Lords Sitting of 18 May 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 Bristol.

Art Market: VAT and Droit de Suite
Lord Pearson of Rannochasked Her Majesty's Government:
Further to the debate on 10th December 1997 and the Written Answer by Lord Simon of Highbury on 8th April (WA 147), whether they believe that they can successfully argue against the European Union's proposed imposition of increased VAT and droit de suite tax on the British international art market.
Lord Haskel: My Lords, the noble Lord raises two issues: VAT, and droit de suite. Regarding VAT, the European Commission is committed to re-examining this year the impact of the seventh Value Added Tax Directive on the competitiveness of the Community art market compared with third countries' art markets. The conclusions are due to be reported to the Council of Ministers by the end of the year. The United Kingdom will be actively involved in that review to ensure that the special position of the British art market will be properly represented.
Negotiations on the Commission's proposal to harmonise droit de suite still have some way to go. We shall continue to focus on the need to maintain and improve the international competitiveness of the Community art market in relation to third country markets. The proposal is subject to qualified majority voting. We are actively seeking the support of other member states to defeat it.
Lord Pearson of Rannoch: My Lords, I thank the Minister for that rather less than confident reply. Bearing in mind that we are considering a hugely important British industry, it does not give one a lot of faith in the Government's new charm offensive in Brussels.
First, can the Minister confirm that our problems in this case, as in so many others, are caused by our powerlessness to stand up to the qualified majority voting system of the European single market, which does not respect our unique global economic interests?
Secondly, can the Minister confirm that the European Commission has so far refused to produce a cost-benefit analysis of these crazy and destructive plans?
Lord Haskel: My Lords, I can confirm that the Commission has not yet produced a cost-benefit analysis.
As regards qualified majority voting, in order to block the proposal in the Council of Ministers, we would need 26 out of a total of 87 votes. We have 10. The
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Netherlands and Ireland, which are also opposed to the proposal, have eight votes between them. That leaves a shortfall of eight. Should the Council adopt a common position, another possibility would be for the European Parliament to reject that position by an absolute majority.
Lord Jenkins of Putney: My Lords, is the Minister aware that the European Foundation and, if I understood my noble friend correctly, the Government have got it wrong about droit de suite? Droit de suite is an excellent institution. It has developed well. It benefits the artist, not the fat cats. That may be one reason why the fat cat dealers oppose it. However, so far as concerns the artist it is working well in several civilised European countries, and even in California.
Under those circumstances, will the Government reconsider their attitude to droit de suite? The previous Labour Government intended to introduce it, and, but for my premature departure as Arts Minister, it would have been introduced 10 years ago or more.
Lord Haskel: My Lords, I shall not ask my noble friend to list what he calls the civilised countries. However, the Government seek to help artists in other ways. Funds are distributed by the Arts Council. We set up the lottery funded Endowment for Science, Technology and the Arts. The Government are committed to encouraging links between business and the arts. The national heritage pairing scheme is a strong force in forging such links. We encourage a wide range of imaginative and valuable partnerships between the private sector and the arts. The Government think that that is of far more value than droit de suite.
Lord Strabolgi: My Lords, in contrast to the view expressed by my noble friend Lord Jenkins, is my noble friend aware that droit de suite will result in many art sales being diverted from London, not to Paris but to Geneva or New York, with the consequent loss of millions of pounds in revenue and thousands of jobs not only in this country but in the Community as a whole?
Lord Haskel: My Lords, the Government are aware of the points made by my noble friend. That is why we seek to have the rules changed.
Baroness Rawlings: My Lords, have the Government succeeded in linking the review of the seventh VAT directive with a droit de suite impact study? Will they agree, as the noble Lord, Lord Strabolgi, said, that, unless that is done, further sales will be it driven out of the UK to the US and Switzerland?
Lord Haskel: Yes, my Lords, the Government have tried to carry out a study as to what the effect would be. A study by the Department of Trade and Industry indicated that, if all works eligible for the right were transferred abroad, British dealers and auctioneers would lose fees of up to £68 million per annum. And up to 5,000 jobs could be affected. That is a worst-case

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scenario. On the other hand, if only non-EU originated trade were lost, the losses would amount to some £17 million and 1,300 jobs.
Lord Stoddart of Swindon: My Lords, is my noble friend aware that the figures he has just given appear rather modest compared with the advice that I have received; namely, that 10,000 businesses may well be involved, and a possible 40,000 jobs which attract (if I may put it this way) high-class art visitors to this country? Will my noble friend explain how it is that we are continually informed that the European Union has no jurisdiction over British taxes, yet we find the Union trying to impose VAT?
Lord Haskel: My Lords, droit de suite is not a tax. While VAT is a tax, it is a question of harmonising VAT throughout Europe. I am afraid that my noble friend's figures bear no relationship to those in the study carried out by the Department of Trade and Industry which I gave in reply to a previous question.

Museums and Galleries: Admission Charges
2.45 p.m.
The Earl of Clancartyasked Her Majesty's Government:
Whether they will allow funding to be made available to those national museums and galleries which charge admission to their core collections in order to ensure that they and all national museums have free entry to their core collections at all times.
Lord McIntosh of Haringey: My Lords, it is a matter for the trustees of each institution to decide whether to charge for admission to their collections. Assistance is being provided for both those national museums and galleries which charge for admission and those that do not. The Heritage Lottery Fund has increased its museums and galleries access fund to £7 million, which is available for all museums and galleries across the UK, and those national museums and galleries which charge for admission may apply to this fund. Additionally, a £2 million challenge fund has been created which will maintain free admission during 1998–99 at the National Gallery, the National Portrait Gallery, the Tate Gallery and the Wallace Collection, and £1 million is being held in reserve for the British Museum to maintain free admission pending the outcome of our departmental spending review. This includes a fundamental review of the whole museums and galleries sector. The review will conclude shortly and an announcement will be made in the summer.
The Earl of Clancarty: My Lords, I thank the Minister for that reply. Will he admit that, with two national museums—the Walker Art Gallery and the National Museums of Scotland—introducing charges in the past 12 months, and as yet none made free, the Government's overall record so far on this matter is not
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good? Will the Minister give the House some idea of the criteria by which funds were awarded in the Budget to non-charging, but not to charging, museums? Does the Minister recognise that, generally speaking, those museums that charge would opt to lift the charges were they to be provided with funds to enable them to do so?
Lord McIntosh of Haringey: My Lords, I am afraid that I did not hear the name of the first museum to which the noble Earl referred. Regarding the National Museums of Scotland, comparable funds are allocated to Scotland under the Barnett formula. I am safe in saying that because my noble friend is not present.
In response to the noble Earl's second question, the Heritage Lottery Fund is finalising its guidance for the access fund. However, it is likely to support such projects as temporary and touring exhibitions; audience development, including events or marketing aimed at groups which do not visit currently; transport to museums; and mobile museums. Whether or not they receive additional money from the access fund, museum trustees still have to make their own decisions about charging.
Baroness Trumpington: My Lords, where do cathedrals sit in the picture as regards admission charges? I believe that some cathedrals do charge admission where there is what might be called a national collection. Would it be possible to have a millennium project involving free admission to all cathedrals?
Lord McIntosh of Haringey: My Lords. I hesitate to tread in the delicate area of the relationship between Church and state. I think I am safe in saying that it would be possible for churches and cathedrals to make applications under millennium funding.
The Earl of Carlisle: My Lords, is the Minister aware that the 1998 UK Visitor Attraction Survey, published today, indicates that over a five-year period attendance at cultural attractions for which there was a charge fell by over 1.1 per cent. and attendance at non-charging attractions rose by 4.1 per cent? In view of those statistics, which I believe to be accurate, will the Minister and his department revise the Answer that he gave to the noble Earl, Lord Clancarty?
Lord McIntosh of Haringey: My Lords, I have no reason to disbelieve the figures quoted by the noble Earl, although he is ahead of me in knowing what has been published today. I do not think that those modest differences would justify revision of my Answer. We have preserved free access to a considerable number of museums and galleries and are providing extra funding to those which charge.
Lord Jenkins of Putney: My Lords, does my noble friend agree that charging for admission and receiving government funding should be regarded as alternatives and museums should be able to choose one or the other?
Lord McIntosh of Haringey: My Lords, my noble friend's proposition would break the basis of my previous answers. It is for the trustees to make their own decisions. It is, of course, for the Government to make such contribution to museums and galleries as is possible within spending limits.
Lord Skidelsky: My Lords, I note what the Minister says about preserving access to some collections. Does he not admit that, when in opposition, Labour promised to preserve free access to all national collections but that since it has been in government it has reneged on that promise by setting up a spending review dealing with general matters of access, in addition to free access, and by making ad hoc grants to particular collections through raiding National Lottery money, all because it realised that it had rashly made a promise which it could not fulfil?
Lord McIntosh of Haringey: My Lords, no, I do not agree that that is what we said before the election. We said that access would be a cornerstone of our cultural policy and that young people, unemployed people and pensioners should not be unable to enjoy our national treasures. But we thought then, and we think now, that access is a good deal more than admission charges, important though they are.
Lord McNally: My Lords, when Ministers decide on allocation of public money to museums, is any thought given to rationalisation of the pattern of museums in this country to prevent overspending on administration and other charges?
Lord McIntosh of Haringey: Yes, my Lords. This is one of the subjects of our departmental spending review, to which I referred, the results of which will be announced in the summer. We are thinking more in terms of rationalisation of collections, by agreement with the trustees concerned, but if the noble Lord has any more radical thoughts I am sure that we would listen to them.
Lord Annan: My Lords, following on the question raised by the noble Baroness, Lady Trumpington, I hope that there would be no attempt, for example, to stop King's College, Cambridge, charging for admission to the chapel. The roof of the chapel, which is leaded, is melting after four centuries of sunshine and will have to be replaced, at enormous cost. I very much hope that there will be no kind of interference, as the money is needed very badly.
Lord McIntosh of Haringey: My Lords, I refused to be tempted into the delicate area of relationships between Church and state; even more I refuse to be tempted into the delicate area of the relationship between state and not only the University of Cambridge but individual colleges of the University of Cambridge—or indeed into issues of global warming, to which the noble Lord, Lord Annan, appears to be alluding. No, my Lords, we have no power, nor is it our intention, to intervene.

UK Business: Mentoring Services
2.54 p.m.
Lord Randall of St. Budeauxasked Her Majesty's Government:
What plans they have to encourage the development of mentoring services for new small businesses.
Lord Haskel: My Lords, the Government believe that mentoring can play a useful part in improving the competitiveness of UK business. Together with the DTI and private sector support, mentoring and small and medium enterprise group networking is being piloted through Business Links in the form of the Business Bridge programme. Mentoring also takes place in business clubs and other networks, and early indications are that the impact of Business Bridge on small and medium size enterprises is encouraging. Perhaps I may take this opportunity to thank those experienced businessmen who give their time so generously to these schemes.
Lord Randall of St. Budeaux: My Lords, I thank my noble friend for that Answer. Does he not agree that experience from the Prince's Trust and other organisations shows enormous benefits to small businesses in terms of both their productivity and their survival? Does he not agree that the Government should get moving and go beyond pilot schemes and encourage the establishment of universal mentoring services in the United Kingdom? In providing such services, should the Government not give serious consideration to exploiting the large pool of experience to he found in business people?
Lord Haskel: My Lords, my noble friend makes a very good point at the end of his question, and I think he makes it in an appropriate place. There is already a good deal of local mentoring activity within the business support community involving retired people working with fledgling businesses. Yes, the Prince's Youth Business Trust uses a wide range of local people to act as business advisers, or mentors, many of whom are retired. There are, as well, business angels, whom one could perhaps describe as mentors with money. They are often retired business people. I see the Government's role as helping to facilitate such good practice rather than setting up a new national scheme, which might adversely affect the flexibility or focus of existing local activity.
Lord Mason of Barnsley: My Lords, is my noble friend aware that a national mentoring service exists within the Prince's Youth Business Trust? That is why the PYBT is so successful. Mentors and advisers have been established for the past 11 years. Every time the Prince's Youth Business Trust launches a new business, that business has an adviser or a mentor attached to it. That is why 65 per cent. of the businesses that have beer, launched are still trading after more than three years. Soon the PYBT will be linked to the Government under the New Deal and all that experience will be available to the Government.
Lord Haskel: My Lords, I thank my noble friend for his comment. I agree with him entirely. A depressingly high percentage of small businesses fail to survive for more than three years, but, as my noble friend said, the percentage of businesses operating under the Prince's Youth Business Trust which survive for more than three years is considerably higher.
Baroness Miller of Hendon: My Lords, can the Minister tell us what advice the Government would give to these mentoring services, organisations or retired business people to help them to advise the many small family businesses in this country, particularly in the retail area, which have built their success on the help of the family and which now, because the Government are refusing to exempt spouses, families and so on, from the national minimum wage will face bankruptcy rather than having the support and success they have had in the past?
Lord Haskel: My Lords, I do not agree with the noble Baroness. I believe that the national minimum wage will help small businesses, including small family businesses. I believe they will find that the introduction of the national minimum wage will bring their operations on to a more businesslike basis.
Lord Weatherill: My Lords, as a trustee of the Prince's Youth Business Trust, I thank the noble Lords, Lord Randall, and Lord Mason, for mentioning the PYBT. It may be of interest to the House to know that these businesses are set up for an average of £2,500, which is infinitely less than the cost of keeping a person on the unemployment register.
Lord Haskel: My Lords, the Government are well aware of the success of the Prince's Youth Business Trust in establishing businesses on a very small amount of money. We congratulate the trust on its work.
Lord Peyton of Yeovil: My Lords, I thought I heard the noble Lord say that he thought the national minimum wage would help small businesses. Will he be kind enough to shed a little light on that and say how he thinks it will happen?
Lord Haskel: My Lords, I had in mind the fact that in many cases small businesses do not invest in new machinery and new technology because they can pay people much lower wages. If employers pay a better wage, investment in the company is often increased and the prosperity of the business increases.
Lord Marsh: My Lords, will the Minister elucidate on that response? Does he mean that the higher the level of the minimum wage, the more efficient small businesses will become?
Lord Haskel: My Lords, I mean that if the minimum wage is at a reasonable level, firms will be encouraged to invest.
Lord Waddington: My Lords, is the noble Lord saying that if an employer has to pay more in wages, he will shed labour and go for new technology, thus being able to operate with fewer employees?
Lord Haskel: My Lords, I am afraid that that is the way of business today. Increased productivity often means more investment and fewer people.
Lord Davies of Coity: My Lords, does my noble friend agree that, with the introduction of the national minimum wage, employers who at the moment provide no training for employees will in future do so? That will make the employees more effective and thereby improve the prosperity of the company.
Lord Haskel: My Lords, I thank my noble friend for making that point. I entirely agree with him. He is absolutely right.
Lord Campbell of Alloway: My Lords, can the Minister say, in plain English, what is the meaning of "mentoring services"? If he does not know, how can he answer any of these questions?
Lord Haskel: My Lords, the meaning of "mentoring services" is clear. The idea is that experienced men and women will help small or new businesses to overcome the errors that they themselves made in their earlier experience.

Art Treasures: Retention in UK
3.1 p.m.
Lord Archer of Weston-Super-Mareasked Her Majesty's Government:
Whether they will help to retain exceptional art treasures in this country when national or regional museums or galleries are unable to raise enough funds to match 75 per cent. grants from the heritage lottery fund.
Lord McIntosh of Haringey: My Lords, all applications to the heritage lottery fund require an element of partnership funding to demonstrate support for and commitment to the project. Were the Government to provide that funding, it would undermine the demonstration of that commitment. It would also undermine the existing arm's length relationship between the Government and lottery distributors and would risk breaching the principle of additionality.
The lottery has helped towards the purchase of many works of art and the Government help to keep art treasures in the UK through their funding for national and regional museums and galleries, the export control system and concessionary tax schemes.
Lord Archer of Weston-Super-Mare: My Lords, I thank the Minister for that reply. However, will he agree that there should be exceptions while our nation is going through a period of such glory with its artists and sculptors? Last week we lost Lucian Freud's masterpiece because the Tate Gallery could not, in the time required, put the money together. Will the Government reconsider exceptional circumstances?
Lord McIntosh of Haringey: My Lords, the heritage lottery fund set up rules for itself. One of those rules is that it will not normally consider works of art created in the past 20 years. As the noble Lord will know, the

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Lucian Freud "Large Interior, W11" was painted in 1979. In fact, no approach was made to the heritage lottery fund. As a rule, it does not intervene in the sale of works of art in New York, which is where the Freud picture was sold.
Lord Strabolgi: My Lords, is my noble friend aware that the Sherborne Missal, which has been on extended loan to the British Library, has now been offered in lieu of inheritance tax? Will the Government ensure that what is probably the most important medieval manuscript in the country is retained?
Lord McIntosh of Haringey: My Lords, I too saw the article in The Times last week in relation to the Sherborne Missal and wondered at the illustration shown. I am glad to be able to tell my noble friend that the Secretary of State for Culture, Media and Sport agreed to accept the Missal in lieu of inheritance tax on the estate of the late Duke of Northumberland. Arrangements for transfer to the British Library are in hand.
Lord Quirk: My Lords, will the Minister agree that a general problem with the heritage lottery fund is that good causes are increasingly chasing the funds from a finite number of charities and commercial firms in order to meet the threshold of 25 per cent.? Is not there a case for lowering that 25 per cent. threshold to 15 per cent., or even to 10 per cent., which is currently the target for smaller projects? Even then, as we see with the Handel House Museum, good causes experience great difficulty in raising the money.
Lord McIntosh of Haringey: My Lords, I appreciate the difficulty, though I should point out that the threshold set by other distributors of lottery funds for matching funding is actually higher than the 25 per cent. set by the heritage lottery fund. It is the responsibility of the lottery fund itself to establish its threshold. We would be under considerable criticism, not least from the Opposition Front Bench, if we sought to intervene.
Lord Skidelsky: My Lords, I completely accept the case for matching funding, but am still puzzled by what the Minister said. Is it not the case that the conditions for matching funding have been relaxed in other areas? Should not we aim for some consistency over the whole field? Otherwise, we may give some people a sense of being unfairly treated.
Lord McIntosh of Haringey: My Lords, the requirement for matching funding is not unfair treatment. If there has been any relaxation in other areas, it is nevertheless the case that the heritage lottery fund has a lower threshold for matching funding than some other distributors. It is not a question of unfairness; it is a question of maintaining the demonstration of commitment for support for a project, which is the basis for requiring matching funding. Indeed, that was established by the previous government.
The Earl of Carlisle: My Lords, has the noble Lord's department earmarked those works of art of exceptional
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value to the nation which it does not wish to see leave this country? If so, will the Minister ensure that the list is brought up to date annually?
Lord McIntosh of Haringey: My Lords, I am not aware of any such list and I believe it would be impossible to compile one.
Lord Rowallan: My Lords, with nearly £4 billion outstanding which has not been given out so far on this matched funding scheme of the National Lottery Distribution Fund, cannot exceptions be made where a loan is given for exceptional treasures which can be repaid at a later date?
Lord McIntosh of Haringey: My Lords, the noble Lord and I have been in correspondence on this matter. It is not the case that £4 billion has not been distributed due to lack of matching funding. The £4 billion to which the noble Lord refers is that amount of money, much of which is committed to future projects, which has not been drawn down. We discourage applicants from drawing down the money until they need it.
Lord Annan: My Lords, in response to the noble Earl's question, is the Minister aware that, certainly in the case of the National Gallery, there is a desiderata list?
Lord McIntosh of Haringey: My Lords, I am delighted to hear it. I did not suggest that it was not possible to compile individual lists. I was asked by the noble Earl, Lord Carlisle, whether there was a list for the whole country. I expressed doubt as to whether it was possible to compile such a list or bring it up to date.

Business of the House: Tax Credits (Initial Expenditure) Bill
The Lord Privy Seal (Lord Richard): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That Standing Order 44 (No two stages of a Bill to be taken on one day) be dispensed with on Thursday 21st May to enable the Tax Credits (Initial Expenditure) Bill to be taken through its remaining stages that day.—(Lord Richard.)
On Question, Motion agreed to.

Social Security Bill
3.8 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.
COMMONS AMENDMENTS TO CERTAIN LORDS AMENDMENTS
[The page and line refer to HL Bill 55 as first printed for the Lords.]
LORDS AMENDMENT
64 After Clause 50, insert the following new clause—
CLASS 1 CONTRIBUTIONS
(".—(1) For subsection (1) of section 5 of the Contributions and Benefits Act (earnings limits for Class 1 contributions) there shall be substituted the following subsections—
"(1) For the purposes of this Act there shall for every tax year be—

(a) a lower earnings limit (for primary Class 1 contributions);

(b) an upper earnings limit (for primary Class 1 contributions); and

(c) an earnings threshold (for secondary Class 1 contributions).

(1A) For the tax year 1999–2000, the lower earnings limit (for primary Class 1 contributions) shall be £81.
(1B) For the tax year 2000–2001 and each subsequent tax year, the limits and threshold referred to in subsection (1) above shall be specified for that year by regulations which, in the case of those limits, shall be made in accordance with subsections (2) and (3) below."
(2) For subsection (1) of section 6 of that Act (liability for Class 1 contributions) there shall be substituted the following subsection—
"(1) Where in any tax week earnings are paid to or for the benefit of an earner over the age of 16 in respect of any one employment of his which is employed earner's employment—

(a) a primary Class 1 contribution shall be payable in accordance with this section and section 8 below if the amount paid exceeds the current lower earnings limit (or the prescribed equivalent in the case of earners paid otherwise than weekly); and

(b) a secondary Class 1 contribution shall be payable in accordance with this section and section 9 below if the amount paid exceeds the current earnings threshold (or the prescribed equivalent in the case of earners paid otherwise than weekly)."

