310, due partly to government regulation.
It is fairly obvious that the demonstration at the ports was misdirected. My Motion refers to the consequence of the crisis, including public order problems, with which my noble friend Lord Thomas will deal later. Having been brought up on a farm in North Wales and spent almost the whole of my adult life in mid-Wales, I have never seen Welsh farmers demonstrate like this before. It is alien to their lifestyle and upbringing. I believe that it amounts to a cri de Coeur—a desperate attempt to call the attention of the public, the media and the Government to their plight.
The Irish, who are fellow members of the European Community, are doing only what British farmers were accused of doing by French farmers a few years ago in relation to lamb. The real problems lie firmly here at home with the attitude and actions of the previous government, perpetuated and to a degree aggravated by the present Government. I believe that it has also been egged on by the constant attempt of much of the media and the Euro-sceptics to try to blame all of our problems on Europe.
It was not Europe but the Government here which so mismanaged the BSE crisis, as the noble Earl, Lord Ferrers, so vividly demonstrated in our last debate—all the more powerful because he was a distinguished member of that Government for much of that time.
It is the policy of this Government, like their predecessors, to keep the pound as strong as possible. It is that fact which is the major contributor to the present crisis. It is the policy of this Government, like the previous one, not to seek entry into the euro at its launch, but nothing could help farmers and manufacturers in this country more than that we should be in at the first possible opportunity. It was the previous government in a policy continued by the present government which reduced the HLCA compensation payments to farmers and initially put every possible additional cost of inspection, traceability and so on on to the abattoirs and consequently the farm. Mercifully, this policy has been modified to a degree, but in the ultimate it will be found that, while the Government have conceded some matters of late, they do not make up for what they have already taken away.
I should like to pose six particular questions to the Government. I hope that the noble Lord, Lord McIntosh, who I understand is to reply to the debate, will be able to answer them. First, what do the Government say has caused this crisis? Overall there has been a drop of 23·1 per cent. in farm income in the UK. The average drop in the EU is 3·1. per cent. (including the UK). We

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are all under the same agricultural regime in Europe. What accounts for the crisis in this country? Secondly, do the Government agree that as a result of the strength of the pound the Treasury benefited from an underspend in the sheep animal premium in 1997 of £190 million, together with a £205 million underspend for the over 30-month slaughter scheme for cattle? If not, what figure do they believe to be true?
Thirdly, have the Government any plans to reduce the burdens on abattoirs so that the cost of slaughtering in the UK is comparable with that of our European partners? I gave this example in a previous debate. It costs £2 to slaughter a lamb from this country if taken to Spain; it costs £6 to slaughter it here. Fourthly, what is the total value to date of the rebates secured by the UK Government under the Fontainebleau agreement? Based on Parliamentary Questions in the other place, it appears that the benefit has been well over £20 billion.
Fifthly, is it not correct that the Fontainebleau agreement was based on the fact that the UK, in comparison with other net contributors, had a smaller agricultural sector so that a 21 per cent. addition intended for agrocompensation agreements was imposed; possibly it was not anticipated at Fontainebleau. Every other government contributed 50 per cent. on agrocompensation agreements. We had to contribute an additional 21 per cent., making 71 per cent., but we have had to do nothing else in the meantime. The Government, whatever their complexion, have benefited enormously from that agreement.
Sixthly, has any UK government previously applied to the European Union for help under the agrocompensation agreements? The noble Lord will be aware that £980 million is waiting to be asked for. Other countries have applied in turn at different times. Why on earth cannot the Government make their 71 per cent. contribution considering that they have never had to pay anything else over the years on these matters?
I have been in politics long enough to know that every Chancellor of the Exchequer and Secretary of State has a back pocket. They have funds available for compensation when there is dire need. The Treasury back pocket on this issue is very well padded. The Government have benefited from a strong pound—just as the farming community has been penalised for that fact—and they should provide compensation. They will find in those items that I have indicated proper grounds for saying that not only is the farming community in rural Wales in a catastrophic state—it cannot see ahead and so on—but there is every justification for the Treasury to help out.
I have been brought up in a farming community. No community in this country is so used to the vagaries of life, weather and the market. I was born during an agricultural slump and I remember my parents talking about it. I have seen it for myself. Farmers do not want to be feather-bedded by the Community, but why on earth should the Government impose additional penalties upon them when they are unable to compete fairly with their partners in Europe under the umbrella of the common agricultural policy? When the Government imposed further and further penalties on
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the farming industry did they take into account the incredible bureaucracy and its cost in farming at the moment? The professional fees that small farmers incur to reply to forms have increased enormously. It is reckoned now to be about 11 per cent. of expenditure in small farms. Veterinary fees have increased enormously. If there is a difficulty with a cow calving, a Caesarean operation would cost over £100, and it is probably cheaper to let the calf die. It is the same with ewes and so forth. All that has happened within a year or two.
Most sensible farmers agree that the CAP should be seriously modified, but it must be done on a European basis. This country cannot do it unilaterally. I look forward to hearing the noble Lord's answers. I hope that he will take to the Prime Minister, the Chancellor of the Exchequer and the Minister for Agriculture the cri de Coeur which is coming from mid-Wales and which is totally genuine. I beg to move for Papers.
3.40 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble Lord, Lord Hooson, for introducing his Motion, and for referring to the report of the Institute of Welsh Affairs which is the subject of the Motion. I, first, have to declare some interests. I am the owner of land in what used to be known as Radnorshire: 13·1 hectares to be exact, which I do not farm myself, unlike the noble Lord, Lord Hooson. I let it out on an annual grass keep to my neighbouring farmer. I am also vice-president of the Campaign for the Protection of Rural Wales, and, more important perhaps, I am a recipient of funds under the environmentally sensitive areas scheme, having signed a Tier I agreement with the Welsh Office. I shall say more about that later.
Having declared all those manifold interests, I shall go on to say that I cannot speak for rural Wales in general. Rural Wales is a diverse community, stretching from the north to the south, with different aspects of agriculture. I can speak only, and I want to speak only, of things about which I know. The things about which I know are livestock farming in the Radnor Uplands. So I hope that your Lordships will forgive me if I concentrate on that rather narrow brief, although it is a brief, I believe, that has relevance for the whole of rural Wales.
I read the report of the Institute of Welsh Affairs. I thought, to be honest, that it was long on analysis. I was rather doubtful about its recommendations. The analysis was undoubtedly done with extreme care, but I am not sure that it is right merely to say—the same is true of the CLA's submission—that just by throwing money at a problem one can solve it. Because, to get back to my home in Radnor, there seem, in the hill farming area, to be two distinct problems.
There is the short-term problem and there is the long-term problem. The short-term problem, as the noble Lord, Lord Hooson, rightly said, is that cash flow is negative for hill farmers. All my neighbours whom I have consulted report that they will make no profits this year; they will be losing money. Cattle, as far as they are concerned, are not even worth taking to market.

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Indeed, the other day my neighbour took three cattle to market and brought them back again. No price was being offered which was consistent with any return on the investment he had made.
The strength of the pound, again as the noble Lord, Lord Hooson, rightly said, has threatened lamb exports. There is a consequent reduction in domestic lamb prices because there is an overhang. If lambs cannot be exported because of the strength of the pound, and they are overpriced in the international market, they will be dumped on the domestic market. All my neighbours are suffering from that.
What are the consequences? The noble Lord, Lord Hooson, described some of them. I leave aside the question of public order. As the noble Lord said, farmers in Radnorshire and Montgomeryshire are not people who demonstrate easily. We are a peace-loving lot and, unless it is absolutely vital, we do not want to be blockading ports or disrupting public order. Nevertheless it is worth bearing in mind that the suicide rate in Powys is second only in England and Wales to the suicide rate in Birmingham.
Hill farming is a hazardous, lonely, desperate business. People can become very, very depressed. Only the other day in my part of Wales there were two suicides: one of a girl of 18, and the other of a young man of 20, both connected with the farming business, who were so depressed that they decided to put their heads in a gas oven rather than go on with life. That is the most dramatic consequence of what is happening.
The second problem—slightly longer term but nevertheless requiring to be addressed—is that local authorities are inclined, quite rightly, to sympathise with the farming plight. In their sympathy they give permission for planning applications which in times of prosperity they would not give; in other words, bungalows can be built on farming land, wind farms can he put up. All sorts of planning applications which, in the long run, are detrimental to the environment of mid-Wales, or Radnorshire, are, because of the sympathetic attitude of the local authorities—a rightly sympathetic attitude—being passed, which previously, or in times of prosperity, would not have been passed.
Those are two of the major consequences of the short-term problem, apart from the difficulties that the noble Lord, Lord Hooson, quite rightly described. There is a longer term problem. The population of hill farmers is ageing. Young people no longer wish to stay on farms and inherit, as their fathers did. The result is that they will migrate to the towns, and possibly the cities, and at the end of the day, when those small hill farms of perhaps 170 acres or 200 acres become free, an undermanaged environmental situation will develop.
Farms will no doubt be converted into second homes. There is nothing wrong with that, but your Lordships should be under no illusion. The farmers in Radnor are extremely sensitive to the environment. They are the managers of the land as well as being farmers. If they are off the land, who knows who will manage that land in a sensible manner?
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I do not want to be wholly negative. I want to suggest a possible solution to my noble friend. I quite understand that we should not be throwing money at the problem. I quite understand that the exchange rate may go up, and may well come down as the interest rate cycle starts to peak. I well understand that if you throw money at a problem you get a situation that existed in Radnor only a few years ago of "grant" roads, as they were known. Grants were given for any road which was made in any hill. The farmer got out the hardcore from the hill and, having put in the application to the Welsh Office, shared the profits with the contractor. There was a burst of prosperity. I well understand that throwing money at the problem is not the right solution.
I am of course in favour of what the Welsh Office has announced as an agri-environmental scheme. I am not sure what an agri-environmental scheme is, as applied to the whole of Wales, but no doubt my noble friend will enlighten me. It is a grand idea, but it will take some time to put into practice.
However, a scheme which the previous government put in place could be the basis of a solution. I refer to the environmentally sensitive area scheme of which I am a beneficiary. I do not know whether Montgomery is in the scheme—no doubt the noble Lord, Lord Hooson, will tell me that it is—but I know that Radnor has been declared an ESA. As a result, farmers in Radnor can sign contracts with the Welsh Office and do what they would normally do—that is, look after the land properly—and receive benefits in cash for doing so. On my smallholding, I cash in on that. I am doing nothing more than I would normally do; nor would any farmer. However, the scheme ensures that, first, the environment is protected and, secondly, that the farmer receives extra cash for being a guardian of the environment.
The difficulties with the present scheme are simple. First, it is bureaucratic. Masses of contracts must be signed in language which is legally obscure. I can understand the language, but many of my neighbours have great difficulty in doing so and they are suspicious that certain aspects may catch them out in the long run.
Secondly, authority is required to do anything on one's land which is contrary to the laid out map. For instance, the map will show that there is a potential archaeological site on a particular field and one must not do anything to disturb that site. As soon as my neighbours see "archaeological site" on their maps, they will have nothing to do with it and say, "I don't understand what an archaeological site is and I would not like to participate in this scheme".
My neighbours are farmers. They were brought up and inherited, or bought, their land in order to produce food. They do not particularly want to be relegated to the position of managers of the environment. If the ESA scheme were properly organised, made less bureaucratic, extended and sold properly, it would be the third way between being purely a farmer and an environmental manager. If the scheme were extended and the bureaucracy reduced I would recommend my noble friend to press the Welsh Office to enlarge it further because I am sure that it is the right way forward.

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In the long run, it is the only way to preserve the rural farming community, which is of such value in communities in mid-Wales, particularly in Radnor.
3.55 p.m.
Lord Kenyon: My Lords, I, too, am most grateful to the noble Lord, Lord Hooson, for introducing the debate today. As he well knows, I take a deep interest in Welsh affairs, even though I can hardly claim to be a Welshman as my family have lived in Wales for only a brief 300 years.
I should, of course, declare an interest as a landowner and farmer in Wales. It is my income, as well as those of my tenants, which are suffering in the present crisis. Unless something is done not just to alleviate the immediate problems, but to underpin a stable climate for the future of farming in Wales, the changes that will take place will drive so many people from the land that parts of Wales will become an unkempt and abandoned wilderness.
Those of your Lordships who know the Welsh countryside, and those who have a concept of it, doubtless remember it for the outstanding natural beauty of its landscapes, its mountains, its forests, its rivers and the timeless charm of its hamlets, villages and towns. Those of your Lordships who saw it doubtless did so on a sunny summer's drive through some of the most picturesque parts of the Principality; perhaps Snowdonia. Perhaps you even got out of your car and took a stroll along a well beaten track in the foothills and thought what a pleasure it would be if you could breathe that air every day of your life. No doubt, too, you saw the shepherd and marvelled at the way he controlled his dog with effortless ease to collect his sheep, apparently without a care in the world.
Dream on, my Lords, dream on, because it is not always like that. When those winter winds are howling and the snow is piling up outside your door, that shepherd is still out there; though now the visibility is down to zero, the dog and the sheep are remarkably less co-operative, while the shepherd himself is very, very short on temper and is dreaming, too—dreaming of your cosy, centrally-heated life.
Why does he do it? Does he do it to make a living? I hardly think that that is what one would call it, working from dawn to dusk, seven days a week, 365 days a year for a net income of perhaps £5,000 a year. What is a minimum wage to him? And then, to add insult to injury, the problems of national government and international finance are heaped upon his shoulders. The strength of the pound conspires to reduce the direct support paid to him each year under the common agricultural policy, and reduce still further the meagre income from his business, while the Government continue to refrain from claiming the agri-monetary compensation that is due to the UK.
Is it a business, my Lords? It certainly is a business and the farmer has all the forms to fill in to prove it. But it is a very different business from the norm. I am sure that the economists among your Lordships would agree that the first principle when starting a business is
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to ensure that it will make a profit. You need to know the price at which you will sell your product so that you can calculate your cash-flow forecast. If you cannot get that to go in the right direction you will not persuade the bank manager to lend you the money.
Sadly, farming is not like that. The noble Lord, Lord Hooson, explained that the price of old ewes is now between £3 and £7. I can add to that. I saw a credit note from an auctioneer to a farmer who had taken four old ewes to market. The price of three was £5 and the price of one was £7; that is £22 in total. But he did not take £22 home. By the time he had paid the auctioneer's commission and the levies and by the time the Government had taken their 17½ per cent. on top of that. his cheque was £1·13. That is less than the price of a sandwich in your Lordships' House. By the time he had taken the cheque to the bank and the bank had imposed its charges, the cheque was worth nothing.
When it comes to farming, you know what your initial costs are and what your running costs are, but until you get to market you do not know what your selling price is going to be. That depends week by week no longer just on the market supply and demand but on the daily stream of pronouncements from Brussels or Whitehall, or on some eminent academic who is telling us that this or that is bad for the health of the nation.
The CAP is in the process of reform and the longer-term result will undoubtedly see an overall reduction in the levels of direct support to farmers. However, at the same time, there is a golden opportunity for the Government to ensure that there will be greater flexibility in the way in which member states can target the spending of these funds. In particular, there is the spectre of modulation to which the CLA and, I believe, the NFU remain opposed. "Modulation" is the Brussels-speak for the process whereby the payments of grants are made on a sliding scale so that the payments to the larger producers are reduced and the smaller farmers receive correspondingly more. The argument against it is that as Continental farms are, on average, so much smaller than those in the UK. the level at which the cut-off begins to operate will be to the detriment of British farmers. But if the modulation were applied with subsidiarity it would then be for the Government to decide where the limits lie.
I should like to end by considering some of the consequences of that crisis, not those of public order which have been addressed already by the noble Lord. Lord Hooson, but the social consequences.
I am fortunate to live in a rural village which still boasts a church, albeit with a falling congregation, a sub-post office and general store, a garage, a butcher's shop and a pub. But all around me I see the shutters going up on the businesses as they are forced to close from lack of customers. Once they close, they are converted to houses and are lost for ever, severing part of the body of the community. I acknowledge that those problems are not unique to Wales but they are magnified by virtue of the greater isolation which is comparable only with parts of Scotland and Northern England.
At the same time, we have an exodus of the young blood from the rural communities. The bright lights of the cities beckon to them and they follow that star,

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leaving an ageing population supplemented by the new villagers who can afford the ever-increasing house prices. No doubt given time they will integrate with the community and learn what village life is all about. But for now, their mobility makes it much easier for them to seek entertainment and to do their shopping further afield.
Next week the Chancellor will announce in his Budget a further hike in the price of fuel, well in excess of the rate of inflation but nevertheless affordable to most people. Sadly, it will be a disproportionately large tax on the mobility of the ageing population in the rural villages where public transport is little more than a couple of words perhaps augmented by a bus once or twice a week. For them, it is just another post in their fence of isolation.
4.1 p.m.
Lord Mackie of Benshie: My Lords, I cannot claim any real connection with Wales except that I recently contributed £10 to the noble Lord, Lord Geraint, as a result of the Wales/Scotland match. I do not think that that will go a long way towards solving the problems.
In speeches from various members of the Government, I have detected a tendency to play down the depth of the crisis in farming. Figures have been quoted to me which have taken 1990 as against 1995: 1990 was a very had year and 1995 was a good year. I have been told that in real terms, farming income has increased by over 200 per cent. I am afraid that that sort of attitude put a great many Scottish farmers very much against the Government. They are right because they cannot see what the Government are doing. The Government have done one or two small things which should have been done before. But, essentially, the Government must take up the money which is being taken up by other governments-I admit that it will cost us a little more, but as the noble Lord, Lord Hooson, has explained already, that is being compensated for—and use it wisely to do something about the appalling condition of farming all over Britain.
That does not apply only to hill farms. I know extremely competent farmers who tell me that they will lose a hatful of money this year. Those people are right up to the mark. They are able and reasonably capitalised. But in Scotland, the Royal Bank published figures which showed that overdrafts at Christmas and the New Year were up by 10 per cent. That is in a period when a great deal of money must go out and yet very little comes in before the harvest. Therefore, I do not believe that the farmers are squealing.
We are in a situation which can be compared only with the 1930s. It is all very well to talk about the free market and the ability to compete. There was a free market and the ability to compete in the 1930s. It resulted in appalling misery and degradation throughout America and the prairies as well as in this country. Something must be done. There are plenty of suggestions as to what could be done. It is now too late for the Government to take up the £940 million but they can still take up the remaining tranches, which amount to about £620 million. Moreover, they should try to pay it out wisely.
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The noble Lord, Lord Kenyon, referred to modulation. I do not believe that the modulation plans of the Commission—and they are only speculation at present—are too bad. They want to reduce the figure to 75 per cent. for the top farmers, which might or might not work. But the fact is, of course, that if a modulation plan is produced it will mean that the total amount of money available to support farming in this country will be much less.
There are a number of steps which the Government should take and take now. One of them is to set up a committee to advise them. They should include on the committee competent people to look again at the support available for farming in the hills and the less favoured areas, as they are called. Without support, those areas will become a desert—a not very satisfactory playground. As the noble Lord, Lord Kenyon, said, all the facilities will disappear and we shall be left with something which nobody wants to see. Therefore, I believe that it would be useful to set up a committee.
Also, the Government should give an indication that they mean to hold to the CAP as it is now. It is not good enough that in the rest of Europe governments are taking full advantage of the facilities available to support farming. Here we must suffer not only from the strong pound, from which all industries suffer, but we must suffer in addition from the fact that those countries are able to export to us at a very low figure.
Wales is not alone, but it is a good example because there is more hill ground there than elsewhere. It needs help and it needs a proper plan. It may need a retiral plan. However, whatever else may happen, the Government should think the matter out. If the population falls and there are fewer people in farming, that change must be managed competently. We should allow other businesses to arise in the countryside to keep people there, not as holidaymakers or occasional residents but usefully employed in the countryside. There is a very good example, set up long ago by a Labour government, in the shape of the Highlands and Islands Development Board which has done a great deal in that regard. There is a task ahead which I do not believe the Government have tackled properly as yet. I hope they will do so now.
4.7 p.m.
Lord Elis-Thomas: My Lords, I thank my noble friend Lord Hooson for initiating this debate. I thank also the noble Lord, Lord Mackie of Benshie, for making a Scottish contribution. As ever, he has informed our debates on Wales and the rest of the UK.
The noble Lord, Lord Mackie, referred to the issue of a free market mechanism. In the context of agriculture, we are dealing with a managed market, managed or mismanaged by decisions of public policy. In the present crisis of agriculture in rural Wales, we are not dealing with a natural disaster or an occurrence relating to production standards, habitat problems or a social crisis. We are dealing with the results of a failure of a series of public policies to understand the context in which they were operating. I shall enumerate briefly those policies because they relate directly to this Government and the previous government.

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First, there is the public policy in relation to public health. Clearly in this House we all have an understanding of the importance of the quality of food and the food chain and the need for clear standards of public health. However, there is the essentially important issue of how issues of public health are presented to the public and the context in which they are presented. Although we have debated that issue many times in this House, I am still completely dissatisfied with the responses that I have received from government on the way in which the BSE crisis and the resulting effect on the beef industry was handled by this Government in the context of the European Union policy on public health.
I know that the Government have established an inquiry into that issue, but the effects of the way in which it was handled in the short term and the consequences of their subsequent announcements on public health aspects of beef, including the whole issue of on and off the bone, was an indication of the insensitivity of the operation. In my view, the effects of those announcements on the beef market were not sufficiently understood. That is one aspect: a public health policy and the need for sensitivity as regards public health policy; and, indeed, the need for public health in relation to food and agriculture to be treated in the same way as it is in relation to other substances and commodities across the board. That is an issue which the Government need to address.
The second aspect of public policy relates to exchange rate issues and the effect that that has had on the return and the income of the agriculture industry as regards the green pound mechanisms. Successive governments have pursued policies which have resulted in a strong pound in relation to other European currencies. I suspect that never in this whole debate was the implication of that policy for agricultural support prices even considered. Clearly that impact has been catastrophic in terms of income levels.
When you have a mechanism of economic and public policy which impacts directly on the income levels of a sector of the economy, I believe that that should be understood and that ameliorating measures should be planned for that context. The whole question of relative exchange rates and green pound levels has perhaps had the most immediate impact on income levels across the board in terms of price support mechanisms.
The third aspect of public policy is that relating to environmental, and agri-environmental policy in particular. It seems to me that there is a lack of clear commitment by the UK Government in the context of CAP changes to the agri-environmental initiatives which are now appearing in the rest of mainland Europe. The whole decoupling argument is one which I suspect that this Government do not really understand. The importance of transferring support from end price support in the context of WTO negotiations, and the present and emerging renegotiation of CAP, requires a whole fresh approach to what countryside management and income support in the countryside should be about. Again, it seems to me that the Government have no understanding of that.
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The further aspect of public policy, which is not understood clearly, is the whole question of the role of countryside and rurality within the post-modern 21st century context. Many in your Lordships' House and so many urban people seem to feel able to make continual demands on the countryside for recreational purposes, but seem not to understand that there is a price to pay for that joy and recreation. I speak as someone who has lived in rural Wales throughout his life out of choice. I am quite happy to see visitors enjoying the scenery and the environment and deriving benefit therefrom. However, there is a price to pay; namely, the price of supporting a viable countryside which is there to be enjoyed.
The transfer mechanisms that we have for that activity have not, in my view, been understood properly. The national park policies that we pursue do not provide enough resources to ensure that recreation is managed in a way which brings benefit to the inhabitants of the countryside. Neither is the whole issue, as it has recently been polarised between countryside and city, helpful to the debate. I shall not enter today into the whole argument about country sports and fox hunting; indeed, my views in that respect have been well documented.
However, there is a perception of countryside which is still sanitised through Country Living and other such magazines. That perception has been very well attacked by Fiona Reynolds of CPRE. I congratulate her on her recent appointment by the Government to assist them in the pursuit of gender equality within the Civil Service. I wish her well. If she takes to gender equality within government what she has delivered to countryside policies she will, I am sure, sort out all those in your Lordships' House, and elsewhere. She very clearly put forward the argument recently that the sanitised perception of countryside and rural living which is marketed to urban dwellers helps to create this false concept of what rural and urban life is really all about. That also should be addressed as an aspect of public policy.
Finally, it seems to me that the results are an indication of a failure to understand the gravity of the income crisis as it affects individual producers. A number of noble Lords have referred to recent income figures. I shall repeat just one; namely, the average income of £10,000 for an agricultural production unit within upland Wales. I emphasise the dependence on the livestock sector and the fact that there has been a reduction across the board in beef, in sheep and in all categories of production, including the milk sector, which all compound each other.
There is a way in which government can respond, but it has to be with greater sensitivity than we have seen so far. The countryside people whom I know and love, and among whom I have lived all my life, have responded with great patience to the current crisis in terms of income. I have lived through a number of crises in the extractive and basic industries in the Welsh economy—in steel, coal and agriculture—but I would say that this is potentially the worst. We have not yet seen what this will produce. I have seen the devastation of our coalfields in Wales: the devastation of our countryside will be even more dramatic. We have a recent estimate from Professor

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Peter Midmore of Aberystwyth of the loss of not just 5,000 jobs; indeed, he is now estimating that 8,000 jobs in rural Wales will be destroyed as a result of the current crisis.
Of course, the Government need to address that issue, but so did the previous government. That brings me to the Fontainebleau Agreement to which reference has already been made. The noble Baroness, Lady Thatcher, never understood the countryside. She was personally responsible for the destruction of the Welsh steel industry. I know that this kind of rhetoric is not normal in your Lordships' House, but I feel emotional on such issues. I want to put this on the record. The noble Baroness, Lady Thatcher, tried to destroy the Welsh steel industry; she tried to destroy the Welsh coal industry; and, with her Fontainebleau Agreement, she is also destroying the Welsh agricultural industry. She shall not pass.
4.17 p.m.
Lord Geraint: My Lords, I am most grateful to my noble friend Lord Hooson for initiating this debate on rural Wales and the agricultural crisis, linked to the report by the Institute of Welsh Affairs. I can say one thing; namely, the agricultural industry in Wales is in a "mess".
I should like, first, to mention the walk of the Countryside Alliance last week. Those who took part in that march can take pride in the way that it was conducted and in the level of support achieved. But one thing the Countryside Alliance demonstrated was the fact that people were prepared to put their differences behind them and stand up for the countryside as a whole. It was a day to remember. Indeed, I do not think that I shall ever forget it. I hope that the Prime Minister in his wisdom will take heed of the efforts to save the countryside. I was also delighted to see the Welsh dragon at the corner of nearly every street as we walked all the way to Hyde Park.
I disagree with the Agriculture Select Committee, because it recommends that the entire EU beef industry must be restructured if the United Kingdom is not to lose its competitiveness In my view, if restructuring were to take place in Britain alone under the present abnormal circumstances a high proportion of British beef consumption would be met by imports. My advice to the Government—for what it is worth—is, do not pursue such a policy. British beef production is forecast to have fallen from 12 per cent. of the EU total in 1995 to 9 per cent. in 1998.
The Liberal Democrats are keen to set up a Royal Commission on the countryside to look at the issues that disadvantage rural areas vis-à-vis the rest of the country. Many noble Lords are aware that sometimes Royal Commissions take a long time to conduct their inquiries. However, we need one to consider the short-term issues and the longer-term issues facing the industry. I hold the view that we should have a Royal Commission in Wales to consider the future of the agricultural industry and the countryside. In addition to the Liberal Democrats others have taken up the challenge. The editor of Farming News said last week,
"We like the idea. We think it has great merit. We think it will cut through the political posturing and present the parties with facts and figures they can act on. So we urge Mr. Blair both to appoint such a commission and to hang fire on all divisive legislation until it reports".
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John Thorley, the chief executive of the National Sheep Association, said in Hereford last week that few farmers would doubt that what we are talking about is the survival of our industry, and its base in family farms which has been around probably since man changed from hunter-gatherer to farmer. There are those who now wish to see all that challenged. Does the noble Lord the Minister agree with me that there is a challenge to our right in Wales to get a reasonable return for expertise in investment and a challenge to the traditional methods of marketing our product? There is also fear in the hillsides of Wales that we shall not be allowed to farm the land over which we have jurisdiction. There are so many people with the backing of massive organisations and money who seek to enforce their collective wills on our industry whether or not they understand the issues. In my view they must be stopped before it is too late and the countryside is destroyed.
The National Farmers' Union is not pleased with the way the Welsh Office Agriculture Department is run at the present time. According to the National Farmers' Union in Wales, the dramatic fall in income has been compounded in recent years by continued delays in the administration and processing of support scheme applications by the Welsh Office Agriculture Department. These continued delays are totally unacceptable and have created severe cash flow difficulties for Welsh producers, thus placing them at a serious competitive disadvantage compared with their English counterparts. The majority of farmers in Wales and in the rest of Britain are keen to know what the future holds for them regarding milk and sheep quotas. I read the other day that they will all come to an end in the year 2006. I ask the Minister how many farmers there will be in Wales in the year 2006 the way things are going today.
Last week I read with interest that the Government are suggesting that they will not close small rural schools. If I understand the law at the present time, the Government have the right to decide whether or not a school is to be closed. The Minister shakes his head and therefore I am bound to be wrong. However, I am delighted that the Government will look after rural schools if they can.
The crucial question is, what is the latest development on the beef export ban? It is now quite clear that we have met all of Europe's preconditions in relation to the lifting of the export ban. The Government must be rigorous in seeking an end to this unjustified ban on our beef exports. An early end to this ban would give consumers a firm reassurance about the quality of British beef and would help restore confidence among producers. I also welcome the beef inquiry. I hope that the conclusions will give us an insight into what went wrong in the 1980s.
I turn to market realisations. It is right to repeat what has happened during the past two years. Agri-monetary changes and their impact on imports /exports, in tandem with BSE, have resulted in reduced market realisations. Cattle prices in Wales in November 1997, at 90·87p per kilogram, were 26·9 per cent. below market realisations in November 1995. By November 1997 lamb prices in Wales had fallen to 13 per cent. below levels prevailing

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in November 1996. In October 1997 farm gate milk prices, at 20·72p per litre, were 19 per cent. below 1996 levels. I am sure the Minister will be asked my next question by many noble Lords in this House.
Have the Government any plans to restore confidence to those who live in the countryside, and especially to those involved in the agricultural industry? The Farmers' Union of Wales is concerned that the difficulties facing the Welsh livestock and milk sectors are irrefutable. These difficulties lie outwith the industry's ability to redress them and, as such, the Farmers' Union of Wales believes that if the Government wish to retain a viable agricultural industry in Wales, upon which the wider rural economy and the maintenance of the countryside is dependent, they must recognise these difficulties and take suitable action to prevent the irrevocable damage that will otherwise ensue. This assistance should take the form of agri-monetary compensation; reasonable compensation for the consequences of BSE measures imposed by the Government on the industry; and support for Welsh hill and upland areas. Unless assistance is forthcoming in the short term, the future of the industry in the longer term will be severely jeopardised.
What the farmers of Wales really need is the right to compete on equal terms with their counterparts in Europe. Unless that day dawns pretty soon I am afraid that our industry will be submerged. My message to the Government is clear: please act now and let us loose from the shackles of bureaucracy.
4.28 p.m.
Lord Harlech: My Lords, I support everyone who has spoken. I thank the noble Lord, Lord Hooson, for initiating the debate on this important issue. As the noble Lord, Lord Elis-Thomas, rightly explained, there is a serious crisis. The Order Paper refers to a crisis. It has far-reaching consequences; it does not end at the farm gate.
As I have said before in this House, the rural economy is based on a complex socio-economic structure in villages and towns. Only this week I am aware that in a 15-mile radius nearly 20 machinery dealers have been laid off because of lack of orders since the farmer has no sense of security in his future at present and cannot make any investment.
The drop in income is crippling. The noble Lord, Lord Williams of Elvel, spoke about suicide rates. The rates in Wales are very high. Sadly, in Gwynedd, within 18 months two brothers have taken their lives. That lack of confidence means that while unemployment rises, costs and services continue to rise. The Government, and the future assembly of Wales, will have to address the increasingly high burden of costs on an industry that is less and less able to make economic returns and therefore be a contributor. Of course, no feather bedding is wanted, but confidence must be restored. It is in the hands of this Administration now to restore that confidence.
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We have heard about the increase in slaughter prices. That is absolutely correct. It is nearly four times as expensive to slaughter in this country, with the inspection that is involved, as it is overseas. That is not. I suspect, a good message for the people who wish to ban live exports. Those exports will increase now that one can have animals killed more cheaply across the Channel.
A catastrophic situation has its roots in policies that were mistakes of previous administrations. I make no bones about that—and bones are part of our thinking these days. There is no doubt that failure to respond to the crisis is serious. We have heard about increasing demands. My noble kinsman Lord Kenyon referred to picture postcard indulgence in countryside activities. It is not like that; that is not the reality of country life. Perhaps I may say this for the third time. It is necessary to make a structure that is secure in order that the countryside becomes a place where people want to invest so that it does not suffer the slow death seen in other industries.
4.32 p.m.
Lord Thomas of Gresford: My Lords, the bare figures and the analysis of those figures are contained in the Report of the Institute of Welsh Affairs, which I commend to your Lordships. I am particularly grateful for the way in which in this debate noble Lords from all sides of the House have brought those statistics to life. The noble Lord, Lord Williams of Elvel, spoke movingly of the suicide rate in what he described as a hazardous, lonely and desperate business. He talked about the migration of young people which depopulates the rural countryside, leaving what the noble Lord, Lord Kenyon, described as the "unkempt and abandoned wilderness" that Wales may become unless there are changes to government policy.
The Secretary of State should realise that the health of the farming industry means the health of the whole rural economy. It is not just the jobs of farmers which are at stake: it is the services which depend upon farming and upon the presence of farming families in the countryside for their very existence. It is the creation of that stability and confidence in farming to which my noble friend Lord Geraint and the noble Lord, Lord Harlech, referred.
The most recent statistics available are from the Welsh Office in its annual Farm Business Survey published last month which confirmed Welsh farmers' worst fears. The figures are worse than have been presented to your Lordships by other speakers today. Incomes are down by well over 50 per cent. on many farms with no prospect of an upward trend. Dairy farms have suffered a slump of 24·7 per cent. in their incomes. Reduced incomes are being met by increased costs, and today those are likely to be overlapping.
In the past year the Welsh Office confirmed that in the less favoured areas where cattle and sheep are farmed, farmers have seen their incomes fall by 40·6 per cent. compared with the European average, to which reference has been made, of 3·1 per cent. In the lowland areas there is a fall in income of 41·2 per cent.

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That means that farmers have seen their incomes fall in cash terms from £14,300 to £8,500 and lowland farmers from £10,300 to £6,100. Those are the latest Welsh Office figures. Out of that £6,100, the current income of a lowland farmer, the farmer not only has to live but to reinvest in the farming business.
In the middle of this crisis, at the National Farmers Union AGM on 9th February, Dr. Jack Cunningham, the Minister of Agriculture said:
"Farmers need to he good business people as well as good farmers. I want to see changes taking place now so that British farmers can take full advantage of the growing world markets for produce, so that they can get on with their job without having to rely on ever increasing subsidies from the taxpayer".
This is farming in Cloud-cuckoo-land. The fact of the matter is that Welsh farmers will soon be out of business altogether unless the Government wake up. As my noble friend Lord Geraint said, the worry is whether farmers will be allowed to farm at all. How many farmers will there he in Wales by the year 2002? Farmers depend upon subsidies not because as a group they wish to batten upon the taxpayer but because successive governments have set up and agreed a system of payment for farmers which the Government lack the will, the drive and the energy to change. The noble Lord. Lord Kenyon, referred to the daily stream of pronouncements from Brussels. The noble Lord, Lord Elis-Thomas, talked about the mismanagement of public policy in this field.
I am sure that farmers would be the first to agree that being a good businessman, or a good farmer, should not consist of juggling one subsidy against another, or filling in forms seeking to qualify for this or that payment. They did not invent the system in relation to which they are criticised by Dr. Jack Cunningham. I adopt the description of Mr. Lloyd Jones, the NFU Welsh chairman, that this is a system which is "state of the ark" rather than "state of the art".
At that same conference, Mr. Ron Davies, the Secretary of State for Wales, speaking to 250 Welsh farmers, said that aggrieved farmers were right to engage in legitimate protests but that any illegal or violent acts, "will be met with a stern rebuttal". He said that Welsh farmers were deluding themselves if they thought such acts would influence the Government.
As the noble Lord, Lord Hooson, said—I am grateful to him for introducing the debate—farmers are not militants by nature. It is alien to their lifestyle to be involved in protests. But when they are faced with the loss not just of a job but of their home and way of life, perhaps even of their language and culture, when they have to suffer the frustrations of listening to the Minister of Agriculture, who produces no resolution of the crisis, while he exhorts them to be good businessmen and to get themselves off subsidies, farmers despair.
The spark that lit the fuse so far as the protests were concerned was the price for dairy cattle at the Gaerwen Smithfield market in Anglesey on 28th November. The price offered then was 50p per kilo, as opposed to the national average of 90·7p referred to by the noble Lord. Lord Geraint—in terms which showed how low that price was. That was the national price, but in Gaerwen on that day it was 50p per kilo lower than in
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the early 1980s and less than at the low point of the BSE crisis. Farmers headed home with unsold livestock, like the neighbour of the noble Lord, Lord Williams of Elvel, and converged on Holyhead. Their anger was fuelled by the Government's failure to take up the offer of EU cash to compensate for the fall in the green pound. They were, of course, aware that the Irish imports between January and August 1997 had increased from 17,558 tonnes of beef to 31,384 tonnes—that is, by some 78 per cent.—in seven months.
Dr. Cunningham's response to the protest on BBC Radio 4 on the following day was this:
"The idea that there is a cheque sitting in Brussels that I can bring back to British farmers cost-free is simply not the case. For every £100 that comes from Brussels, £71 has to he funded by the British taxpayer".
What he did not explain, as my noble friend Lord Hooson did explain, was that as a result of the Fontainebleau agreement this country has benefited to the tune of some £20 billion and has never had to contribute in this way before so far as we are aware. In a leader on 5th December, following that announcement, The Times said of the compensation figure of £980 million which was then available to British farmers—now, we are told, £620 million:
"set against the £5 billion cost of handling the BSE crisis, this is small change. Beef farmers are hit from every angle: fatstock prices are on the floor, they face levies to pay for the £58 million cost of new hygiene standards and the cattle data base, and the seasonal boom in the beef market will inevitably be dented by the new ban".
That was the atmosphere in which the initial protests began.
Those protests, in Holyhead, were initially handled with great skill and understanding, as one would expect, by the North Wales police. There was no serious clash between the police and farmers: true, 40 tons of Irish hamburgers ended up in Holyhead harbour, and that is to be regretted. It was an action which, I suggest, was less criminal than symbolic, carrying as it did overtones of protests in the past when governments failed to listen to the proper grievances of the people.
Thereafter, there was no more violence at Holyhead for a long time. Permanent pickets of up to 50 farmers were in place; farmers were allowed by police and port authorities to monitor cargoes and persuade lorries to turn back. One Irish lorry driver returned when picketing farmers discovered that his load of mushrooms concealed a cargo of Irish beef. There was an agreement that farmers could leave their vehicles parked and unmolested along the road out of the port. A North Wales police spokesman described the policing approach as a relative success, largely owing to the co-operation and responsible attitude of the majority of the demonstrators. They were well led and acted responsibly; and although they may have been aiming at the wrong target—Irish lorry drivers and Irish farmers are not responsible for the crisis in this country—they were doing their best through that means of protest to bring the farming crisis to the attention of this

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Government. Although protests spread in Wales to Fishguard and Pembroke, there were no further acts such as the dumping of the hamburgers, and the protests were responsibly led.
But then, somebody decided to change the police tactics. In the early hours of 28th January, police officers were brought in from Cheshire, from over the border, no doubt to stiffen the resolve of the local police, who up to that time had handled the matter admirably and without clashing with the farmers. The numbers on that day were about 100. Some farmers later described the attitude of those police officers as, "wanting to show who was boss". Video cameras were used to take details of the farmers' parked vehicles. One farmer described how protesters were poked with truncheons. He told the Western Mail:
"We told the inspector that we would be done by the animal welfare if we treated our animals the way they treated us with their truncheons".
Unhappily, violence erupted—and then the police used CS gas on Welsh farmers. Regrettably, there was a struggle. We do not know how many farmers were injured. Unhappily, injuries occurred to at least 19 officers, one of whom was hospitalised with chest injuries. To put the other side of the coin, so that noble Lords have the full picture, a police spokesman said that farmers were intent on seeking a confrontation and that the police responded to the violence offered to them. He said:
"The police had no alternative but to draw their batons in self-defence and CS spray was used in accordance with training techniques".
Well, bully for them!
This was a deplorable incident. It is impossible without fuller inquiry to choose between the competing claims as to who started it. My family motto is: "Ar bwy mae'r bae?"—"Who can we blame?"; and I do not propose to try to apportion blame in this particular case. It is undoubtedly the case that Irish farmers and Irish lorry drivers are not to blame, and that the farmers' protests should be directed at government and at the organisations which, at a time of national crisis, still buy imported meat. But this Government will not get away with portraying Welsh farmers as violent yobs who have to be put in their place. Farmers for their part should realise that. if they step out of line themselves, all they are doing is giving this Government an escape route which they will willingly embrace to escape from their responsibility. The buck for doing something about this crisis stops with the Prime Minister. We await his response.
4.47 p.m.
Lord Roberts of Conwy: My Lords, we are all grateful to the noble Lord, Lord Hooson, for initiating this debate. It has shown the concern that there is about the impoverished state of farming in Wales. It has reached a dangerously critical point. We have heard a variety of figures bandied about, but I am grateful to the noble Lord, Lord Thomas of Gresford, for concentrating on those contained in the farm business survey released at the end of last month by the Welsh Office. Those are
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the figures that I shall use. They do indeed tell their own story of a severe slump in incomes over the past 12 months. Cattle and sheep farmers in the less favoured areas have seen their incomes fall by 41 per cent. and those in the lowlands similarly. In relation to LFA farms, we are talking about a fall in average income from £14,300 a year to £8,500 a year.
If one takes the preceding year into account as well, incomes in Wales are down by more than half on the majority of farms. That is the stark reality with which we are faced. Clearly, a major drop in income of that order is going to have a devastating effect, not only on the farming industry itself but on other industries and services dependent on agriculture. That was the finding of a survey carried out in west Wales by the National Farmers Union and graphically summed up in the opening paragraph of a report in the Farmers Guardian of 20th February:
"Trade down 50 per cent., staff being laid off, debts still unsettled 12 months on, veterinary practitioners surviving largely on cat and dog treatments and even a vicar praying hard that the depression within the farming industry would not turn into a wave of suicides".
One would perhaps at first reading think that an exaggerated description. But clearly much of it accords with the experience of the noble Lords, Lord Williams of Elvel and Lord Harlech.
Of course there have been bad times in farming before—and good years too. But what characterises this depression is that there is no clear vision, it seems to me, of the way out of it. It is the current mood of hopelessness and no sign of better prospects ahead that causes real despair in the farming and rural communities. That picture was very much implied by the noble Lord, Lord Elis-Thomas. One has to couple with that, I fear, the apparent failure of the Government to get to grips with some of the urgent and obvious problems and provide remedies.
Let us take, for example, the central issue of agri-monetary compensation for UK producers as a result of the revaluation of sterling. It is referred to in the report of the Institute of Welsh Affairs mentioned in the Motion.
For my analysis I turn to the First Report of the Agriculture Committee in the other place, and paragraph 18 in particular, where the whole issue and the evidence of the Minister of Agriculture are authoritatively discussed. The paragraph states:
"Dr. Cunningham explained that about £980 million was theoretically available for such compensation. Half of this could be claimed from the EU budget but because of the operation of the Fontainebleau abatement mechanism on additional EU expenditure in the UK, 71 per cent. of this or about £340 million would in effect be met by the UK taxpayer".
The report adds:
"Dr. Cunningham stressed that he had not yet reached a decision on whether or not to seek compensation and had an open mind on it".
That was the position at the end of last year. I was surprised to find that the situation had not substantially changed when the issue was debated in the other place last week, although some underspends had by then been revealed in the European Agricultural Guidance and Guarantee Fund which would have made tapping the