(3) For subsections (1) and (2) of section 8 of that Act (calculation of primary Class 1 contributions) there shall be substituted the following subsections—
"(1) Where a primary Class 1 contribution is payable, the amount of that contribution shall he the primary percentage of so much of the earner's earnings paid in the tax week, in respect of the employment in question, as—

(a) exceeds the current lower earnings limit (or the prescribed equivalent); and

(b) does not exceed the current upper earnings limit (or the prescribed equivalent);

but this subsection is subject to regulations under section 6(5) above and sections 116 to 120 below and to section 41 of the Pensions Act (reduced rates of Class 1 contributions for earners in contracted-out employment).
(2) For the purposes of this Act the primary percentage shall be 10 per cent; but the percentage is subject to alteration under sections 143 and 145 of the Administration Act."
(4) For section 9 of that Act there shall be substituted the following section—
"Calculation of secondary Class 1 contributions.
9.—(1) Where a secondary Class 1 contribution is payable, the amount of that contribution shall he the secondary percentage of so much of the earnings paid in the
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tax week, in respect of the employment in question, as exceeds the current earnings threshold (or the prescribed equivalent).
(2) For the purposes of subsection (1) above, the secondary percentage shall be 12.2 per cent; but the percentage is subject to alteration under sections 143 and 145 of the Administration Act.
(3) Subsection (1) above is subject to regulations under section 6(5) above and sections 116 to 120 below and to section 41 of the Pensions Act.").
The Commons agreed to this amendment with the following amendments—
64A Line 4, leave out ("subsections") and insert ("subsection").
64B Leave out lines 12 to 15 and insert ("and those limits and that threshold shall be the amounts—").
Baroness Hollis of Heigham: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 64A to Lords Amendment No. 64. In moving this amendment, I shall speak also to Amendment No. 64B.
These amendments remedy the damage caused by the introduction to Government Amendment No. 64 of changes put forward by noble Lords opposite at Third Reading—changes that I condemned as ill judged, irresponsible and imprudent and that I urged the House to reject. Noble Lords opposite sought to introduce into the Bill a change that my right honourable friend the Chancellor of the Exchequer has said he will make at a later date. But the way they sought to do so would have had extremely damaging effects. They would have removed access to certain contributory benefits for up to 1 million low paid workers, four-fifths of them women. They would have cut future SERPS occupational and personal pensions for millions of others and would have reduced national insurance contribution revenue by approaching £1.5 billion a year without any consideration of whether the financial circumstances were right.
It is not, and never has been, the Government's intention to make this change to the lower earnings limits in April 1999. The Chancellor never said that it was. As he explained, he would not implement the change until accompanying measures were in place to ensure that people did not lose access to contributory benefits as a result. That is why, as I explained to your Lordships at the time, despite the noble Lord's amendment, the Government would not and did not introduce the measure into the Bill.
The other place has now had the debate—at some length—so unnecessarily wished upon them by noble Lords opposite. The result is the amendments before us today, amendments which clearly and unequivocally reject the changes proposed by noble Lords opposite and repair the damage that those changes would otherwise have done to the Government's carefully considered package of proposals for restructuring the national insurance system.
The Government's proposals have been widely welcomed. They will help to make work pay. If the new structure was in place today, each and every employee paying national insurance would pay £1.28 a week less. Our proposals will also encourage employers to create jobs for people moving from welfare into work and they

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will simplify the administration of the scheme for business. The overall effect will be to improve work incentives and make it more attractive to employ those moving from welfare into work. The Government will build further upon these measures in future reforms, but only when the time is right and when the benefit implications have been properly addressed.
Amendments Nos. 64A and 64B clearly show that the other place believes that the Government's approach to the reform of the national insurance system is the right one. The noble Lord opposite said at the time that his prime concern was to allow the other place the debate which it has now had. As a result, I urge the House to support the Government's reforms by agreeing to Amendments Nos. 64A and 64B.
Moved, That the House do agree with the Commons in their Amendment No. 64A to Lords Amendment No. 64.—(Baroness Hollis of Heigham.)
Lord Higgins: My Lords, the noble Baroness said a moment ago that your Lordships had unnecessarily wished upon the Commons the amendments we are now considering. It is often said that the purpose of this noble Chamber is to be a revising Chamber. However, what we did in our amendment was not to ask the Commons to think again but to give it an opportunity for the first time to consider the important issues raised in our debates. It is surely entirely appropriate, even more so than asking the Commons to think again, that your Lordships should have sought to do that. I reject wholeheartedly the noble Baroness's charge that this was in any way irresponsible.
It is, of course, the case, as the noble Baroness rightly pointed out, that the sums of money are considerable. I shall return to that in a moment. The fact is that we asked the other place to look at measures which were widely thought, particularly in the media in reports of Budget day, to have been part of the Budget. Therefore, I regret the fact that the other place was not prepared to accept the amendment which your Lordships put before it; or, indeed, if the other place did not like the exact terms, to amend the amendment.
To some extent, this whole issue turns on timing. I do not wish to weary the House again—we debated the matter at some length at Third Reading—about the way in which the Chancellor of the Exchequer has behaved. It is now clearly on the record that he went before the Treasury Select Committee and in terms said that he had said something in his Budget speech which only a superficial examination demonstrates he did not say. I regret that. It would have been more appropriate simply for him to have apologised and to have explained why the misunderstanding arose. It is widely thought that he used the words he did in the Budget speech to create the impression that he was going to give concessions which he is not at the moment prepared to do. To be absolutely frank, I cannot conceive of any of the Members of your Lordships' House who have previously been Chancellor of the Exchequer behaving in the way in which the present Chancellor of the Exchequer behaved in front of the Treasury Select Committee. However, I leave the matter there and turn to the issues of substance raised by the noble Baroness.
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Timing is, in a sense, the essential part of this issue, which is why we put forward an amendment referring specifically to 1999–2000. If, as appears to be the case, the Chancellor does not propose to go ahead with his original proposal—indeed, he has gone so far now as to have it voted down in the Commons so he himself did not appear to defend it—it would have been perfectly appropriate for the Government to have put down an amendment to the amendment saying that they did not like the dates and that they would change them.
Baroness Hollis of Heigham: My Lords, I am grateful to the noble Lord for giving way. He stated that the Chancellor was not going ahead with his original proposal. I have to say, and it has been said dozens of times, that the Chancellor never made that as an original proposal. The noble Lord should not attribute to the Chancellor words which were not given.
Lord Higgins: My Lords, I may have misunderstood what the noble Baroness has just said. If she is saying that the Government are not at any stage proposing to go ahead with what the Chancellor said in his Budget speech, that would be an interesting statement. However, at all events, it would have been perfectly appropriate for the Government to have changed the dates. The Government did not change the dates and they are not now proposing to accept the amendments in the form in which they were originally tabled.
Why are they not prepared to put dates on what the Chancellor felt appropriate to put forward in his Budget speech? My purpose today is to get an answer from the noble Baroness in that regard. If the Chancellor thought it appropriate to go ahead and mention this—it was very much a central part of the press coverage which he received—it is not inappropriate for us to ask to have a date put upon it. The reality is that we have not had a date put upon it.
The Red Book did not contain the £1.5 billion figure which one would expect. The purpose of the Red Book is to set out the Government's plans for the economy for the following four or five years. Yet we have something here which the Chancellor put in his Budget speech but we have no idea whether it will happen in those five years or at a time beyond the next election. If economists and others are to judge correctly what the Government's position is, the expenditure should be set out in the appropriate place. But that has not happened. We are therefore forced to the conclusion that it will happen in the next Parliament. I hope very much that that will not be the situation. One cannot have a sum of 1.5 billion knocking around in the forecast for the next four or five years without people having some idea in which year this will take place.
The noble Baroness said that we ought to say where we will find the money. Alas, that is not the task of those on this side of the House. If we were on the other side of the House, it would be our task. However, the Chancellor has floated this idea—we are now told that it was no more than an aspiration—without saying where he will find the money in the following years. That has not turned up. We are not clear about the reason for the delay.

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I should say in passing that we reject the argument put forward by the noble Baroness both at Third Reading and again today that our amendment would have the effect which she set out on 1 million low-paid people and so on. The Government themselves made clear that when these proposals are implemented they intend that every employee in the country who has had an income of between £64 and £81 a week will have his position protected. What we are not clear about is the reason for the delay.
There seem to be two obvious reasons. First, the Chancellor does not know where he will get the money from. If that is the case it is appropriate to put that in the Red Book. The second reason is that the Government have not yet thought how to protect the position of those with incomes of between £64 and £81 a week. As the Chancellor took the trouble to mention this specifically in his Budget speech, we are entitled to ask the Minister to give the options for protecting people in this particular group. The impression created at the moment—it is difficult to draw any other conclusion—is that the Government do not have the remotest idea of how to carry out what the Chancellor said in the second part of the controversial paragraph which has now been quoted so often both in your Lordships' House and in the other place.
This is an ideal opportunity for the noble Baroness to clarify the position and to say whether this matter will be delayed until we have the Green Paper on pensions reform. This has become a very movable feast. When these proposals were first put forward after the election we were told that the Green Paper would be published in the early part of this year and then in the middle of the year. The noble Baroness will correct me if I am wrong, but we understand from press reports and leaks, that it will not be until the latter part of the year—perhaps the final quarter—that we shall get the Green Paper on pensions reform. Can she now say when we shall get it and specifically whether the Chancellor's proposals for protecting those earning between £64 and £81 will be included in the Green Paper? If that is not the case, are we to get the news before that or some time yet further in the future?
It is helpful to have this debate this afternoon. We want to move the matter forward. It is an important matter. Therefore, first, when are we now likely to get the proposals which the Chancellor foreshadowed—it was no more than that, although it did not seem that way at the time? Secondly, can the Minister say what the options are for protecting those in the income groups to which I have referred? Finally, can she say when we are likely 'o have the Green Paper? The amendment was entirely appropriate and in no way irresponsible. Indeed, believe we would have been failing in our duty if we had not given the other place the opportunity on a specific amendment to debate this very important issue.
Lord Goodhart: My Lords, the noble Lord, Lord Higgins, was severely critical of the method by which the Government introduced the extremely important changes to national insurance contributions. Those changes were introduced at Report stage in this
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House after the Bill had completed all its stages in the other place. We on these Benches entirely agree with those criticisms. It is not right that matters of such importance should be introduced at Report stage in this House on a Commons Bill, especially when that Bill relates to the raising of money.
At Report and Third Reading I made that view clear on behalf of my party. Therefore, I take the view that the amendment put down by the noble Lord, Lord Higgins, was a useful peg on which to hang a debate at Third Reading. However, I take the view that it was quite wrong to press it to a vote. As the Minister pointed out extremely powerfully in her speech at Third Reading, it will cut Government revenue by £1.5 billion, which is not an appropriate action for this House to take. Even more importantly, the amendment as it stands would deprive those with incomes between £64 and £81 a week of the right to contributory benefits.
The alleged justification for this amendment was the Chancellor of the Exchequer's undertaking in the Budget to raise the threshold for employee contributions, but that is not really sufficient to justify it. I have re-read the Budget speech and press releases which accompanied it. It certainly seems to me that the Chancellor of the Exchequer was ambiguous as to whether those changes were to be introduced in 1999. It is justifiable to criticise the Chancellor on that ground. What he said confused people, if only for a short period of time. But it certainly does not go beyond ambiguity to anything in the nature of an undertaking. It is clear that the Chancellor of the Exchequer never said that he would raise the lower earnings limit for the single person's allowance in 1999.
The amendment of the noble Lord, Lord Higgins, gave rise to a very lengthy debate in the other place: it took some three and a half hours. I have skimmed through it and I must say that I am left with a feeling of some pleasure at not having had to listen to it. The noble Lord's amendment has served its purpose by leading to a full and intelligent debate in this House and to what can only be described as an interminable one in the other place. I believe that it is now time that that amendment is put to sleep and that the Government's amendment be accepted by this House, with the amendments proposed by the Government.
Baroness Hollis of Heigham: My Lords, I thank the noble Lord, Lord Goodhart, for his contribution. Perhaps I may comment very briefly on some of the points made by the noble Lord, Lord Higgins, before inviting the House to accept the amendments made by the other place.
The noble Lord, Lord Higgins, made the point that the amendment served its purpose by giving the Commons the opportunity to debate at some considerable length issues associated with national insurance and LEL which would otherwise be denied to us had this amendment not been passed by this House. That is not true. A range of national insurance amendments went from this House to the other place, but whether they should have gone to that place first is a different issue. There was plenty of opportunity for the other place to discuss national insurance at as great a length and with such degree of

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detail or tedium as it chose to bring to bear. The notion that somehow this House was obliged to offer that hook to the other place was not true at the time and it was not true in the event. It is still a spurious argument for the noble Lord to advance.
Nor is it true that the media thought that, arising from the Chancellor's Budget Statement, the lower earnings limit was going to be introduced in just 11 months' time. The Chancellor never said that at the time. He said that from April 1999 the 2 per cent. entry fee contributions paid by employees on the portion of their earnings up to LEL would be abolished which would lead to the figure of £1.28. The Times the next day said that Gordon Brown had told MPs that his reform of national insurance would put an extra £66 in the pocket of all employees or £1.28 a week, as did the Daily Telegraph. In other words, the Chancellor's own words and those reported by two national newspapers made it very clear that they understood that the Chancellor was addressing the issue of the 2 per cent. entry fee and not the wider issue of the lower earnings limit, knowing perfectly well that that required a whole set of other changes which were not explored in that Budget. There should not have been any of the misunderstanding that the noble Lord, Lord Higgins, appears to have suffered.
Equally, it was clear that the Chancellor was not giving a date when the raising of the lower earnings limit would be introduced. He never intended it to be April 1999. It has not yet been determined when it will be introduced, but only when we believe that the situation is right. It is therefore obvious that there will not be an indication in the Red Book as to the financial consequences flowing from the change because the timing of that has still to be determined.
For the noble Lord to criticise the Chancellor for making a commitment that he did not make and for then not having it in the Red Book, presuming that the commitment had been made, is to criticise him in a back to front way. The Chancellor has a settled intention to raise the lower earnings limit when he believes that the arrangements for contributory benefits are fully in place and that the £1.5 billion implication for the national insurance fund will be met. When he has done that and he is sure that the circumstances are correct, he will introduce that change and not before. Surely, that is the prudent way to behave. As a result, I believe this amendment was irresponsible—
Lord Higgins: My Lords, as regards the amendment, the question was whether the other place had an opportunity to vote on these issues. In a general sense they could have debated it a little but not voted. As regards the Red Book situation, that covers the next four years. If it going to happen in that time, clearly this measure should be included in the calculations, otherwise no one has any idea what the forecast means. Looking at the Red Book now, the only inference is that it is not going to happen in the next few years.
Baroness Hollis of Heigham: My Lords, I suggest that the noble Lord is wrong on both counts. As regards the first, a number of amendments went from this House on national insurance. The other place can debate any issue that it wishes to raise which is relevant to national insurance and by amending our amendments had they chosen to do so. It is not true that it required the noble Lord's amendment in order to discuss this issue. It was not true in this House and nor was it true for the other place. It is not true now that the matter has come back to us again. On three occasions it has not been true so it is unlikely to be true now.
The second point that the noble Lord made was that it was not in the Red Book and therefore there is some assumption that it will not happen in the next four to five years. The noble Lord does not need me to tell him, because he has much greater expertise on this than I would profess to have, that the Red Book outlines a rolling programme. Each and every year there is a new Red Book.
Were the Chancellor to have indicated a date when the financial consequences would have to be addressed he would have already made up his mind about when the changes were to be introduced. If he had not made up his mind he could not possibly indicate in the Red Book the date at which the financial consequences would be experienced by the public finances. When he determines that they will be introduced, that will be reflected in the Red Book for that year, with its rolling programme for the next four years. That is standard procedure and the noble Lord knows it perfectly well. You cannot include in the Red Book the fact that X will happen if you have not decided when X will happen. If you have not decided when X will happen, you cannot put it into the Red Book as a proposal on which all relevant government departments must operate. The noble Lord knows that perfectly well. He is yet again producing a red herring for the House that I would hope the House is not misguided enough to follow.
He finally made a point of asking when the pensions review would take place. We expect to see a pensions Green Paper later this year. At that point, some of these issues will be discussed, although not necessarily the lower earnings limit.
I hope that with that assurance on pensions, the House will be minded to accept the amendments put forward by the other place. I commend the amendment to the House.
On Question, Motion agreed to.
3.30 p.m.
Baroness Hollis of Heigham: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 64B to Lords Amendment No. 64.
Moved, That the House do agree with the Commons in their Amendment No. 64B to Lords Amendment No. 64.—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.
LORDS AMENDMENT
166 Schedule 6, page 80, line 8, at end insert—
(".For subsections (1) and (1A) of section 41 of the Pension Schemes Act 1993 (reduced rates of Class 1 contributions) there shall be substituted the following subsections—
"(1) Subsections (1A) to (1C) apply where—

(a) the earnings paid to or for the benefit of an earner in any tax week are in respect of an employment which is contracted-out employment at the time of the payment, and

(b) the earner's service in the employment is service which qualifies him for a pension provided by a salary related contracted-out scheme;

and in subsections (1A) and (1B) "the relevant part", in relation to those earnings, means so much of those earnings as exceeds the current lower earnings limit but not the current upper earnings limit for that week (or the prescribed equivalents if the earner is paid otherwise than weekly).
(1A) The amount of the primary Class 1 contribution in respect of the relevant part of those earnings ("amount A") shall be reduced by an amount equal to 1.6 per cent of that part.
(1B) The amount of any secondary Class 1 contribution in respect of the earnings ("amount B") shall be reduced by an amount equal to 3 per cent of the relevant part of those earnings ("amount C").
(1C) Where amount C exceeds amount B, the excess shall be set off against the amount which the secondary contributor is liable to pay (under paragraph 3 of Schedule 1 to the Social Security Contributions and Benefits Act 1992) in respect of amount A."
. For subsections (1) and (2) of section 42A of that Act (reduced rates of Class 1 contributions, and rebates) there shall be substituted the following subsections—
"(1) Subsections (2) to (3) apply where—

(a) the earnings paid to or for the benefit of an earner in any tax week are in respect of an employment which is contracted-out employment at the time of the payment, and

(b) the earner's service in the employment is service which qualifies him for a pension provided by a money purchase contracted-out scheme;

and in subsections (2) and (2A) "the relevant part", in relation to those earnings, means so much of those earnings as exceeds the current lower earnings limit but not the current upper earnings limit for that week (or the prescribed equivalents if the earner is paid otherwise than weekly).
(2) The amount of the primary Class 1 contribution in respect of the relevant part of those earnings ("amount A") shall be reduced by an amount equal to the appropriate flat-rate percentage of that part.
(2A) The amount of any secondary Class 1 contribution in respect of the earnings ("amount B") shall be reduced by an amount equal to the appropriate flat-rate percentage of the relevant part of those earnings ("amount C").
(2B) Where amount C exceeds amount B, the excess shall be set off against the amount which the secondary contributor is liable to pay (under paragraph 3 of Schedule 1 to the Social Security Contributions and Benefits Act 1992) in respect of amount A."").
The Commons agreed to this amendment with the following amendment—
166A Line 2, leave out from beginning to ("(reduced") in line 3 and insert—
(". In subsection (2) of section 8 of the Pension Schemes Act 1993 (meaning of "minimum payment" etc.), for the words "section 42A(2)" there shall be substituted the words "section 42A".
. For subsections (1) and (1A) of section 41 of that Act").
Baroness Hollis of Heigham: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 166A to Lords Amendment No. 166.
I shall be extremely brief. This amendment is consequential to the changes made by Lords Amendment No. 166 to Section 42A of the Pension Schemes Act 1993. It clarifies the definition of minimum payment in Section 8(2) of that Act. I commend the acceptance of the amendment.
Moved, That the House do agree with the Commons in their Amendment No. 166A to Lords Amendment No. 166.—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.

Regional Development Agencies Bill
3.32 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): My Lords, I beg to move that this Bill be now read a second time.
Just over a year ago, this Government were elected with a clear mandate to take forward a large number of substantial and far-reaching reforms, including many which will revitalise the way we run our country and its institutions. The electorate agreed with us that it was time to take a fresh look at the way government business is done and at how we involve people in that business and to put matters on a footing more appropriate to the 21st century.
In Scotland and in Wales we have, as promised in our manifesto, embarked upon devolution of powers to a Scottish parliament and a Welsh assembly, responding to demands from the Scottish and Welsh people. In London we are proceeding with our plans for a Greater London assembly and mayor, following the "Yes" vote secured in the London referendum. And in the English regions we are taking a first important step towards decentralising decision taking.
The needs and the interests of England's regions have for many years been neglected, particularly during the 18 years of the previous administration. I should, however, acknowledge one positive step. The previous government established the government offices for the regions, so bringing together for the first time four departments of state in a single regional office. In Opposition we very much welcomed that development. It was a relatively small step towards better organisation of government representation at the regional level, but it has provided us with a foundation on which to build when in government.
Generally, the English regions have not in recent years commanded the attention they so obviously deserve. This Bill is intended as a first step to redressing that balance and giving people in the regions the opportunity to influence their own future in a way that has not previously been possible.
This Bill will provide for regional development agencies (RDAs) to be established in each region of England. Its primary purpose is to give our regions the