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EU funds less costly to the British taxpayer. Of course, the Government had announced some £85 million of agri-monetary compensation on 3rd February and described it curiously as "an exceptional and one-off" payment.
People know, we know, farmers know, that there is considerably more money available and that other countries have sought compensation for their agricultural producers following revaluations of their currencies in the past. People cannot understand the Government's reluctance to seek assistance on a more substantial scale. It has never been properly explained why the Government have not made this application. Even the Agriculture Select Committee is puzzled—and that is the word it uses on more than one occasion—by aspects of it, as is stated in its Third Report.
The Minister also told the Agriculture Select Committee towards the end of last year that, contrary to reports in the farming press that hill livestock compensatory allowance rates were to be frozen, agriculture ministers had not yet decided on the appropriate levels for HLCAs this year. That may well have been the case then, but subsequently the Minister did decide to freeze them at 1996 levels and farmers appear to have lost the increase in planned HLCA spending for 1997–98.
The Government's reply to the First Report published last week contains the statement:
"In the longer term the Government will review the HLCA Scheme with a view to replacing it with instruments better designed to deliver environmental benefits to the Less Favoured Areas".
I am sure that that will he warmly greeted by bodies like the Institute of Welsh Affairs who are keen supporters of agri-environmental schemes. But they realise only too well that such schemes, if they are to be genuinely helpful, must be properly funded. That depends on the nature of the Commission's proposals for the reform of agricultural support generally and support for the less favoured areas in particular. Those proposals are, I understand, expected shortly. But much depends too on the attitude of the Government and whether they will be positive or niggardly in their approach.
On 5th March there was a report in the Financial Times under the heading "Minister unveils countryside plan", which referred to two pilot projects at Bodmin Moor, Cornwall and in Bowland, Lancashire, which will test how best to combine protection of the countryside with measures to boost the rural economy. Dr. Cunningham is quoted as saying:
"The initiative will build on existing schemes and, I hope, point the way for the kind of changes we would like to see to the CAP".
I understand from the same story that the grants will come from existing budgets under the countryside stewardship scheme for improving landscape and environment and the European Union-funded Objective 5b programme for rural development.
I had the good fortune, when I was a Minister in the Welsh Office, to be involved with the introduction of the Tir Cymen Scheme which is a rather superior countryside stewardship scheme in Wales. I must say that I was struck by the comment of one of the farmers who operate the scheme in the Dinefwr area of
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Carmarthenshire when his farm was recently visited by Prince Charles. The farmer, Mr Jim Thomas of Llanfynydd, near Nantgaredig, said:
"Many people don't seem to understand that a successful agri-environment scheme depends upon a successful farm enterprise. Without the hard work that the farmer puts into the land to begin with, none of these agri-environment schemes would be possible".
Of course, hard work is not the only input. Financial resources are also required. The current fear is that if the profitability of farming is not greatly improved, there will not be many farmers left capable of taking advantage of the agri-environmental schemes when they become more extensively available. That point was made by the noble Lord, Lord Geraint.
Of course, we acknowledge that the Government have agreed to bear certain costs and defer charges, as announced on 25th February. But the farming industry is still crippled by the beef export ban, with cheap imports coming in and the collapse of incomes largely due to the strong pound. Again, perhaps I may refer to the remarkable statement in the Third Report of the Select Committee which said:
"Our concern is quite simply that the industry could become too enfeebled to be able to restructure itself rationally".
It is talking only about the beef industry, but our concern extends to the farming industry as a whole.
The report of the Institute for Welsh Affairs is full of ideas that call for a cohesive strategy backed by ample resources. But the situation with which we are now faced is far more basic. As Mr. Jim Thomas put it:
"There is a disturbing pattern emerging which shows that jobs are being lost in the countryside … where there is virtually no alternative employment … Matters must quickly improve or the current crisis will not only sound the death knell of the farming industry but also for the entire rural economy".
His words were echoed today by my noble friend Lord Kenyon, and I cannot believe that the 11 per cent. projected increase in domestic council tax will assist matters in rural areas either.
The rural economy lies at the heart of Welsh life and its prosperity is essential to the survival of the language and culture, as the Minister well knows. When we were in government we published our vision for rural Wales in a White Paper entitled, A Working Countryside for Wales. It was full of good ideas about how to sustain rural communities, promote enterprise and employment in the Welsh countryside and protect the local environment. The political commitment to the countryside was there but one has to say that it appears to be absent from the present Government's dicta, despite all their pre-election promises.
We are aware that agriculture is in a parlous state and that the rural economy is under threat. The Government will no doubt argue that that is not the result of their 10 months in office and that it has been building up over the past two years at least. But it is an inescapable fact that matters have now reached a critical stage and that unless substantial action is taken the rural economy faces serious and possibly irreversible decline. That is

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the challenge facing the Government and it must be properly and effectively addressed if the farming and rural communities are to regain their confidence and rediscover an acceptable future for themselves.
5.2 p.m.
Lord McIntosh of Haringey: My Lords, I should like to start by saying, "My Lords, and fellow Celts". I can only claim half Celtic ancestry but am pleased to have the noble Lord, Lord Mackie of Benshie, from north of the Border rather than from west of the Border joining me in this debate. My mother in fact came from Bethnal Green. She claimed that part of her ancestry was Welsh, in the horse-dealing business, but was not terribly specific about the nature of the horse-dealing business that came to Essex from South Wales.
I join with other noble Lords in thanking the noble Lord, Lord Hooson, for giving the House the opportunity to debate this matter and to expand on the considerable emphasis given to Welsh farming in the interesting debate that took place in December of last year. Some noble Lords were surprised by the emphasis on farming in that debate but, having heard today's debate, there can be no justification for that surprise. It was clearly appropriate that we should seek—and the noble Lord sought—an opportunity to debate the issue in full. I am grateful to all noble Lords for the expertise and personal knowledge which they brought to the debate and which the Government will take extremely seriously in their consideration as policies develop. I shall try to answer as many as possible of the points made in the debate. Should I miss any—I probably will—I shall write to noble Lords following the debate.
During the debate on 10th December my noble friend Lord Williams of Mostyn underlined the importance of agriculture to the Welsh way of life. I know that he and my colleagues in another place fully understand the frustrations which led to the recent demonstrations. The farming community in Wales, as elsewhere, is a decent, hard-working and resourceful community. No one in Government for one moment underestimates its current plight. We recognise the depth of feeling which prompted many to join the countryside rally on 1st March, together with the noble Lord. Lord Geraint, and no doubt others here today.
In relation to the Holyhead hamburger party, I was going to make mildly sympathetic comments. However, I confess to being taken aback by the speech of the noble Lord, Lord Thomas of Gresford. If a comparable speech, which bordered on justifying lawlessness, had been made in relation to the miners at Allgreave or Saltley, or about the French lorry drivers and the way that they treated British transport drivers and Spanish farmers in recent years, there would have been a considerable degree of outrage in your Lordships' House. If we are to stand up against lawless behaviour, against intimidation and against the maltreatment of those who the noble Lord, Lord Thomas of Gresford, recognised—the Irish farmers—are entirely innocent, then we must stand against it wherever it occurs, whether in Holyhead, France or in the Midlands at coal depots.
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The Secretary of State for Wales and the Prime Minister have taken a close personal interest in this issue. Ministers have met farmers' leaders on several occasions to hear at first hand the anxieties of the farming community. The Motion today concerns the recent report of the Institute of Welsh Affairs on the present situation in the farming industry. The institute makes a valuable contribution across a wide range of issues affecting the people and the economy of Wales. However, on this occasion I do not believe that the report, in its conclusions, tells us anything that we are not already addressing in the development needs of rural Wales.
Perhaps I may start with the first question of the noble Lord, Lord Hooson; that is, the reason for the crisis in the agricultural sector reflected in the decline in farming. It is the result of a combination of several factors. First, there has been a general decline in demand for meat throughout Europe, coupled with over-production and the consequent impact on prices. That has been evident for a number of years and requires structural adjustments to agriculture. I shall of course return to that point.
Secondly, there is a ban on exports of British beef following the BSE scare. The Government inherited that problem and the House will know that we have now started a full inquiry under Lord Justice Phillips into the way the BSE issue was handled at the outset. I was grateful for the welcome given by the noble Lord, Lord Geraint, to that inquiry. The lifting of the ban is our top priority and the House can rest assured that we are working and will continue to work very hard to achieve that during the UK presidency of the European Union. Remarks have been made in relation to beef on the bone. There was perhaps a small step, but a move towards lifting the ban last week. That was the main purpose of the ban on beef on the bone; that is, to progress the lifting of the European ban. We will stick to our guns on that, as on other issues.
Thirdly, the strength of sterling has of course been a major contributory factor in the fall in prices for all major commodities, which in turn led to a fall in farm incomes. This is a matter, as has been recognised in debate, of swings and roundabouts. Over time UK farmers in all sectors, including the dairy sector, have benefited from the operation of the EU agri-monetary arrangements which slow down the rate at which currency strength feeds through to the sterling value of common agricultural policy payments. Even taking into account revaluations from last year, the current conversion from CAP payments remains 3 per cent. higher than in January 1992.
I know that the noble Lord, Lord Mackie, does not like selective comparisons over time. As a statistician, I sympathise with him. I know that the noble Lord, Lord Elis-Thomas, was suspicious of the way in which these figures are sometimes presented. But it is a fundamental fact that farm incomes have risen and fallen dramatically in different years, even in the past 10 years. Some of the reasons for this have become apparent in the debate and my noble friend Lord Williams of Elvel referred to the effects in Radnor in the early 1990s.

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Fourthly, in response to the questions of the noble Lord, Lord Hooson, there is the strong consumer demand for greater food safety and animal welfare. This Government have made no secret of the fact that public health is a high priority to us, as it is to the noble Lord, Lord Elis-Thomas, and we have wasted no time in taking forward the work on the independent food standards agency. These four major factors point to the urgent need for restructuring, especially in the beef sector, and particularly underline the need for common agricultural policy reform.
The institute's report calls on the Government to respond to the plight of farmers. Indeed, the Government have responded positively to the current difficulties with a substantial aid package worth £85 million to the livestock industry. This exceptional and one-off aid package is both substantial and realistic, given the pressures on public spending. The maximum compensation that the UK could have paid under the compensation available in the period up to 31st January was, as a number of noble Lords have said, around £980 million spread over three years. Up to half of that in total can be reclaimed from the EU budget. The other half—or more than half—as has been recognised, comes from our own resources.
Within the totals there are limits on the amounts which can be spent on each of the four sectors for aid—beef, milk, sugar and cereals. The maximum payable to the beef sector under the arrangement up to 31st January was £154 million spread over three years. The maximum we could have paid to the beef sector in year one would have been £77 million. So the £72·5 million of agri-money compensation for suckler cow producers that the Government have announced is close to the maximum we could pay under the rules. I want to make it clear that, when people talk about global sums of £980 million, in the case we are most concerned with in this debate, we have spent virtually up to the limit of what would have been permissible under the rules.
A number of noble Lords referred to the hill livestock compensation allowance. The noble Lord, Lord Roberts of Conwy, in particular referred to the fact that it had been held at 1996 prices. He will recognise that it was increased in 1997 by £9·6 million to £36·4 million. I recognise, in turn, that that is because of the BSE crisis, but I would wish him to know that the European Union turned down any other prospect for one-off relief. That is why those are the only increases available. A major review of the HLCA has been carried out. It is very close to being published. The reason it has not yet been published is that it is still being translated into Welsh as I speak.
In Wales the package is worth more than £12 million: £8·4 million will go to farmers with suckler cows and £3·8 million will go to sheep farmers. This will mean—I say this to the noble Lords, Lord Thomas of Gresford and Lord Roberts of Conwy—nearly £2,000 extra on average for most cattle and sheep farmers in the Welsh uplands. The Welsh Office has sought to target help on the farmers with suckler herds so that we can help the farmers who are the bedrock of specialist beef production in Wales now and for the future. The aid is in addition to the substantial aid, worth £1·4 billion,
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already budgeted to help support the beef sector during the current financial year. These are very large sums indeed and clearly demonstrate the Government's continuing commitment to the farming industry.
The institute's report makes great play about the provisions of the Fontainebleau agreement. Under its terms the UK's VAT contributions are abated by an amount equal to 66 per cent. of, broadly, the difference between what the UK contributes to the Community budget and what it receives. Over the years the abatement mechanism has generated some £22 billion for the United Kingdom. That is my answer to the fourth question of the noble Lord, Lord Hooson. It has had a significant effect on the amount of public expenditure which has been available to benefit all parts of the United Kingdom. My answer to the fifth question of the noble Lord. Lord Hooson, is that, after all. Fontainebleau was 10 years ago. Of course, agriculture was one factor in the agreement, hut it was far from being the only factor. So my answer is qualified on that particular point.
The Institute of Welsh Affairs argues that the abatement acts as a disincentive to government to seek additional European Community spending in the United Kingdom. But without the abatement we would all he poorer. The nub of the matter for making additional aid available to any group in whatever form is that it involves an increase in government spending. Additional government spending in one area requires that a choice be made between reordering priorities and reducing spending in another area in order to live within what the country can afford; or going beyond that and either increasing borrowing or raising the level of taxation. These choices mean that there is a need to strike the right balance in the interests of all groups. The £85 million beef support package the Government were able to agree demonstrates that we have done that.
The Government have also recognised the industry's concerns about BSE-related compliance costs. The House will know that a fortnight ago the Government announced that they will pay some £70 million of those costs. What that means in practice is that charges for implementing specified risk material controls on cattle, sheep and goats will not now be recovered from the industry from 1st April as previously planned. This will represent a total saving to the industry of £35 million. I have to say to the noble Lord, Lord Hooson, in respect of his third question, that that is some support for abattoirs, but there is no other support for abattoirs planned at the present time. In addition, the entire start-up costs and the first year of the running costs of the new computerised cattle tracing system will be funded by the Government. This will represent a total saving to the industry of £35 million: £15 million in start-up costs and £20 million in running costs, including enforcement.
Noble Lords can see that the Government are paying attention to what is happening in agriculture. As I said earlier, we have responded positively to the needs of the industry. This reaffirms the Government's strong commitment to agriculture in Wales. It is a key industry.

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For the country as a whole agriculture represents about 2 per cent. of GDP. I am conscious that in some parts of Wales it is even more important in the economy; for example, about 7·5 per cent. in Dyfed and Powys. In addition, the Government are acutely aware of the importance of agriculture to the distinct character of Welsh rural communities—a number of noble Lords, including the noble Lord, Lord Kenyon, referred to that—not only economically but socially and culturally. Planned expenditure on agriculture in Wales in this financial year is around £260 million. This clearly demonstrates the Government's support for the rural economy and reflects a major contribution by the taxpayer.
The key issue for the immediate future in terms of stimulating economic growth is to focus on getting the new Welsh Development Agency running. The establishment later this year of a single economic development powerhouse will. I am sure, lead to significant improvements in services tailored to the specific needs of Wales. The powers of the Welsh Development Agency will be combined with those of the Development Board for Rural Wales and the Land Authority for Wales to provide services for urban and rural areas alike. While, for some, mid-Wales seems to be regarded as the rural part of Wales, that is not exclusively the case. There are many other rural areas in Wales and the combined skills of the new agency in rural affairs will be available across the whole country. The Secretary of State for Wales has confirmed his commitment to a strong rural affairs structure within the new agency and it is likely that this will he located in one of the regional offices.
However, there is little doubt that agriculture needs itself to adapt to meet the demands of the 21st century. As a number of speakers have recognised. Welsh agriculture, in common with farming in the rest of the United Kingdom, faces immense challenges in the years to come. The challenges arise both within the European Union and worldwide, but we cannot ignore them. We have to be realistic; agriculture needs to adapt. Reform is inevitable and we must respond to the challenges which it will bring.
Current market trends in the three key agricultural sectors in Wales of beef, lamb and dairy production all reflect price changes at the global level. We have to recognise that our prices in some key sectors are well above the prices of some of our world competitors. In the five years between 1992 and 1997. the average steer price in Great Britain exceeded the Argentina beef export price, one of our main competitors, by between around 40 per cent. and almost 100 per cent. In the second quarter of 1997. it was still some 50 per cent. higher. Lamb prices exceeded world prices by some 35 per cent. United Kingdom milk prices exceeded world prices by some 45 per cent. As a result our market position is weak and vulnerable.
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In addition we suffer from the problems of over-production of some foodstuffs and therefore hold a substantial stockpile—
Lord Mackie of Benshie: My Lords, will the noble Lord give figures for the difference between British and European prices instead of world prices?
Lord McIntosh of Haringey: My Lords, it is increasingly a global market for many of these products, particularly beef from Argentina. I shall gladly write to the noble Lord about the difference between European and British prices. As the noble Lord knows, European prices, like British prices, are very much affected by the common agricultural policy in its present formulation. Despite what the noble Lord, Lord Mackie, said, the Government believe that fundamental reform of the common agricultural policy is inevitable, given world trade pressures and costs to consumers and taxpayers. The European Commission is expected to publish its proposals shortly, but we believe that reform will be evolutionary and there is scope for debate about the likely pace of change. But the direction is clear. It is essential that Welsh agriculture starts to adapt now to help safeguard the future of our industry and our rural communities.
I know the way forward will be difficult hut, as so often with changes, they do offer opportunities. My ministerial colleagues firmly believe that Welsh agriculture has tremendous potential. We agree with the outgoing chairman of the National Farmers Union in Wales, Mr. John Lloyd Jones, who has already been quoted. In his new year message he argued that the way to keep Wales farming successfully into the 21st century was by producing the best.
The Government want to see Welsh farmers and food processors producing more premium products, which can command premium prices, with a greater degree of value being added in the food supply chain in Wales. Consumer concerns offer potential opportunities in terms of farm assured and organic production for which Wales is ideally suited. We need to make the most of these opportunities. As with any business, agriculture will prosper only if it responds to the needs of its consumers.
The Welsh food strategy is central to helping the industry respond to the needs of consumers and become more competitive. Our aim is to develop much stronger food supply chains in Wales, with closer links between farmers and food processing, to secure greater added-value production in Wales. A great deal is already being done to this end, through support for branding and marketing generally and through farm assurance and traceability schemes by Welsh Beef and Lamb Promotions Limited and Welsh Food Promotions Limited. We will continue to support and develop this work in the future. I am again grateful to the noble Lord, Lord Geraint, for his support for improved marketing.
I can give many more examples, but I do not have time to do so. The approach that I have been describing is to review and develop the Welsh food strategy. We shall be establishing working groups from the industry, including the unions and the farmers themselves, in

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formulating plans for the development of the industry. We shall also consult widely with other interested parties, including the local authorities and the development agencies.
Action is needed urgently to start our response to the needs of the agricultural industry in Wales. We plan to constitute the working groups and to commission consultancy support very quickly.
Listening to consumers applies not only to what farmers produce, but how they produce it. A number of noble Lords, notably my noble friend Lord Williams and the noble Lord, Lord Elis-Thomas, referred to the need for balancing the production of food with environmental measures that will continue to conserve the countryside. Farmers are rightly recognised as being the custodians of the countryside, which the public so enjoy. While reform will take time, it is clear from the commission's Agenda 2000 proposals that there is a move in thinking towards farmers delivering environmental goods in return for support payments. The new agri-environment scheme, which we are setting up to cover the whole of Wales, will put our farmers well on track to taking full advantage of any European moves in that direction.
Perhaps I may take a moment or two to respond to specific points that have been made. The second question of the noble Lord, Lord Hooson, concerned the under-spend of £190 million of the sheep annual premium. I believe that he will recognise that that is somewhat arcane. I shall have to write to him about it, as I will on his question about agri-compensation. The short answer is that it is in livestock and milk, but I shall send the noble Lord more details.
My noble friend and a number of others referred to suicide rates. Every suicide is a tragedy, but suicides among farmers in 1995 and 1996 were in single figures for each year. So without in any way saying it is not a serious problem, we must put it in context.
My noble friend Lord Williams referred to the bureaucratic problems with ESAs. I shall have to write to him on that point. I believe that I have responded to the points made by the noble Lord, Lord Elis-Thomas, about agri-environmental policy in Europe. I shall look again at what I have said. I do not agree with the noble Lord, Lord Geraint, about a Royal Commission. I believe that what I have been describing today and what we are doing is much more important than the results of a Royal Commission, which would inevitably take a considerable amount of time to report. I am right in believing that county councils can close down rural schools now, but they will be unable to do so in the future without the permission of the Secretary of State. I do not know how many farmers there will be in the year 2006 and I do not believe that anyone does.
The noble Lord, Lord Kenyon, referred to rural transport. There are new transport grant arrangements for local authorities. There will be a threshold of £5 million, but integrated transport bids can be as little as £1 million, so that it will be more accessible to rural local authorities.
I would like to have responded to the noble Lord, Lord Roberts of Conwy, in more detail, but it is always difficult at the end of a debate. However, I am grateful
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to him for giving me advance notice of his speech by its publication in the Western Mail this morning. That was particularly helpful in my thinking about the whole issue.
I hope that I have demonstrated in too long a speech the concern that the Government have about these issues and the positive way in which we are tackling both the financial and social issues. I know it will not he easy, but we recognise that it is vital. We are determined to see that appropriate action is taken. The outcome is crucial to Wales in so many different ways, including economically, culturally, socially and environmentally. We shall do our best to help Welsh agriculture meet the challenges to come.
5.28 p.m.
Lord Hooson: My Lords, I am most grateful to all noble Lords who have taken part in this debate and for the very good attendance here from noble Lords who live in other parts of the country and some who are not country dwellers at all. They have taken a great interest in the debate. I was particularly impressed by the fact that the former Prime Minister, the noble Lord, Lord Callaghan, sat through most of the debate. I discussed the debate with him the other day. I believe that he represents an element in the Labour Party which understands the countryside. The Government could do worse than to have a word with him about the present situation. In fact, as was adverted to in the debate on 21st January, there was a very good tradition of Labour Ministers of Agriculture from Tom Williams in 1949 on through Fred Peart and afterwards, the noble Lord, Lord Cledwyn of Penrhos. I hope that the Government are not going to disappoint us now by showing a lack of sensitivity as regards agriculture, particularly the present Minister.
I turn now to the speech made by the noble Lord, Lord McIntosh. I am most grateful to him. I know that he appreciates the part of the world about which we are speaking because he knows it. However. I did not find his contribution at all reassuring. I do not want to be in any way offensive in saying that. The noble Lord told us that the Prime Minister was concerned about this matter. I remind him that, save for two Liberal Democrat seats and four Plaid Cymru seats, the Labour Party represents the whole of the rest of Wales, including most rural areas.
Urgent ameliorating measures are needed. That point needs to be appreciated by the Government. The noble Lord mentioned the grant for suckler cows. I think that it comes to £44 per head. The grant for sheep comes, I believe, to 70p per head. I have already adverted to the price that sheep are fetching in the market at present.
I am with the Government on their long-term objectives and on so many of the matters to which the noble Lord referred. I am sure that the farming community will accept those objectives, but where I think that the Government have failed is in the fact that farmers have been encouraged to grow and farm intensively. I entirely agree that the country is over-stocked with cattle and sheep, but until very recently farmers were encouraged to do that by MAFF.