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opportunity to bridge the economic deficit which has afflicted them for far too long. RDAs will provide the mechanism to ensure that efforts in the regions to boost skills, promote business excellence and attract new investment will be delivered in a co-ordinated and effective manner, with all interested parties working to agreed and common goals. The Bill fulfils a manifesto commitment which promised that each region would have a development agency of its own to match those that have worked so successfully in Scotland and in Wales since the mid-1970s.
The economic case for RDAs is overwhelming. Most of our regions are performing well below the European average. Indeed, the most recently published statistics from Eurostat—the European Commission's statistical agency—for 1995 show a decline in GDP per capita in every region in England since 1993 compared to the European average. There is now only one region in the whole of the UK which is performing above the EU average. By contrast, in Italy six out of 11 do so; in Germany 11 out of 16.
Much work has already been done in our regions—by local authorities, regional partners and the government offices—to improve regional performance. The problem is that there are often too many disparate organisations delivering economic development in the regions. That leads to confusion, fruitless competition and sometimes duplication of effort. Where people are following a common agenda, this has often been more by good luck than by good judgment. The Government's objective with this Bill is to put in place a framework which builds on the partnership and co-operation which already exist but gives them a clear direction developed through consensus. That is the added value that RDAs will bring.
One striking feature of the past 12 months has been the degree of enthusiasm our proposals have met with in the regions. Our consultation paper, for example, received over 1,500 responses. Throughout England people see in RDAs a real opportunity to improve the fortunes of their regions and recognise the advantages RDAs will bring. The whole process has created its own momentum for regional co-operation and regional partnership, even in regions where traditionally there has been no strong identity. I saw this myself at first-hand when I joined the Eastern region's local government conference earlier this year in Chelmsford which started the process of establishing a voluntary chamber for the Eastern region.
Turning to the Bill itself, the Government's White Paper Building Partnerships for Prosperity published last December set out our proposed agenda for RDAs. The Bill will give them the powers they need to deliver that agenda.
The Government recognise that different regions have different needs. The Bill therefore contains a framework of enabling powers which will allow each RDA to develop its own approach to its unique and individual regional problems and needs.
Clause 1 of the Bill provides for the establishment of an RDA in each of England's nine regions. The areas of the RDAs will correspond to those of the government
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offices for the regions. The administrative boundaries of the government office areas are well established for economic purposes, and we think it makes sense to base the RDAs on them. We decided early on, for reasons of economy of scale, that the north-west would be best served by one RDA.
I know that boundaries have been an issue of concern for some Members of the House. But I am absolutely certain that my right honourable friend the Deputy Prime Minister was right to decide at the outset that we should not be diverted from the main task in hand by disputes endlessly about boundaries. That would serve only to fuel disagreement and rivalries within regions. Our objective is to get people to work together and sometimes they will need to work together, across regional boundaries as well as within them so as to make our regions and our country more competitive.
Clause 2 of the Bill deals with the constitution of RDAs. It provides for between eight and 15 members to be appointed to the boards of the agencies. The Government envisage appointing 12 members to each board. We are looking for high calibre candidates with experience relevant to the RDAs' purposes to serve on boards which will be business-led and which will reflect the broadest possible range of regional interests. In making appointments, we do not propose to stick rigidly to a set composition of sectoral interests on the board; board members will not act as delegates. We are looking for candidates who can bring a range of experience to the board, including with experience and expertise from local government, further and higher education, trade unions and the voluntary sector. As many of your Lordships will be aware, we have made a firm undertaking that at least one member of each RDA board outside London will be someone with rural knowledge and expertise. We have sought nominations from all interested parties in preparing for making these appointments.
Clause 4 sets out the five key purposes of the RDAs: furthering economic development and regeneration; promoting business efficiency, investment and competitiveness; promoting employment; promoting the development and application of skills; and promoting sustainable development. Clause 4 also provides, for the avoidance of doubt, that the purposes of RDAs apply as much in relation to the rural parts of their area as to the non-rural parts.
Clause 5 enables RDAs, with certain restrictions, to do anything which they consider expedient to their purposes.
The Government intend that the functions of RDAs should be wide-ranging. We want RDAs to have a degree of influence and authority in their regions which will enable them to make a real difference to regional economies and regional competitiveness.
The White Paper Building Partnerships for Prosperity set out in detail the functions we propose for RDAs. It is, as I shall briefly outline, a challenging and influential package: RDAs will be responsible, for example, for the development of a strategic framework for the provision of skills training. We want RDAs, working with TECs and other regional partners, to

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ensure that the workforce has the capability to meet the needs of business in the regions. To reinforce this, they will play a part in scrutinising the work of TECs and Business Links with a view to advising government how to improve their performance.
Regional development agencies will be responsible for co-ordinating inward investment in their regions. Government funding for inward investment work will in future be channelled through RDAs. They will advise Ministers on regional selective assistance applications.
Regional development agencies will also become the major bodies responsible for regeneration in the regions. They will inherit the regeneration role of English Partnerships, which has, under the skilful chairmanship of the noble Lord, Lord Walker of Worcester, secured a wide and well deserved reputation for innovative and successful regeneration work, and this will provide RDAs with a firm foundation on which to build. They will also inherit the rural regeneration work of the Rural Development Commission, which I know already is highly valued in our rural areas.
Under Clause 6, which enables Ministers to delegate functions to RDAs, RDAs will be given responsibility for administering the Single Regeneration Budget Challenge Fund.
By bringing together within a single body the separate regeneration programmes of the RDC, English Partnerships and the government offices for the regions, RDAs will be able to provide a better co-ordinated approach to meeting the needs of their regions. They will continue to work with local partnerships, as their predecessor organisations have done.
Clause 7 requires RDAs to formulate and keep under review a regional strategy in relation to their purposes and to have regard to the strategy in exercising their functions. For the first time there will be, in each region, a body responsible for setting a strategic framework for economic decision-taking at the regional level. The strategy will be the first, and most important, task for RDAs.
Much of the remainder of the Bill establishes the legislative framework for governing the activities of RDAs, replicating for the most part the statutory powers and duties of the Urban Regeneration Agency—that is, English Partnerships—in order that RDAs can take on the regeneration role of EP. There are, in addition, provisions for transferring property, rights and liabilities to the regional development agencies in connection with the functions they are to inherit; for example, from EP and from the RDC and the government offices.
Regional development agencies are to be set up in the form of the conventional non-departmental public bodies. They will for the most part be financed from public funds and, in the absence at present of a legitimate, directly elected regional tier of government, they will be accountable to Ministers and to Parliament for their actions in the normal way. But it is important, as we take this first step towards greater regional autonomy, that we make proper provision for RDAs to be responsive to views from within their regions. We have, therefore, made provision in the Bill for scrutiny
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by regional interests of the work of RDAs. The Bill, in Clauses 8 and 18, provides a mechanism for building on the informal structures that local authorities and their regional partners have already taken, or are taking, steps to set up.
Clause 8 enables the Secretary of States to designate a regional chamber as the focus for regional consultation about the work of an RDA; and Clause 18 allows him to direct RDAs to give an account of themselves to regional chambers. Chambers will therefore have a substantial role to play in the work of RDAs and in ensuring that their work reflects the needs and views of the whole region. We are delighted that local authorities in the regions are actively participating in developing chambers.
This is perhaps an appropriate moment to mention a concern that was raised by a number of noble Lords in the context of the Statement on our White Paper last December—that is, the question of planning powers for RDAs. Noble Lords may be aware that the Government, responding to concerns expressed, in particular by local government, announced at the Report stage of the Bill in another place that we would not proceed with our proposal to give RDAs reserve planning powers. It was suggested that these powers were inconsistent with the partnership approach which is at the heart of RDAs. On reflection, the Government agreed with this.
There are one or two specific matters on which I should like to spend a few moments, since I know concerns have been expressed about them. The first is sustainability and the role of the RDAs in achieving it. I have spoken at some length about the need for our regions to be competitive and for the regional partners to improve the economic prospects of their region through attracting more inward investment, through improving business performance and through economic and social regeneration. But we intend that this will be done in a sustainable way.
The Bill provides for sustainable development to be at the heart of the regional development agencies' work. Indeed, we are striking out on a new pathway in this Bill because, for the first time, the purposes of a development agency will require the agency to treat economic, social and environmental considerations with equal regard. An RDA will be required—for example, when it is acting to further the economic development and regeneration of its area—to do so in a way which contributes to the achievement of sustainable development in the United Kingdom.
This is not, I must stress, an optional extra. The effect of the Bill is to require sustainable development to be a factor in all the decisions an RDA makes. The RDAs will promote jobs, growth and competitiveness in our regions—that is their raison d'être—but they must do so in a way which is compatible with safeguarding the environment, and with social progress.
The guidance we intend to give the agencies will be important in making it very clear what we expect of RDAs in this respect. It will be vital that RDAs are clear about how they should go about fulfilling their sustainable development purpose. The Bill provides for us to issue guidance on how they might do this.

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I also want to say a few words about the impact of the Bill on rural areas. The Government believe firmly in opportunity, fairness and prosperity for all, whether they live in the city or the countryside. Rural areas are a key part of the national economy where many people live and work. Our countryside must be both living and working, and we are committed to addressing its own range of problems as much as those of anywhere else.
Regional development agencies will be region-wide bodies, with extensive responsibilities for the development and regeneration of their regions and for promoting the economic well-being of their regions. This means the whole region. They will add value precisely because they will be required to take a coherent and integrated approach to the needs of their regions. This, in the Government's view, can only bring benefits to rural areas and will avoid the risk of rural interests being marginalised in any way.
There are, of course, often very different pressures on our rural areas from those on our urban areas. Indeed, different rural areas face very different pressures. We have said that the guidance we give to RDAs will deal specifically with rural needs and the determination of priorities for rural areas. Government support for rural areas will continue to be reflected in the RDAs' funding. As I have already mentioned, at least one member of each RDA board will be someone with rural knowledge and expertise.
Although RDAs will take over the rural regeneration programmes of the RDC, the Government are committed to retaining a national body for expertise, advice and information on rural matters. On 27th March my right honourable friend the Deputy Prime Minister announced the merger of the Countryside Commission and the Rural Development Commission to form a new champion for rural England and its countryside. It is intended that this merger will be effected under powers in Part II of this Bill. The new body is expected to begin operation in April 1999. Taken together, our proposals for RDAs and a new countryside body will ensure that we understand the particular needs of rural areas, while addressing them within the overall framework for a region as a whole.
I should also like to say a brief word about London. The Government's proposal for a new London development agency was announced in the White Paper on London government. The LDA will have broadly the same powers and functions as the other RDAs. The people of London have voted an overwhelming "Yes" to having their own mayor and assembly. The LDA will be directly accountable to the mayor and will implement the mayor's economic development and regeneration strategy for the capital. As an arm of the Greater London Authority, the LDA will not be established until the mayor and assembly are in place. The LDA's board will be business-led, as with the other RDAs, but it will be appointed by the mayor. In addition, government funds for regeneration, the promotion of inward investment, English partnerships and tourism will be channelled through the mayor.
This Bill has not captured the overwhelming attention of the editors and sub-editors of our national dailies. This is not surprising. Perhaps it is a reflection of the
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neglect of regional interests to which I referred earlier. But I can assure your Lordships that it is a very different story in the regions themselves, where this first but significant step in our regional agenda has been widely and enthusiastically welcomed. Anyone who visits the regions and meets those who have regional interests at heart will know that people welcome the opportunity to shape their own future which RDAs and this Bill will give them. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Baroness Hayman.)
3.50 p.m.
Lord Bowness: My Lords, I thank the Minister for her usual clear explanation of the Bill and its provisions. She will understand that, while we on these Benches share her enthusiasm for prosperity in the regions, we do not necessarily share her enthusiasm for the methods outlined in the Bill to try to achieve it. Our concerns are about whether there is a need for this additional layer of bureaucracy, the effect on local government, the power of the Secretary of State, the rural dimension and how the proposals fit with the Government's intention towards the regions and their proposals for regional government.
Had the Government not climbed down over the planning powers which were originally to be given to regional development agencies, we should have been concentrating on those. Suffice it to say that the withdrawal is welcome, although the fact that an administration committed to open government, the extension and strengthening of local government and the rolling back of the "tide of quangos"—the Prime Minister's words, not mine—should have contemplated giving wide planning powers to centrally appointed, non-elected and locally unaccountable bodies is, to say the least, extraordinary.
Therefore, while we shall not be voting against the Bill, there are nevertheless significant matters of detail upon which it is legitimate for this House to express a view. Is there a need for this additional bureaucracy? A number of questions must be answered. First, will the existence of these bodies attract more investment into England? What is it that leads Ministers to believe that these structures, with the accompanying staffing and administrative costs, will do better at attracting investment into England than in the past?
The Government try to have it both ways. On the one hand, as the Minister has said this afternoon, it says that the measures are necessary because of the state of the regions and their economy. On the other hand, the Government say in the White Paper:
"The cumulative value of foreign direct investment … into the UK has risen from $28 billion in 1975 to over $344 billion in 1996. The UK receives the largest share of [foreign direct investment] in the European Union, including about 40 per cent. of US and Japanese overseas investment.
"In manufacturing [foreign direct investment], accounts for 18 per cent. of employment, 32 per cent. of capital expenditure and 40 per cent. of UK exports. Over the last decade, FDI has not only created over 600,000 jobs but has helped to develop and modernise the industrial base".

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The question must be asked: will not the proliferation of agencies lead to different and competing voices being heard for England? If competition is no bad thing, then why not leave it to the existing local authorities either individually or by ensuring that they have the means to work together to continue the excellent work that many of them are doing irrespective of their political complexion?
If the regions proposed had a clear identity obvious to the people of England—never mind the foreign investor—I would be less worried as it would then be possible for each region to speak with a united voice in the same way as to a great extent it is possible to speak with one voice for Scotland or Wales. As it is, there will be inevitable confusion for foreign investors as they are faced with competing demands for their business from different parts of what to them is the same country. What protection will the Government provide against an auction of benefits between the regions? If the answer is that this is one of the many aspects which is to remain in the hands of the Secretary of State, why set up the structures in the first place?
The Government represent this Bill as a decentralising measure but, while the agencies may be based in the regions, accountability is to be to the Secretary of State and, through him, to Parliament. He is able to control all aspects of the RDA including from the beginning the central selection of the membership. It is not good enough to answer this by the requirements to consult. The RDAs will be central government bodies created, appointed, guided, reporting to and funded by central government grant and consent. From where will the necessary funds come? How much is to be taken from existing programmes and how much from local government under the pretext that certain matters are now being dealt with regionally?
Local government of all political colours has made enormous efforts in the field of economic development. Partnership deals have been struck, new investment has been attracted and regeneration has taken place. What is local government's reward for this? It is to see the primary responsibility taken away and given to a government-appointed quango operating at least in some cases over an area to which some authorities will feel no loyalty. I have no confidence in government denials that this will not be the case. Among the primary objectives of the RDAs are the furtherance of economic development, employment and business investment.
If there is to be a regional view about all this, then clearly the plans for some parts of the region are to be preferred to the plans of another part. The objectives for the area may not be compatible with individual authorities' own plans. Ministers may well believe that this is right but they should not pretend that the proposal does not impinge on local government. It will be said that the RDA is to work in partnership with the local authorities in its area but the decisions will rest with the appointed regional development agency responsible to the Secretary of State. But it is true that all the objectives of the RDAs are matters of legitimate concern to local government.
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The rural dimension to which the Minister has referred—or rather the lack of a clear recognition of it in the Bill—is of great importance. Although it is referred to in the White Paper, the Bill needs to be strengthened to protect the rural dimension. The decision to scrap the Rural Development Commission has already caused a great deal of concern. The RDC has a proven track record in rural affairs and the decision to remove most of its functions and hand them over to the new RDAs, which will be largely urban-based, adds to the crisis of confidence in rural England. We shall want to pursue a number of these matters in Committee including a guarantee on the face of the Bill of rural representation on the RDA boards and an explicit responsibility for RDAs to promote the interests of rural areas.
The Labour Party manifesto said:
"The Conservatives have created a tier of regional government in England through quangoes and government regional offices. Meanwhile local authorities have come together to create a more co-ordinated regional voice. Labour will build upon these developments through the establishment of regional chambers to co-ordinate transport planning, economic development, bids for European funding and land use planning".
Later, in the same section it reads:
"In time we will introduce legislation to allow the people, region by region, to decide in a referendum whether they want directly elected regional government".
The Government are certainly building on the quango and regional office with this Bill. The agencies will be major organisations, answerable to the Secretary of State, with very considerable powers, including the compulsory acquisition of land. In another place, it was suggested that that should not be the subject of criticism because they merely replicated the powers given to the ultimately-to-be-abolished English Partnerships. But its role was limited in scope compared with RDA's which will together cover the whole of England and therefore be capable of exercising those functions over the whole of the country in the area of every local authority.
We should look at the scope of the RDAs as published in the White Paper, a list which is rather more extensive than in the party's manifesto—leadership in developing regional economic strategies, social, physical and economic regeneration, regeneration of rural areas (a reference in the White Paper, not on the face of the Bill), taking a leading role on European Union structural funds, co-ordinating inward investment, providing advice to Ministers on regional selective assistance support, reclamation and preparation of sites facilitating investments, marketing, technology transfer promotion and improvement of the skills of the region. But interestingly enough, the TECs are not to come within the scope of the control of the RDAs. Added as a footnote to the list in the White Paper it states:
"RDAs will also contribute to policies and programmes on Transport; Land use; The environment and sustainable development; Further and Higher education; Crime prevention; Public health; Housing; Tourism; and Culture and sports infrastructure projects".
If I were a local government leader, I should not understand why the Secretary of State's White Paper, Local Democracy and Community Leadership, bothers to have a chapter on councils leading their communities,

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given that in virtually every field of local endeavour, they will be second-guessed by the regional quango which will often be based miles from their community.
I return to that part of the manifesto which spoke of regional chambers and regional government. Your Lordships will know that my party does not favour the division of England into separate regions. But this afternoon we are not discussing my party's policy. We are discussing a major government proposal to establish powerful regional bodies, centrally controlled, exercising important functions, and we are entitled to ask how that proposal fits with other government commitments in their manifesto.
If we do not ask that question, we are enabling the Government to proceed with significant changes to the way in which the regions are governed without being told the whole story. Do the Government believe that the regions, as set out in the schedule, represent the true regions of England? Do they have popular acceptance? The truth is surely that they are based, with one exception—and that is an amalgamation of two government office areas—on the arbitrary boundaries of the Government's own regional offices. It was legitimate to establish those boundaries for the operation of the government offices, but it is not legitimate when trying to create a region which has a genuine community of interest across its whole area. Surely before proceeding, steps should have been taken to try to establish—and I have no doubt it would be difficult—what areas enjoyed a broad consensus that they belonged together.
Certainly if the Government believe that regional identities comparable with those to be found in other parts of the European Union, will spring from the areas specified in the schedule, I fear that they are seriously mistaken. I have no doubt that some of those issues will he raised in Committee, just as they were in another place.
The White Paper speaks of the establishment of voluntary chambers and requires the RDA to "take account of" those views. Presumably at some time in the future, the Government, unless they have changed their mind, will envisage those structures being transferred into statutory chambers and ultimately, regional assemblies.
It is fair to examine the place of local democracy in relation to those proposals. The White Paper expects to draw members of RDAs from a broad range of interests including business, local authorities, the voluntary sector and wider business and employee perspectives. It also speaks of regional chambers being created to provide a regional voice which includes, as well as local councillors, all regional stakeholders. Would a regional assembly retain those unelected elements? If the RDA becomes accountable to an elected assembly, I presume that there would be no role left for the regional chamber. Where, then, is the voice of local government to be heard?
At present, however, not all the areas have voluntary chambers and certainly, when the White Paper was published, where they did exist, they did not necessarily coincide with the proposed regions. Perhaps the Minister will advise the House as to the up-to-date position.
However, it indicates that to start that process without first deciding what are the right areas for the regions is the wrong way to proceed. The Secretary of State has among
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his considerable armoury of powers the right to change areas. I fear that a great deal of initial energy may be spent by some parties seeking to make changes at an early stage. That is inevitable and, I submit, right since communities must feel included and joined with their natural neighbours, otherwise, within the area of an RDA, there is a great danger of divisiveness and alienation, and possible accusations of unfair treatment will abound.
As for the proposal for elected assemblies, the timetable, if it still exists, seems to be somewhat uncertain. But if it does exist, there seems to be a danger that by this Bill, which will establish the RDAs, which will presumably become accountable first to chambers and then to any assembly which is created, the areas of the regions will have been pre-empted.
The Financial Times this morning reported that:
"Ministers intend to recall the Commons regional affairs committee. It could be renamed the English grand committee and may, over time, acquire limited law-making powers.
The committee will be the exclusive preserve of English MPs … The recall of the committee will take place in the next session of parliament, and its first meetings are expected to focus on the planned regional development agencies for England … The cabinet is divided on whether to pursue Labour's commitment to elected assemblies in the English regions. Those who oppose assemblies because there is limited demand for them believe that the regional affairs committee could be an effective alternative".
If that is what is being said, reported and spun out of government offices, the House should be told what is the position when we are debating this important Bill on the establishment of those powerful bodies.
Lastly, the RDA for London is to be a special case. It is to be created by this Bill, but, according to the White Paper on London, the RDA will be appointed by and answerable to the mayor of London. I ask the Minister, as I have before, whether that means that the Greater London Authority is to be the regional assembly for London or whether that is something which comes later. The Bill does not appear to deal with the London position. The White Paper speaks of transitional arrangements. There are none in this Bill. If I have missed them, I apologise. But it appears that we shall be setting up the London agency through this Bill and then need to amend the proposals in relation to it when we have the legislation on the mayor and authority for London.
There are reflected in the responses, which the Government claim to be overwhelmingly in support of their proposals, a number of reservations and comments of concern. Those concerns, the apparent inconsistencies, the unanswered questions and, indeed, the important points of principle are matters which we need to expose, discuss and, if necessary, amend in Committee.
4.8 p.m.
Baroness Hamwee: My Lords, I follow the noble Lord, Lord Bowness, in thanking the Minister for her introduction. That is not the full extent to which I support what he says, and I hope that my tone, as well as my words, will be rather more supportive.
The Liberal Democrats broadly welcome the Bill. We welcome it in part because of the centralisation which we have seen over the past two decades, particularly in

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the 1980s. I have seen that referred to as the fragmentation of the public realm arising from privatisation, the establishment of arm's length agencies and "marketisation"—a terrible word—of public services. Those things are not necessarily bad but they have highlighted the need to improve management at regional level. We also welcome the Bill because, quite simply, we have been losing out in a Europe which organises many of its affairs regionally. We welcome the holistic approach to regional affairs. The jargon term may make this sound no more than a matter of fashion, but there is much criticism of every government when they fail to use the imagination necessary to cross departmental boundaries.
Whether, in practice, the RDAs will meet the tests of devolution and decentralisation, and of common sense breaking through bureaucratic structures, remains to be seen. We would have wished them to have had greater responsibility; for example, for the work of the TECs and Business Links. We are disappointed that the Bill represents only a small step on the road to regional government. The degree of decentralisation may not be as great as has been claimed for the agencies. I use the term "decentralisation" deliberately because I want—indeed, as all of us on these Benches want—to see decentralisation, devolution from central government, not detracting from local government.
I recall how the government offices for the regions were packaged as some form of regional government when they were introduced by the previous government. They were not. Even though we welcomed them, we welcomed them for what they were. They were not a form of regional government. In that period, we were concerned about the remaining central control. I must confess to a degree of concern that central control, or at any rate the scope for central control, can be read into very much of this Bill.
Local government is all too familiar with financial regimes which involve government grants, the Secretary of State's approval of borrowing, with low aggregate limits, and the Secretary of State's determination of financial duties. All these appear in the Bill. That is perhaps fair enough. The RDAs are to be the creatures of central government. As they are not directly democratically accountable, I accept that there is a logic to that type of control. But that control is there and must been seen to be there, as well as being accepted as such.
The other side of the coin is the scope for—perhaps the need for given the retention of central powers—secondary legislation and directions. Again, that is perhaps fair enough, if it is not the RDAs or the regional chambers which are democratically accountable and responsible. However, that degree of central control—the scope for further legislation and directions—reminds us of their true constitutional position. That is pointed up especially in the geographical areas which will make up the RDAs. Both the noble Lord, Lord Bowness, and the Minister referred to them.
The anomalies of the government-designated regions, and in some cases their lack of regional identity, have been much discussed. I do not necessarily argue that the boundaries of the regions should be revised now. I well
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understand the point that the Minister made; namely, that to concentrate on the boundaries would probably destroy any prospect of establishing the agencies for some considerable time. However, any review can only tinker at the margins. It appears that the boundaries can be revised, but not the number of regions. I wonder whether it should need primary legislation to alter the number of RDAs. If there is a review of the regions, then the numbers must be an issue as well as the fine detail of where the boundaries begin and end. It is possible that the European elections, which will be based on the same regions, will give us an opportunity to see whether they truly represent communities. In my view, especially in the south-east, they do not.
I have mentioned some of the financial constraints on RDAs. In some ways their powers are very wide but in others they are very much constrained. For example, unless I have misread the provision, it is beyond my powers of comprehension to understand why the agencies can only report on what the Secretary of State directs them to report on. Coming from a local government background, I must confess to an envy of each agency's ability to do anything which it considers to be "expedient for its purposes". In other words, it will be the agency's view not, I am happy to say, that of the Secretary of State; nor, more interestingly, an objective view. Nevertheless, I look forward with interest to the probability of conflict between the RDAs and the Secretary of State. The latter may consider that the actions of the RDAs are threatening his position. He may say that what they want to do is not "expedient". In any event, it will be their decision. Indeed, this will be a battle worth observing.
I am puzzled by what the Government anticipate. The RDAs can do what they believe to be "expedient" but, specifically, they cannot provide housing. I admit to a certain amount of confusion in that respect. We all know the links between employment—an objective of the Bill and of the agencies—and affordable housing. To exclude this topic, as the Bill does, is a matter that we may like to revisit.
I particularly welcome the Government's acceptance that to have given planning powers to the RDAs would have been quite inappropriate. However, I still wonder whether the regional planning frameworks will be robust enough to deal with the demands which will come from, the RDAs. On Report in another place, the Minister, rightly in my view, spoke of regional planning guidance and the RDAs' strategies being compatible and consistent. She said that the strategies of the RDAs will have to have due regard to regional planning guidance. However, she went on to say that neither would predominate. But surely there is a hierarchy. Is it not the case that regional planning guidance should be informed by, and take account of, the objectives of the RDAs and then do the job of reconciling the competing interests?
One of those interests is sustainability. It is no surprise to me that both previous speakers referred to it. Indeed, I am sure that that will be a topic which features in much of this afternoon's debate. I admit to being baffled by the wording in the Bill which requires each