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Turning that policy on its head in a matter of months has terrible consequences for part of the rural community. Of course, well padded farmers will survive; frugal farmers will survive and others may survive, but thousands of people's livelihoods and homes are at risk in the immediate future. That is why ameliorating measures are needed now.
If I judge the Prime Minister correctly, I am pretty confident that if he knew of, and understood, the position properly, he would respond. I am sure that the noble Lord, Lord McIntosh, will make every effort to get through to the Government how we in rural Wales feel about the immediate future because it is urgent amelioration that is needed.
I am most grateful to all noble Lords who have participated and I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Consolidated Fund (No. 2) Bill
5.32 p.m.
Brought from the Commons, endorsed with the Certificate of the Speaker that the Bill is a Money Bill, and read a first time.

South Africa
5.33 p.m.
Baroness Nicholson of Winterbourne Baroness Nicholson of Winterbourne rose to call attention to the role of the Truth and Reconciliation Commission in South Africa and its possible application in other post-conflict zones; and to move for Papers.
The noble Baroness said: My Lords, it is a happy juxtaposition that this debate in your Lordships' House coincides with the coming to London of the new High Commissioner from South Africa, Cheryl Carolus. If she is as effective—perhaps even partly as effective—as her predecessor, I feel confident that she will be a great force for good in the development of a greater understanding of South Africa within the Commonwealth. Indeed, her work is matched by that of our own High Commissioner from the United Kingdom to South Africa whose work I saw in Lebanon during the "grapes of wrath" campaign. She, too, is a most remarkable woman.
Today we look at the Truth and Reconciliation Commission and discuss whether or not its mechanisms can be applicable in various ways in other post-conflict situations. It is a unique and radically new forum because it is not a court and, theoretically, that should allow witnesses to speak more freely. Indeed, the work of the chairperson, Archbishop Tutu, and his warmth and personal attitude, encourage people to come forward and to speak in confidence. The TRC's neutrality makes it a genuine tool of reconciliation. That neutrality is sometimes difficult to accept in South Africa because the pressure of the work on the TRC is so great. It cannot consider every case and every travesty of justice
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of the past. Indeed, it is due to wind up its work, after several extensions, in July this year. I doubt whether it will have finished by then.
The TRC has the power to grant amnesty and compensation—in other words, only the positive aspects of justice; no punishment and no retribution. It has the power to recommend to the president that he should act. And, as I have said, it has the power to grant amnesty. That is a special, large power.
The TRC is devoid of all the traditional shortcomings of the justice of the victorious, such as the tendency to ignore the crimes of those who won in the aftermath of war. The Allied leaders who turned German and Japanese cities to ashes in a deliberate terror strategy—however necessary that was—never faced Nuremberg, even to be discharged.
The TRC promotes and even demands forgiveness on truthful evidence to move human healing forward. Is that too difficult, is that too high a price to pay for peace? I cannot forget the parents of the dead boy Lobo Sono, Caroline and Nicodemus Sono, or their pain as they faced the person they believed had caused his death, or the pain of Stompie's mother, that small boy who also died before the ending of apartheid.
When we examine the Truth and Reconciliation Commission, we must consider first what it needs to have in place in society if it is to work properly. First, it needs peace. Secondly, it needs a civil society in the background with its own tribunals to handle the formal justice work. It also needs a democratic parliament and all the other democratic institutions in place and at work. It also needs actors who can accept the process under subpoena. After all, Winnie Madikizela-Mandela did not refuse to face the TRC although white former leaders were jibbing. I wonder whether those particular conditions are met in any other nation.
The necessity to have peace first means that bodies such as the TRC cannot be used as such in war-torn countries. Therefore, alone, it cannot he considered a conflict resolution tool. It is a swifter-than-normal legal process, but it does not supplant those normal legal processes. Surely it should never replace Nuremberg jurisprudence although I believe that it can reinforce it. Are the key elements which give the TRC its authority and effectiveness present, or likely to be present, in any other country with a recent past that is just as bloody?
Today's triumphs can just as easily, I fear, descend to tomorrow's pain. We celebrate Sierra Leone now. I visited it on 25th May last year as it was falling into the pit of terror. The Foreign and Commonwealth Office should surely be proud of Peter Penfold, our High Commissioner there, whose personal bravery, commitment to saving life and whose further commitment last year to recreating democracy for Sierra Leone's people, shine out. President Kabbah has just returned to power. Sam Norman, his deputy minister of defence, with his Kamajors, has triumphed with Nigerian support. The Organisation for African Unity has played a large role. Now we have the 90-day plan put together with the assistance of the British Council—there was a great conference on that here in London last

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year—to re-establish democracy. However, democracy was a fragile flower that lasted just 10 months in Sierra Leone, in 1995. Would the mechanism of the Truth and Reconciliation Commission have anything to offer here?
I turn to Rwanda. I saw an area there where 20,000 people had lived until March 1994; by November 1994 only 400 survived. There was a mass grave guarded by a traumatised and damaged soldier and further down the road a village for children who were killers themselves.
In Rwanda there is now a whole system of internationally recommended legal tribunals right down to village level, but justice is slow and very difficult. How can the 400 who survived watch those who have killed come back to their village of genocide and take over the property of their victims? Where are retribution and reconciliation?
I cannot but turn to Iraq for half a moment to suggest that we should look further than the dictatorship era. I laud the efforts of the Foreign Secretary last week to put together a new body of NG0s, officials and EU politicians to plan a better way of ensuring that the food for oil reaches the people rather than remains in Baghdad. But I believe that we should look still further, perhaps with a fresh group and a longer vision, at what to do after the dictator has happily disappeared.
In Africa seven years ago I found a South African prisoner in a foreign gaol. That led me to have a personal experience with the Truth and Reconciliation Commission in its hearings last November in Johannesburg. A young man called Katiza Cebekhulu had been imprisoned by President Kaunda of Zambia. With great efforts by many kind volunteers and professionals such as partners in Withers, the solicitors in London, Olivia Lichenstein of BBC's "Inside Story", journalist Fred Bridgeland, Nicholas Claxton and others, the trail led me on inexorably to Mrs. Winnie Madikizela-Mandela in Johannesburg, the then wife and now the former wife of President Nelson Mandela. There I saw the Truth and Reconciliation Commission at work with Chairperson Archbishop Tutu; his deputy, Dr. Alex Boraine; Mr. Dumiza Ntzebesa, the Head of Investigations; its legal advisers, Hanif Vally and Piers Pigou; a pro bono lawyer (whom we were given) Mr. Stephen Joseph, and another lawyer Mr. Charles Abrahams who also briefed me. It was a wonderful group of people within the wider Truth and Reconciliation Commission organisation. The TRC is an extraordinary coming together of people of many disciplines for a short period of time under extreme pressure.
Many witnesses came forward for the hearing last November. Almost no one was deemed to be innocent by the other accusers. How could the TRC handle this and apportion the blame? Who were the greater criminals? Of course, what it sought to do was to find public confession and repentance. This major hearing was an unusual occurrence. It gave me the opportunity to experience the work of the commission from a unique position—I believe that I was the only foreign witness—and I observed at close quarters the complexity of the
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task that parliament had assigned to this novel organisation created by South Africa's first democratically elected parliament.
I felt a fraction of the pressure on each commissioner. There was enormous daily pressure from the press, the media, society and parliament. The pressure was almost unsustainable and yet the commissioners kept going. The press in the aftermath of apartheid has had a difficult time trying to be a free press. It is distorted and inaccurate, sometimes very badly. Radio and television, particularly the South Africa Broadcasting Commission, make great efforts to be impartial in the best tradition of international television and radio.
I scanned the international newspapers very carefully. The best journalism appeared to me to come from Sam Kiley of the London Times. By the end of my time in Johannesburg—just a few days—I had great sympathy with Nelson Mandela's call for more press objectivity. But the worst aspect was the stench of apartheid which still lingered; it was heavy and almost acrid in the air. I recall the way that people behaved post-apartheid: personal judgments were made on colour alone, sometimes with false deference and barely suppressed and wholly justifiable rage. It was a society struggling with great difficulties. But the light on the horizon was also there, shining from the TRC, stemming from the death of apartheid. As Dr. Boraine, the deputy chairperson, said in a speech in Brussels in 1996,
"apartheid was a system of minority domination of statutorily-defined colour groups on a territorial, residential, political, social and economic basis".
He went on to say that there was a need to consolidate democracy and ensure a peaceful future for all South Africa. The interim constitution stated that,
"the pursuit of national unity, the well being of all South African citizens and peace require reconciliation between [the] people of South Africa and the reconstruction of society";
in other words, the TRC was given a double mandate: to transform the economic and social life of South Africa's citizens through peace and reconciliation and, at the same time, to restore the moral order which was put in jeopardy by the earlier mis-application of the rule of law and the gross violations of fundamental human rights. While South Africa's commission has of course been shaped by its own history and circumstances and the transition to power, there are many similarities as regards the experiences of which we know in eastern Europe and South America. There is a shift from totalitarianism to a form of democracy; a negotiated settlement, not a revolutionary process; a legacy of oppression and serious violations of human rights; a fragile democracy and a precarious unity; a commitment to the attainment of a culture of human rights and a respect for the rule of law; and a determination that the work of the commission will help to make it impossible for the gross violations of human rights of the past to happen again.
We need to look at the following points. First, how do emerging democracies deal with past violations of human rights? Secondly, how do new democratic governments deal with leaders and individuals who were responsible for disappearances, death squads, psychological and physical torture and other violations

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of human rights? Thirdly, how does a new democracy deal with the fact that some of the perpetrators remain a part of government and security forces or hold important positions in public life? Although there have been some 19 truth commissions in 16 countries over the past 20 years. I believe that there are some unique features of the South Africa model that can be of relevance and assistance to other countries. The key point is that the establishment of the South African TRC was essentially democratic. I believe that that is the most important point. The process has been open and transparent. The proceedings have been filmed, broadcast on the radio and printed. Everything has been placed before the people. It has been in operation since December 1995. The current cut-off date is July of this year. I hope and believe that it will be extended.
Twenty thousand submissions have been made to the 40 TRC officers across the country of human rights violations. The evidence has created a rich tapestry of oral history from ordinary people. That is also unique. The investigation unit comprising 60 personnel has had in hand an overwhelming task. That is the largest component of the commission. It has subpoena, search and seizure powers but it has just been able to scrape the surface. It has not yet looked at the military or other issues of violence in trains in the early 1990s.
The commission can only make recommendations to the president of the country. The large number of amnesty applications—one of the most important parts of the process—which have been granted, and the details of those involved in assassinations and why, continue to be highlighted on a weekly basis.
The TRC's final report whenever it comes will not please everyone, but it will provide for an official version which for the first time takes into account the experiences of ordinary people. Has the TRC achieved its objectives, and can it be used as a model for other countries? I wait to hear what other noble Lords will have to say about that. My Lords, I beg to move for Papers.
5.50 p.m.
The Lord Bishop of Southwell: My Lords, like other Members of your Lordships' House, I am most grateful to the noble Baroness, Lady Nicholson, for providing the opportunity for this debate. In the course of my ministry, the underlying issues which must be considered have challenged me greatly. At its heart, the key question is the relationship between reconciliation and justice. Even in direct personal relationships, genuine reconciliation is hard to achieve. Who should apologise? Who should make the first move? When the issues confront societies and whole communities emerging from the traumas of civil war, genocide or repression, then they become immeasurably more complex and take on a tragic intractability.
A significant part of my ministry—the 17 years between 1963 and 1980—were spent in Argentina. Because of that, I am acquainted with the terrible consequences of the "Dirty War", which led to the disappearance and deaths, during the military
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dictatorships, of tens of thousands of people—a large number of whom had no connection with any kind of terrorist activity. Two years ago I was able to spend an extended sabbatical in South Africa, studying the situation there.
Much has been written on the subject of reconciliation by Latin Americans. There is a particularly moving poem by the Chilean, Ariel Dorfman, entitled His Eve is on the Sparrow. In it he takes up the profound human and theological question—who looks after and protects those who are tortured and destroyed by brutal forces? Who supports those whose loved ones are swept away by the violence of evil and brutal regimes? The questions do not end there. What about nations torn in two, communities and societies? How can they be restored to tolerable levels of justice after such trauma as was experienced in Latin America in the 1970s and 1980s, and after apartheid in South Africa? What can and should be done to recompense the victims? How should society respond to those who have committed politically motivated crimes, or been forced by their superiors to violate human rights in the enforcement of an unjust "law and order"?
As is rightly implied by the framing of today's Motion, the experience of the TRC in South Africa is of wider application, but it must also be set in a wider context. The Stockholm International Peace Research Institute catalogues about 30 ongoing major armed conflicts which have led to the death of over 1,000 people each year, and those are in mainly forgotten wars such as that in Sudan. In the post-Cold War period, the majority of those have been internal conflict wars, within, not between, nations.
Conflict prevention, mediation of conflicts, and post-conflict reconstruction are thus vital tasks. The contexts are each distinctive, but there is much that can be learned from different models. I should like to suggest that there is a continuum of approaches from which it is possible to learn.
The two poles of the continuum seem to me to be, on the one hand, an emphasis on reconciliation, and, on the other, an emphasis on justice. "Reconciliation" without truth or justice is immoral: "justice" without mercy or any opportunity for forgiveness and rehabilitation is brutal and has in fact within it the seeds of new communal conflict as soon as the defeated become strong. That is surely one of the lessons of the long-standing conflict between Hutu and Tutsi in Rwanda and Burundi.
As I have said, each situation is distinctive, and in each case of post-conflict reconstruction, it is vital that the response is culturally relevant to what has gone before. Many elements made the TRC so appropriate for South Africa. Here I wish, together with the noble Baroness, to pay tribute to the remarkable figure of Desmond Tutu, who retired as Archbishop of Capetown to take on that wider pastoral and almost juridical role on behalf of the nation. As a well known, "voice of the voiceless" and critic of apartheid, honoured with the Nobel Peace Prize, and with his known commitment to non-violence, no one could have been more apt to lead the commission in its controversial and agonising work.

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Some will have seen on film the personal anguish and distress caused to him and those working with him. However, at the same time, Archbishop Desmond Tutu was chosen as a representative figure for his community, acceptable to all parties as a person not seeking humiliation or even revenge, but reconciliation.
The commission was, of course, not a court of law, as has already been pointed out, though it did have some juridical status by being able to offer immunity from prosecution in return for a full confession. That raised the issue of what one might call tactical rather than real repentance. That issue was posed in a particularly acute form by the widow of Black Consciousness leader, Steve Biko. Mrs. Biko argued that those who had been involved in killing her husband, and the cover-up, had had 20 years to repent, and would only now be doing so to get off. That was a particularly painful incident for Desmond Tutu, as he had preached at the funeral of Steve Biko those many years previously.
Against that, one has to set the experience of the many who merely wanted to know who had killed their loved ones and why. One of the most poignant questions is that put by a relative who said, "I am ready to forgive, but who—and for what?" There is a necessary process in bereavement, which brings a sort of cathartic experience, and part of it is the final leave-taking. In the situation in South Africa, there was also the honouring by the community of those killed unjustly, and seeing those who had perpetrated the crimes in the end having to render account. None of that can be underestimated.
That sense of the need for justice is mirrored by, for instance, the Madres de la Plaza in Buenos Aires, who, every Thursday, continue to make their silent witness, asking the question, "What has happened?". Some of the military in Argentina have been brought to trial, but in other Latin American countries the power of the military has prevented further action. General Pinochet, having retired as commander-in-chief of the army, was signed in yesterday as a senator for life, which assures him of continued immunity. It is an indication of the strength of civil society in South Africa, and the largely non-violent tactics of transition to democracy, which made the TRC possible, and made it successful to the degree that it has been.
At the other end of the spectrum, with the core emphasis on justice, one might take the case of war crimes tribunals. Her Majesty's Government have, I believe, properly taken the issue of an international criminal court seriously, as it is clear that there are serious shortcomings to the approach of establishing ad hoc commissions on a case-by-case basis as has been done with the former Yugoslavia and Rwanda.
If the guiding inspiration for the TRC in South Africa has been that the two communities in a conflict have to find a way to live together after the conflict is over, the guiding principle for such tribunals is that internationally accepted standards must be observed, and that crimes such as genocide cannot be tolerated. Here, too, there are serious questions which must be addressed concerning actual implementation as opposed to righteous sounding resolution. There will be questions about the resourcing of such a court and the international political will to effect the court's decision.
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In the case of the former Yugoslavia and Rwanda, we have seen that the architects of genocidal policies have not, or rather have not yet, been brought to justice. Both reconciliation and justice are serious imperatives for post-conflict societies. It will depend both on the exact context and the strength of civil society and international political will which approach should be the guiding one in any given situation. I believe that we should warn against hasty conclusions or easy slogans. Prolonged use of armed force within a community does immense harm. Peace processes are hard to keep on track and are susceptible to attempts to derail them by acts of violence from either side. One's thoughts immediately turn to the conflict within our own nation.
However, it is essential that exchanges of experience, not least between human rights groups, movements in civil society and religious organisations committed to justice and reconciliation, should be strongly encouraged. Often, the victims are ready for reconciliation long before the politicians, as citizens are ready for peace long before those who orchestrate violence. President Mandela and Mr. de Klerk showed that peace can be made between enemies. The Truth and Reconciliation Commission has demonstrated that truth can help to break the spiral of violence in our world. Ordinary victims of brutality and violence have shown that many have an extraordinary capacity to forgive.
The Truth and Reconciliation Commission is one of the most important and imaginative social experiments in forgiveness at almost any time in history. We have a duty to learn from it; from its successes, its limitations and its applicability. Most of all, we must recall that it is a home grown experiment with truth, created in a particular setting and climate. And in providing a model for us, we are not thereby absolved of the responsibility of discerning what we must do in loving and forgiving.
6.2 p.m.
Lord Hughes of Woodside: My Lords, I thank the noble Baroness, Lady Nicholson, for introducing the debate. I join her in welcoming Cheryl Canolus, the new South African High Commissioner to London. She will be a breath of fresh air and is one of the younger generation. The future of South Africa looks good.
I have some direct knowledge and experience of the TRC in South Africa. Early in November 1997, it wrote to the Anti-Apartheid Movement Archives Committee asking it to submit evidence on the human rights abuses of the South African security forces in the UK and Europe. It also asked the committee to submit written evidence on the activities of British and international business in propping up and supporting the apartheid regime over the years. In October last year, I was invited to give evidence to the TRC in Cape Town on the human rights abuse question and to the week-long session in Johannesburg about the activities of business within South Africa and internationally in supporting the apartheid regime.
I am never sure about declarations of interest, but perhaps I should say that as regards finance the sole and valuable contribution of the TRC was three nights' hotel expenses. All other expenses had to be met by the committee. I mention that in passing.