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RDA to contribute to the achievement of sustainable development,
"where it is relevant to its area to do so".
The Minister said that sustainability will be at the heart of the work of the RDAs and that it is not an optional extra. But that is not what the Bill suggests, or at any rate what it suggests to me. I do not know what possessed the Government to put in that limit or to believe that sustainability would ever not be relevant. Similarly, I do not understand why they think it right to retain that limit against the barrage of attack that we have witnessed. Perhaps the difference is in the interpretation of what is meant by the term "sustainable development". Do the Government envisage that sustainable development is somehow a separate category of development? I would prefer to be assured that all that the RDAs do will be sustainable. By that I mean that it will be sustainable environmentally and socially and that it will not necessarily involve "development" as that word is often understood.
References to rural areas also make me wonder whether the Government are perhaps protesting a little too much. Surely it is axiomatic that the RDAs' purposes apply to rural, as to urban and as to suburban, areas; and, indeed, as the Minister said, to the very varied rural areas. I understand that the politics of the day may have led to an attempt to reassure in this slightly odd fashion. I also understand why a number of rurally focused organisations have concentrated on this clause. To include it almost suggests that what is stated may not be entirely what is meant. I think that, logically, rural areas should not have been referred to because rural concerns are so fundamental. To say that there will be an application to rural areas suggests there may have been doubt that the RDAs would address rural concerns.
Baroness Hayman: My Lords, I thank the noble Baroness for giving way. I follow the tenor of her argument. However, when that doubt has been expressed—as it was when the establishment of the RDAs was announced—it is sometimes necessary to rebut it. I agree it is axiomatic that RDAs must look after the needs of all parts of their regions.
Baroness Hamwee: My Lords, I understand that point. I am perhaps making a philosophical point which concerns more than just this Bill. One wants to see the wording in legislation stand the test of time and not constitute too much of a knee-jerk reaction to current concerns. Further, in addition to rural concerns there are urban concerns. These constitute two sides of the same issue. I have never believed that it is practicable to deal with rural issues without at the same time attending to urban issues and vice-versa.
I think I have made clear my concern that the references to rural matters and to sustainable development are perhaps—it is harsh to say this—understandably regarded as a bit of window dressing. If they were truly thought to be central to the Bill, they would not have had to be superimposed. However, the Government will not win with their words but with their deeds. We shall see how the RDAs perform. No doubt these points will be
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addressed in amendments at later stages of the Bill, together with a number of technical matters relating to property, rights of way and other matters.
One technical but important area concerns the way in which RDAs and regional chambers interrelate and how each operates. Matters of accountability and openness were raised by my honourable friends in another place. On the Hunt Bill I raised similar concerns. I was pleased then that officials referred to forthcoming legislation on freedom of information, even though it had not been enacted. The noble Baroness, Lady Farrington, was much involved with that matter. I hope that freedom of information, openness of meetings and other such matters will be referred to, as they were on that ill-fated Private Member's Bill. I also look forward to gaining a better understanding—perhaps by means of a probing amendment—of how the performance of the RDAs will be assessed. Is the Audit Commission to have a role? Are they to meet performance indicators? What will be published? We would welcome further information on those points.
The Minister referred to London. Like the noble Lord, Lord Bowness, I, too, think that we must expect some further legislation on London. London is a region within the first schedule to the Bill. There will be a Bill in the autumn to deal with London which will immediately amend this legislation. I should be grateful if the Minister could confirm that that will be the case.
I have another question to ask on behalf of my noble friend Lord Rodgers of Quarry Bank. He wonders what the Government have learnt from the experience of the economic planning councils which were established more than 30 years ago. They were formed at about the same stage in the Wilson government as this Government have now reached. I am sure we shall he told that much was learnt and has been incorporated in this measure.
I have mentioned a number of concerns. We hope that in practice these agencies will be truly representative of their time and will reconcile the competing interests of sustainability, development, environmental concerns and social concerns with their important task of economic promotion and regeneration. We wish them well.
4.24 p.m.
The Earl of Lytton: My Lords, I must first declare an interest as a chartered surveyor and landowner. I am president of the Sussex Association of Local Councils. I have put my name forward for membership of the board of the south east regional development agency. I commented in response to the White Paper. However, my views are fundamentally my own. I welcome the Bill.
When I wrote to the Minister in December last, one of the points I raised concerned accountability. This followed previous points I had raised on such matters as national park authority membership. In the Minister's kind response, for which I am grateful, I was given what I shall describe as part of the answer that I was looking for. But neither accountability of the RDA via the Minister nor an obligation towards a regional chamber—I am not quite sure of its composition—seem anything other than a rather indirect approach to the matter. However, I realise

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that that tends to be the way things are done these days. My late father's favourite Swahili term—"desturi bwana" or "standard practice, sir"—comes immediately to mind.
The measure has fuelled much comment from local authorities who could perhaps be forgiven for wanting to see their local democratic base represented in force both at agency and regional chamber levels. There has also been comment from rural interests who fear their position will not be adequately represented as they are inherently in a demographic minority. Representation and accountability inevitably colour the deployment of resources whether one likes it or not. Although I take some comfort from Clause 4(2) which deals with the rural and non-rural balance, commitment to the RDAs' work will to some extent depend on how it is perceived that they maintain that balance. I feel that further guidance ought to be given. A guarantee of one rural RDA seat in each region—if that results in one seat alone—may not be terribly helpful. I am always concerned about guarantees of that kind.
If rural and non-rural areas are to be treated equitably—as indeed they must—for RDA purposes, it will nonetheless be a matter of practicality as to how that works out depending on the prevailing pressures in the region concerned. I foresee difficulties as regards attracting that difficult-to-achieve mix of impartial expertise among the membership that covers urban, rural and indeed suburban facets mentioned by the noble Baroness, Lady Hamwee. That will be a hard mix of disciplines to achieve in an integrated way. But if the mix is not right, the choice of priorities—whether urban, suburban or rural—will not command confidence outside the RDAs even if there is unanimity within them. How is that expertise to knit and to co-operate with the normal diversity of opinion common in local politics? Certain local authorities aspire to some of the economic functions—indeed some carry them out—to be exercised in future by the RDAs. That issue must be addressed.
However, I welcome the clear remit for economic development and the intention to forge partnerships across the urban/rural spectrum. I shall say more about development later. I have crossed out the word "divide" in favour of "spectrum" which I feel is more neutral. I have long thought that there are too many administrative bodies, particularly as regards countryside matters. At the risk of offending some, I hope that there will be a further rendering down of functions performed by a number of different agencies.
For too long local authorities, in terms of their development plans, have implicitly or explicitly maintained that economic factors are not primarily their responsibility. I hope that we now have a clear indication that these economic factors will have to be relevant to planning in the future. If not, I have concerns that local planning authorities will go on claiming that it is none of their business because there is a new, distinct and formal structure for dealing with it as opposed to a rather diffused approach previously. Rural planning guidance and planning policy guidance, as referred to by the noble Baroness, Lady Hamwee, will need to be looked at in that context, and I say that not for the same reasons as those of the noble Baroness when she raised the point. Development is an unfortunate word.
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It denotes building work and substantial physical change. When dealing with rural matters that is by no means what is always wanted. It is, I believe, behind some of the non-development-in-rural-areas mentality that has grown up, but sustainability and Agenda 21 considerations, already referred to, involve reliance on equity at home as well as abroad and, critically, on social and economic as well as environmentally sustainable practices. Deprivation never gave a good economic out-turn, or indeed a good environmental out-turn.
I am not sure that I understand how regional chambers are being brought into being; nor what the RDAs' relationship with them should be in practice, particularly in the light of possible hard decisions having to be made. The chamber, we learn, will be composed of those who have "an interest" in the work of the RDA. It is obviously a very wide definition of potentially qualifying persons, possibly too wide. However, on the whole, I think that the Bill and the proposals to create RDAs should be welcomed. I am concerned that another template of administration may not always fit neatly over current practicalities and it would be disastrous if alienation from economic development initiatives pursued by some very able local authorities in the past was to take place.
I feel passionately that an alternative rural economic strategy is needed beyond what I can only describe as the pious hope of the CAP: more of that later in our last debate today. I will not dwell on that subject now. However, it is all the more important when dealing with severely less favoured rural areas, where environmental policies hold sway, that there is increasingly a severe economic deficit in what supports land use management. If genuine efficiency is to be gained by the new RDAs I would welcome and encourage the Bill and the agencies it sets up. I do not mind what shape or size that efficiency comes in or whether indeed it comes in a uniform-sized package.
The noble Baroness, Lady Hamwee, made a point which struck a chord with me. Economic issues do not stop at the city gates; nor indeed, it should be said, at the village shop. We are inevitably all in this together. If the rural development agencies successfully address that point without having the divisions, or fostering the divisions, of the past it will be a major step forward, and if there is created a long-term strategy in the place of short termism then I give the Bill three cheers.
4.33 p.m.
Lord Dormand of Easington: My Lords, there can be few Bills which have had such a widespread welcome as this one. To receive support from the CBI, from the Country Landowners' Association, the Local Government Association, trade unions and other bodies, while perhaps not unique, is certainly unusual and the Government are to be congratulated on introducing such a valuable and, if I may say so, comprehensive measure.
I was not sure when the noble Lord, Lord Bowness, spoke for his party, whether the Conservative Party agrees in principle with the regional development agencies. It would be nice to know. The noble Lord did say that while he agreed with the objectives he would

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have something to say about the methods of achieving those objectives. Perhaps it is revealing that at this stage we do not have a real clarification of his party's position—
Lord Bowness: My Lords, would the noble Lord give way? I do not want to take up the time of the House, but our position is quite clear. Of course we support the objective of regional prosperity, but we do not believe that the structures in this Bill are an appropriate way of achieving it. We believe its proposals to be centrally controlled, centrally focused and damaging to local government.
Lord Dormand of Easington: My Lords, when the noble Lord says "the methods" is he or his party in favour of a regional development agency? He has not clarified that point. Perhaps I could press him.
Lord Bowness: My Lords, my party is not in favour of the regional development agencies as set out in this Bill. No doubt we could bring forward all kinds of policies, were we sitting on that side of the House, to enhance regional development; but the issue is what is before the House today.
Lord Dormand of Easington: My Lords, I am grateful for that clarification. I have particular pleasure in welcoming it because the Northern Group of Labour MPs, of which I have been an active member since I entered another place, has advocated a northern regional development agency for a number of years. Here we are at long last with a document in front of us—an actual document, which is a Bill setting out the objectives and how to achieve them, which some of us in the north have been shouting about (I do mean shouting) for a considerable time.
However, we must realise that this is only a start. There are no RDAs and so there will be much to learn. The Minister of State recognised that in saying that development of the agencies will evolve—that is the word he used—and I certainly support that view. Of course there are some bodies from which inevitably we can and should learn lessons; indeed my noble friend on the Front Bench mentioned that in passing. There is, not least, the very successful Northern Development Company, which is unique to the country. It consists of representatives of employers, businessmen, trade unions and local government, and is a highly successful partnership. It has been very effective in the four or five years since it was established.
Lessons can and should be learned from the urban development corporations and the new town corporations. Perhaps I might be permitted to say that when I was in another place I had quite a finger in the pie in helping the development of a new town in my constituency and, more recently, I have been deputy chairman of an urban development corporation and remain there until next month. I am very sad that that is soon to come to an end. All of us who have been members of those bodies have learned from the very valuable experience which we have gained over a number of years.
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In this respect the Government proposals in giving the functions of English Partnerships and the Rural Development Commission to the RDAs is wise and sensible, I believe. There has long been the need to integrate urban and rural policies and this Bill provides for the first time the opportunity to achieve that objective. I am very interested to hear that those matters—the integration of urban and rural policies—have already been mentioned several times although we have only had four or five speakers so far.
It is important to realise that RDAs are not only about inward investment, crucial though that is. The northern region, if I can quote it again, has a success story to tell. Some of the nation's biggest and best companies have come to the region, although we must not let that success disguise the fact that hundreds of smaller firms have established themselves and brought thousands of jobs to the north. That must continue, and the RDAs are better placed to do it than were the previous bodies, however successful they have been. My point in mentioning the matter is that the improvement and regeneration of a region's indigenous industry and commerce are at least as important. Much can be done, and RDAs provide the machinery for it.
A crucial part of the internal drive within a region must come from its education and training provision. The whole range of education must make its contribution: further education; adult education; universities; and training and enterprise councils—although some of us feel that an examination of TECs is overdue. Co-ordination between all the branches of education is essential, and RDAs can be a catalyst for promoting it.
As has been mentioned, there will need to be clarification in a number of areas. I give two examples. The first is tourism. In some regions it can be crucial to their well-being. The regional tourist boards will remain but their role in relation to the RDA will have to be spelt out clearly, not least to avoid possible duplication and bureaucracy.
The second example is ad hoc proposals—it is my own phrase. I choose the warmly welcomed decision of the Government to undertake the rehabilitation of the former coalmining areas. I assume that where there are former coalmining areas in RDA areas, the RDAs will make some contribution in that vital work. However, as I have said previously in this House, I hope that the finance to be provided will be ring-fenced. There is obviously a danger that the resources, or part of them, will be subsumed in the larger budget of the RDA. In those circumstances, the finance may lose its effectiveness.
I have given two examples of matters which involve RDAs. But the co-ordination of such areas of activity is fundamental to the work and success of RDAs. That is one of the RDA's principles. It is virtually certain that there will be conflicts involving regional planning and economic development. We are all pleased to see the Government proving once again to be flexible in dealing with regional planning matters. I suggest to the Minister that the resolution of those conflicts is a matter of urgency if the RDAs are to begin effectively.

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Even more important may be the move towards a regional chamber which, as noble Lords know, is a consultative body for the agency. Such consultation will ensure that account is taken not only of different regions but of different local circumstances within a region; it will provide the distinctive nature of RDAs.
I hope that there will be no hesitation in pressing on from the assemblies to elected regional councils where they are shown to be wanted. I stress that because Members of the Opposition are opposed in principle to them. The Labour Government have to make it absolutely clear that that is their objective: that that will be done wherever there is a demand for it. The evidence is there for such a change in the north, the south west and the north west. There will be opposition from the Conservative Party, but I fail to see why it should disagree when the change is to be made gradually and only with the consent of the people in the region. It is a two-stage method.
The financing of the RDAs is of great importance. As time goes on, it may be necessary to change the system. I hope that the block financial allocations made to the Scottish and Welsh development agencies will apply to the English RDAs. There has been criticism for a long time, not least from the northern region, of the advantages that they have given to Scotland, Wales and Northern Ireland. I need hardly say—my noble friend touched on it—that clarification on the distribution of European funds will have to be undertaken as soon as possible.
Before I conclude, I have to make one critical point. The Government are aware of it; it has been made already by some of us in the northern region. I refer to the proposal to make one RDA for the north west which includes Merseyside. That means that Cumbria will not be part of the northern region. I and my northern Labour colleagues are at a loss to know why the Government take that view. While I hesitate to say that it is complete, there is overwhelming support that Cumbria should remain in the northern region. The regional view must surely be paramount in such a decision. I hope that the Government will think again about the proposal. Cumbria has been part of the English standard planning region known as the northern region for the past 25 years—all the time that I have been concerned with regional matters. The new north west region has almost 8 million people. In great contrast, the exclusion of Cumbria from the northern region results in a population figure of just over 2 million. That does not conform with Ministers' statements that the average size of a region should be about 5 million. That calls for an explanation from the Government. I look forward to hearing my noble friend's comments.
Although not of major importance, there was an interesting occurrence recently. The BBC decided to change its well-known regional programme called "Look North" to exclude Cumbria. There were massive protests. They were so strong that the BBC changed its mind about the proposal. That is strong evidence! The concept of a northern region without Cumbria has never
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crossed the mind of northerners, nor perhaps some southerners. The Government must produce some hard evidence for such a change.
I see two principles at the heart of the Bill: first, integration; and, equally important, decentralisation. I believe that the politics and economics of the modern world require both those principles if we are to improve society. I strongly support the Bill.
4.47 p.m.
Lord Wade of Chorlton: My Lords, first, I apologise to the House for being unable to stay until the Minister winds up the debate. I particularly apologise to the noble Lord, Lord Sefton, because I may not be able to listen to the whole of his speech. Tomorrow I lead a delegation of 16 companies to an exhibition in Budapest in Hungary. I almost said Cumbria. The noble Lord, Lord Dormand, reminded me of Cumbria; I shall return to that subject in a moment. I have to fly out this evening. I hope that the House will forgive me.
The Bill is in two parts. First, it seeks to establish a development agency in all the regions of Britain with the purpose of driving forward the economies, creating more economic opportunities and developing growth. Secondly, it seeks to give wide powers to the Secretary of State to mould those agencies as he thinks fit. I support the concept of establishing regional development agencies, and welcome an organisation in each region focused upon the economic needs of the region and the need for growth. Perhaps I may use this opportunity to suggest some issues of which the Secretary of State might take heed in order to help him mould those organisations so that they are most effective in creating their objectives.
My experience and knowledge are based on my activities in the north of England. I support some of the comments made by the noble Lord, Lord Dormand, on the importance of the north of England economy. I have always seen Cumbria as part of the north-west, and have no objections to the Government's proposals. Since I shall refer to my experience in the north-west, I ought to declare some interests. I am chairman of NIMTECH, an organisation focused on developing the economy through the use of technology; chairman of Campus Ventures, an incubation unit for high-tech companies based at Manchester University; and president of the Federation of Economic Development Authorities. FEDA has 100 members of authorities throughout the UK, and is on the whole in favour of the Bill. I am also president of the Cheshire Economic Partnership, to which I shall refer later.
I have always believed that the key issue in achieving all the environmental factors referred to and supplying the right facilities for everybody is economic growth. Jobs, the development of businesses and the creation of wealth are the key elements in achieving anything. This type of organisation brings focus, especially in a region such as the north-west of England—where, as in other regions, there are very varied bodies which sometimes do not work together; their approach to such issues is often disorganised and the timing is different.