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There is no doubt that the reason for the establishment of the TRC is that unless the truth is known about the past, reconciliation now and in the future cannot be fully achieved. The nefarious activities of the state security system have not yet been totally unravelled. Much has been learnt, but there are still huge gaps. For example, we still do not know who assassinated the ANC chief representative in Paris, Dulcie September, in March 1988. We believe that it was the same person who attempted the assassination of the ANC representative, Godrey Motsope, in Brussels in February of the same year. We believe that we know who firebombed the Anti-Apartheid Movement offices in London and set off a bomb at the ANC headquarters in Penton Street, London.
At that time, attempts were made to lay the blame on factional infighting within the liberation movement forces. It was said that dissidents within the ANC were carrying out those activities in London. That proved to be wrong: it was the work of South African state agents.
The climate of the times is perhaps summed up by the activities of an organisation called the Economic League. It was paid for by employers in this country to vet and weed out subversives before they were employed. It is astonishing today to think that being a member of the Anti-Apartheid Movement or working against the evil of apartheid was considered to be subversive and people were refused employment on that ground alone. We have come a long way. Now, I can find no one who ever supported the apartheid system and no one who had not spent their lives working for the Anti-Apartheid Movement—and grateful for it.
The scale of what happened in Europe and the UK in terms of human rights violations is of nothing compared with what has been revealed in South Africa. The killings and torture went on for many years. As late as November last year, evidence was being given to the Truth and Reconciliation Commission about the graves of people killed many years ago. Those who had lost their loved ones were at least able to recover the bodies and discover what had happened to them.
Yet the leaders of the state—those who formulated the policy—still deny complicity. They say that they knew nothing of what happened. They say that the tragedies were perpetrated by over-zealous personnel who misinterpreted the rhetoric of anti-communism which they daily espoused. Until they clearly admit that they designed the system of terror, the whole process of reconciliation will not be fully met.
It is also true that business in South Africa and internationally had a great responsibility for the continuation of apartheid. Representatives of South African business stated that business did not like apartheid. They said that apartheid was bad for business and that, with hindsight, perhaps they should have done more to speed up the process of its ending. Yet some witnesses have been clear; for example, Chris Ball of Barclays said there was no doubt that banking profited from apartheid. He said that there was no doubt that there was a symbiotic relationship between business and government; each needed and used the other. The
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Federal Reserve Bank admitted that had there not been further international loans and roll-over debt provision, apartheid would have collapsed perhaps 10 years earlier.
What does all that achieve? As regards those who campaigned for many years, perhaps it provides a little self-satisfaction in proving that they were right. But that is not the purpose of the Truth and Reconciliation Commission. The knowledge gleaned must be used in the future. Reconciliation is not just an admission of guilt; it is not a question of saying sorry; nor is it just a recognition of past wrongs. It must lead to an attempt to work together for a better future. Those who perpetrated the wrongs must be prepared to work and plan for a new and better future in South Africa.
We still do not know what will be the final effect of the Truth and Reconciliation Commission. There are some in South Africa—I believe a significant minority, although it is impossible to quantify the numbers—who believe that TRC should stand for Truth and Retribution Committee. They do not want reconciliation, they want vengeance. We hear many victims in this country saying, "What we want is justice." They do not want justice; they want revenge. That feeling is still there and must be over-turned.
However, I believe that the Truth and Reconciliation Commission has had a great deal to do with engendering and keeping going the spirit of good race relations. The commissioners of the TRC, under the splendid leadership of Archbishop Desmond Tutu, have conducted their hearings in a remarkably constructive way. They are seeking the truth and have not adopted a confrontational approach. Nor are they trying to apportion blame. They would have found that difficult without the leadership of two of the greatest leaders of the South African people.
Of course, the first is President Nelson Mandela. His spirit of magnanimity after all that he went through is almost beyond comprehension. I frankly doubt that I would have been forgiving in the same situation. The other was the acting president in exile of the ANC, the late Oliver Tambo. The true nature of the work of Oliver Tambo is yet to be recognised but I believe that in time, posterity will recognise his contribution to the liberation of South Africa and the basis he laid for a multi-racial and multi-cultural South Africa.
Neither President Mandela nor Oliver Tambo ever preached hatred against the white population of South Africa. Their quarrel was with the system of apartheid. That is what they were against. I believe that that provided a basis for the future. That view of reconciliation is universally—or perhaps one should say in view of one circumstance—virtually universally held throughout the leadership of the ANC and beyond.
If you speak to ordinary black South Africans in the countryside, there is a remarkable lack of bitterness. That is not to say that they are not angry about what happened in the past; nor that they are not anxious for the future; and they do demand change. But we should remember what the pundits and forecasters of doom were saying; that once there was a black majority government in South Africa the country would slide into

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chaos with massive violence and attacks by blacks on whites. In fact, that has not happened. Old scores are not being settled.
That is undoubtedly due to the ethos of reconciliation and forgiveness which brought forth the Truth and Reconciliation Commission and which has pervaded its work. It cannot be translated into other post-conflict situations. I do not wish to refer to particular situations, especially Northern Ireland where we have a very fragile peace process taking place. I am conscious that even a humble Back Bencher in your Lordships' House could say something which might be used in the difficult times ahead. However, the model of the TRC cannot be imposed from outside. The United Nations cannot impose it from outside, nor can the European Union. It must be driven from within.
The call for truth and reconciliation must come primarily from those who were the victims. Unfortunately, as I look around the world—and I recognise and do not wish to minimise the tragedy of what happened in South Africa and the terror over the years—apart from, perhaps, the butchery in Sharpeville and one or two other places, during the apartheid years there was not the ferocity that one has seen in other countries. In those other countries, I do not see people calling for a truth and reconciliation commission. I hear people calling for a war crimes tribunal. I can understand why people feel like that. But that is why I say that it is dangerous to recommend the South African model for all situations. Presented in the wrong way and in the wrong manner, it can be used as an excuse for doing nothing. It is important that the whole exercise of the TRC does not turn out to be months of taking evidence with nothing to follow; that it stops.
The TRC has been fortunate in its leadership, its ethos and its good relations. However, I wish to conclude on a slightly cautionary note. Unless those who profited from apartheid are prepared to provide redress by way of helping South Africa towards a prosperous future, all the good of the TRC and the leaders of the ANC will be undone. The manner in which the trade negotiations between the European Union and South Africa are proceeding does not bode well. The European mandate is over-protectionist of European countries and people within its ambit. The effects of free trade may be fine for the wealthy countries of the European Union. But they can spell tragedy and chaos for the economies of South Africa and her neighbours within the South African development community. Those are people whose whole future was retarded by the apartheid system.
Therefore, we must look for solutions and we who have the capacity to do so should provide help to make sure that the economy develops. It has been said that man does not live by bread alone. I would simply say that man does not live by the spirit alone either.
6.15 p.m.
The Duke of Montrose: My Lords, like other noble Lords who have spoken this afternoon, I thank the noble Baroness, Lady Nicholson of Winterbourne, for putting down this Motion.
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As your Lordships will be aware, the role of the Truth and Reconciliation Committee, as laid out in the Act of the South African Parliament of July 1995, was, first, to establish as complete a picture as possible of the past; secondly, to facilitate the granting of amnesty after the full disclosure of relevant facts: thirdly, to establish and make known the whereabouts of victims and restore their human and civil dignity: and, fourthly, to compile a report on the findings and recommend measures to prevent future violations of human rights. Archbishop Desmond Tutu put it more simply when he said:
"We have to face the past because, if you don't face the past. it may return".
All that is in a country where until recently, as the noble Lord has just said, the greatest blood bath ever seen in Africa had been predicted.
The Act limited the investigation to those who had suffered what were termed "gross human rights violations", which were detailed as those who were the victims of murder, manslaughter, kidnapping, rape, severe ill treatment and torture that caused permanent mental or physical harm.
On that basis, the commission—and I am using figures which I obtained today through the good offices of the House of Lords Library—has heard statements from 2,400 victims and amnesty seekers. That may be only a proportion of those who are qualified to make statements, but it has filled every minute of the time of the different committees and their various sub-divisions.
In a talk I have read, Professor Meiring, who is a co-opted member of the Truth and Reconciliation Commission, discusses some of the experiences of truth commissions that have gone before. He quotes the main conclusion of an expert who has made a study of these, which was that there are three requirements for a truth commission to have a successful process: first, the nation involved must own the process; secondly, the government of the day must have the political will to take the process to its final conclusion; and, thirdly, the process must stop.
As the noble Baroness was saying, in South Africa there is a closing date for the commission, which has been extended once and perhaps will be extended again. However, I hope that it will hold to the idea that the process should be brought to a close.
On the second point, the government seem to be doing all in their power to take the process to a conclusion, but there is certainly a weakness in the South African situation in that the first condition might not be fulfilled because there is resistance among some elements of the nation to accepting as their own the commission and its findings.
An unusual feature of the South African approach, as we have been hearing this afternoon, lies in the stated purpose of some of the major participants, and most notably from the African Nationalist side, that forgiveness should be a major outcome of the disclosures. I should like to illustrate this attitude by giving your Lordships a few examples.
My sister and brother-in-law, during many years in South Africa, got to know the man who is currently the South African ambassador in Washington. During a

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recent visit to the United States they called in on him and found themselves being entertained to a meal with Archbishop Tutu. My sister tells me that, as the meal wore on, the ambassador said that he wanted to tell them a story about the Archbishop. After President Mandela's release, but before any change of government was in the offing, the women of Cape Town, led by Mrs. Tutu, staged a mass demonstration. The police surrounded the leaders and said, "If you do not stop and disperse we will take our whips to you". The women refused to comply and the police went to work with their sjamboks.
At that point, the men decided that they had to do something. So three of them, the Archbishop, Jakes Gerwel (now Mandela's Chef de Cabinet) and the ambassador called for an even bigger demonstration. The police then arrested all three of them, and the Archbishop's wife into the bargain, and took them off for intensive interrogation. The interrogation went on for several hours. Meanwhile, outside the station the demonstrating women became anxious about them, so they went to buy some Kentucky fried chicken and sent it in for them to eat. When it was handed to the Archbishop, he held up his hands and asked, "Has food also been bought for the police guards outside? Unless it is I will not touch it". The ambassador said that his mouth dropped open at this, but Tutu was adamant. So after much debate, the women also brought food for the guards.
When the police officers finally decided to release them, Tutu said, "Before I go, I want to see the commissioner". The Commissioner of Police finally appeared, very defensive and expecting some legalistic challenge. The Archbishop said to him, "You had a job to do. You have done it well. Thank you". That was all. It was a lesson that neither the ambassador nor the commissioner will ever forget. Shortly afterwards an even bigger demonstration took place in Cape Town on what had, by that time, become a legal basis. That was an example of how the actions that went towards the achievement of a new government in South Africa took place.
Another remarkable event was the statement in April 1993 by President de Klerk, as President of the Nationalist Party, of his regret for the misery of apartheid. This produced a two-inch headline in the Cape Times, "I am sorry". These attitudes triggered what I have heard termed, "The forgiveness factor". This seems to have been for these men grounded in their religious faith. Without it, it is hard to see that injustices, on the scale that so many are perceived to have suffered, could ever be resolved.
However, looking at this and other evidence, it would seem to me that to be effective a truth and reconciliation commission has to be more than a ready-made technique for conflict resolution. Indeed, that is something that previous speakers have already mentioned. The mere Act of Parliament which brought it into being could never bear fruit on its own. It requires a deeper understanding of the processes required for reconciliation.
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Frequently nowadays diplomacy seems to mean the mediation of a third party. In a great many recent cases this has been the United Nations, sometimes with success and sometimes not. There has been a growing recognition in international circles that, where problems do not yield to conventional diplomats and diplomacy, it is sometimes possible for some non-official individual or body to bring about a solution. This has been referred to under the title of, Track Two Diplomacy. A recent example was the involvement of several Norwegians in the Israeli/Palestinian peace process; indeed, noble Lords could probably think of many more.
Efforts are being made to obtain a better understanding of that approach and it has become the subject of studies in various countries and universities. A surprising number of these initiatives has been taken by people whose advocacy of reconciliation stems from their religious convictions. A public policy research body in the United States, called the Centre for Strategic and International Studies, recently published a report entitled, Religion the Missing Dimension of Statecraft. In that report, the centre readily recognises the areas where religion has polarised conflicts and aggravated them, but it also traces the reaction in western civilisation to the control exerted by religious institutions over philosophy and historiography from early to medieval times. This was then broken through by the Renaissance and finally by the 18th century Enlightenment. But, even so, the latter contained attitudes which promoted its owns constraints and fashions and produced what is now appearing to be the mistaken prediction that the progress of knowledge and the influence of religion were mutually exclusive.
That view would appear to have had a major influence on our western way of thinking and on our diplomacy to where, not so long ago, an attempt within the Central Intelligence Agency in the United States to consider the religious dimension in Iranian affairs was dismissed as mere "sociology" and deemed politically irrelevant. The study goes on to investigate a series of conflicts resolved in recent times, documenting the influence of various bodies or individuals from various religious backgrounds—the reconciliation of France and Germany, apartheid in South Africa, Biafra, the Rhodesian/Zimbabwe transition, and so on.
In the introduction to the study an interesting line is drawn where it describes the classical tools of diplomacy as the exchange of information, the often manipulative signalling of positions and several forms of negotiation; measures which are quite suitable for dealing with conflicts related to power politics and tangible material resources, because these are inherently divisible and subject to compromise. But, today, in our post-Cold War world, there appears to be an increase in potential conflicts which are non-material and identity based and which are within, as well as between, nations, where past injustices are as much the driving force as present day interests.

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The South African Truth and Reconciliation Commission provides some useful ideas on how to tackle reconciliation within nations. It provides an element of recompense. It also provides a lightening conductor to defuse bitterness and hatred. But, if we are looking for lessons from the South African reconciliation process, it seems to me that its kernel is a novel and perhaps uncomfortable challenge to those who approach problems from a religious or even from a non-religious standpoint. This is that in any area of tension it can be important to identify where the "forgiveness factor" is necessary and, if they are participants, be prepared to admit where they themselves have been wrong.
I, for one, earnestly hope that what is being done will he a sufficient foundation for future peace in South Africa, though the process itself would have to be continued on many levels.
6.28 p.m.
Lord Sempill: My Lords, I have to admit that I had serious reservations about contributing to this most interesting debate. The reason that I have such reservations is quite simply that, while I am in a position to tell your Lordships quite a bit about South Africa, it is difficult for me to be able to give any real advice as to whether the Truth and Reconciliation Commission has possible applications in other areas of conflict.
What I thought I might do is to describe the experience I had in South Africa and to say why I think the Truth and Reconciliation Commission has been successful in that country to date. I lived in South Africa between 1980 and 1992. During that period—as noble Lords will be well aware—South Africa experienced international isolation, an escalation of civic unrest and the outbreak of the power struggle between the ANC and the Inkatha Freedom Party. Throughout this time the government were dominated by what can be best described as the more conservative wing of the National Party. They clearly saw themselves as involved in a rearguard action against the onslaught of communism. I, and nearly all of my friends, lived in comfortable, white only suburbs. We worked in liberal, English-speaking corporations. In short we had a wonderful lifestyle. I would probably still be there today if it were not for family commitments that brought me back to Scotland.
My reservations, mentioned earlier, stem from the mixed feelings I have regarding the extent to which I and my friends and colleagues were, or are, guilty of failing to address the iniquities of apartheid which we so clearly saw. Should we agree with the premise in an article written by John Battersby, editor of the Sunday Independent in Johannesburg that we, that is, the whites who were living there at the time,
"should acknowledge our collective role in a system that murdered, gaoled, detained without trial, tortured and maimed tens of thousands of innocent South Africans"?
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In trying to answer that I hope to clarify why the Truth and Reconciliation Commission has been a useful tool in the transition of power in South Africa from a small minority government into what seems now to be growing into a fully fledged democracy.
I start by dismissing the impression that the South African government were a brutally repressive regime. As another respected academic, Heribert Adam, professor of sociology at the Simon Fraser University in Vancouver, observed:
"Afrikaner/white minority rule fits neither into the category of criminal regimes nor regimes of criminals, a distinction that has been made between Eastern Europe and Latin American military dictatorships".
Most of your Lordships who have spoken, or who will speak, in this debate will probably have been given the same information that I received from the Library. I read it with great interest.
The cases that have been mentioned did not come to light as a result of the Truth and Reconciliation Commission. They have been known in South Africa from the moment they happened. The press were actively involved in trying to expose the instigators. Unfortunately, they were often misled, especially with the often quoted ANC/Inkatha power struggle. These events were an endless source of discussion both at work and at the dinner table. I recall quite clearly that the hand of the government was often suspected.
Against this background it is important to understand that on an average weekend in Soweto there could be upwards of 25 murders and countless rape cases. There was, to most whites, a culture of violence inherent in the townships. The difference between urban as opposed to political violence became blurred. Furthermore, atrocities north of the Limpopo had been well documented for years—Uganda under Amin, Sierra Leone under Sam Doe, Ghana under Rawlings, the corruption of Nigeria and Kenya and finally the "communist onslaught" in Angola and Mozambique. That is how many whites in South Africa saw the situation in the mid-80s. It seemed to many of us that the strong hand of government was essential for the long-term stability of the country. During this time I—unlike most of my friends—visited the townships on a regular basis. I did so in my role as a marketing manager for South Africa's leading brewery. I had many conversations with "shebeeners", who are illicit publicans, and other local entrepreneurs and individuals drinking in those shebeens. I admit that I was nearly always apprehensive but the one thing that staggered me time and time again was that I was always greeted with what I perceived to be genuine warmth. By 1988 the mood had changed and visits were no longer advised. The point I wish to make here is that there existed an extraordinary level of goodwill, much of which seems to have survived through to today. As I believe was said earlier, this is one of the reasons why the Truth and Reconciliation Commission has made the progress it has.
More importantly, these visits highlighted the real crime of apartheid, that of poverty and the absolutely glaring lack of opportunity for anyone who happened to

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be brought up in those townships. This was well captured in a recent newspaper article I obtained from the Library. It was written by Rick de Satg, who is a trainer at a local development group. The article refers to human rights violations and to,
"Detention, dirty tricks, deaths, disappearances … there is another D …'separate development'—and all that went with it: forced labour tenancy, forced removals, the establishment of bantustans… migrant labour, segregated towns and cities and the hostel system … 'this list of human rights violations which has had the greatest impact on the lives of the majority of South Africans … the toll is not human lives lost in violent political confrontation, but withered away in the but de sacs of enforced poverty'".
Apartheid, the policy of separate development, is undoubtedly the biggest single cause of the conflict. If it teaches us anything, it is to be wary of political philosophies that create inequality within a society, whether that is between races, religions or between—dare I say it?—genders.
Another important reality in apartheid South Africa was the role of Christianity. The country has always had a high level of religious tolerance. I shall always remember the Zionist Church, so visible among most of the black labour force that we employed who wore small green flashes with silver stars. Every Easter Sunday or Easter weekend over a million of them congregated in Petersburg in Northern Transvaal for a total day's worship in the veld. It was said that the bishop of the Zionist Church had by far and away the strongest following in the country. I maintain that the deeply engrained Christian values of much of South African society made it easier for it to understand and to get on with the role of forgiveness.
World opinion has also played a critical part in the making of the new South Africa. The media have maintained a continual focus on the country, whether on political aspects, economic aspects, or, in many instances, aspects related to tourism. But the focus nevertheless is there. The South Africans are determined to create the fairer and more equitable society that so many of us in this Chamber wish. Let us not forget that the South Africans have benefited substantially from the charismatic leadership that all the previous speakers have mentioned. Both Mandela and Tutu are exceptional people in anyone's society in any country in the world. The South Africans have benefited from the strongest economy in Africa which, it must he said, has been influential in paying for the transition.
The Truth and Reconciliation Commission has exposed some of the worst abuses of apartheid and has played a key role in moving the country forward. But I have to conclude that many of the conditions found in South Africa in 1992 seem to be missing from most of the other areas of conflicts which we in this Chamber would wish to resolve.
6.40 p.m.
Lord Beloff: My Lords, we are fortunate indeed in the presence in our House of the noble Baroness, Lady Nicholson of Winterbourne, because into our plush surroundings she brings echoes of horrible affairs in more than one part of the world; and today she has raised with us the question of the current attempt in
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South Africa to overcome its past. We have been assisted in our consideration by three other noble Lords who from different points of view have also been able to bring some first-hand account of what has been going on or what the situation bodes for the rest of the world.
I cannot add to that. My own acquaintance with South Africa is almost 40 years old, perhaps longer. As I remember—it was just at the beginning of the transition towards complete apartheid—it was already evident, as the noble Lord, Lord Sempill, said, that the situation in the end would depend on whether it was possible to find an economic future; and that that in turn would depend upon whether the majority would receive an education. I was taken by the late Sir Robert Birley to see schools in Soweto. It was illegal, but he was not very concerned with South African legality. Under such conditions it was remarkable to see that some teachers were able to try to bring hope to their charges.
My conclusion from listening to the speeches is that the Truth and Reconciliation Commission is almost certainly a one-off. The conditions which make it possible in South Africa are for a variety of reasons unlikely to be replicated in any other of what the noble Baroness calls post-conflict situations. One element which has been mentioned again and again is that there is and has been an unusual degree of religious belief in all sections of the people of that country in terms which make dialogue possible. Archbishop Tutu is the obvious symbol of that.
On the other hand, it is difficult to know—I do not think anyone who has spoken is willing to prognosticate the future—whether in a changing society where elements of secularisation and materialism may come from abroad, as they have in many other communities, a particular cement will be strong enough to bring about the conclusion for which one hopes.
We must take care to note to what extent this is a particular situation. For example, if we take note of what the right reverend Prelate said about South America, where there are comparable evils but no comparable set of attitudes, we can understand that it is not easy to translate one experience to another. However, my real worry—it is the only reason that I venture to address your Lordships with so little background on the subject—is that I should like to see the prospect of more post-conflict situations.
I am more worried by the fact that, as we are reminded by frequent Statements from the Minister, events are taking place at present in different parts of the world, the breaking of which we seem to find extraordinarily difficult. What seems present in President Mandela and others who have taken this course in South Africa is a set of convictions that they are right. They think that reconciliation is right; they think amnesty is right; and they think that bringing a community together is right. But what does one do in the case of groups or regimes which do not hold that view? I regret that the noble Baroness, Lady Cox, is not present. What does one do, for instance, about the Sudan? At the moment one is concerned to stop people being massacred rather than how they should be reconciled at some future date with those who massacred them.

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In so many parts of the world we find it difficult to steel ourselves to undertake the necessary unpleasant actions to prevent or bring to an end the conflict without worrying too much about the distant future when the pressing concern will be the need for those communities to live together.
It is not that there are not elements in many countries which seek to bring about what the right reverend Prelate called justice. We see an attempt—it was mentioned by the noble Baroness—in Rwanda and Burundi. We see attempts, not altogether effective, in West Africa. But even there our hopes have been dashed to some extent. There is still no resolution to the hardships inflicted by the Government of Nigeria, the largest African country, upon an important section of its people. It is then a question of whether what is rather flatteringly called the world community has lost a willingness to bring about justice—a justice which involves the curtailing of the activities of such people, and, perhaps as a measure of deterrence, some form of punishment.
Most noble Lords present are too young to remember what we thought about the future of the world community in 1946 and 1947, with the founding of the United Nations, and the belief that this would place behind justice the full weight of the most important and powerful societies. There was, too, the belief that those societies would be willing to go a very long way in order to bring about the kind of world for which they hoped. We can see that over the past half century our world community has not thrived in the pursuit of justice. Not only the forces of evil, which were in conflict at that time, but even older forces of disunion and antipathy are coming to light. Let us take the Kosovo situation, which we discussed in vain, necessarily, yesterday. There are people worrying about the result of a battle in the 14th century. We live in a world in which the growth of literacy may in fact have made matters worse by making people more conscious of their differences with others.
The lesson I draw—and I doubt whether the noble Baroness would disagree—is that the important thing is not to say, "Here we have an admirable effort which we all hope will succeed", but that our business is to see and study each individual case of conflict in its own terms, to try to understand what it is that moves people to behave in this way and to see in each case what those who live in more fortunate circumstances can contribute in trying to bring such conflicts to an end.
6.51 p.m.
Baroness Williams of Crosby: My Lords, this is not a very crowded debate; however, I have found it a remarkable one. I feel privileged to have heard some of the speeches—based as they were on so much, and such deep, personal experience. Perhaps I may return to them in the course of my remarks. I should like to begin by adding my thanks to my noble friend Lady Nicholson of Winterbourne for having inaugurated the debate. She is a person of the most far-ranging experience. Her work in international organisations for children and others has taken her to some of the remotest and most dangerous parts of the earth. She speaks from a depth of understanding and knowledge of what she has seen—
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those who were described long ago in a great book as "the wretched of the earth". She has not forgotten them, and she bears witness to them in this House. I also wish to pay tribute to the noble Baroness's courage. She is never intimidated in any way in seeking the truth in areas such as the southern parts of Iraq, the Middle East and the Horn of Africa. Indeed, it can be said of the noble Baroness that no door will keep her out and no window will exclude her. For that, I pay her the tribute that she deserves.
I shall return to the remarkable speeches that we have heard, but turn first to the remarks of the noble Lord, Lord Beloff. The noble Lord quite properly reminded us that there are many strands in the strange and chaotic world that we are now entering, and that we must examine all of those strands to weave together a world of law and order. The noble Lord mentioned that not all conciliation can take the benign form of the South African Truth and Reconciliation Commission, and in some cases peace-making or peacekeeping, or even military action, may be required by the situation.
As the noble Lord spoke, I was reminded, for example, of the way in which peace was, frankly, imposed upon the peoples of Bosnia by the Dayton Agreement—because there was very little chance of getting the sort of citizenship response that was possible in South Africa or may be possible in some other parts of the world. So there are many strands to our debate, ranging from conflict resolution, through peace-making, through peacekeeping, through the use of the powers of the great powers, and finally to the more benign forms that we are discussing today.
The right reverend Prelate drew to our attention the extent to which in other parts of the world as well as South Africa, there have been attempts to deal with the terrible outrages of the past, to reconcile people to them and to put them back into their shared and common history. I shall return briefly to those matters. Before I do so, perhaps I may say a word about law, and then about the issue raised by in particular the noble Lord, Lord Sempill; namely, the question as to whether South Africa is in some ways different from other countries.
The law can take many forms. It can take the form of the law of the victors, which is the form that it took at Nuremberg. We know that the crimes of the Axis were dealt with at Nuremberg and the outrageous behaviour of the leaders was prosecuted there. But nobody at Nuremberg raised the issue of the treatment of displaced persons and refugees following the Yalta settlement. Nobody looked at the pathetic people driven back to the Communist sector although they had sought refuge among us. Nobody raised such issues as saturation bombing, which killed thousands upon thousands of innocent civilians as part of the waging of an outright and total war. Only very recently have we begun to see some willingness on the part of those who were among the powerful to accept their responsibility to those who were among the powerless. I understand very well how it comes to be the case that the Queen is asked to apologise for Amritsar and that the Prime Minister is asked to apologise for Bloody Sunday. I understand very well, too, the reasons why we have seen, for instance, in the United States—and I pay that country tribute for

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this—the provision of the highest medal in the land for actions that are conducted outside the battlefield, the Soldier's Medal, to the three United States soldiers who intervened at My Lai to stop the massacre of civilians. Slowly, we are learning to be more self-critical, more understanding, more capable of forgiving others, and even ourselves.
The second form that law may take—the first being the law of the victors, as we saw at Nuremberg—is simply the forgiving and forgetting of all that has been. That may be a very benign outcome, but in some cases what has happened is so outrageous, so burning in its effects, so arousing of resentment, that one cannot simply wave away the past. I believe that to have been the case in South Africa. The third form is the way in which South Africa has tried to show us the path of reconciliation.
Let me take up two speeches in that context. The first was a remarkable speech of self-examination—not only of himself but of his whole community—by the noble Lord, Lord Sempill. It is the case that, not only in the past but in the Truth and Reconciliation Commission itself, there has been a reluctance on the part of some communities to take part in that procedure. The Inkatha Freedom Party and the far right of the Nationalist Party led by the former president, President Botha, have been unwilling to take any co-operative part in the proceedings.
I remember, in 1990, visiting a township outside Durban which had been in part burnt down the previous night. I was taken by the assistant to the Archbishop of Durban to a small church in the township which was full to the limit with terrified families, some of them still hearing the wounds that they had received from assegais and other weapons. The priest told me that he had called repeatedly upon the South African police the night before to come and save his parishioners, but nobody had responded. Finally, he had rung up a parishioner, a regular communicant who was a senior officer in the South African defence forces—the army, not the police—and ordered him, literally on pain of excommunication, to come and save his parishioners. Reluctantly, the senior officer appeared, and shot randomly at the opposite hill from which gunshots were coming.
Later that night, the priest went up to the top of the hill because men were dying or were already dead on the hill. He found that at least half those who had been shot at and killed from the place from which the gunfire against the parishioners had come had turned out to be members of the KwaZulu police bearing the badges of their office. It is not therefore altogether surprising that the Inkatha Freedom Party has been so reluctant to take part in a procedure which might well reveal its own share in some of the actions and the extreme behaviour that occurred during the apartheid years.
Perhaps I may say one word to the noble Lord, Lord Sempill. I suppose the obvious comment on what he said about the behaviour of the majority of white English and Afrikaner citizens, citizens of South Africa, is the famous remark of Edmund Burke: "For injustice to triumph, it is enough that good men do nothing". It
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is a cruel remark to make, for not one of us in this House or anywhere else knows how we would behave in similar circumstances. Yet Edmund Burke's great remark remains as a constant reminder to us all of what is demanded from us when evil is to be seen in such a way as it was in South Africa. The noble Lord, Lord Hughes, who has had a most distinguished role in having headed the anti-apartheid movement over many years, knows precisely of what I speak.
I come lastly to a part of the debate that we have discussed perhaps only a little. I refer to that remarkable characteristic of South Africans—mainly South African Africans, it must be said, but shared by some remarkable other white citizens of South Africa—namely, the capacity for forgiveness and courage beyond what is normally asked of human beings. That courage was exemplified alongside the extraordinary forgiveness that South Africans have shown to those who have exploited them and brutalised them over many years. I had exactly the same experience as many other noble Lords and it was referred to in a marvellous speech by the noble Duke, the Duke of Montrose. It is the experience of coming across men and women who had emerged from seven, 10 or 15 years in prison and bore no resentment, no anger and no hatred against the very people who had imprisoned them.
I am glad that there was one white South African woman who spoke to the Truth and Reconciliation Commission. She was wheeled into the court. She could no longer walk since she had suffered so much shrapnel injury from a bomb that had exploded, set by freedom fighters or guerrillas—you use the word you choose—in her back garden. She said: "Of course I forgive them". Then she paused and said: "And I hope they can forgive me". That was a remark of astonishing spiritual insight.
It is because of people like Alan Paton, Donald Woods, Trevor Huddlestone and Archbishop Hurley that we can say that we ourselves are associated to some extent with a miracle that has happened in South Africa.
In conclusion, discussion about politics in our time has become dominated by economic, administrative and technological considerations. We almost define politics today in those terms. If we cannot speak the language of economics, the language of science or the language of technology, we are increasingly regarded as unfit to be democratic representatives in the modern age.
But South Africa has taught us something and, to a lesser extent, so has Argentina, if I may refer to the speech of the right reverend Prelate. Undoubtedly Raoul Alfonsin helped to bring his country back from the extreme attitudes of totalitarian injustice to something resembling a civilised community. The world owes him a great debt for doing that. There are other countries who have done so too.
What we should remember and what is to me the central lesson of the debate inaugurated by my noble friend Lady Nicholson is that there is a spiritual dimension to politics of the greatest importance. An understanding capacity for mercy, forgiveness and imagination may bring peace to our troubled world, from Bosnia to Northern Ireland, to Somalia and the

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outer edges of the earth in a way that sometimes the technologists, economists and scientists fail to imagine. That. I believe, is one of the crucial messages of the debate.
7.4 p.m.
Lord Moynihan: My Lords, I am pleased to be in a position to congratulate the noble Baroness, Lady Nicholson, on securing the debate and to follow the perceptive and moving speech of the noble Baroness, Lady Williams of Crosby. The debate has enabled us to have a valuable opportunity to hear reflections from all sides of the House, not only on the Truth and Reconciliation Commission and South Africa itself—a country in which many of your Lordships have shown a deep and abiding interest—but also on the broad and far-reaching question of the merits of the wider application of such a body within the context of the need for a nation emerging from a post-conflict situation to confront and exorcise the ghosts of its past.
I join your Lordships in paying tribute to the work of Archbishop Tutu, Dr. Alex Boraine and their fellow commissioners in the Truth and Reconciliation Commission. Their task has been a harrowing and exhausting one. It has involved treading a delicate balance to defuse the tensions of the post-apartheid era. It has required immense resources of understanding, wisdom and compassion.
As we have heard, the search for truth and reconciliation in South Africa has often involved navigating in uncharted waters. I believe that if the final verdict on the Truth and Reconciliation Commission is a successful one, South Africa will owe a great debt to its skill, insight and dignity.
The challenge of how to deal with its past within the framework of the negotiated end to apartheid has been one of the most contentious issues in South Africa. The government's response—the creation of the impermanent Truth and Reconciliation Commission—has been a bold and controversial experiment on the precarious road to a democratic and peaceful South Africa, a South Africa that in the future will finally deliver on its promise of development opportunities for all.
South Africa is now a non-racial, multi-party democracy. As they framed the new constitution the government sought a means to exorcise the past, to prevent the prospect of a future repeatedly overshadowed by the incessant rattling of skeletons in the cupboard of the country's apartheid years and thereby to close a dark chapter in the life of the nation.
But the government were confronted with a question familiar to many governments this century: how do a country's people forgive but not forget their pain and suffering; and how do they build a future from the ashes of the past, based on new respect for human rights?
It seems an impossible task, but this is what the Truth and Reconciliation Commission, provided for by the Promotion of National Unity and Reconciliation Act, was set up to achieve. Rather than follow the Nuremberg model of criminal trials which the negotiated end to apartheid precluded, or the South American practice of
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giving blanket amnesties, the commission was to he a third way, between the formal justice system and prosecution on the one hand and amnesia on the other.
The South African Minister of Justice, Mr. Dullah Omar, explained that,
"a commission is a necessary exercise to enable South Africans to come to terms with their past on a morally accepted basis and to advance the cause of reconciliation".
In its simplest terms then, for a limited period of time, the commission has been empowered to trade confessions for amnesties on the basis that South Africans needed reconciliation and that true reconciliation requires forgiveness and that forgiveness requires knowledge. In all its work the commission has been guided by two principles: that you cannot forgive when you do not know what or whom to forgive; and that those who cannot remember the past are condemned to repeat it.
In order to rescue the country from the future perils of continued deceit and denial about its past, the aim of the commission has been to slice cleanly through a thicket of lies about the preceding 30 years and to catalogue its horrors as fully as possible, to give victims and their families the chance to tell their stories and to be compensated for their years of suffering and so to regain their dignity and honour; to publish its findings so that no one in the future can claim to be ignorant of the past in the hope of restoring South Africa's moral order and preventing a repetition in the future; and, most controversially, to force the murderers, the torturers, the rapists, the terrorists and the bombers—all those who grossly violated human rights for a political goal, be it in defence of apartheid or in resistance to it—to confront the human cost of what they had done before being granted amnesty.
At the end of its term of office the commission will report in full to the president with its recommendations, guided by the watchwords of restoration and reconstruction rather than ruin and wreckage; reparation and restitution rather than retaliation and revenge; and reconciliation and rehabilitation rather than reprisal and retribution.
The work of the commission has been mainly undertaken by its three committees. Through its Human Rights Committee, victims or their families have been given the opportunity to relate the violations that they suffered and the committee has attempted to establish how and why such violations were committed and who was responsible. Through its Amnesty Committee it has provided a mechanism for a selective and temporary amnesty, provided three criteria were satisfied; that is, that the offence took place between March 1960—the date of the Sharpeville massacre—and December 1993 when the first post-apartheid constitution was agreed: that the offence was politically motivated or consistent with the policies of either the then state or liberation movement; and provided that full disclosure of the offence for which amnesty is being sought has been made. Through its Reparation and Rehabilitation Committee it has made proposals to deal with compensation of victims as fairly and as fast as possible,

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including a measure for urgent, interim reparations aimed at restoring the human and civil dignities of victims of human rights violations.
And now, as the work of the commission nears completion, though it is perhaps unsurprising that Archbishop Tutu recommended that the lifetime of the Amnesty Committee be extended, the time is approaching to assess the achievement of the commission. It has been a traumatic and distressing two years of grief, tears, and tales of torture, of beatings, burnings and murders. Nearly 20,000 statements from victims have been heard, 10 to 15 per cent. of them in public and over 7,000 amnesty applications have been made at a cost of over 29 million dollars.
But what has the exercise achieved? Has it fulfilled its objectives, confounded its critics and brought South Africa nearer to the goals of truth and ensuing reconciliation? I will first address the complaints of the critics of the commission, who have been vociferous and strong, comprising an ironic alliance of those who have most to lose and those who have lost most; those who complain of a biased "victor's justice" and those who complain of no justice at all.
From the perspective of the latter group of critics, perhaps the task of the commission was always impossible. How could it hope to reconcile the victims' raw need for justice in its most conventional sense of trial and imprisonment provided for by the formal court system when it was fettered by the negotiated nature of apartheid's demise and the indemnity which was a concession for securing its peaceful collapse? For the families of Steve Biko and Chris Hani and many more like them, who have seen and will see those who have committed terrible crimes walk free, while they, the victims, lose their right to seek civil redress, it is a bitter pill to swallow.
The Truth and Reconciliation Commission asked those people to accept that the moral equilibrium that human nature demands, that those who have done harm must pay for what they have done, has temporarily been not only suspended, but inverted; they have been asked to sacrifice the trappings of individual justice as the price that must be paid for a greater good—a peaceful and democratic South Africa.
The charge of the second group of critics is perhaps easier to answer. Those on the right wing feared the double standards of a "victor's justice" combined with a witch hunt of the state security forces who killed, tortured and maimed, while the terrorist offences committed by the ANC were ignored which, far from being cathartic, would wreck the fragile harmony of the post-election period. Indeed, those fears seemed as if they might be realised in the early days when the ANC apparently recommended that its leaders should be granted automatic amnesty on the grounds that there is no moral equivalence between those who resisted apartheid and those who defended it; and when, in its first months, it seemed as if the commission would be submerged by the weight of the legal and political dilemmas which faced it as it tried to balance the conflicting interests of truth, reconciliation and justice, culminating in the fiasco of the Dirk Coetzee case.
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Accusations of a partisan witch hunt more concerned with revenge than with the truth have now subsided, but there are still lingering suspicions that the Truth and Reconciliation Commission, despite its efforts to reflect South Africa's political spectrum, remains the creature of the ANC and is biased accordingly. For the remaining duration of its life, if this is not to besmirch its reputation and achievement, the commission must—and I hope will—confound the critics who speak of double standards, and be seen to be totally independent and autonomous.
It will have ample opportunity to do so in the major hearings yet to come, which not only include high profile amnesty applicants who served the former government, as in the Hani and Biko cases, but also those who perpetrated the human rights violations in ANC camps in Angola, Botswana, and Zambia, and those who were responsible for the terrorist Church Street bombing, the Wimpy Bar bombings, the Johannesburg magistrates' court bombings, attacks on policemen and police stations; and the Inkatha Freedom Party hit squad killings.
Furthermore, there are key decisions to be made in three important cases. I mention first that of Winnie Mandela. Secondly, there is the blanket amnesty granted to 37 ANC leaders by the Amnesty Committee, even though it is clearly stated that each amnesty must face in detail the crimes for which indemnity is sought. That decision has rightly, but regrettably, called the commission's political impartiality into question and Archbishop Tutu sought High Court clarification on the validity of the ruling. Should it be upheld, the reputation of the commission would be tarnished by the slur of double standards. Thirdly, there is the need for the political impartiality of the commission to be fully tested in the case of Mangosuthu Buthelezi.
Yet, setting those specific cases aside, what truth and reconciliation has the commission achieved or has the exercise simply resulted in a performance by a theatre of puppets, as some of its critics maintained? Certainly, in its pursuit of truth, its quasi-judicial status has not helped to dispel that perception. Although it is not a court of law, it does have the right to subpoena witnesses, yet their unwilling testimony has not always been compelling or satisfactory.
The commission has relied to a great extent on voluntary participation and, as a result, the number of heavyweight political leaders who have chosen to come forward remains derisory. Of the more than 7,000 applications for amnesty, some two dozen came from ANC leaders. Only two former National Party Cabinet Ministers came forward and no one from the Inkatha Freedom Party. That has left the commission wide open to the criticism that, as is so often the case, the foot soldiers, the middle management of the security forces, those who executed the orders, have emerged while their superiors who devised the policies they implemented have kept quiet, still unwilling to accept accountability for the past.
Indeed, so long as the generals and politicians, the state sponsors of apartheid and the perpetrators of terror in protest against it, stay silent, the commission can only

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hope to uncover a partial truth. Yet that partial truth is not without value. In these two years of hearings, we know now what happened in many officially unsolved cases, both famous, such as that of Steve Biko, and less well known. We have learnt now that Steve Biko's death was no accident but that, as many already believed, it was indeed murder. Later on this month we will hear more of the details surrounding his death. For the many who have long suspected a cover-up, this comes as confirmation rather than revelation. But from such confirmations month after month, week after week, hearing after hearing in the narrative of victim and perpetrator alike, it is hoped that some measure of national social catharsis, itself so necessary to the process of healing, is being achieved.
Finally, and briefly, I turn to the important debating point raised by my noble friend Lord Beloff and to the possible application of the concepts underpinning the Truth and Reconciliation Commission to other post-conflict zones. In this century, we have seen and continue to see nations strive to come to terms with a violent and bloodstained immediate past. I have already mentioned two of the traditional routes; the criminal prosecutions of the Nuremberg war trials at one end of the spectrum and the amnesia approach of blanket indemnities, such as those granted to fallen military regimes in South America, at the other.
South Africa has chosen to follow a different route and to acknowledge that its body politic was unwell, that it had wounds in need of healing, and unless those wounds were opened and cleansed, they would fester until the condition became critical and ultimately the country would pay a high price for any attempts to erase or evade this chapter of its history. Its decision to establish the Truth and Reconciliation Commission was based on the belief that the irreducible minimum for lasting reconciliation and unity was the quest for the truth, agreed, accepted and acknowledged by all South Africans.
South Africa's experience, although not without controversy and not without flaws, might just prove to be an example that other countries, from Rwanda to the former Yugoslavia, can use, suitably tailored and adapted, in the process of trying to unite a divided people, reconcile a dysfunctional society and rebuild a shattered nation. For the divisions and violence in South Africa were deep, enduring and institutionalised and are not yet fully conquered. So if this experiment is successful and it benefits South Africa, then its potential relevance and value elsewhere in the world cannot lightly be dismissed.
A watching, waiting and supportive world with bated breath prays that the Truth and Reconciliation Commission is indeed a bridge in the transition from a deeply divided society. In South Africa, they quote a Russian proverb: "injustice is like having an eye gouged out; looking away is losing both eyes." From these Benches, we extend our support to South Africa in hoping that the Truth and Reconciliation Commission proves to be that country's clear-sighted and wise eye.
7.22 p.m.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, I thank the noble Baroness, Lady Nicholson of Winterbourne, for initiating this debate. It has shown your Lordships' House at its very best. Our Benches have not been full but the speeches we have heard have been based not only on personal experience but on real thoughtfulness about the issues.
The debate is also a timely opportunity to pay tribute, as so many noble Lords have done, to South Africa's remarkable success since 1994. South Africans have managed the transfer of political power more peacefully than once seemed likely or possible, and without serious economic disruption. President Mandela has made an enormous and courageous personal contribution to the process of reconciliation. He has given a personal lead in bringing together former enemies to work for the future of their country. He offered not only courage and leadership but integrity, magnanimity and commitment when they were really needed.
As the noble Duke, the Duke of Montrose, pointed out, the Truth and Reconciliation Commission was given a most ambitious remit: to uncover the full truth about apartheid era atrocities; to provide a forum for individuals on all sides publicly to acknowledge their guilt; and individually and collectively, through national catharsis, to achieve national reconciliation. Many would say that the commission has been a fundamental component in the building of the new South Africa.
As the noble Lord, Lord Moynihan, reminded us in what was a powerful and compelling speech, the commission has also attracted criticism. Some have said that it concentrates on the misdeeds of the previous regime and goes easy on those committed by the freedom movements. Some have protested at the granting of amnesty to self-confessed criminals. No such exercise, delving as it does into such painful events, could ever have been free of controversy.
The truth and reconciliation process in South Africa is an internal matter for that country. It is not for us to pass judgment on the specific details of that process. But I suggest that there has been a broad consensus in your Lordships' House; one of admiration for the work carried out by the commission and for the spirit in which it has been done. In particular, the efforts of Archbishop Tutu, in the face of controversy and despite health problems, have been remarkable. The commission's final report to the President is due at the end of June this year. I am sure that we all wish them well with the great amount of work that remains to be completed.
The noble Lord, Lord Hughes of Woodside, and the noble Baroness, Lady Nicholson, reminded us of some of the cases that have been looked at by the commission. The noble Baroness herself had been intimately involved in one of those cases. I do not propose to comment on those individual cases. The hearings are an internal matter in South Africa. The Truth and Reconciliation Commission has heard a great amount of evidence and its final report may well make recommendations about specific cases as well as about