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Therefore, I hope that this organisation will provide, as a top priority, a co-ordinated approach to the need for growth throughout the region. Co-ordination is needed in urban and rural policy; the areas have to be seen as one economic entity. The concept of a separate approach to rural areas which seeks to preserve the activities of rural communities is not the key. The key issue in rural communities is the establishment of their economic viability and economic variability, the ability to widen their opportunities and at the same time understand the equal needs of those who want to use rural areas and have the facilities and services that are available in urban areas. The key in creating understanding between rural and urban areas is rural development. It will be an important issue in the future, and I shall refer to it again.
Technology is another key matter which needs to be grasped by any regional development agency. There needs to be far more proactive agreement between the requirements of business and what is provided by universities and technology centres. The gap is still too wide. There is a fear on the part of the small businessman of the intellectual power of the universities, and a complete lack of understanding on the part of many academics of what the businessman needs in order to develop his business and the pressures that he is often under. The establishment of a regional body, particularly in relation to the north-west, provides the means for a better understanding between the needs of business and what universities can provide. We can establish in universities the incubation units that have been of such great benefit at Manchester University. From a very small beginning, businesses can be nurtured through the stages of crisis which they continually hit until they become major, secure organisations. That is a role that we can certainly play.
Later today, this House will debate the report of the EC Committee on Agenda 2000 and how it affects the environment and rural development. In future years we shall see a continuing decline in agriculture as an economic driving force in rural areas. It will remain important, but less so. We have to develop policies for the creation of alternative and viable business units within rural areas to employ those no longer involved in agriculture. During the course of our deliberations in Sub-Committee D, an interesting issue arose in relation to the situation in Germany, where there is a long tradition of part-time farmers having other paid jobs when they are not engaged in farming activities. As agencies develop over the coming years, and as we have closer contact with the policies of Europe, particularly in relation to theses changes, we shall see projects and proposals for programmes—rather like the Objective 1 and Objective 2 programmes made use of in urban areas—to assist the movement in rural areas from present types of economic activity to new and revised types of activity. I see the rural development agencies as the key in creating effective policies to make the best use of money and, most importantly, to create other economic opportunities in rural areas.
I wish to refer briefly to sub-regional groups. In Cheshire, we have established the Cheshire Economic Partnership. That group is in balance with what has happened in Lancashire, Manchester, Merseyside and
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Cumbria. I hope that during our debates on the Bill a better understanding will emerge as to how the Government see the sub-regional groups playing a part in the development of regional policy. They can, and need to, play an important part.
There has been comment on the planning powers of regional development agencies, and the fact that the Government have changed their mind on the degree of planning power that they are to be given. I was very attracted by the original proposals. I have never been happy with existing planning arrangements; they are definitely in favour of minorities and rarely to the benefit of the majority. I hope that the new arrangements will at least bring planning on a regional basis for the main projects for growth, jobs and opportunity and the creation of inward investment, which seem impossible when planning is reduced to a small entity where everybody is against any proposal. You cannot, in the future of a country, a society or community, give more and more to those who want it, unless growth is achieved and is accepted.
I hope that the RDA will become an enabling body, using other organisations for delivery. In that regard I do not understand the need for acquisitions. I do not see why the RDA has to own property or do things. It needs to make sure that other people are encouraged and enabled to do things. That is the best way to use its resources within its region, and to use those bodies which most effectively deliver what the RDA requires.
I have already referred to the use of EU funding. Clearly, that will be a key element. The EU funding that we have received in Greater Manchester and Merseyside has been of enormous benefit. However, I am aware, as are many people in the north-west—as no doubt are the Government—of the enormous difficulty in achieving a uniform approach to how that money should be spent, with the inevitable battles between all the factions that want to draw a portion of it. Again, I hope that the RDA can be much more effective in ensuring that funding is used for its prime purposes and directed far more efficiently than it has been in the past.
I referred to the need for incubation units, and I emphasise that need again. One of the great successes in the United States has been the ability to encourage the setting up of new companies and to treat failure, rather than with contempt, as a means of gaining experience.
If we are to continue to move our economies forward and give people the same level of growth into the next century as they have had in this one, we must continue to see the development of new businesses which will be highly important in creating the kind of products to enable us to compete in the world. One of the main requirements to make all this possible is to have the resources at the right stage to put into companies to make them move forward. I should like to see within a north-west RDA the encouragement of a financial fund to make moneys available on a venture capital basis to small companies. There are many very successful venture capital companies throughout Britain, but they have tended in recent years to look for the easy options, the very large investments, and possibly, like banks, to

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give their money to those who can manage without it. I look for a fund which can be more sympathetic and understanding to the needs of small, start-up businesses, particularly in the high-tech areas which will be so important. We need to encourage the development of new ideas and innovative enthusiasms and look not backward to how things were but forward to how wonderful things will be in the future. I see these agencies as bodies that can help us to do that.
5.1 p.m.
Lord Sefton of Garston: My Lords, I apologise to my noble friend the Minister for the fact that I was not present to hear her opening speech, having been unavoidably detained on personal matters.
I am not very interested in the organisation of RDAs; I am more interested in the net result of our efforts to deal with the problems not just of the regions but of this country. The noble Baroness, Lady Hamwee, and other Members of the House have moved me from my original decision to spend only three minutes speaking in this debate by reminding me of things that have happened in the past.
If I were a Frenchman, I would be able to use a French phrase, but I will say, "Never mind French phrases, I have heard it all before". Twenty years ago I made a speech in this Chamber about whether we would be successful in Europe. I said that, unless we did something about our own country and its economic affairs and began to use all the nation's resources, we would not do very well in Europe. I said that on that day the Financial Times carried a story that it was about to start printing in Frankfurt. No one thought at that stage that there was a threat to the Bank of England's position at the centre of European affairs. But where is it now? Is it not true that the centre of our financial affairs is in Frankfurt? Why is that? I have said before, and will continue to say until I am no longer in this Chamber, that if we look at the national picture we see the highly congested belt in the south east which appears to provide a dam to any developments.
I should like to go back to the time when we did have regional development areas and an organisation. That was referred to by the noble Baroness, Lady Hamwee, in the context of the leader of her party the noble Lord, Lord Rodgers. We had regional economic planning councils, which produced strategies. There is a difference between the regional economic planning councils and the kind of regional development agency proposed in the Bill. The least one can say is that the Bill does not provide a strengthening of the democratic element in our society. My own feelings must be expressed. I am extremely disappointed that the Bill does not go further in strengthening that democratic element. I know we have been promised that in the future things will get better and that there will be a new organisation of a more democratic nature. I am sorry, I have been too long in politics to take the promise of jam tomorrow; I want it now.
The difference between the RDAs proposed in the Bill and the old economic planning councils is that the economic planning councils were part of the Department
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of Economic Affairs, a department established by a government in the teeth of hostility from the Treasury, which wanted to abide by the old rules and which ultimately won the battle to abolish the DEA. That is the fundamental lesson to learn from what is happening to our regions. If one looks at the strategy of those economic planning councils, one sees in them an essence for the re-establishment of unity in our economic affairs. The Opposition Front Bench spokesman said that the Opposition was opposed to the idea of divisiveness on a regional basis. I agree with him; we should not divide the nation on a regional basis. But the nation will divide itself on a regional basis, whether we like it or not. One has only to look at how people are attracted to the south-east.
The North West Economic Planning Council drew up a strategy, which was notified to the DEA in the usual way. The government of the day took note of it, and that is all they did. They drew attention to the necessity of preserving the rural areas and concentrating industrial development in the Mersey belt. I am not talking here just of Liverpool; the Mersey belt started at the River Mersey by Liverpool and went through two towns and into Manchester. The strategy was that that was where development should take place and that proper consideration should be given to the preservation of the rural hinterland on both sides of the belt—a very valuable hinterland in the case of Cheshire.
There was a strategy on transport. The North West Economic Planning Council said that it was wrong, for two reasons, to concentrate our international airport facilities in the south-east. First, it debarred people in the north from taking part in the development of that international traffic and, secondly, it was loading the south-east with inescapable burdens. Nobody took any notice. Let us look at what has happened. For three years people have been battling to demonstrate that there should not be a fifth terminal at Heathrow. Yet there is a possibility at Stansted. We said that, if there were to be a third international airport, it should not be in the south-east but should be further north, perhaps near Birmingham. On balance, the planning council thought that the development should take place at Stansted. Are we happy with what is now going to happen in London? There is no doubt in my mind that, even with a Labour Government, we shall have that fifth terminal at Heathrow.
Let us take another strategy. This is an ironic example. We thought that there should be decentralisation of central government activity. We were not the only planning council or local authority to say that we needed decentralisation of government activity from the south-east and to spread it throughout the country where it could operate efficiently on the basis of modern technology. To give an example, we had a conference with the DEA. We decided to circularise all the businesses in the north-west. The DEA would produce a leaflet and we would produce a leaflet in Manchester. Our leaflet went out in three days; it took the DEA two weeks to publish the same leaflet.
The business of concentrating all the civil servants in the south-east is stupid. Has it changed? Let me give another example. One of the major problems facing

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Members of this House is getting here. It is a terrible journey sometimes. If we come by car, we must not come before nine o'clock.
And what has happened in this very spot? There used to be a car park at the end of Vauxhall Bridge; a nice little wide open space. Then a new phrase crept into our language: "business-led people operate themselves". It was decided to build a new building on the end of Vauxhall Bridge. I went to a seminar given by London Transport and my question to the planners was: "Do you know anything about this building they are going to erect on the car park at the end of Vauxhall Bridge?". They answered, "No. What is that?". I said, "I thought that if you were responsible for the transport undertakings in London, you would know what it is. It is going to affect you because you will have to move people in and out of the building".
The planners knew nothing about it. It is a place that could have been used for business other than generating jobs. Let me give a tip to the new Government. They should look at how MI6 came to be at Vauxhall Bridge Road. As I read it, that site was developed in a purely speculative fashion. The slump occurred and it could not be let. Then, miraculously, MI6—that secret organisation about which nobody is supposed to know—started to adorn the building with Christmas trees to let everybody know what it was.
That is not the important point. The important point is that, if the Government and the Audit Commission look at the situation carefully, they will find that it cost more to alter that building and make it fit for the government department than it cost to buy it. It would have been much better to have gone out of London, but the situation is controlled by the south-east mafia.
That brings me to my closing peroration (as it is called in the best circles); that is, what is the fundamental question at which we should be looking? We have heard a great deal about regional planning bodies and what they should and should not do. I am sure that we received an excellent explanation of the Bill—I shall read it with interest—with all the details given by the Minister. Again, I apologise for not being present to hear it. All that was discussed, but at the end of the day we must decide what we want to do with our regions. We must look at them as part and parcel of our economic, social and national life. It is important that we look at them in the context of the nation.
Let me give one further small example. When will we know the outcome of the development in London Docklands, Canary Wharf and the extension of the tube which robbed other parts of the underground of much needed improvement? When will we learn the real lesson of the cost of those developments? When will we learn the real lesson of Liverpool's Docklands? If we compare the two, they will stand as a condemnation of the way that the people responsible—I do not care whether they are Labour or Conservative and, in the real sense, they are probably civil servants—conducted the whole scheme.
The whole thing is ironic when we see the damage, the congestion and the bad standards of living that exist in London and the south-east and consider the effect in
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Europe. God knows what will happen because we are not going into Europe and the pressures will get worse. They will not be borne in the south-east; they will be borne in the north. It is the north that will suffer the most and we must ask ourselves what we should do.
A man named Heseltine came to Liverpool. He thought he would not have anything to do with economics. But there were riots in Liverpool—I often wonder why those riots are not still ongoing. We have pockets of unemployment where 50 per cent. of the people do not have jobs; they have nothing to do. The economic planning council decided that we should concentrate on Liverpool's unemployment position at the cost of elsewhere. That was agreed. The government said that they would send 3,500 civil servants to the north-west—3,000 to Liverpool Docklands and 500 to Blackpool. We all thought it was a wonderful idea.
We then removed the economic planning councils. I do not know how that came about. It was the end of a battle between the Treasury and the Department of Economic Affairs. The man who announced it was proud to call himself "Mr. Liverpool". If those 3,000 civil servants had been put inside Docklands before the riots, the riots would never have occurred. However, the riots did occur and Mr. Heseltine took the matter away and later boasted about the fact that it was he who established Liverpool Docklands, after Liverpool City Council had been fighting for the establishment of an organisation to look at that development. They knew what was coming in relation to unemployment because of the international trade moving away from Liverpool. It was resisted in the south, and it was ironic that the man who did it was the man who caused the riots to take place in Liverpool in the first place.
5.18 p.m.
The Earl of Arran: My Lords, while it is always a pleasure to listen to the eloquence of those from the north, some noble Lords may agree that they have had their say in this matter for the time being. I should like to bring a west-country business perspective to our debate on the Bill this afternoon and some Members may draw similar conclusions from the areas that they know best.
In the west country, South West Enterprise Limited, known as SWEL—a private sector, joint venture whose purpose is to capitalise economic development—agrees with many aspects of the Bill. SWEL combines the local interests of the Federation of Small Businesses, the Forum of Private Business, the Chambers of Commerce, the National Farmers' Union and the CBI. It has the single purpose of helping a business to help itself in turning around the economy of Devon and Cornwall. I must declare an interest in that I am a director of South West Enterprise Limited, and proud to be so.
Since 1992 the business community in Devon and Cornwall has energetically supported the creation of a development agency to lead and co-ordinate a turn-around in the economy of the west country. Understandably, in Devon and Cornwall, we would have preferred to have our own agency, but then probably so

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would every other part of England. If the Government, in creating nine RDAs in England, are saying that they are seeking nine bodies rather than 19 or 20 which will report and be accountable to the Government, that makes good management sense.
As with the other five counties, business in Devon and Cornwall will play its role in the development of the south-west region. Unfortunately, however, under the Government's present proposals, I consider it improbable that much of the business community will be able to play as strong a role as it should from the outset, when the RDAs are formed in April of next year, despite the RDAs being business led. I shall, if I may, explain why.
Business Links, of which I am sure your Lordships are well aware, is a national brand assuring the quality of business services which are delivered locally. It is managed nationally by the DTI and guided locally by business-led boards. Business Links, which was created by Michael Heseltine under the previous government, plays a vital and increasing role in the development of businesses, especially small and medium businesses, known as SMEs. Business Links forms the only body which currently has potentially almost daily contact with all the SMEs. It is my contention that, if the Government were to include Business Links, ab initio, within the RDAs, they would then meet the functional requirements and the geographic coverage needed for sustainable economic development. I am fairly surprised that not more prominence was given to Business Links during the passage of the Bill through another place.
First, I shall tackle the functional view. An examination of international best practice has shown that sustainable economic and community development requires the development of the indigenous business community alongside the other core functions of regional development. Regeneration and inward investment must be co-ordinated with the development of small and medium enterprises and their investment in the community. As Ministers will know, inward investment presents many media opportunities, from the first announcement, through the turf cutting and the foundation stone laying, to the opening ceremony with multinational business figures. It is both exciting and enticing.
However, the evidence is that more jobs, and more sustainable businesses, are created through the development of a region's indigenous businesses than through inward investment. For example, Cornwall, being peripheral to European markets, has not been successful in attracting much inward investment, and there the regeneration of the local economy is urgently required. However, recent employment figures have shown that, if the loss of employment due to the demise of tin mining and the demise of china clay is taken out of the data, there was a net gain in new jobs created in Cornwall last year. These new jobs are coming from small and medium enterprises in Cornwall—in industry, commerce and tourism. They are perhaps the new shoots of prosperity emerging amid the fallen boughs of Cornwall's industrial past.
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The "In Pursuit of Excellence" project, whose work has been endorsed by this Government and by the previous government, has drawn attention to the high quality of many local businesses and the great potential which exists in Cornwall. IPE, as it is known, is a very well supported partnership between the public and the private sectors and, crucially, it has successfully engaged the business community in the development of its own future. It is imperative that the development of these businesses, their growth and the investment in them, be closely associated with the RDA's regeneration and inward investment activities.
This is true, I suggest, not only of Cornwall but of all business communities, both rural and urban, in every English region. It is not just a matter of business; it is also a matter of social inclusion. Small businesses are an integral part of the local community. Community regeneration requires civic pride and pride requires self-sufficiency. Business development is easier in urban areas than in rural areas, and the south west is predominantly rural. Regeneration, inward investment and business development must be closely co-ordinated in rural areas if we are to overcome the decline of rural communities and protect the landscape which is the basis of our tourism and agriculture industries. As the Minister said, our countryside must be both living and working.
However, there is more to regional development than addressing the problems of economic blackspots, whether they are visible in Camborne, Plymouth or Bristol, or hidden in rural areas. In business it is often said that, "You are only as good as your last sale". The strong need to be supported as much as the weak strengthened, albeit in different ways. Under the current proposals, the RDAs, when they are launched in April next year, will be focused much more on overcoming economic weakness and much less on promoting economic strength. But improving competitiveness is as much about sustaining today's winners as training tomorrow's. After all, small and medium enterprises currently account for nearly 50 per cent. of employment outside the public sector and for around 38 per cent. of the United Kingdom's gross national product, and SMEs are expected to be the main source of future economic growth.
I now turn to the geographic view. The parts of a region outside its blackspot areas may see little value for them from an RDA. This is particularly so in the south-west region, which is the largest region in terms of land area and coastline. The distance from Land's End to the Gloucestershire border is the same as the distance from Gloucestershire to the Scottish border; and the distance from Bristol to London is the same as the distance from Plymouth to Bristol. The south west is the most diverse of the English regions and it has the greatest economic disparities of any English region. Although, on a range of 24 economic indicators, the south west ranks between third and fourth among the 12 UK regions, in Swindon the economy is overheating while in Cornwall it is emerging from a period of permafrost, economically speaking. Economically, it is also fairly chilly in Poole and in the Forest of Dean.

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Scenically and climatically, the south west is a wonderful place to visit and we have some superb businesses.
The functions currently to be included in the south west RDA are primarily focused on the relatively much weaker far south west of the region. As a result, Swindon in particular, but also parts of Gloucestershire, Wiltshire, Somerset and Dorset, seem to expect little benefit from the creation of an RDA. If Business Links became part of the RDAs from the outset, the RDAs would be truly regional.
The Government have admitted that the Bill allows for Business Links to be included in the RDAs at a later date, if it were appropriate, without recourse to primary legislation. The Government's present policy is that the RDAs will provide the strategic context for the services offered by Business Links at the local level, and that Business Links will wish to draw upon the priorities identified in these strategies as they develop their detailed services. In contrast, I believe that the RDAs will need to be operationally, as well as strategically, involved in running Business Links from the beginning.
The Government have an opportunity they should not miss. If Business Links were to be included as part of the RDAs from their formation, the RDAs would immediately be able to offer the portfolio of development services needed to overcome economic weakness and, at the same time, promote economic strength. They would be able to promote regional cohesion and economic convergence by virtue of their activities covering, in some form, all parts of their region, rural and urban. They would be able to engage the region's business community in its own development and investment in the region.
The national chairman of the Federation of Small Businesses has said,
"that the value added to our members' businesses by Business Links will be enhanced by the inclusion of Business Links within the responsibilities of the RDAs. Logically, therefore, the sooner this occurs, the better".
Indeed, I should make it clear that the Federation of Small Businesses would wish to go further and include the training and enterprise councils ab initio as well.
The FSB's national chairman and I are calling for nothing which the Government have not already accepted, other than the timing for the inclusion of Business Links. The regional Business Links' budgets are relatively small. Incidentally, in the south-west region the total Business Links budget of £8.5 million was equivalent to around 10 per cent. of the funds spent on regeneration and the promotion of inward investment in 1996–97. Further, it may also be easier to include Business Links within the RDAs now rather than later. If Business Links were to be included after April 1999, the internal and external relationship of the established RDAs may need to be reconfigured to accommodate them and there would probably be cost penalties and delays to programmes during the period of assimilation.
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The National Head of Policy of the Forum of Private Businesses said that,
"leaving the RDAs to run with only a strategic remit for Business Links, risks confusion in the minds of many small businesses. Private business needs to be assured that the services of Business Links are properly co-ordinated with the other main instruments of economic development".
I have an open mind as to whether the Government support my proposal for all the English regions or adopt it for the south-west region alone, given its special characteristics. The thrust of my case is that my proposal should be adopted for all nine English regions and for the tenth in London in due course. But if the Government are resistant to that, I suggest that the south-west region be used as an ab initio pilot for this proposal.
I am sorry but I may be unable to be here for the Minister's summing up. As regards what the Minister says in response, I may seek leave to table an amendment to the Bill in Committee. In conclusion, the success of the RDAs and the degree to which they achieve the Government's purposes, will depend to a large extent on the degree to which they are able to engage their business communities in achieving the objectives of the RDAs from the very outset. I submit that this can be achieved only along the lines that I have suggested.
5.30 p.m.
Lord Beaumont of Whitley: My Lords, it gives me great pleasure to intervene in this debate after the speeches of the noble Earl, Lord Arran, and the noble Lord, Lord Sefton of Garston. I believe that the noble Earl pointed, absolutely rightly, to the fact that if the scheme is to succeed and if this Bill is to be a step along the right lines, it is probably seen best as an encourager of what can be done in the regions themselves. From what the noble Earl said about the south-west and from my knowledge of all the links of my party in that area, I know how much can and is being done there.
The noble Lord, Lord Sefton of Garston, put his finger on a large number of very valid points.
Lord Graham of Edmonton: My Lords, he always does!
Lord Beaumont of Whitley: My Lords, maybe the noble Lord always does, but this was a very conspicuous occasion. I remember in the 1960s arguing in the Liberal Party of those days about the necessity for regional authorities in a climate which did not then encourage them very much, particularly with my then colleague, Lord Evans of Claughton, who was, I believe, a sparring partner of the noble Lord, Lord Sefton, for some considerable time.
In those days we believed, and I still believe, that we ought to have regional government which is known for its accountability, democracy and openness; that we have democratic regional assemblies with tax-raising powers. That is a very important aim. The Government pay considerable lip service to these aims. But I have a cynicism, drawn from long experience of governments of all kinds and through sitting in your Lordships' House with different people on the Government Front Bench, as to whether anything which should be democratic, open

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and accountable will come from the rather nice intentions which are suggested by the Government Front Bench. My noble friend Lady Hamwee is rather more trusting than I am in these matters. She probably has a nicer temperament than I have. She believes that these things may well happen. I hope that they will.
I am speaking on this Bill for two reasons. One is to see that the needs of rural areas are not swamped and, secondly, to make certain that the whole question of sustainable development is also firmly endorsed on the face of the Bill. The noble Baroness, Lady Hamwee, dealt principally with that last issue. She dealt with the rural areas in a way with which I am not entirely sympathetic. I do not believe in an urban, powerful and centralised capitalistic state that rural areas will be looked after, whatever the intention, unless it is spelt out on the face of legislation. Therefore, I would like to see that happen.
Rural areas have their own special needs. They have special requirements. The firms operating in them are often small; employment is fragile at times and seasonal. Transport is a very great problem for people living in rural areas, and the cost of housing must be considered. The social life of rural areas has become fairly low grade. We have often discussed these matters and we shall be discussing them again this evening when we come to the common agricultural policy. As this Bill goes through we must make certain that it does not just produce a regional machinery for attracting investment from outside, but regional machinery which taps the loyalty of local people and local enterprises and produces a step towards the kind of regional government that we on these Benches certainly wish to see in the near future.
5.36 p.m.
Lord Elliott of Morpeth: My Lords, I have taken part in many debates on the well-being of the north-east of England, principally in the other place. The north-east is now listed as one of the proposed nine areas to be included among those having a regional development agency. I wish to concentrate on the need or otherwise for this Bill in the north-east. Debates on the northern region were fairly regular occurrences in another place due to the enormous requirement for reconstruction because of the post-war decline of our basic industry—coal, steel and shipbuilding.
I recall the very last debate in the other place in which I took part. I stated that we had known in the post-war period 17½ years of Labour Government and precisely the same number of Conservative years.
I now come to a point which answers a request made by the noble Lord, Lord Dormand of Easington, who, unfortunately, is not in his place. I said in that speech that in my opinion both major parties in their period of office had done their utmost to support the redevelopment of regions like the north-east. That is so true. The methods may have varied, but our aim was the same. Both major parties wished to bring back economic well-being to a region which knew enormous difficulties just after the war.
For instance, I remember when Labour won in 1964. The Minister with responsibility for the regions was the enormously energetic late Lord George-Brown. He said
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in a speech at the beginning of his period of office that we had not thought "big enough", as he put it, with regard to development in the region. He contended that we were wrong to have established development districts to which we encouraged new industry. The entire region became a development district at that time. We went back later—but not much later—to local districts. The point I wish to make is that it was the desire of all concerned in both parties to get the right answers.
Regionally, we have had a series of bodies which have known government encouragement and support. The first I was associated with was the North East Development Association. That was a smaller body than those we have known since. In its membership it had leading industrialists, businessmen, trade unionists and regional MPs. Then we had, a little later, the North East Development Council which was more broadly based and involved local government. That body knew for a long period the distinguished chairmanship of the noble Lord, Lord Glenamara.
For the past 11 years we have had the Northern Development Company, which the noble Lord, Lord Dormand, mentioned. All three of these bodies have done a great deal to revitalise the region. And we are now, it seems, to have a regional development agency.
I should like to refer to Clause 4 of the Bill before us which states the purposes of the new agency: to further economic development and regeneration; to promote business efficiency and investment; to promote employment; and to promote skills. So what is new? We have had these aims for years. The bodies which we have had, with both parties' encouragement, have achieved an enormous amount. The region has been transformed. New industry has been established and places like Sunderland and Consett are thriving today.
In mentioning Consett I should like to refer to the Derwent Development Agency as being one body whose future I am somewhat concerned about under the proposal of this Bill. Consett steelworks were closed down in September 1980. At that time we had very high regional unemployment, much higher than the 7.4 per cent. that we have today. I was asked by a colleague in another place a simple question, "Can you see unemployment in the north-east of England?" I answered him by saying, "Not really, not in the centre of Newcastle. You just can't see it". But I visited Consett in the Christmas Recess following the closure of the steelworks. My goodness, unemployment was very visible then. The empty steelworks were still there and rusting. There were able-bodied people standing on street corners. But, thanks in no small measure to the Derwent Development Association, which I visited soon after my private visit, Consett is transformed. A year later I visited the Consett number one development area and saw there, in very new factories, ex-steelworkers and ex-miners practising new skills—a very good illustration of the adaptability of our northern workforce.

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Today Consett has unemployed people numbering 1,028. In other words, it has almost full employment. I mention this on the debate on this Bill because the Derwent Development Agency did such a good job. But what will happen to it?
On regeneration, we have one of the best road networks in this country, again thanks to the efforts of both major parties in the period of their office. Because of the Tyne and Wear Development Corporation, 30 miles of derelict land on the banks of the Tyne and Wear have been renewed and revitalised and are a much more pleasant sight than they used to be. So what is now to happen with regard to the Tyne and Wear Development Agency? Actually, it closed down at the end of March.
But my main question is this. Do we need this new agency? It has been suggested that there is enormous support for it in the north-east of England. Certainly there is some. There is general support for a type of new agency. There has been considerable concern expressed as well in the region. The Local Government Association fears that the new body,
"an appointed quango, will take powers away from democratically elected local authorities".
The regional newspaper The Journal, in a leader, feared the creation of a Whitehall controlled quango which may be responsible to a locally elected and representative body at some vague time in the future.
The chief executive of Newcastle City Council has expressed concern on accountability, as has the North Durham Labour Party. The CBI fears that in some places the Bill appears to preclude development which may be desirable. The city council of Sunderland has said:
"The City Council of Sunderland would like to point out, that when in opposition, the Labour Party attacked the democratic deficit proposed by the creation of quangos at regional and local levels, which were not accountable to local democratically elected local authorities".
The Institute of Directors was very much to the point, saying that the new body would be another layer which risks bringing more confusion, more bureaucracy and more expense. So I can assure your Lordships that there is opposition to this new body in its present proposed form in the north-east of England.
There is, of course, for the north-east a heavy potential competitiveness just over the border because of the proposed new Scottish parliament. In another speech in another place in a debate on devolution, with which I still disagree, I expressed my views on the unfair advantage that a Scottish parliament with civil servants and lobby correspondents would have in attracting new industry. That concern is still there, but the north-east has known enormous success in attracting new industry.
Despite our disadvantages, geographical and otherwise, it has known success in recent years which other development areas might well have as an aim. I should like to pay particular tribute, as did the noble Lord, Lord Dormand of Easington, to the Northern Development Company which according to a recent
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survey has succeeded in the 11 years of its existence in creating 520 investment projects, 75,000 new jobs and £9 billion of capital investment in the region.
Finally, my suggestion is simply this. The proposed regional agencies can be justified only if they can add to existing arrangements for regional attractiveness and management. Much depends on the relationship which they establish with other bodies and local government and the speed with which they become democratically accountable.
5.48 p.m.
Lord Grantchester: My Lords, I start by declaring an interest in that I put my name forward to serve on the board of the north-west region.
This Bill plans to create nine new development agencies in the English regions. They will be business-led but will include all regional interests to integrate social and physical regeneration and economic development. The development agencies will form a vital part of the process of decentralisation—moving the planning process nearer to the people—and co-ordination of government programmes in transport, tourism, regeneration and social inclusion.
The regional development agencies will have five core areas of responsibility: economic development and regeneration; competitiveness, business support and investment; skills; employment; and sustainable development. Sustainability is a little like "motherhood and apple pie". We all sign up to it but it is a complete turn off for the private sector. There needs perhaps to be a clearer definition, by which we mean reconciling social, economic and environmental factors. The RDAs will need an achievable strategy and framework, building on existing regional competitiveness, thus bringing greater coherence to the work of regional bodies. There is no purpose in any large-scale re-engineering, nor in reinventing the wheel. The RDAs have to build on what is already there, thus providing continuity.
Each RDA will have as a core function the social, physical and economic regeneration of its area to gain maximum benefits and to spread the benefits of economic development and investment. They will take on the regional regeneration work of English Partnerships and the Rural Development Commission, which will bring about their budgets, including the Single Regeneration Budget Challenge Fund, and take a leading role in securing European Union structural funds.
Regional development agencies must address at an early stage the economic development and regeneration of rural areas. That is especially important, as Agenda 2000 and the reform of the common agricultural policy will challenge agriculture to respond to competitive pressures and to the transfer of resources from support to investment in rural enterprises.
Tensions between rural and urban areas must be addressed early, allaying the distrust about the intentions of the RDAs, with specific structures to reflect rural needs and to halt economic decline.

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Instrumental to regional regeneration will be improvements to the skills base linked to the community, not just to specific companies. There also needs to be a skills audit, assessing the contribution of the training and enterprise councils in achieving regional objectives. The TECs and Business Links were not included as part of the RDAs' functions, but perhaps in Committee we can examine whether TECs can be brought into the process to determine the skills requirements of each region and the best ways of providing those skills. Priorities include dealing with skills shortages.
Each RDA will play a major role in facilitating investment, involving projects as part of the public-private partnerships and bridging the gap between cost and value. They will take a leadership role in inward investments of strategic significance, in the marketing of a region as a business location in conjunction with the Invest in Britain Bureau and other regional partners, and in promoting technology, including maximising the benefits of the work of educational institutions.
Each RDA must face up to the challenge of strategic long-term regeneration through funding plans of five to 10-years' duration to replace the short-term focus of annual budget funding. However, this must be coupled to short-term milestones where the emphasis is on outcomes, not on outputs.
It is entirely sensible to co-ordinate regional economic and regeneration activity in association with established regional structures, local partners and government offices. However, there is anxiety within the rural sector that RDAs will become urban-oriented and discriminate against rural communities. The fact that MAFF has different boundaries from those of the government offices necessarily means that communication between them will not be as effective, efficient or influential as it could be and that that will result in a less powerful rural voice and a smaller share of resources. Perhaps in Committee we can examine whether it is sufficient to have one rural representative on a board of 12 and whether there should be a minimum of two.
Furthermore, financial resources may move from MAFF to the RDAs if, under CAP reforms, subsidy expenditure decreases in favour of enhancing environmental schemes. Will the budget of £200 million be enough to achieve all that is envisaged when each region of MAFF runs on a budget of almost half that figure? What is the extent or availability of any new income? To what extent will funding be affected by changes in EU structural funds under Agenda 2000 proposals? At present, aid is available to rural areas under Objectives 5a and 5b, with urban areas coming under Objective 2. Under the Agenda 2000 proposals, a new single measure (a new Objective 2) will encompass both urban and rural aid. Each RDA must ensure that rural issues will have sufficient prominence and that the integration of town and country is embraced through an equitable balance of funding.
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It is also sound that each RDA is promoted as an independent organisation setting regional priorities. However, we must examine the control mechanisms in detail and whether accountability is adequate. The RDAs must consult widely and must seek to work effectively with regional chambers.
I look forward to the opportunities presented by this Bill. The establishment of regional development agencies creates a unique opportunity for a new, sustainable future for the regions through integrating development. Policies on transport, tourism, education, employment, housing and community development can now be brought together into a coherent framework for the next millennium. I commend the Bill to the House.
5.55 p.m.
Baroness Cumberlege: My Lords, like many of your Lordships, my roots have been in local and regional government. At one time, I served concurrently on a county council, a district council and a parish council. I was a glutton for local government. My family said that I was an addict. I simply loved it. Then I got distracted into the NHS.
When I was invited to join the last government, I was appointed first as Minister responsible for the task force in Plymouth and later as the sponsor Minister for Plymouth, with a much wider remit. It felt like going home. I really enjoyed working closely with the city council, the development agencies, the private sector and, above all, with the local communities.
Many of your Lordships will know the city of Plymouth even better than I do, and especially the part that it played in the Second World War. It is a remarkable city. Visiting the war memorial, I read name after name of the men and women who gave their lives for me and my generation, and I found it deeply humbling. The names covered not only those who had served in the Armed Forces, but civilians also. I was told that the city had been so heavily bombed and that the bombing had generated so much heat that gold and silver melted in the jewellers' shops and molten metal ran out from under their doors into the city's streets. The people of Plymouth showed their courage and their defiance, and they danced night after night on Plymouth Hoe.
With its naval and army bases, the city's destiny has always been closely linked with defence. Successive governments have been by far the largest employers, so although we must all rejoice in the peace dividend, it has been anything other than a dividend from the point of view of the city's employment prospects. The task force was set up to address some of those problems, to help to regenerate the city, to improve skills and to instill confidence in the most deprived wards in the city.
I mention that in the context of this Bill because it was the first time that I had witnessed, at first hand, effective central government investment producing results to a very tight timescale. The task force had a life of only five years, with a clear exit strategy, so nobody could become dependent on it. It had £1 million to spend every year, over five years. Its activities were

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targeted on the most deprived wards. Its accountability was to me, and since I was a very junior Minister, I was accountable to a Minister of State at the DoE.
The task force had a very clear action plan, agreed by Ministers, and closely monitored. It had a small staff—of fewer than half a dozen at its peak. It had no baggage in terms of bureaucracy—no committees, no sub-committees and no working groups. It had no in-built delays to satisfy a complex bureaucratic structure. So, it was flexible and accountable but, above all, it was fleet of foot. It achieved some remarkable things in terms of job creation, reductions in the crime level, and enhancing self-esteem in individuals and confidence in previously run-down and miserable estates. It was a lesson to me—because I had always worked through a labyrinth of committees in both local government and the health service.
Knowing now a little about regeneration and the challenges of inward investment, I have serious misgivings about this Bill. Like my noble friends Lord Bowness and Lord Elliott of Morpeth, I worry about introducing another layer of bureaucracy into what must be an entrepreneurial area which, by its very nature, requires the freedom to act quickly and decisively and to be fleet of foot.
However, I am a realist and, despite my misgivings and those of other organisations as well as many of your Lordships, I have no doubt that the Bill will be passed—and by a large majority in another place. As a revising Chamber, we have a responsibility to try to make it as workable as possible. I therefore ask the Government that, when setting up RDAs, they promote the concept and philosophy of a holding company. Like a holding company, RDAs should ensure that they get a return on the public investment made, but that does not mean they cannot have a light touch, freeing-up and delegating to their subsidiaries. If businesses are to benefit from European money or inward investment they have to be able to reach decisions quickly and have enough authority to act. Potential investors are not prepared to hang around so that an RDA, and in future possibly a regional assembly, can comply with a self-indulgent and lengthy bureaucratic system.
The second point I draw out from my experience with the task force is that economic regeneration does not depend solely on financial investment, or even investment in education, retraining and employment skills, but it does require "social" investment. A community that takes a pride in itself is much more likely to produce entrepreneurs and high quality employees. I hope the RDAs will understand and promote some of these softer, quality of life issues which have a direct bearing on regional prosperity. As my noble friend Lord Arran has said, community regeneration requires civic pride, and prosperity is not just a matter of business—it is also a matter of social inclusion. My noble friend also drew attention to the need for RDAs to be involved not in the detail of running businesses but in co-ordinating the development of new businesses, especially small or medium-sized ones. I agree with him on this. At the invitation of South West Enterprise Limited he and I led a trade mission from Devon and Cornwall to the southern states of the
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USA. Our purpose was to promote west country exports, but we also took the opportunity to study the inward investment and regeneration initiatives taken by the two highly successful southern states that we visited. At the time I was the sponsor Minister for Plymouth and it seemed appropriate to visit Charleston where the naval base was contracting and faced the same issues as Plymouth.
Two aspects of that visit left a lasting impression on me: first, the enormous size of the mosquitoes; and, secondly, the tightly focused programmes to develop indigenous businesses to regenerate the local economy. In South Carolina not only was it patently obvious that business development was closely co-ordinated with regeneration and inward investment, but that the development of local businesses was seen as the key to success. The point was reinforced when we visited the state of Georgia and met senior politicians, businessmen and women and those responsible for economic development. The state of Georgia is similar to the south-west region of England, in that its economy is very strong in the north, especially in Atlanta. In the south it is rural and faces the same challenges of structural adjustment as in our south west. The big difference is their success in economic development. We wanted to find out why.
First, there was no doubt or ambivalence that economic development was top of the state's agenda—way above any other programme. Despite the huge investment and energy put into hosting the Olympic Games, which sadly we missed—they had finished a few months before we arrived—the state was not distracted from its mission. As in South Carolina, its mission was to develop home-grown businesses and to co-ordinate their development with inward investment and regeneration at state and county levels. In our travels throughout Georgia we identified one other strong theme, and one that should be of great interest to the Minister and her colleagues in government: the concept of total community development. This phrase haunted us wherever we went. These three words were like a creed and encapsulated an inclusive approach to the creation of competitive businesses, competitive people and competitive communities. It was the clear basis for achieving sustainable development both locally and regionally. As the noble Lord, Lord Dormond of Easington, has said, businesses, especially small ones, are an integral part of every local community. If the RDAs in England are to be able to improve the competitiveness of their regions they must encompass and nurture the development of these small enterprises, not just within cities but also in rural areas. They must have power to co-ordinate business development with regeneration and inward investment, and that cannot be achieved through a purely strategic role.
Small businesses cannot afford the luxury of long-term strategies. Their horizons are much shorter than those of development agencies or larger businesses. If RDAs are to be responsive in co-ordinating activities, they will need some degree of operational oversight, but they will also need fast communications and detailed intelligence as to what is happening locally.

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As my noble friend Lord Arran has said, Business Links is the Government's service that supports the development of commercial enterprise on the ground. It has almost daily contact with potentially the vast majority of businesses. I agree with him that within this Bill there is an opportunity to strengthen its activities and to make them more effective by co-ordinating them regionally through RDAs.
The chief executive of the Cornwall Chamber of Commerce and Industry has said:
"Bearing in mind our County's economic performance and its urgent need to improve this situation, it is vital that the business development functions of what is, after all, the Government's chosen delivery arm, should be brought within the RDA's control at the earliest possible time, that is to say from the outset".
The Royal Institution of Chartered Surveyors' national policy officer has said:
"The RDAs should take the lead in co-ordinating the integration of bidding processes, timescales and decision making, and in brokering contracts with mainstream government budgets to prioritise areas of local need. We therefore support the proposals that Business Links should become part of the RDAs from the Agencies' formation in April 1999 rather than later, as the Government have indicated should happen. We would also see the wisdom, if this proposal was not accepted on a national basis, for a pilot to be considered, possibly in the South West region."
Learning from my experiences as the sponsor Minister for Plymouth and my appreciation of the relationship between Plymouth and the rest of the south-west region, including working very closely with the government office for the south west, I agree with both of these knowledgeable men.
It is suggested by some organisations that the training and enterprise councils should also be included from the outset. I believe that there is much merit in that. I am not sure whether I heard the Minister say that Business Links would be co-ordinated in some way and monitored by RDAs. I see the Minister nodding. I hope that that is the case. Although I know that Business Links can vary enormously in scope and delivery, it has huge strengths.
Finally, when RDAs are formed they will be expected to draw upon international best practice. I suggest that if they are to be successful their very formation will need to take account of the practice and experience of other countries, perhaps particularly the USA. I very much look forward to the Committee stage of the Bill when, with other noble Lords, I shall have the opportunity to explore some of the issues that have been raised this afternoon.
6.10 p.m.
Baroness Young of Old Scone: My Lords, these are exciting times in which we live. We shall perhaps look back at the next few months as a period in which there has been a number of bold decentralising measures reshaping government in this country. More and more processes and more and more funding streams are settling at regional level. The noble Lord, Lord Grantchester, talked about the new Objective 2 but there are many examples of both policies and funding streams.
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Regional development agencies and the associated regional chambers are part of that process and they offer major opportunities to promote prosperity in the regions. But it must be sustainable prosperity achieved through sustainable development which takes account not only of economic objectives but of environmental and social objectives too.
I welcome very much the fact that the Minister made special mention of sustainable development in her introduction because it is no secret that there has been a lot of arm-wrestling in another place over the exact terms of the sustainable development purposes of the regional development agencies in the Bill. The White Paper, Building Partnerships for Prosperity, very much stressed that RDAs should have sustainable development at the heart of their programmes. However, I should be unwise to say anything other than that the Bill itself is still rather vague on that issue.
I do not wish to argue here today about the exact terms of the sustainable development purposes. It is rather like arguing about how many angels can dance on the head of a pin. However, the fact that many people have been arguing about it at length is because it is an important issue for RDAs.
Perhaps I may digress. Over the past three or four years, on numerous occasions we have seen that kind of skirmishing over the terms of a sustainable development duty for various statutory bodies. We have seen it in the Environment Act with the setting up of the Environment Agency, we saw it in a minor way during the progress of the lottery Bill and we have seen it again as regards the Government of Wales Bill. Therefore, there is a lesson that we need a standard definition of the sustainable development role of public bodies which have an impact on the environment and on sustainability so that we can simply drop that into successive pieces of legislation and cease to spend large amounts of time on rearguing the case on every Bill.
The Minister also mentioned the importance of the right kind of members of RDAs and gave assurances about specific rural interests. Although RDAs are clearly very important to sustainable development, no environmental expertise has been specified. I should welcome the Minister's assurances on how she can make sure that RDAs have access to sufficient environment expertise to ensure that the environmental objectives of the sustainable development purpose can be fulfilled.
I welcome very much the provision in the Bill on government guidance to the agencies and a commitment from the Government at previous stages of the Bill to giving guidance on how RDAs will interpret and implement the sustainable development purpose in practice. The guidance must have a number of parameters to it in sustainability terms. It must ensure that RDAs take account of national environmental and sustainable development priorities, including whatever emerges from the national sustainable development strategy and the requirements of the current UK biodiversity action plan.
The guidance should ensure that the RDAs adopt environmental appraisals of strategies, policies and programmes. I do not believe that it is too much to ask

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for a simple requirement that RDAs should have a basic tenet of not funding activities which damage major environmental assets, including important wildlife habitats.
The Government's intention to decentralise decision-making is very welcome, but it means that we are seeing a plethora of different bodies and strategies at regional level with the potential for strategies not quite to match with each other or, indeed, to come into conflict. Two issues need to be brought forward in that regard. First, we need to see overarching sustainable development strategies for the regions, perhaps prepared by regional chambers in association with RDAs and government offices for the regions and other regional stakeholders, not least local authorities. Such an overarching strategy is not unique. It has already been presaged in the White Paper on London. RDAs could then prepare their regional economic strategies within the parameters of the sustainability strategy. I believe that a mention on the face of the Bill of the relationship of sustainable development strategies and regional economic strategies would be welcome.
Secondly, regional economic strategies must be set firmly within the context of general planning guidance. We have heard of the disquiet that there was about the planning role of the RDAs. The role of regional planning guidance will be very important. Indeed, the Minister has stated already that regional economic strategies and planning guidance must be compatible and consistent. Perhaps I may press the Minister on how the Government will issue strong guidance to ensure that regional economic strategies are not only consistent with but also help to deliver regional planning guidance. The whole process of preparation of regional planning guidance also needs to be strengthened and regional planning conferences adequately resourced to play a strong part in that. I welcome parallel proposals on regional planning which are currently out for consultation.
There is one further point which needs to be made in the light of some of the arm-wrestling which has taken place in relation to the sustainable development duty of the RDAs. The discussions sometimes seemed to imply that economic development is an alternative to the environment; that you can have one but not both. I believe firmly that RDAs must pursue both for three reasons.
First, natural environmental assets are often the greatest assets possessed by remoter regions and, in particular, remoter rural regions. Sustainable exploitation of those assets and sustainable development of those assets are often the only way in which to create viable, sustainable jobs in areas where it is incredibly difficult otherwise to create jobs. The noble Lord, Lord Wade of Chorlton, talked about the decline in agriculture employment that we shall see. We must find innovative ways of creating alternative employment in rural areas. The environment is a great job generator. Conservation alone accounts for 10,000 jobs in this country and for every direct conservation management job there are another five in infrastructure, green tourism and the industries which support such activities.
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Secondly, environment industries are a growing part of the economic sector. We have done insufficient in this country to promote the growth of environment industries. I hope that RDAs will play a strong role in ensuring that we are world leaders, through our regions, in the promotion of environmental technologies.
Thirdly, the environment, the quality of the environment and the quality of life are incredibly important in terms of attracting inward investment. It is at our peril that we ignore the environmental aspects of attraction for investment, particularly foreign investment.
I believe that we are seeing a vital reshaping of the way in which this country is managed. RDAs have an immense potential, provided that the regional development that they promote is sustainable regional development. I ask the Minister to indicate the practical measures that are to be put in place to ensure that that happens.
6.17 p.m.
The Viscount of Oxfuird: My Lords, our debate this afternoon deals with a most important constitutional issue. Like a number of noble Lords, I shall make only a very short intervention. I confess that I am not totally convinced by some of the arguments which have been put forward today to support the creation of regional development agencies. However, I acknowledge, as did my noble friend Lady Cumberlege, that with the majority which the Government command in another place, their creation is inevitable.
Therefore, I suggest that we should strive to ensure that the country gains the greatest benefit from this initiative. One important task for the regional development agencies to tackle is the provision of adequate training for our workforces. It is my belief that the regional development agencies must take into account regional strategic training needs in a national context.
A good example of that is demonstrated by the existing practices in Scotland and Wales. By taking a strategic regional overview, the training needs of Wales and Scotland have been enhanced very considerably in the past 10 years or so. In that context, I should like to raise the important issue of the current system of funding for vocational education and training in this country. Here, I believe that the RDAs have a vital role to play within the overall national guidelines.
We all recognise that national budgets are tight, but what I am suggesting is that the Government and RDAs give consideration to a new approach to the distribution of current resources, to reflect both the differential costs of vocational education and training and, also, national priorities in terms of increased support for the wealth-creating sectors.
Perhaps I may offer your Lordships an example of how that might work in practice. The training of young people in engineering is one of the most expensive to deliver. Research figures given to me by the Engineering and Marine Training Authority indicate that it costs a minimum of £27,000 to educate and train an engineer to National Vocational Qualification Level 3