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general principles. The allegations made against individuals are a matter for the commission and the South African Government.
We believe that the commissioners have done an important and extraordinarily difficult job conscientiously and with a high level of integrity. The commission's achievements will no doubt be judged by the extent to which it is seen to have treated people equally, to have been fair and objective and to have met its aims of discovering the truth and assisting national reconciliation. Its report will be, as the noble Lord, Lord Moynihan, reminded us, an important building block in the process of national healing in South Africa.
The noble Duke, the Duke of Montrose, drew our attention to the role of Archbishop Tutu and to the role which faith has played in this process. The noble Lord, Lord Beloff, concentrated many of his remarks on the role of religion and of the Churches. The example of the South African Council of Churches, and in particular that of Desmond Tutu, has been an extremely important component in this process, as it was in the struggle against the injustice of apartheid. The theme of reconciliation has been central to the message of the Church. But it is also worth noting the role of many denominations and indeed of faiths other than Christianity. In particular, I should mention the statement made by the Dutch Reformed Church to the Truth and Reconciliation Commission last year in which it frankly acknowledged some of the mistakes it had made in support of the apartheid regime.
The noble Baroness, Lady Nicholson, has drawn our attention to the possible use of the South African model in other post-conflict situations. The noble Lord, Lord Beloff, doubted that such a model would necessarily work in other situations. As the noble Lord, Lord Hughes of Woodside, reminded us, the ways in which societies and states manage such periods of transition will always depend on their individual circumstances. There are precedents—for example, in Latin America—for seeking to establish truth through non-judicial commissions rather than pursuing justice through the courts. Indeed, South Africans drew in particular on the Chilean example.
As the right reverend Prelate the Bishop of Southwell said, societies have to strike balances between seeking justice against the perpetrators of abuses and turning the page on past events to allow the wounds to heal themselves. The bold approach taken by the South African Truth and Reconciliation Commission suggests a third route that allows a country to confront its past and identify what happened, but to do so in a context of forgiveness, as the right reverend Prelate pointed out. I understand that after the commission has been wound up there are proposals to create a new institute to carry out further research and education and to consider wider applicability of the South African experience. I believe that that is to be welcomed. But as the noble Baroness, Lady Williams of Crosby, said, sometimes other solutions are necessary.
The approach of the tribunals in the former Yugoslavia and in Rwanda is clearly different to that of the Truth and Reconciliation Commission. Those
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accused are tried and, if found guilty, are sentenced to punishment. But the aim is similar. We hope that bringing to justice those who have committed atrocities will help their victims towards real reconciliation. The link between justice and reconciliation was made clearly by the women of Srebrenica when they met my honourable friend, the Minister of State at the Foreign and Commonwealth Office, Tony Lloyd, last November.
As the noble Baroness, Lady Williams, said, commitments are needed not only from societies but from international communities. Sometimes they need mechanisms to enable them to act against those who have committed the most serious crimes of international concern. The aim is to deter the perpetrators as well as to promote reconciliation between them and the victims. That is why we strongly support the creation of a permanent international criminal court, as the right reverend Prelate indicated. We are all doing what we can to ensure that the convention providing for the creation of such a court will be ready for signature by the end of the diplomatic conference in Rome this summer.
In debating the questions raised by the Truth and Reconciliation Commission, we should not ignore the material and practical issues facing South Africa, as the noble Lord, Lord Sempill, reminded us. Huge investment is needed to extend basic services to previously marginalised communities, to tackle the enormous challenges in the education sector and to foster growth in the economy that will make a real impact on unemployment.
Britain has an excellent record in its development co-operation with South Africa, with major projects in education, water supply, local government and other sectors contributing to tackling poverty and the problems of transition. As South Africa's biggest trading partner and foreign investor, we have an important role to play in the development of the South African economy. Britain has also made a significant contribution in helping with the integration of the armed forces from both sides into a new non-racial defence force. I make these points not merely to show the close involvement of the United Kingdom with South Africa but to emphasise that the challenges of South Africa's transition go wider than the work of the Truth and Reconciliation Commission.
The noble Lord, Lord Hughes, raised questions about our trading arrangements with South Africa. We have agreed to work for an early and favourable conclusion to negotiations between the EU and South Africa for a trade and co-operation agreement. I agree with the noble Lord that the trade terms offered need to be liberal. We are using our presidency of the EU to support these negotiations as far as we are able. We hope that significant progress will be made before the end of our presidency. We are in close touch with the South African Government, with our EU partners and with the commission about this issue.
The noble Lord, Lord Sempill, reminded us in a remarkably frank and brave speech about the various sections of the population who have very different perceptions about the changes in South Africa and very

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different personal experiences of them. There is no easy solution. The South African Government face a balancing act, seeking to achieve high levels of growth while at the same time redressing the economic inequalities created by apartheid, the apartheid so eloquently described to us by the noble Lord.
The noble Lord, Lord Hughes of Woodside, raised rather broader issues about the economy. It is important to remember that the South African economy is in better balance now than it has been for many years, especially on the monetary side. The rand is probably stable against most of the major currencies and so far it has weathered the Asian financial turbulence. Inflation is in decline and resources are strengthening; foreign debt exposure is low, public finances are under control and manufactured exports are doing well. This is all a great tribute to the way in which South Africa has managed its economy since 1994.
The noble Baroness, Lady Nicholson, reminded us of areas of conflict in other parts of the world when she was describing how, if at all, it was possible to look at the South African model when talking about conflict resolution elsewhere. She spoke about Sierra Leone. I thank her for the very warm words of tribute which she paid to our High Commissioner, Mr. Penfold, for his courage last year when Sierra Leone was in such trouble.
Her Majesty's Government have warmly welcomed the restoration of President Kabbah in Freetown yesterday as the elected president of the legitimate government of Sierra Leone. Her Majesty's Government in particular welcome the fact that President Kabbah, when he returned to Freetown yesterday, urged national reconciliation. It is also worth noting that Moslem Imams, Christian Bishops and traditional leaders offered their blessings for his safe return.
The noble Baroness also spoke about the slow progress that is being made in Rwanda. She is right. But recent reports by the UN Office of Internal Oversight Services point to improvements in various aspects of the tribunal operations in Rwanda. Of course, there is still a great way to go. The United Kingdom Government continue to play a major part in international efforts to improve the Rwandan judicial system. We have welcomed recent improvements in the trial process and we continue to urge the Government of Rwanda fully to respect internationally agreed standards in their conduct.
The noble Baroness also brought to our attention again the very difficult situation in Iraq. We have discussed that on a number of occasions recently. But I point out to the House that Her Majesty's Government are now planning a meeting, which will be hosted by the United Kingdom in its presidency of the European Union, to work out with the European Union and others how we can help the UN in the implementation of the expanded oil-for-food programme to meet the most pressing needs of the Iraqi people.
The noble Lord, Lord Beloff, pointed out in an extremely thoughtful speech the enormous difficulties in translating the South African experience to other parts of the world. He is quite right. All too often in this House I have the sad task of making statements about
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the gravest possible conflicts in many different parts of the world. But central to the United Kingdom's international policies, it is the Government's aim to build the will and the capacity of countries and civil societies to resolve their disputes non-violently.
Within the United Kingdom development co-operation programmes the Government aim to prevent conflicts through contributing to the longer-term goals of democratisation, the promotion of the rule of law, good government, social cohesion and respect for human rights. We do this in a number of different ways and in many different countries. It is always important to look at those countries as individual countries and to work with the people in those countries who wish to go ahead on conflict resolution.
I am extremely glad that we have had the opportunity today to debate the achievements of South Africa's Truth and Reconciliation Commission. Although at times controversial, the commission has played an important role in South Africa's transition. We have sought as a government to give human rights a greater prominence. Within that context, we welcome the contribution of the Truth and Reconciliation Commission to developing a human rights culture. We will continue to support the South African Government's efforts to meet the political, economic and social challenges which face them.
As the right reverend Prelate reminded us, the efforts of Archbishop Tutu, his colleagues and all those who have co-operated with the commission have made it easier for South Africans to turn the page of history and look to their common future. Whether other countries which are torn apart by conflict are able also to turn that page will be a matter of leadership, integrity, forgiveness and courage. The means will owe much to the individual customs and cultures of those countries, but like the noble Baroness, Lady Nicholson, I agree that the lessons of the South African experience may well have a resonance and a relevance to many other peoples and many other countries around the world.
7.40 p.m.
Baroness Nicholson of Winterbourne: My Lords, when I was fortunate enough to have the opportunity of placing this Motion before your Lordships, I was in no doubt that noble Lords would make speeches of depth and quality, displaying lifetimes of personal experience around the world. I have not been disappointed. I have listened today to some of the finest speeches I have heard for many years.
Noble Lords have given me conclusions. The TRC is unique. As the noble Lord, Lord Beloff, said, it rests on a unique concatenation of attitudes, beliefs and circumstances, but with other extraordinary dimensions which noble Lords have outlined. As the Minister said, there is also a broad consensus that its resonance may reflect positively in other areas throughout the world. The noble Baroness, Lady Williams of Crosby, mentioned South America, where, as the noble Lord, Lord Moynihan, said, there have been blanket amnesties. Of course, they have been anonymous—perhaps a very different matter from the way in which the Truth and Reconciliation Commission in South Africa works, with complete transparency.

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The right reverend Prelate the Bishop of Southwell referred to one point that was not highlighted throughout the debate in the way in which almost every other matter was fully explored. He quoted the Chilean poet who asked: Who looks after the victims of torture? Who protects the victims?
Of course, the answer comes from Archbishop Tutu in his statement of 24th November, which I heard. Speaking of the Act which enshrined the Truth and Reconciliation Commission he said:
"The Act enjoins that we should be victim friendly … As always, we are here concerned primarily for the victims and survivors … We seek the truth, not for the purposes of prosecution … but for the purpose of seeking to re-integrate people into our society".
That work is very painful personally for Archbishop Tutu and for the commissioners. I wrote my first letter to Archbishop Tutu in 1996 and, after a delay, his secretary, Lavinia Brown, wrote back saying that he and the other commissioners were in the first round of hearing of the violations of human rights and they were in such personal pain that they could barely articulate on other matters. Perhaps the pursuit of justice (which, as the noble Lord, Lord Beloff, reminded us, is the overarching goal) has to be matched with the implementation by each and every one of us of every United Nations human right for human beings with all the humility we can create in daily life.
Indeed, a member of the human rights violation committee of the Truth and Reconciliation Commission, Pumla Gobodo Mandikizela, commented:
"interpersonal contacts … ultimately are the best way to break down stereotypes and antagonisms … The issue of reconciliation should at least be addressed in every home and every boardroom and hall of power".
I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Commonwealth Development Corporation
7.45 p.m.
Lord Lucas Lord Lucas rose to ask Her Majesty's Government what are their plans regarding the Commonwealth Development Corporation.
The noble Lord said: My Lords, I am grateful to all noble Lords who have put down their names to speak on this Unstarred Question. I see that I am to be followed by three old stagers who know a great deal more about the Commonwealth Development Corporation than I do, so I shall not start my speech by going into long details about what it is. To the extent that we hope to hear information today, we hope to hear it from the noble Lord, Lord Whitty. We are all looking forward to that, so I shall keep my speech brief and merely point out a few matters on which I hope that the noble Lord will be able to enlighten us.
Looking at the Commonwealth Development Corporation, it seems to me that it is very hard for anybody in government—in governments back down the ages—to take responsibility for its existence. It is an
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extraordinary and wonderful beast when you get to know it. We are grateful to this Government for having picked it up off the floor and polished it. Suddenly, we discover that we are in possession of a unique organisation with enormous potential for doing good in the world, particularly now that the Cold War has ended and commerce and capitalism of various varieties are spreading and succeeding. We are greatly encouraged by what the Government have said about turning it into a public/private partnership. We very much support what they are doing in that regard—to the extent that we understand it. I hope that the noble Lord, Lord Whitty, will be able to improve our understanding considerably because although we have the concept of a public/private partnership, what it means is a mystery to us.
I shall ask a lot of questions. Indeed, I hope that the noble Lord, Lord Whitty, will consider most of my comments to be questions even if I do not put question marks at the end of every statement. I am sure that he will not be able to answer them all today, but I hope that he will write to me in due course to cover those points which he feels that he has not covered today.
My overall question is how the Government see the strategic role of the Commonwealth Development Corporation. How do they see it fitting in with the Department for International Development in providing a continuum of support to developing countries? How do they justify the term "public/private partnership"? What is CDC to do which a private company could not? Apart from the obvious few petty restrictions on what it can do and how it should behave which might he applied equally to any private company, what is it about the concept of a public/private partnership which is so unique and which marks it out from a mere privatisation? And, when that is established, will that understanding of CDC's role inform the Government's actions when they come to roll out CDC into the private sector or half into the private sector? Will the yardstick against which the financing structure and the governing structure and other aspects of CDC are to be judged be that that role should be central to the Government's thinking? I hope that we shall see that it is, but as yet we languish in confusion.
Turning to some particular aspects, do the Government envisage that CDC and DflD will work together in an active partnership? Indeed, if it is not to be an active partnership, DfID will have the role of passive investor with a bit of government oversight and we are really looking at a privatisation. I hope that we are looking at something that is much more active. If it is more active, how do the Government see it working? For example, are there to he projects in which CDC provides the equity to help industries off the ground and DfID is alongside to provide education, training and infrastructure, or perhaps is upfront providing pilot studies? Is that the kind of future that the Government envisage for the partnership between CDC and DfID?
I turn to objectives. What objectives do the Government envisage for CDC? How will they be set, maintained and monitored? How will they evolve? I understand from what has been said that one objective is the concentration of CDC on poor countries. I am sure

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that that is something with which we can all agree as a concept, but how will the list be set and changed? Who will be in charge of making sure that the list is kept up to date? What procedures do the Government envisage for taking a country off that list or forbidding CDC from making further investments in it?
Will CDC have objectives related to female employment, labour rights, technology transfer, poverty elimination and social responsibility? Are those the levels of objectives that the Government envisage setting for CDC, or will they be much looser, relaxed and general than that?
How do the Government see the future of the governmental aspect of CDC? One of the very attractive aspects of CDC at the moment is that it is pretty well corruption-free, because anyone who works with CDC knows that it is associated with the British Government and tends not to try it on. It also has the attraction for third country governments of probably being take-over free because there is no mechanism by which a corporate raider can come in and asset strip it. I believe that that is a very important aspect of the present set-up of CDC.
The governmental connection also provides the governments of other countries with a means of voicing concern or discontent with what CDC may be doing in a particular country. It provides them with a channel through the normal diplomatic route to express concern and receive a response. The link with government strengthens CDC's ability to ensure that it gets fair play in its investments and it is not done down by some local change in the law or local politics. There is always a relationship with the Government in the background to ensure that CDC is treated fairly.
All of those appear to me to be valuable aspects of the present arrangement. How do the Government envisage maintaining, monitoring and enforcing, where that is relevant, those aspects of CDC's qualities in the new world of public-private partnership? What part in that will be played by the constitution of CDC's board and the way that that is selected? Do the Government yet have any ideas on how that will work?
I turn to financing. Tony Blair said words to the effect that CDC would have substantial extra funds to invest each year in development as a result of the changes envisaged. Are those words which the noble Lord, Lord Whitty, is prepared to repeat today? If so, can he enlighten us on what "extra" means? What is the base level against which this commitment to "extra" is to be judged? Further, am I right in understanding that the future of CDC will be to concentrate largely on making equity investments? Does the noble Lord agree that to a large extent the previous government picked the plums out of CDC's existing equity portfolio? Therefore, in looking at how CDC is to be financed in future does the noble Lord agree that it will be perhaps seven or 10 years before it reaches a point where its equity portfolio is capable of generating sufficient cash inflow to finance its continuing investments?
Does the noble Lord share my understanding that the words uttered by Tony Blair—which I hope will be repeated today by the noble Lord—imply that CDC will
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be set up in a way that gives it certainty of funding, at least as to its base level of costs and investments, and it will know where to go to obtain the funds that it needs to make the additional investment which the Prime Minister has said it will be able to do?
One can look at two obvious secure sources. If CDC is left with its existing debt investment intact and ungeared that portfolio can be used to generate funds in a predictable way in the next seven or 10 years. If CDC is given partly-paid shares that will give the corporation certainty, but to drop below that level of certainty will call into question the Government's commitment to make sure that CDC has extra funds. It would be interesting to know what financing routes the Government are considering for CDC. On top of the base level of funds the CDC has already had considerable success in launching investment funds of its own. One hopes that they will continue but they cannot be relied upon for the base investment. Nor can it rely on borrowings. There is no asset structure in CDC other than its loan portfolio that can support borrowings.
Equity investments, particularly start-up or relatively young ones, cannot support a substantial portfolio of debt. If CDC is to be floated and the idea is that it should run share issues every other year to finance its continuing investment that is a most unsound prospect. If the Government have that in mind, does it mean that they envisage their interest being diluted considerably below the 40 per cent. initial shareholding in order to allow CDC to achieve that financing? If the price of that financing becomes necessarily low because of market conditions at the time, will the Government avoid the exercise of veto on CDC raising money on terms that they consider temporarily unsatisfactory?
I am getting into too much detail. Perhaps the noble Lord will enlighten me by spelling out the principles on which CDC is to be financed so that all my worries about the detail disappear and can wait for the Bill. I hope that we do not have to wait long for the Bill. Can the noble Lord, Lord Whitty, provide me with some comfort in that regard? I hope to hear that it has been leaping the hurdles in the Cabinet committees and is firmly on the stocks for next year. If not, I should like to hear the noble Lord's confirmation that the Chancellor will make good the shortfall which would otherwise occur in DfID's budget and that aid funds will not be cut as a result of the Government's inability to get this legislation into the programme where it should be. I should like to know who, in the absence of BZW, the Government now have as their advisers.
I should be interested to hear the noble Lord's reply to these questions. I hope that we shall learn something today. I am sure that we will learn a great deal more in a few months' time. However, we on these Benches wish the CDC a strong, prosperous and successful future and trust that the Government feel the same.
7.58 p.m.
Lord Acton: My Lords, I am most grateful to the noble Lord, Lord Lucas, for asking this important Question about the Government's plans for the Commonwealth

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Development Corporation. I congratulate the noble Lord on his speech, which contained more questions than any speech, that I have ever heard in your Lordships' House.
The Attlee government originally founded the CDC in 1948 as the Colonial Development Corporation, with a mandate to assist the economic development of the British dependent territories. Today, although the Commonwealth Development Corporation is empowered by statute to operate in any developing country, 70 per cent. of its investments are in the Commonwealth. The CDC has £1·6 billion invested in 404 projects in 54 of the world's poorest countries. In 1997 the corporation managed 33 businesses in 16 countries. Those businesses employed 40,000 people directly and, allowing for families and ancillary services, supported nearly 1 million people all told.
In addition, the CDC has a network of 27 overseas offices. They are responsible for developing new business and managing existing investments. The offices are staffed by experienced professionals—half recruited locally and half in the UK. Mention must also be made of the CDC's 14 capital investment funds.
The corporation in 1996 made a pre-tax profit of £97 million. Its return on capital over the years 1994 to 1996 averaged 8·2 per cent. Despite its obvious importance, the CDC has for some time been constrained from significant expansion because it has not been allowed to borrow in the capital markets. The corporation has been entirely self-financing, having to rely on profit flow and the sale of existing investments to finance new investments.
With that background, on 22nd October last year the Prime Minister announced that the CDC would become a public-private partnership. He underlined the corporation's contribution to promoting economic development in areas of great need such as sub-Saharan Africa and South Asia. However, he emphasised that the corporation was an under-utilised asset. He announced that legislation would be required to allow private investment in the CDC, while the Government would retain a substantial minority holding.
The Prime Minister promised that the money raised from the sale would be ploughed back into the international development programme. The kernel of his speech was that that new partnership would allow the CDC to borrow on the capital markets. It would give the corporation substantial extra funds each year to invest in development.
On 27th November, Mr. Roy Reynolds, chief executive of the CDC, issued a statement on the CDC's future. He pointed out that the Government would retain a substantial minority holding together with a golden share. He stressed that the corporation's board and management welcomed the proposals, and that:
"CDC's ability to contribute as a long-term commercial investor supporting economic development will be significantly improved by this decision".
In October, following the Prime Minister's announcement, the CDC started to raise its profile in the City by holding a successful investment conference for fund managers, invited to come from London to Edinburgh for the occasion.
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From the point of view of ethically minded potential investors, the ethical aspect of the CDC is obviously important. Some time ago the corporation codified its environmental guidelines. Currently, the board has commissioned a study to produce a document to formalise its social policies and procedures. Subjects for consideration include human rights, resettlement, rights of minority groups, gender issues, linkage with the community, impact on rich and poor groups, social mobility, welfare services, health and safety, and many others. The study should be ready in a few months.
Clearly, turning the CDC into a public-private partnership will require a great deal of financial work. Among many considerations, the size of the Government's shareholding has to be worked out. The value of the shares to be sold has to be calculated, and just how much the corporation will be allowed to borrow has to be decided.
The CDC and the Department for International Development are working on the financial and legal aspects at the moment. I wonder whether things have reached a stage—I shall not ask as many questions as my noble friend Lord Lucas, as I think I should call him on this occasion—when my noble friend the Minister can give any indication as to these matters. I am particularly keen to learn what amounts of money might become available for the development programme.
In answer to a Written Question on 28th January, my right honourable friend the Secretary of State for International Development indicated that she hoped to bring forward legislation to create the new public-private partnership for the CDC during the next Session of Parliament, if parliamentary time permitted. I know full well that my noble friend the Minister cannot say what will be in the gracious Speech in the autumn, but I echo the noble Lord, Lord Lucas: I strongly support my right honourable friend and strongly urge that the new CDC legislation be foreshadowed in the gracious Speech. If that is achieved, the sale of the majority of shares in the CDC to the private sector should take place at least by 2000.
Delay of another year would be far from helpful. The corporation would find itself in a sort of limbo. Potential investors might start to think that the public-private partnership had taken place in 1997, at the time of the Prime Minister's speech, and be surprised when the shares actually came on to the market in, say, 2001. CDC staff morale might well sag. I am very much in favour of the new proposals for the CDC. I urge that legislation be brought forward as soon as possible.
8.5 p.m.
Viscount Waverley: My Lords, I welcome the proposal to permit access by CDC to private sector funds through public and private sector co-operation and note that that is part of the Government's initiative for the Commonwealth following the recent Commonwealth Heads of Government meeting, but practically speaking the need for privatisation has arisen from the inability to borrow funds on the open market, restraining the organisation from maximising on its investment programmes.