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through a modern apprenticeship, compared with an average of £8,000 for a business administration candidate educated to the same level.
A difficulty lies in the different approaches of the various training and enterprise councils. Although some TECs are able to fund engineering at a higher level than other sectors, many do not. The result is that there is a very large financial burden on engineering employers and training providers, to the detriment of recruitment of young people into engineering. The lack of any national, or regional strategy means that the amount of funding that is spent on engineering training is dependent on the attitude of the local TEC.
I hope that the Minister might consider placing a responsibility upon the new regional development agencies so that, in the provision of engineering training, their regional strategies also take account of national needs. Indeed, there may even be a case for asking the new RDAs to identify priority sectors to meet both regional and national economic needs. Training and enterprise councils should be targeted to achieve a minimum level of training in the priority areas, which should be funded at higher levels. Indeed, my noble friend Lord Arran mentioned that fact in his speech.
I have one final point to make and here I must declare an interest as a trustee of the Understanding Industry charity, a responsibility which I share with a number of other noble Lords from all sides of our House. We try to promote the cause of industry nationally. How much easier the job would be if we could break it down into "bite size chunks" of a reasonable, but manageable size and devolve our activities into a defined regional infrastructure.
I know that the issues which arise in Hampshire, where I live, are very different from the issues that I see when I frequently visit, say, Cornwall or Glasgow. From this variety lies the logic for a sensible creation of RDAs. But let us ensure that true national issues continue to be considered at a national level, and that this legislation gives due weight to the importance of preserving our United Kingdom.
Let us have regional development agencies to maximize and harmonize local issues, but never let us forget that we gain great strength by standing together as a nation.
6.23 p.m.
Lord Graham of Edmonton: My Lords, I should like to express my very warm welcome for the Bill. I have heard almost every speech that has been made this afternoon. However, I believe that the opening speaker from the Opposition damned the concept with faint praise and was very selective in his memory of what had gone before. I plead my credentials in the following way. I was leader of a London borough. I am now the Vice-President of the Local Government Association, as well as being president of a body called the United Kingdom Co-operative Council, which appears in the register of interests under Category 3.
I can go back to the time of metropolitan councils, one of which was the GLC. However, there were six others. They all did a great job. The big difference
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between our concept of such work and that of the Opposition was mentioned by my noble friend Lord Dormand; namely, democracy. I do not for a moment deride any of the efforts that have been made. I listened to the speech of the noble Lord, Lord Elliott, with a great deal of affection, as I am wearing my Newcastle United tie. I should point out to the House that the marks on it are stains; but they are tear stains. I see that my noble friend the Minister is chuckling with great care. Indeed, I can see red and white stripes all over the place.
I should now like to set the scene. This Government have been in office for literally one year, while the previous government had 18 years in office. We should pay tribute to the Government, the Ministers, the manifesto and the mood for the view that, whatever has been done well, it could be done better. They may be right or they may be wrong. We shall see the result in practice.
The noble Lord, Lord Elliott, poured cold water on the remarks made by my noble friend Lord Dormand who said that there was a welcome for the Bill in the north-east. The noble Lord, Lord Elliott, said that he was not so sure about that and quoted sources for that view. I believe that we shall have either mild enthusiasm or no enthusiasm at all, until the whole concept starts to work. I am absolutely confident that there is a place for the concept of RDAs.
We know that in every region there are many of what I call "good people" and "good bodies". Some of them are professional while others work on a voluntary basis. They all have the same aim at heart: they want to see the economy of their region lifted. I listened most carefully to what the noble Baroness, Lady Cumberlege, said, in what I thought was a most helpful speech. She accepted the fact that, because of parliamentary arithmetic, this must happen. The noble Baroness made a plea for the RDAs to be aware, among other things, of the social dimension; in other words, their social responsibilities. Indeed, I very much warm to that view.
The Government have done a remarkable job in putting the Bill before us in their first parliamentary year. We always say, in many other contexts, that it is much better to get it right than to get it done quickly. If there is a criticism it is the fact that we need to be exceedingly careful about a number of loose ends which have appeared. When my noble friend the Minister replies, I shall be interested to know how there will be a synthesising between the various bodies with responsibility in a region. If the answer is that the RDA will in effect impose what we might call a "Whitehall view" on the region, that will not work at all.
There must be sufficient flexibility and opportunity for all those concerned to get together and iron out the difficulties. If the chairman and the members of the RDA are merely seen to be the voice of Whitehall in the regions, the whole concept will not work. The RDA must be a genuine, regional institution and authority, rather than the other way round. That may not be what the Government have in mind. I hope that my noble friend the Minister will assure me that the Government are more concerned to create a concept of regionalism than simply taking Whitehall into nine other parts of the country. We have a strategy here that we can develop.

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As non-departmental public bodies RDAs must, in the absence of regional assemblies, be ultimately accountable to Parliament and Ministers. How soon will we achieve the reality of democracy in the regions? The noble Baroness, Lady Cumberlege, spoke warmly of her time as a local councillor. She wanted to be involved in the community and in politics. My background is no different. There are thousands of people who have experience which can be harnessed in the new bodies. Clearly the right mix will not arise overnight as a result of an edict from Whitehall; it must evolve.
I hope that we shall not create a climate in which there is a power battle between the chambers and the RDAs. We do not wish to see a battle in each region between what one might term the "old hands"; namely, the councillors and the chambers of trade, and the new bodies. We want to see a genuine partnership. I hope the Minister can tell us a little more about the four councillor representatives. As I understand it, a councillor who ceases to be a member of a council on retirement or through losing his seat can continue to be a member of an RDA. Someone may cease to be a councillor after two-and-a-half years' service. I believe that person should then resign from an RDA. Some have argued that such a requirement would not be appropriate as RDA board members are not delegates. However, I believe there is a slackness in this regard which the Government would be sensible to consider.
Reference has been made to the clash between urban and rural interests. On 1st May, the political complexion of the country changed. Millions of people live in the countryside and work in the town. Millions of people live in the town and work in the countryside. The division which has undoubtedly existed between town and country is disappearing. The RDAs must accept that one cannot ignore any element in the community. One cannot favour those who live in towns as that would disadvantage those who live in the countryside, and vice versa. I believe that RDAs will ensure that both those who live in towns and those who live in the countryside get a fair crack of the whip. I refer to greenfield and brownfield sites. The best way to preserve undeveloped sites is to ensure that derelict and unused sites are reclaimed and put back into productive use. That is not a new concept. The sparsity of rural populations can create as many problems as the density of urban populations. However, over the past 10 years those who live in the countryside have suffered deprivation, for example in terms of a lack of public transport, the closure of shops and the absence of a dentist. I live in Loughton in Essex and from my window I can see Epping Forest. Therefore, I consider that I live in the countryside. The interests of town dwellers and of countryside dwellers are the same.
I mentioned my interest in the co-operative movement. That movement looks forward to the regeneration of the economy in many areas where co-operative societies have flourished. The philosophy of the co-operative movement is participation and democracy. The movement also recognises that the Bill is designed to decentralise power and authority from the centre to the regions. The movement considers that will be a good thing if it works. Reference has been made to
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quangos. They have been spoken of in a derisory manner as an additional layer of bureaucracy. However, there were more quangos at the end of the previous government's term of office than at the beginning of it. That just proves that, "It ain't what you do, it's the way that you do it".
Many co-operative societies are employee owned. I should like to see the concept of common ownership being established and encouraged. I believe in finding local solutions to local problems. The co-operative society is economically fairly strong, but in a democratic sense it is weaker than has previously been the case. The co-operative movement proposes that RDAs should be provided with ring-fenced funds for co-operative development. We believe that the experience of the co-operative movement will be valuable to RDAs. I hope that my noble friends on the Front Bench will tell their ministerial colleagues that the concept we are discussing is well understood and has been well received, but that it will not be endorsed until it has been put into practice. I hope that when it is put into practice we shall be pleased with the result.
6.38 p.m.
Baroness Anelay of St. Johns: My Lords, like others of my noble friends who have spoken today I. too, am concerned that we are having yet more bureaucracy thrust upon us. Despite the calming words of the noble Lord, Lord Graham of Edmonton, I believe that bureaucracy will undoubtedly flow from this Bill. However, like my noble friend Lady Cumberlege, I hope that I take a pragmatic view; namely, that if we must have this Bill at least let us make the bureaucracy work as effectively and as equitably as possible.
The success of the RDAs will of course depend on how much value they can add to existing arrangements and spending. But I am concerned about the operation of RDAs with regard to the needs of rural interests. I assure the noble Lord, Lord Graham of Edmonton, that I do not intend to go overboard, as he put it, on this matter. I would just like the Bill to dip its toes into the water—fresh water of course—of the rural areas.
I believe it is vital that the creation of RDAs should not lead to the marginalisation of rural areas in decision making on economic support, housing, transport and services. I feel that there is a very real danger that, as a result of this Bill, the particular needs of rural areas could be unappreciated and could go unmet.
Earlier today my noble friend Lord Wade of Chorlton referred to the fact that we would at some late hour tonight be discussing the European Select Committee Report on Agenda 2000— The transition to competition: measures for rural development and the rural environment. That report demonstrates graphically the danger that Agenda 2000 itself may fail to deal with rural development and rural policy as an integrated policy. It could prove to be a significant disappointment in the development of the rural economy of EU member states into the next century. At present it represents a failure to understand how the rural economy and rural society work. I believe it is vital that we do not make the same mistake in the development of RDAs.

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The White Paper makes several references to rural communities and their problems. During the passage of this Bill through another place, the Government made soothing comments about their devotion to the countryside and its prosperity but I believe they gave little, if any, proof of the reality of that. Now is their opportunity in this Chamber to show understanding and real commitment. In another place my honourable friend Peter Luff asked the Government:
"If we make positive suggestions for improving the rural dimension of the regional development agencies, will the Minister consider them sympathetically?".
The Minister replied:
"The answer is obviously yes."—[Official Report, Commons, 14/1/98; col. 374.]
It may have been the obvious answer, but any evidence that the Government responded to my honourable friend's concerns by amending the Bill to respond to rural worries is far from obvious when one looks through the minutes of the Standing Committee of another place.
Several omissions in the Bill must be rectified if the interests of rural communities and businesses are to be fully protected. The White Paper states that the RDA boards will have 12 members, although the Bill provides for a minimum of eight and a maximum of 15. The White Paper also says:
"each RDA board w ill include at least one member who can contribute a strong rural perspective".
That could be considered quite an extraordinary insight into the Government's attitude towards the countryside. Twenty per cent. of the population lives there; 80 per cent. of the land area is rural; but so far we are told that just one member will represent the rural interest. As my noble friend Lord Bowness said earlier, what is even more extraordinary is that at present on the face of the Bill there is no guarantee that one of the members will be appointed from among those who can contribute to a strong rural perspective. That is a serious omission which I sincerely hope the Government will agree to put right during the passage of the Bill through this House. It is important that the Bill should guarantee rural representation on the RDA boards. Not all of those who live in rural areas are dependent upon their self-sustaining economic viability. Some of course do travel into the urban areas to work. The boards need to include those who do depend upon the sustainability of the rural areas.
I note that the response to the consultation paper by the Consortium of Rural TECs stated:
"There are concerns that the Regional Development Agency model may increase the focus on inner cities and fail to address the needs of the communities in rural areas."
There are widespread fears that the RDAs will be urban-based bodies and will focus upon urban issues. Earlier, a noble Lord from the Government Benches stated the fact that the Country Landowners' Association welcomed this Bill. In large measure it did, but it also pointed out the dangers inherent in the Bill of neglecting rural interests. I appreciate that the noble Baroness the Minister stated earlier that the board
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members are not to be delegates. I understand that. The Government have argued that members should represent every part of their area, as indeed Members of Parliament are expected to do in another place. I would hope that board members would take that approach, but I feel that rural areas would benefit from the appointment of at least one member to champion their cause and to ensure that their interests are properly taken into account.
That is not the only omission from the Bill with regard to the rural interest. The White Paper gave the RDAs an explicit remit to promote the interests of rural areas, and a similar provision is surely needed in the Bill itself. I would also argue that rural representation within the regional chamber is vital (as in the case with boards) if the interests of rural areas are to be protected, and the Bill should guarantee such representation.
As the Minister said earlier, in March the Government announced that they would merge the Countryside Commission and the Rural Development Commission. If the Government do pursue this approach, the national research and advisory functions of the RDC will be of great importance. The RDC has been the only organisation providing detailed national information on what is going on in rural areas. Without that research and advice, national government and RDAs will not be in a position to make informed decisions on issues that affect rural areas. The Bill makes it possible for the Government to preserve these services, but at present it does not guarantee their future. I would hope that the Government would agree to the Bill being amended to provide an assurance that these services are continued on a national basis and are not allowed to become fragmented.
It is vital that the RDAs prove themselves to be committed to an integrated policy in rural areas, and one which truly understands and represents the needs of those who live and work in those areas. At present I believe there are a number of defects in the Bill which should be remedied, to make sure that the RDAs are as responsive to the needs of rural areas as to urban areas. I look forward to the opportunity to introduce those remedies at Committee stage.
6.48 p.m.
Lord Burlison: My Lords, I thank your Lordships for allowing me to make a short contribution to this debate. As one of a small group who met to form a body which later became the Northern Development Company (which I understand at some stage will be subsumed by a regional development agency) I would simply like to point out where, in my experience, a future regional development agency will need to give consideration. As the noble Baroness, Lady Hamwee, said, we have the experience of the Northern Planning Council in the north-east of England. We have had other bodies, as has been pointed out by other speakers, but we set out in the north to formulate a sharp but small executive body which could act as a one-stop shop, bringing together all the elements which were necessary to attract inward investment to the region. This took place in the early 1980s, before the establishment of the Northern Development Company.

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The background to these discussions was such that they were held in a predominantly Labour area during the time of the Conservative government. Although these circumstances meant that all the participants had pressure put on them to come up with a compromise, there was a genuine desire by all the elements to find a solution which would give the region a greater opportunity to sell itself to potential investors. The region at that time, as my noble friend Lord Dormand explained, included Cumbria, which of course is not included in the boundaries of the northern region RDA.
At the outset, I sat on the embryonic body as chairman of the Northern Regional TUC. At this stage, I did not have its agreement, although it was aware that I was pursuing an objective to create a regional industrial executive. However, I must add that it was the first organisation to endorse this document and had it not been for its positive stance at that time the Northern Development Company would not have come about. All political parties in the region were against such a regional body being formed. If the Northern Development Company had not been formed the region would clearly have been the loser. Although the Northern Development Company achieved excellent results in the field of inward investment, as some noble Lords have said, its success could have been greater if its strategy had been more widely embracing and its resources greater.
The Northern Development Company, like the regional development agencies, at its outset had to subsume some of the existing regional bodies. Although individuals were fairly treated, the takeovers had to be aggressively resolved. Because there had been common agreement on the composition of the NDC and the involvement of strong regional patriotism, those issues were easily resolved.
My message to the Minister, therefore, drawn from my long experience of dealing with all elements of the northern region, is this. Ensure that representation is fairly selected to reflect both sides of industry. It does not surprise me that some politicians oppose the Bill. They opposed the Northern Development Company at the outset. We have got rid of tribalism in the north. Make it a partnership of people, and it will work. I can assure this House that those involved in inward investment in the north welcome the Bill.
6.51 p.m.
Baroness Thomas of Walliswood: My Lords, during this interesting debate, a large number of technical questions have been asked. There has been reference to the relationship between the regional development agencies and the regional chambers; and to the danger of downgrading rural needs among the RDAs' other priorities. There has also been discussion on the sustainability issue. I propose to speak on those four main points.
On technical matters, my noble friend Lady Hamwee raised the important issue of public information and public access to meetings of the RDA. I am sure that Ministers are fully aware that in another place our friends put down amendments on that issue.
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As regards regional boundaries, I hardly dare mention the south east after the comments of the noble Lord, Lord Sefton, about the south-east mafia. However, I agree with everything said on the unsuitability of some of the regions. I find it difficult to understand the consistency of interest. All of us are interested in what happens in London, but that does not amount to creating a region out of those counties. I suspect that discussions on regional boundaries in that part of England will continue for some time.
I refer to the relationship of the new RDAs with existing local authorities, the role those authorities have played in promoting economic well being, and how and when the TECs and Business Links will be absorbed by the RDAs. From these Benches we agree with those who said that the TECs and Business Links should become part of the RDAs from their inception. I support noble Lords on all sides of the House who asked for further information on these and a large number of technical issues. In particular I seek an answer to my noble friend's point about freedom of information and public access. An excellent example of government flexibility in that respect is their modifications to the hunt Bill. We look forward to a response of that kind in relation to this Bill.
I am aware that there are at least two strands of thought on the relationship between the RDAs and regional chambers. One is that the regional chambers should not restrict the dynamic impetus of business. I believe that that comes from a well known quarrel, of which I have had experience in the past, between "business" and "planners". Among some business people, there is a conception that planners take a deliberate delight in preventing them from doing what they wish to do. I believe that that impression is misplaced, but in recent years local authorities have begun to take a more sympathetic, holistic (to use the word of my noble friend) attitude as to how business may be allowed to flourish within their communities.
The chambers bring together a wide range of interests within the regional community. They should not be treated simply as sounding boards for whatever the regional development agencies wish to do. The Minister said that the regional development agencies and the regional development chambers were set up in the absence of an elected regional tier. My noble friend Lord Beaumont intervened to say that we had looked forward for some time to a moment when we would have real regional government. He shared some of the cynicism of the noble Lord, Lord Sefton of Garston, that this initiative will lead to that desired end. He believed that the attitude of my noble friend Lady Hamwee to the Bill was more accepting—the fruit, he maintained, of a nicer personality. It cannot be wise for me to intervene in such a discussion. However, the noble Lord, Lord Graham of Edmonton, asked a pertinent question about whether the RDAs were to be the voice of national government at regional level, or the voice of the region. That is one of the most important questions that has to be answered in the course of this debate.
The Minister sought to head off criticism about the potential downgrading of rural issues within the priorities of the regional development agencies.

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Criticism has been vocal in another place and outside Parliament too. As noble Lords know, many of your Lordships have considerable rural interests and are always vocal on this matter. The noble Baroness made a number of suggestions indicating that we need not worry about these matters. In responding to the Minister, my noble friend Lady Hamwee said, in effect, "Methinks the lady doth protest too much". However she made a valid point which I support. It is that urban and rural issues are two sides of one coin. For example, if London does not work as a capital city, if it is not a pleasant place in which to live and work, if the smog is so bad that one needs a bandage over one's mouth when leaving the Chamber in the evening, the remainder of the south east will be unable to function. It will be overwhelmed by those in London spreading outwards in order to escape intolerable conditions in the centre of London. Those matters very much form two sides to the same coin.
Sustainability is a difficult issue. It was given impetus by the unfortunate wording of the subsection dealing with the fifth purpose of the RDA; namely, to contribute to sustainable development,
"where it is relevant to their area to do so".
There cannot be an area in the entire country in which sustainability is not a relevant aspiration. All those who have said that sustainability should be an overarching issue within which the RDAs conduct their business have the right end of this particular stick. In responding, perhaps the noble Baroness, Lady Farrington of Ribbleton, will be able to reassure the House on that point. If not, the matter will continue to spin itself out during our debates in Committee.
I have briefly expressed some of the concerns raised by my honourable friends and others. That is inevitable at Second Reading, when Members of this House are seeking clarification on government intentions. I hope that clarification will be forthcoming. However, on these Benches we generally welcome this initiative—in clear distinction from the official Opposition, who said that they did not support RDAs as a solution to regional difficulties; at least, that is what I understood the noble Lord, Lord Bowness, to say in answer to an intervention.
Intriguingly, the noble Lord added that if his party were in power they would no doubt be able to propose alternative solutions. I am bound to ask why, if that is the case, his party were not able to turn to this problem during 18 years in government. We offer a general, though not entirely uncritical, welcome to the Bill.
7.2 p.m.
Baroness Miller of Hendon: My Lords, if the road to hell is paved with good intentions, then this present Bill must be regarded as the legislative equivalent of the M.25. The good intentions are of introducing economic advantages to England. I make no apology for referring to "England", and not treating it as though it were some minor constituent of the United Kingdom. I do not say that out of any sense of chauvinism or feelings of xenophobia in relation to the other three countries. On the contrary, I am proud to be a citizen of the United Kingdom, along with the citizens of all four countries.
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In Scotland, Wales and shortly in Northern Ireland, residents have been allowed a referendum on the future of their country. The English have not. Never mind the general election and Labour's much-vaunted manifesto. They promised to,
"establish one stop regional development agencies to co-ordinate regional development".
But even among all the fine print—microscopic print in fact—and all the ambiguous phrases, the Labour Party did not say, "We will divide England into nine regions". Yet those are the words with which Clause 1 begins.
Even under Julius Caesar, all Gaul was divided into only three parts, as many of us who struggled with Latin at school will recall. Germany, a far bigger country than England, has only 16 regions, compared with the 12 that are proposed for the United Kingdom. That includes one, Bremen, with a population of 700,000—less than the population of Leeds. So why nine regions? Why not eight, 10, or even 12 compatible regions, not the hodgepodge of disparate areas with which we are presented in Schedule 1?
In fairness to the Government—and the Minister will know that I always want to be fair to the Government—I realise and accept, as the Minister did, that in order to avoid delay in their legislative programme they have used existing regional boundaries rather than go through the procedure of a Boundary Commission inquiry, public inquiries and so on which would be needed to create new ones. But boundaries that are appropriate for whatever administrative reasons the Schedule 1 boundaries were created—Government statistics, book-keeping and other bureaucratic purposes, and the new form of election of MEPs—have absolutely no relevance to economic and industrial affairs. Why are the Home Counties north and south not treated as separate regions? Their economies certainly demand it. Instead, look at the proposed south-east region into which they are lumped—
Baroness Hayman: My Lords, I am grateful to the noble Baroness for giving way. She confuses me slightly. Is she suggesting that there was absolutely no logic to the boundaries set up for the government offices by her own government? Those are precisely the boundaries that we have used. These are not some administrative, bureaucratic construct; they are the boundaries considered sensible by the previous government for economic development and bringing together the four government departments within the regions.
Baroness Miller of Hendon: My Lords, I was suggesting that the boundaries created previously were created for reasons different from those behind this Bill.
Let us look at the proposed south-east region into which they are lumped. What possible commercial affinity do the regional interests of Southampton and Oxford, for example, have in common? Even the Deputy Prime Minister, in his White Paper, Building Partnerships for the Future, admits that this proposed region is what he euphemistically described as "especially diverse". The local Members of Parliament—my honourable friend the Members for