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In addition, the redirection of the organisation's own investments, away from governmental and parastatal clients and towards the private sector in developing countries, suggests that it is incongruous for the organisation to remain a government-owned vehicle.
In addition, in the spirit of a win/win situation, the Secretary of State for International Development has an incentive to support the sale of 60 per cent. of the organisation not least to bolster her department's funds. I want to stress the unique role of CDC and ask the Minister tonight to ensure that future ownership and structure retain the following advantages. First, it operates solely in the poorer developing countries. Secondly, it is trusted by governments overseas because of its association with the UK government and stands for creating financially viable development which is economically sound. That relationship makes governments comfortable with the activities of CDC knowing that it behaves both ethically and responsibly. That is especially important, for example, with regard to privatisations. The target government can be confident that CDC will act in that country's interests and include plans to have nationals participate in the to-be privatised enterprise.
Thirdly, it has a network of offices maintaining close touch with overseas governments and the local business community. Fourthly, it has a staff that is skilled in the investigation, financing and management of projects in developing countries.
Those are all most worthy, but while there are a number of ways to achieve the Government's objectives, I believe that we need to ask ourselves the following: will the private sector consider holding an equity stake in the organisation unless financially attractive, particularly when the Government continue to hold a significant amount of equity plus a possible golden share in the organisation? To what extent will the Government's approach inevitably drive the organisation into making safe, high-return investments and in doing so move it out of its traditional role of development-orientated business?
The organisation has in the past few years been achieving financial targets similar to those of the IFC and has been able to do that without having to satisfy a market-driven return to its own shareholder, the Government. These targets may not be sufficient for a private equity partner.
That brings me on to a point which I believe to be important. Although profit is important to the CDC on one side, from a development point, being profitable at 8 per cent. of capital employed creates a sufficiently sustainable business. There are many who believe that this is, however, a low return for commercial investors and that if the CDC is to move towards a greater equity component in its investment portfolio it will be under pressure to improve returns, with the bottom line needing to be improved.
I believe that we need two things: shareholders who will sympathise with the CDC's development aims, but somehow not to restrict corporate shareholders and yet retain the profit level at around the 8 per cent. mark. Would the Government undertake to offer the shares, or
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at least have substantive discussions with like-minded bodies such as the African and Caribbean development banks, together with such institutions as the Caisse de Developpement of France? They share the CDC's objectives and would make understanding partners.
I offer my final remark with a degree of sensitivity as I have friends who work in the CDC. I am aware that the CDC is owed considerable moneys from the state of Cameroon to the tune of £50 million to £60 million. Clearly, any sale with that recouped would add value to the company. It is fair to say that the CDC has tried every trick in the book to be paid, hut without success. I believe that attention should be paid to this and that the timing of any sale should coincide with a successful resolution of this matter. On that point, when is the sale to be and when will Parliament be allocating time for the required legislation?
8.11 p.m.
Lord Watson of Invergowrie: My Lords, the noble Lord, Lord Lucas, said, and I paraphrase, that the Government have taken the CDC off the ground and are polishing it for a bright new future. That is true in terms of the information which we have thus far. It is appropriate, because a Labour Government founded the CDC almost half a century ago. It was founded with the aim of channelling desperately needed investment to the world's poorest countries. Tragically, many remain among the poorest.
Today, the CDC manages investments worth more than £1·5 billion. They are extremely important and stand to be influential in helping to alleviate world poverty. Much of that money is spent in countries which are still among the poorest in the world. It is appropriate that about two-thirds of that investment is active within the Commonwealth. The Commonwealth is vastly different today than it was half a century ago, and we should not lose sight of the fact that the links which remain, and were clearly seen in Edinburgh in October to be strong, are used to ensure that not in a paternalistic sense but in a genuine sense of partnership the United Kingdom seeks to assist those corners of the Commonwealth which still require our assistance.
During the past half century much has changed in the world of finance. Constraints on public sector borrowing restrict the ability of the CDC to attract sufficient capital to act as effectively as it might. The public-private partnership offered by the Government and outlined in the Prime Minister's speech last October offers the best means of allowing the CDC to achieve the necessary financing to continue to operate effectively.
I welcome the golden share, which I hope will match the suggested 40 per cent. level. It will ensure that the DfID, the new government department, which I welcome, retains sufficient influence to ensure that the new partnership respects the need for ethical considerations to be placed at the forefront of the CDC's investment. That point was mentioned by previous speakers and it cannot be overstressed.
The ethical trading and investment agendas are gaining in importance. They draw in many people who in the past would not have become involved in political

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activities. These days, many people decide against joining political parties but instead enthusiastically join single issue groups, charities, aid and campaigning organisations. It is appropriate that they should do so, but often it is in the desire to ensure an ethical basis for what they are doing and becoming involved in. That is understandable and is to be welcomed. That ethos fits neatly with the ethical foreign policy outlined by the Foreign Secretary in the early days of the Government.
People increasingly want reassurance that the money they invest, whether it be directly into companies or indirectly through pension funds, should actively benefit the people in the countries in which the money is being invested. The new deal for the CDC presents those who regard themselves or want to be seen as ethical investors with a real opportunity to place their money with confidence in an organisation committed to ensuring ethical and socially responsible investment in the poorest countries of the world.
Another example of the CDC's philosophy is illustrated in its attempts to develop a new code of core business principles and values. That should be central to the new public-private partnership within the CDC. It recognises that it is not only developmentally sound but also makes good business sense to have a socially responsible code of business conduct.
I know that in such debates it is appropriate to ask questions, and I wish to conclude by asking my noble friend to address two issues. I mentioned ethical investment, and make no apology for repeating it. I encourage my noble friend to outline the procedures which the CDC and the Government will put in place to ensure that they encourage socially responsible investment which benefits the poor.
Secondly, how will the Department for International Development benefit from the proposal? We have received assurances that the proceeds gained from the sale of equity will be ploughed back into the development programme. I hope that my noble friend will be able to comment on that because, as the CDC moves into the second half of its first century, it is important to have reassurance that it can do so with confidence under the proposals which we have heard outlined. I echo the hopes of other noble Lords that there will be legislation at an early date.
8.17 p.m.
Lord Redesdale: My Lords, I, too, thank the noble Lord, Lord Lucas, for initiating the debate. He gave the Minister warning that he would ask a vast number of questions. Perhaps I, too, should warn the Minister that I have a number of questions. However, a few years ago I was told by a noble friend to ask only two questions because more would not be answered. With the leave of the Minister, I will outline the two questions that I wish him to answer in particular.
The privatisation of the CDC comes two or three years later than I was expecting. The party of the noble Lord, Lord Lucas, legislated on the Crown Agents rather than the Commonwealth Development Corporation, and I found that surprising. It is now the Labour Government
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who are bringing about the privatisation. I hope to confirm my party's position on the far Left of British politics by opposing a privatisation, as I did in respect of the Port of Tyne Authority. However, this privatisation is to be welcomed. If the legislation is handled properly, it has no adverse effects which can be seen and it has many advantages. The advantages are mainly concerned with allowing the CDC to expand its work; for example, the Commonwealth Africa Investment Fund. That fund is particularly welcome and is pumping money into sub-Saharan Africa.
The CDC is an unusual company. To see that one only need take a quick look at the accounts and reports, which I saw the Minister glancing at earlier. As was remarked to me recently, company accounts are usually taken up and the first couple of pages scanned before one goes to the back to see what the chief executive is paid. I found this report to be slightly different. If anybody wishes to know on which page the chief executive's salary is, it can be found on page 68. But I was much more impressed with the first few pages of the report which outlined the fundamental philosophy of the CDC. I was especially interested to note that there is a committee on the board of the CDC which looks specifically at the issue of development and how company policy should be directed in that area.
The CDC is unusual in that it operates in areas which investment companies often avoid. It acts in developing and high-risk countries. It does that because of its unusual structure, which is supported by the Government. It is given a form of stability based on a large degree of knowledge gained from many years' experience.
Its work in sub-Saharan Africa is particularly welcome in view of the fact that very little private investment flows into that area. In the White Paper, a particularly interesting graph showed the growth of private investment as the great hope of development. But in the case of sub-Saharan Africa, there was a flat line just above zero and in some cases it was difficult to distinguish it from the bottom line.
That is where the CDC is most helpful. It acts as a catalyst, drawing investment into those areas which would not normally attract it. And it does so in a way which is realistic. The noble Viscount, Lord Waverley, mentioned an 8 per cent. return. That is quite a low rate of return in a high-risk market. Private investment will be prepared to invest in such a market because, rather than acting as an obstacle to investment, government support of the CDC will bring essential stability and credibility to that organisation. I hope that that will bring in funds.
Moreover, the CDC is expanding its range of activities. It is well versed in agriculture, but I was interested to hear that it is looking also at moving into mining and tourism. The mining aspect is particularly interesting in view of the inherent problems which are associated with mineral extraction.
I now move on to my vast list of questions, and I apologise for that. The questions do not have any political Machiavellian instinct about them. I believe that they will be answered when the legislation is

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brought forward. The Prime Minister mentioned back in October, as the noble Lord, Lord Acton, pointed out, that the CDC is to be privatised. The Minister, Clare Short, made a statement to that effect. There were rumours at the time—I do not know the foundation for them—that the staff read about that privatisation only in the Financial Times. Why was there so much haste? I believe that parliamentary time will not be found for that legislation in this Session of Parliament, and that may be the case until 1999. I understand that that may be due to other pieces of legislation being brought forward. But it seems unfortunate that there was such haste then when now there is to be a delay.
At that time a value for the CDC was put at about £1·4 billion, with an estimated value on privatisation of £500 million being available to the DfID. I wonder where those figures come from, because, looking at the hooks, they seem to be quite crude estimations.
I should like to know also to what extent the Government's golden share will operate. I hope that the Government will be prepared to keep as much of the share in the CDC as is practical, because it would help the credibility of the CDC to have that safe backing. It would reduce the political risk and so bring forward the idea that private investors will take part.
I should like some assurance—and this is my second question—that the £500 million or thereabouts, whatever is realised from the privatisation, will go to the Department for International Development. Obviously that will not solve the funding crisis of the DOD, nor reverse the cuts over the long term because it is a one-off investment. But that money would be extremely valuable to the department. I hope the Minister can give an assurance that during the time before privatisation takes place that will not be whittled down.
This privatisation will be far from straightforward and will not be like the privatisations that we have had in the past. I suspect that there will not be any small investor element. It is more likely to be institutional investors taking part. The CDC will change fundamentally. It will change from being an organisation which has dealt mostly with debt and a small amount of equity to being a company which is far more interested in equity. But I hope that the very character of the CDC will not be lost.
The noble Lord, Lord Watson of Invergowrie, mentioned the fact that ethical funds are gaining a degree of prominence. That is not just because of the moral implications although I believe that even small investors will invest in moral funds. Rather it is because in the long term there will not be the implications of pollution and short-termism which can lead to problems in the long term that many other funds might face.
I hope also that the Government can make a commitment that, although the CDC must make a profit, it will remain focused largely on Commonwealth countries; that it should remain focused quite clearly on the poorest countries. It has an excellent record in that field. Although I do not believe that under privatisation there is any need for it to remain strictly bound within the Commonwealth—there are many poor countries
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which could gain from the CDC's knowledge—I hope that sub-Saharan Africa will attract very large parts of the investment.
I hope also that the knowledge and experience which have been gained by the CDC, especially in relation to training its executives to handle funds which are based on development, can somehow be spread throughout the private sector. I hope that the Minister can make some commitment as regards the nature of the CDC, and that its focus on development can be maintained.
8.28 p.m.
Lord Whitty: My Lords, this has been a very useful, albeit short, debate. I am grateful for the degree of consensus achieved, at least on the principle. I shall endeavour to answer some of the questions that have been raised but I hope that noble Lords will recognise that, to some extent, it is too early for us to give answers to all the questions that have been raised, in particular by the noble Lord, Lord Lucas. In addition, estimates have been bandied about on which it would not be sensible for me to comment.
Before I deal with some of the issues that have been raised, perhaps I ought to put the whole concept of the CDC in a wider context. The new Government are clearly and firmly committed to the new international development strategy. Our objective is to halve the proportion of people living in poverty by the year 2015. Those policies were set out in a White Paper published last November. In order to do so, poorer countries will need to achieve much higher rates of economic growth in order to meet the targets for poverty reduction, but growth must be in a form which embraces the poor, conserves the environment and allows the poor to secure new income-earning opportunities. Obviously that includes increased levels of official development assistance in order to deliver those poverty reduction goals.
However, in addition to development assistance, increased flows of private investment will be needed for those poorer countries, especially of Africa and South Asia. That is primarily what the change in the status of the CDC is about. Additional private capital must be mobilised if the world is to stand a chance of moving away from the current unacceptably high levels of poverty. As various speakers, especially the noble Lord, Lord Redesdale, pointed out, the poorest countries in the world are receiving only a very small proportion of total private foreign direct investment. The least developed countries receive under 2 per cent. of all the private capital flows to developing countries. That means an insignificant amount of total global flows. Indeed, as the noble Lord, Lord Redesdale, said, sub-Saharan Africa in particular is unfavoured by that process.
Therefore, mobilising more finance to invest in the private sector of the poor countries is a clear objective for the department. It is also important that private investors should not have to put up with either low levels of profit or subsidised returns. There is a whole range of opportunities for commercial and sustainable investment in the poorer countries. Increasing the amount of long-term investment in viable businesses in

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those countries is good for development. It will also significantly enhance the livelihood opportunities of the poor. However, there are also commercial returns to be had.
I am grateful to my noble friend Lord Acton and others, for outlining both the history and the current achievements of the CDC. In effect, it is currently the main instrument of Her Majesty's Government for mobilising private finance and other finance into the poorest countries. But, as the Prime Minister said when announcing the proposed public/private partnership, the CDC is very much an under-utilised asset: it could do significantly more. The Government's plans for the Commonwealth Development Corporation are to create a new dynamic public/private partnership with the Government retaining a substantial minority holding; a partnership that will provide leadership as an ethical and socially responsible investor in poorer countries and a partnership that will catalyse new investment for sustainable business.
Therefore, the objectives are clear. The Government are doing this because the environment in which the CDC operates is constantly changing. In many of the poorer countries economic reform is taking place and the private sector is growing. There are probably more opportunities today than ever before. The CDC is exceptionally well placed with its historic record to identify new opportunities and to invest in those countries. It is better placed than almost any other financial institution, traditional or new, in seeking to invest in developing countries. Indeed, its wide network of offices on the ground and its strong track record have already been mentioned. To enable it to fulfil its full potential and to make a greater contribution to development, we want to bring in more private capital. By offering private investors an involvement in a clearly defined and stable development partnership, it is intended to establish the partnership to raise private capital in ways which do not impinge upon the public sector borrowing requirement.
So how much more can the CDC do? The introduction of private capital should be a unique opportunity for private investors to gain a new exposure to pre-emerging markets. With access to private capital the CDC will be able to do more. At present, the CDC invests about £300 million from self-generated revenue. It is perhaps too early to say by how much the CDC could grow, but we see substantial potential to build upon CDC's existing strengths.
Those strengths lie in the CDC's close understanding of business in poorer countries. The new partnership will emphasise continuity and build on the corporation's current business focus. Indeed, many of the questions about the balance of CDC's profile relate to that. The CDC currently makes 30 per cent. of all new investments in sub-Saharan Africa and over 70 per cent. of investments in the poorest countries of the world. Broadly speaking, we would aim to continue with that balance.
The CDC operates in a range of different sectors. Agri-business has always been one of its strengths and still represents one-third of its investments.
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Infrastructure is also important, with about 25 per cent. of its total portfolio being in infrastructure projects. The CDC also has expertise in the commercial and manufacturing sectors and also increasingly in the mining, oil and gas industries. The corporation has also expanded its country and regional fund management business. During last year, two new funds under the Commonwealth Private Investment Initiative were launched—one for South Asia and a smaller fund for the Pacific Region to add to the CDC's pre-existing fund for Africa.
The CDC has for some time been refining its business strategy in line with the new opportunities. In particular, it is shifting more away from simply making loans towards offering more equity. Equity is a scarce resource in many of these countries and has the potential to catalyse more investment. The CDC is currently required to make at least 25 per cent. of its investment in equity and this will increase. The CDC's office network and knowledge and skills base put it in a leading position to find and manage equity investments.
Under the new arrangement, as now, it is important to consider the framework in which the CDC carries out its business. As the noble Lord, Lord Lucas, and others have said, the CDC already has a philosophy: it will provide leadership as an ethical and socially responsible investor in its new manifestation. As my noble friend Lord Acton and the noble Viscount, Lord Waverley, pointed out, the corporation is already working on developing its code of core business values in that ethical context. Like many other national and international businesses, both private and public, the CDC recognises that it is not only developmentally sound but also that it makes the strongest business sense to have a socially responsible code of business conduct. That relates to many of the questions raised by the noble Lord, Lord Lucas.
In making new investments, the board will continue to seek to ensure that the positive social impact outweighs any negative effects and that ways to tackle the negative impacts of investment have been addressed. The CDC will continue carefully to consider the impact of investments on local communities. In managing its businesses, the CDC will provide guidelines on minimum standards for a range of issues—indeed, that relates to questions raised by several noble Lords this evening—such as housing, education and health and safety as regards its workforce and the environment. We believe that that approach will not only enhance the impact of all investments of the CDC, but also make the company an attractive proposition for the kind of ethical investors to which my noble friend Lord Watson referred.
As to the form of the new partnership, I should tell noble Lords that we shall be creating a new public-private institution. First and foremost, the new partnership must reflect a genuine and lasting relationship between government and the private sector. Therefore, the department will retain a substantial minority interest in the new company. I believe that I was asked indirectly why we want to keep the 40 per cent., or thereabouts, stake in the corporation. The general view is that the CDC would have much to

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gain from the continued endorsement of government. I believe that the noble Lord, Lord Lucas, referred to that fact. For its part, the department has done much to build the CDC over the years and the retained stake would allow it to share in the success of that partnership.
The continued involvement of Her Majesty's Government will also enable the CDC to provide its private sector partners and overseas governments with continued and increased comfort. The Government's involvement will add weight to an organisation operating in countries in which the traditional financial sector is small.
In general response to the point raised by the noble Lord, Lord Lucas, the balance between the public and the private areas will be reflected in the way in which the whole structure of the company is geared, including the board. This has been referred to as a straightforward, simple privatisation. I wish to modify that concept. Of course it is a privatisation in one sense but the motives behind it are not the same as in the case of many privatisations in the past. Our concern is not so much the return on the equity sales that will be involved but rather the ability to use that to extend access to additional funds. This new institution will lead the way in gaining access to funds in pre-emerging markets. To ensure that it does so, the Government will make a long-term commitment to its place in the new partnership. Substantial extra funds will arise from that access to the market. Clearly, the CDC will operate within a framework agreed with the Government, but within that it will optimise its return. It should he attractive to investors of all kinds. There will be a return on its own equity. As my noble friend Lord Acton said, there will be borrowings and there may well be additional equity issues at some future date. Those will be decisions for the future.
However, the framework will need to recognise the ground rules right from the start. That clarity is important not least because it will prevent any concern from private investors about potential hidden interference by Government. The aim is to set up a firm and agreed framework; not for frequent, day-to-day interventions by the department. The framework will be drafted so as to ensure that the CDC remains focused on the poorer countries, as the noble Lord, Lord Redesdale, requested. It will continue as a leader in ethical investments.
As regards the detailed figures of the financial structure, I think noble Lords will understand that it would not be sensible for me to comment on either the figures or the precise way in which the balance sheet will be restructured. However, it will be restructured with a substantial equity base so as to enable it to develop its portfolio over time by a mixture of internally self-generated funds and additional borrowing. We would expect it to attract interest from the private sector in the emerging and pre-emerging markets and from those concerned with ethical and sustainable investment in poorer countries. The creation of the partnership will allow the CDC to continue to be financed as it is now, that is, mainly through self-generated revenue as well.
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The CDC will continue to mobilise funds from management in respect of the way in which the new funds were set up last year.
A number of noble Lords while applauding the objective have queried the timetable. I was not clear whether the noble Lord, Lord Redesdale, was complaining about haste last October. That was the start of a long and detailed process of assessment. We are still receiving advice and guidance on that assessment. The noble Lord, Lord Lucas, asked about our current advisers. The advisers now are Credit Suisse First Boston who have replaced BZW, as the noble Lord will be aware. Those advisers continue to make a number of assessments on the detailed preparation. The timing of this will depend on our getting all of that right but also on the busy parliamentary timetable. However, the Government are determined to ensure that we can legislate at the earliest possible opportunity. Noble Lords must not believe everything they read in the newspapers. The Government's programme for the next Session has not been determined and will not be determined until we are much closer to the next Queen's Speech. However, when we have this matter right, we are determined to legislate at the earliest possible opportunity.
Active partnership involves not only the structure of a company or an organisation, but also active co-operation on the ground. We shall build on existing relationships. The DfID is a partner with the CDC in a number of equity funds in Africa which target smaller businesses. The department will of course have to maintain a level playing field with other businesses who may benefit from joint working. The partnership will continue to create more Opportunities for the CDC and the department to join forces in the creation and implementation of projects of all kinds. The DfID can certainly benefit from the CDC's understanding of and approaches to private sector development. The department is particularly keen to work with the CDC and others in new public/private projects for infrastructure in the poorer countries. In some cases we may as a department also consider asking the CDC to manage funds which are targeted at small and micro businesses. In this way the aid programme of the DfID can be leveraged with the CDC's commercial funds to create sustainable local businesses.
My noble friend Lord Watson asked how the DfID will benefit. In addition to those advantages of working on the ground, the department will also benefit from the ability to realise part of its existing investment in CDC and from the retained interest in the partnership. It is, of course, too early to say how much the CDC is worth. Ultimately the market will decide. But in making the announcement about the partnership last October—and in response to the noble Lord, Lord Redesdale—I make it clear that what the Prime Minister said at that time still stands; namely, that any funds raised from the sale can be retained by the department and used in its work for the eradication of poverty. That remains the commitment. I think that I have answered most of the points raised. On the point raised by the noble Viscount,

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Lord Waverley, on the particular difficulties with Cameroon, I shall be happy to look into that but I cannot give the noble Viscount the answer tonight.
The new CDC partnership is creating a new being. It is the first public/private partnership of its kind and in designing the partnership we are breaking new ground both in terms of development policy and in terms of the relationship between government and the private sector. It is not a straightforward exercise, as noble Lords have recognised. However, there is an exciting opportunity to demonstrate that the public and private sectors can work together for the common goal of investing and creating wealth in poor countries in a way which will benefit
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poor people. We are confident that the new partnership will make a significant contribution to long-term sustainable development. The Prime Minister's announcement in October to create the partnership was widely applauded not only in this country but also by the leaders of developing countries in anticipation of the wide benefits it will bring. I believe those benefits will arise and I am grateful for the support of noble Lords tonight.

Fossil Fuel Levy Bill [H.L.]
Returned from the Commons agreed to.
House adjourned at fifteen minutes before nine o'clock.