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Faversham and mid-Kent, and the Member for Tonbridge and Malling, with all his expertise as a former Minister for the Regions, described this particular region as "absurd". Even the right honourable Member for Bishop Auckland was unhappy with what the Government proposed for his area.
But this Bill is supposed to be about creating a new, modern dynamic industrial structure. What excuse is there for the arbitrary putting together of the rural parts of Cambridgeshire and the industrial parts of Southend and Essex? As the honourable Member for North Devon said during the Second Reading debate in the other place, relying on his considerable local knowledge,
"to suggest that the south-west is a coherent region stretching from Penzance up to Gloucester and across to Christchurch is absolute nonsense.—[Official Report, Commons, 14/1/98; col. 397.]
It is the Government's aim to establish regional chambers,
"in time to introduce legislation to allow the people, region by region, to decide by referendum whether they want directly elected regional government".
In other words, the Government are planning on the Balkanisation of the country. We on this side of the House would like to be assured that they are not plotting to establish by the back door a fait accompli as to the boundaries of those regions.
It is premature to ask what would happen if in the referendums some of those regions voted "yes" and others voted "no". What is required from the Minister is an unequivocal assurance that the proposed regional development agencies' boundaries will not be used as a precedent for any future regional assemblies of which we have been forewarned in the Government's manifesto. The Minister's answer about giving that assurance may affect what we do at the next stage of the Bill.
I have another reason for asking for such assurance. Clause 25 gives the Secretary of State a blank cheque to alter the boundaries, admittedly after consultations with interested parties. But the Secretary of State is not bound by those consultations. Clause 25(5) states that the Secretary of State "may" cause a local inquiry to be held over any proposed boundary changes. I suspect that we "may" have an improvement to suggest in connection with that very word "may".
Returning to other current issues in the Bill, let me remind your Lordships of its many shortcomings. First and foremost is the establishment of the nine mighty unelected quangos, with no democratic accountability to the localities they are supposed to serve, merely to the Minister—and that from the party which in its manifesto attacked the previous government over "unaccountable quangos". The Prime Minister, when in Opposition, said,
"We need to roll back the tide of quangos and to have a revival of proper democratic local government".—[Official Report, Commons, 20/2/97; col. 1076.]
Well, the Prime Minister seems to be having the same trouble as King Canute in rolling back the tide; and I shall have something to say soon about his weird ideas about reviving proper democratic local government.
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I referred to "mighty" quangos. Let us look at some of the powers that the Bill proposes they should have. Under Clause 5 an agency may do anything it considers expedient for its purposes—another blank cheque. Who else is given limitless powers like that? Can the agencies order the diversion of a road or a river? Can they order a business which competes with one of their projects for customers or labour to move? We hope that the Minister will give us an adequate explanation of this extraordinary provision in the legislative notes, well before Committee stage.
Agencies can also, with permission of the Secretary of State, grant loans and sell their land for less than it is worth, presumably to subsidise potential investors or form or take shares in companies. They can make compulsory purchase orders to acquire land. The Secretary of State can take land away from public authorities—ratepayers' property, that is—and from other public bodies with limited compensation and give it to the regional development agencies.
Under Clause 21, regional development agencies can issue a warrant demanding entry on anyone's land to survey it or value it and to make bore holes and take soil samples. Anyone who obstructs this invasion of his land can be taken before the magistrates and fined. There is no messing about with civil injunctions in what is essentially a civil matter.
Under Clause 24 a regional development agency can order the local authority to connect any private streets it owns—presumably estate roads in some industrial development—to the highway.
There were even more wide, sweeping proposals which would have turned the regional development agencies into their own judge, jury and executioner by appointing them to be the local planning authority and highway authority in respect of their own property. Fortunately, after strong protests by my honourable friends and others in the other place, the Government withdrew these proposals, which are no longer in the Bill.
Secondly—and I am sorry that I have only just reached secondly—there is absolutely no evidence that these new, powerful quangos will do any better than the existing arrangements for attracting both domestic and inward investment. On the contrary, I believe that by making these nine regions compete with each other, presumably with the aid of discretionary grants and loans and government guarantees under Clauses 10 to 13, they may very well detract from the effectiveness of other regions. "Come to region A, because we are far better than region B": that message—the cry of "stinking fish"—may permanently damage the credibility of region B with other investors.
Perhaps it is appropriate that here I declare an interest—or, rather, a former interest. When I was in business I built a factory in Newport with the aid of a grant from the Welsh Development Agency and subsequently provided work for 11 direct employees, three extra postmen and a number of people in two local factories supplying me with components. The point is that I did not go to Newport because of the availability of a grant; I discovered the existence of grants after

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I had selected my site. Talking of the Welsh Development Authority, why does Wales need only one authority while England is to have nine? North and south Wales are distinct areas with different characteristics. Many of the inhabitants of north Wales do not even regard English as their first language. Would the Government have dared to try to chop Scotland into several parts? Not so long as the Scottish National Party was breathing down their necks!
The White Paper which preceded the Bill was in turn preceded by a so-called consultation. A more perfunctory one it would be difficult to imagine. The consultation document was a mere four pages long. The circulation seems to have been somewhat limited as only 1,500 responses were received, mostly from organisations, not individuals. Of the replies received, there were many from local councils, even Labour councils, protesting about the lack of democratic accountability of regional development agencies, especially vis-à-vis the local authorities in their area. In fact, although the Government in their White Paper selectively quoted about 57 endorsements of their proposals, they carefully omitted the very large number that came from organisations which either opposed the Government's plans or which had serious reservations about them. These included a number of Labour controlled councils, the Local Government Association, the Council for the Protection of Rural England and the Royal Society for the Protection of Birds. These latter two organisations are concerned that the Government's plans do not require the regional development agencies to place sufficient weight on environmental concerns.
I think it right to say that this problem is aggravated by the geographical format of the regions, which produces a cocktail of urban and rural areas where there are conflicting needs and conflicting concerns. One has only to look at the situation in Germany, in the heaviest populated region of North Rhine-Westphalia. This includes the industrial cities of Essen, Cologne, Dortmund, Düsseldorf and Duisburg, but is otherwise made up of rural areas. Between the two there is constant conflict.
There is a genuine fear that, when considering such conflicts of interests, the regional development agencies will put the needs and wishes of rural communities in second place. Many noble Lords have commented on that this evening. This is because there is a preponderance of influence in favour of the interests of commerce and industry, which is only to be expected given the nature of the brief of the agencies. Clause 4(2) states:
"A regional development agency's purposes apply as much in relation to the rural parts of its area as in relation to the non-rural parts."
Considering the carte blanche contained in Clause 5(1) enabling a regional development agency to do anything it thinks expedient, what is to stop Clause 4(2) being interpreted as a licence to turn vast areas of countryside into a desert of concrete and hideous industrial buildings? We would particularly appreciate the Minister's comments on this point.
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It is of no less concern that the Government are breaking up English Partnerships, which has been highly successful in attracting inward investment to England and which, as a national organisation, has a team of top calibre staff. It is difficult to understand how fragmenting that team will be of benefit. It points out the folly of the Government in trying to deal with a national objective by parcelling it out amongst nine parochial quangos.
The fact is that the principle objective of this Bill is not the promotion of commerce. The hidden agenda is for it to be a launch pad for its plans to remove power from Westminster and to place it in the hands of these proposed new regional assemblies. The Government have made no secret of their objectives. Apart from what they said in their manifesto, the Minister for the Regions said in an interview with the Scotsman on 1st December that the process was "evolutionary" and that the next stage after RDAs and indirectly elected regional chambers was to give them more powers. He even hinted that the future regional assemblies would be given tax-raising and law-making powers.
I suggest that the Government should try to keep their eye on the ball. The ostensible purpose of these regional development agencies is the promotion of commercial interests. It is not to serve as the thin end of the wedge, or as a Trojan horse, whichever metaphor your Lordships prefer, for the grandiose plans to revolutionise—and I use that word advisedly—a whole tried and tested constitution.
The Local Government Association in its briefing paper, which many of your Lordships will have seen, complains that it is far from clear how the functions of the regional development agencies will sit alongside the functions of the local authorities in their area. In fact, it is abundantly clear that they will only be required to consult, and not necessarily to take the slightest bit of notice of the views expressed in such consultation. Such is the disregard of the Government for the views that the democratically elected local councils may have on the operations of their nominated quangos that, if any of the token councillors who are placed on them loses his seat, he is not required to resign or to forfeit his place, but can remain there, supposedly to represent the views of the local authority of which he is no longer a member.
Lord Dormand of Easington: My Lords, I am grateful to the noble Baroness for giving way. She mentioned a criticism which the Local Government Association had made. It was not so much a criticism as a suggestion. The Local Government Association strongly supports regional development agencies. A number of us, including some on these Benches today during this debate, have made suggestions as to how the Bill can be improved. That is the normal parliamentary process. I am sure that the Government will take notice of what has been said on both sides. But I feel that the noble Baroness has given the impression that the Local Government Association is opposed to the Bill. It is quite the contrary.
Baroness Miller of Hendon: My Lords, I had no desire to give that impression. I mentioned the

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57 endorsements quoted in the White Paper; the Local Government Association is included in that 57. I was trying to point out that it is among those which commented, in the way that the noble Lord has commented, to the effect that there are other things which, in its opinion, could improve the Bill. That was the point I was making. The point I made about local councillors losing their seats was made also by the noble Lord, Lord Graham of Edmonton.
When this obvious farcical position was pointed out in the other place, the Government vigorously resisted making the obvious and reasonable change and used their voting steamroller to defeat the amendment—so much for the Prime Minister's lip service for,
"the revival of proper democratic local government",
to which I referred earlier.
It is relevant to note that, when the White Paper was published, the first result was the resignation in protest by the admirable chairman of the Rural Development Commission. The Government are entitled and will indeed have their Bill as a result of our self-denying ordinance regarding matters contained in the Labour manifesto. But we believe that it is a bad Bill with many defects that we shall attempt to illuminate in later stages. We hope that that is clear because the noble Lord, Lord Dormand of Easington, was not sure of what my noble friend's attitude was. That is the position of Her Majesty's Opposition.
We hope, but without much expectation, that the Government will not close their ears and collective mind to logical proposals to ensure that their project can he carried out without devastating problems to the economy and the environment—problems caused by the new layer of bureaucracy that they are setting up, whose separate parts will not only compete with each other, but will also be fertile ground for conflict with the democratically elected councils within their bailiwicks.
7.20 p.m.
Baroness Farrington of Ribbleton: My Lords, I am pleased to have the opportunity to close this debate on the Regional Development Agencies Bill. As my noble friend said in her opening remarks, it is not a Bill that captured many national headlines. But as many of your Lordships will know—particularly those whose principal residence is outside London—the regional media reflected the great interests among regional people in the establishment of regional development agencies. Speaking as an advocate over many years of greater regional autonomy, from my home region of the north-west, I believe that we may come to recognise this Bill as the measure which first gave our regions the opportunity they have long sought to influence their own affairs.
I am pleased too that so many noble Lords welcomed the Bill. Many of those who have spoken have a rich experience of regional affairs and of working to improve regional prospects. This Government have shown that we recognise and appreciate the work that has been done in our regions by organisations such as the North of England Assembly and, in my own region, the North West Partnership. The purpose of this Bill is to build on
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that work, to develop further the regional partnership approach and to give the work of all those in our regions which strive to better regional performance a new focus and direction.
RDAs will be influential new bodies charged with formulating a strategic framework for economic decision-taking in the regions. They will have the powers and the authority to make a real difference to regional performance. For the first time there will be, in each of our regions, an organisation strong enough, and sufficiently broadly based, to make a real mark on regional economies and to give direction to regional and national programmes.
The RDAs first and most important task, as my noble friend said, will be to produce and implement regional economic strategies—strategies which reflect national and regional priorities and (I stress the importance of this in response to questions raised by many noble Lords) express the views and interests of the regional partners, including local authorities. The strategies will cover economic development, social and physical regeneration, competitiveness and innovation. Skills training and employability must also be at the heart of regional strategies. The strategies will be developed in a context that safeguards the environment and promotes sustainable development.
Many noble Lords spoke with support for the principle of the need to ensure that our regions develop, meeting the needs and potential of those regions. Frankly, I fail to see how the noble Baroness, Lady Miller, speaking from the Opposition Front Bench, could claim that, for the purposes of regional development with the functions proposed in the Bill, it is illogical, irrational or unreasonable for this Government to adopt the view that the boundaries created—not to be fixed in stone for all time—by the previous government, including the Department of the Environment, the Department of Transport, the Department for Education and Employment and the Department of Trade and Industry, were appropriate for the early stages and the building of our regional development agencies project.
Lord Bowness: My Lords, I thank the noble Baroness for giving way. While she is dealing with this point, can she tell us how she sees the establishment of regional chambers? Is she saying that it will be at a sufficiently early stage to use the government office boundaries for those assemblies when they come?
Baroness Farrington of Ribbleton: My Lords, I shall come to the question of chambers later in my response, if the noble Lord will allow me to do so.
Lord Bowness: My Lords, perhaps the noble Baroness will deal with the question of boundaries now; it is important.
Baroness Farrington of Ribbleton: My Lords, the experience so far is that the boundaries of the regions which formed regional chambers have been coterminous, with one exception. I wish to refer to that exception later because it is quite complex; it relates to

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the perception, about which people have made assertions, as to where people living in Cumbria believe they live. I was not clear whether noble Lords were speaking of those who live in Barrow, which those of us who live in Lancashire know is really part of old Lancashire, or those who live in the north of Cumbria. If the noble Lord will forgive me, therefore, I shall come back to that point later.
The strategies will be developed in a context that safeguards the environment and protects sustainable development. This Bill, in some detail, puts flesh on the bones of the policy that the noble Baroness, Lady Miller, seemed to make sound like something produced in a furtive document which we had hidden away and which has come as a great shock to Members of the Conservative Opposition. In fact the document was the Labour Party manifesto. It was widely available. The British public read it and were aware of our proposals.
We are committed to more accountable regional government in England but believe that much can be done within the present democratic structure to build up the voice of the regions. It was difficult to tell from comments made by the noble Lord, Lord Bowness, whether he was in favour of a fully fledged, fully accountable, agreed by the Conservative Party, regional form of government in the UK or whether he was opposed to it root and branch.
We were pleased that the noble Baroness, Lady Hamwee, set the tone for the sort of constructive co-operation on developing this tier of democracy that we welcome. I welcome the fact that my noble friend Lord Burlison referred to the fine record of the Northern Development Company and the support it is giving in principle to going ahead with regional development agencies.
I hope that as a result of this debate and listening to debates during the passage of the Bill, the noble Earl, Lord Lytton, will develop some confidence. It is the experience of those in regions where regional chambers have been together and working for some time that people develop a sense of cohesion and an ability to work together. As my noble friend Lord Dormand of Easington pointed out, there is widespread support, ranging from the CBI to the trade unions, to local authorities for this project.
We recognise that this is an evolutionary process. We must make certain that the development takes with it the wishes of the people. The noble Lord, Lord Bowness, speaking for the Conservatives, criticised us because we were not going far enough in having directly elected regional assemblies for the north-west and he was then critical of the very notion of the need to have them. We believe that this first step, through the creation of the development agencies which will be linked to voluntary regional chambers, will provide a focus for regional consultation and scrutiny.
The noble Baroness, Lady Miller of Hendon, raised the spectre, which I thought the Conservative Party might have dropped by now, of additional taxation
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creeping in by the back-door. I can assure her that nowhere in the Bill is there any plan to increase taxation.
Lord Beaumont of Whitley: My Lords, what a pity!
Baroness Farrington of Ribbleton: My Lords, the noble Lord says it is a pity that there is no such plan. I suspect that on the Government Benches we have got it right if we are being criticised from both directions at the same time.
We will not be more specific. We will assess the position over time. It is wrong to pre-empt the stage and rate of change towards the assessment of the demand for regional assemblies. As my noble friend Lord Dormand of Easington said, the very first stage is extremely important. The noble Lord, Lord Beaumont of Whitley, followed by the noble Baroness, Lady Thomas of Walliswood, had doubts about our commitment. Anyone looking at the record of this Government in terms of their commitment to a sound and fundamental change and democratisation and decentralisation of the United Kingdom could not fail to believe that we intend to move ahead. However, in terms of the English regions, it is important that we take people and organisations with us.
A whole range of important issues were raised in the debate. I was asked why we have started from here in terms of the boundaries. Those of us who are committed to the concept of the development of regional strategies in England are only too well aware of the siren voices of those who would lure us onto the rocks by saying, "Only when we can agree exactly where the boundaries between north-west and north or south-west, south and south-east can be drawn may we then go ahead". We in the Government are not fooled by that argument. We know it is a recipe for inaction. Therefore, we believe it is important to move ahead, using, as I have said before, those boundaries which were agreed by the previous government for many, though not all, of the functions that the RDAs will carry out.
The issue with regard to Cumbria is one which I understand has been accepted for the moment by those living in Cumbria. I understand that the voluntary and well-established north-west region assembly was chaired by someone from Cumbria at the time the consultation took place. We have not committed ourselves to using these boundaries for regional assemblies in the future. We communicated our intentions to the regional partners and asked them to put aside differences and get on with making RDAs a success. I am pleased to say that most people in both the north-west and north-east have accepted the Government's decision to move ahead on a voluntary basis.
Perhaps I may move on to the role and make-up of the RDAs. The noble Lord, Lord Bowness, and the noble Lord, Lord Elliott of Morpeth, with particular reference to the Consett experience, raised the issue of inward investment. They posed the questions: is the UK already so successful that we do not need RDAs; and why not leave it up to the local authorities or existing organisations? One has only to talk to many, many

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people in industry who speak of potential inward investors receiving well worked out single packages from Scotland and Wales to realise that these packages cannot be met by the English regions. There is a whole range of issues which need to be sorted out. The need to have a co-ordinated approach draws together people in the regions from both sides of industry in support of moving ahead with RDAs.
The Viscount of Oxfuird: My Lords, I thank the noble Baroness for giving way. I have personal experience of Tyne-Tees German inward investment. I was sent a letter of compliment for all the information that was provided and its particularly fine support package.
Baroness Farrington of Ribbleton: My Lords, apologise to the noble Viscount if I implied that there has never been an ability by organisations to overcome the problems involved. However, I think that those involved in industry would agree that it is far easier to bring together all the partners and to have a strategic approach with a larger unit. That is the scale of the particular project to which the noble Viscount refers. It is one on which all those concerned must be complimented. I know myself from experience in the north-west that it is important to bring people together to plan for the future in a structured way.
The noble Lord, Lord Bowness, referred to the level of funding. RDAs will be given a substantial budget in order to help them meet their objectives. The final budgets will not be decided until later in the year, but expenditure this year on the programmes which RDAs will inherit will be in excess of £800 million, with a further £1 billion of finance attracted through joint ventures with the private sector. This package of finance will ensure that RDAs are key players in the development of their regions.
With regard to the regional split, in the first instance, government funding for RDAs will be split between the regions principally to meet existing commitments. In future years we will take account of the needs and size of the region and the performance of the RDA when setting budgets. Progress is being made in all regions towards the establishment of regional chambers. The first chamber was launched in Yorkshire and Humberside in March by my right honourable friend the Deputy Prime Minister.
I was asked about the article in the Financial Times today. The Standing Orders of another place provide for a standing committee on regional affairs. The committee has not met since the 1970s and I am not aware of any plan to reconvene it.
The noble Lord, Lord Elliott, asked about the bodies currently involved in economic development. Other noble Lords raised the matter of the functions of the new RDAs and the noble Lord, Lord Bowness, raised the issue of London. The Bill does not distinguish London from elsewhere because we do not want to prejudge the plans we have for the greater London authority. But we have in mind that forthcoming legislation for the greater London authority will make whatever provision is
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needed—perhaps by amending the Bill—to set up a development agency accountable to the London authority.
I was asked why there is no mention of housing in the Bill. RDAs will not be housing bodies but will be able to facilitate the provision of housing by others. English Partnerships estimates that in 1996ߝ97 it facilitated the provision of 5,200 housing units. RDAs will continue the work done by English Partnerships as well as taking on the Rural Development Commission's rural regeneration programme. It will also be responsible for administering the SRB Challenge Fund which includes housing.
The noble Lord, Lord Bowness, asked whether there would be any top-slicing of funding from local government. There will be none whatsoever. RDAs will receive their funding from central government programmes.
The question of the performance of RDAs was raised by the noble Baroness, Lady Hamwee. They will be required to report their performance against targets set by the Government as part of the corporate planning process. The NAO will audit RDAs and will be able to conduct value-for-money studies as well.
Several noble Lords asked about rural membership. It is difficult to ascertain whether any reply could gain universal support. The noble Lord, Lord Bowness, wanted to know why we were spelling out the need to have at least one member with a rural background. My noble friend Lord Grantchester asked whether there should be more than one member. Other noble Lords were concerned that this aspect may be left out.
In our White Paper Building Partnerships for Prosperity, we said that each RDA board outside London would include at least one member who can contribute a strong rural perspective. The information provided to potential candidates made clear that members will be drawn from a range of regional interests, including rural interests. RDAs must be inclusive and therefore all the complementary elements—rural-urban, employer-employee, large and small—must be brought together. RDAs need to be innovative and imaginative. They must recognise that small companies need help to grow. The co-operative movement is growing in a large way in both rural and urban areas.
The RDAs' rural duty, in terms of their functions, will apply equally strongly. To have required them to have particular regard to the needs of rural areas would have meant that they would have done so at the expense of other areas and would be drawn out. If we are not careful, our intention can appear to favour one area more than another. We assume that the importance of the large and small, the rural and the urban, will be complementary, as the noble Lord, Lord Wade of Chorlton, said.
Noble Lords referred in passing to our record. As regards rural areas, an extra £50 million for rural transport was announced in the Budget. A further £1.4 million was made available for public transport in rural areas. Rural schools are to be given greater protection. In housing there will be more flexibility for

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local authorities and also in rural areas. Further as regards rural areas, my right honourable friend the Deputy Prime Minister announced on 27th March that the RDC and the Countryside Commission were to merge—neither is being scrapped, as the noble Lord, Lord Bowness, suggested. We see that as an important basis for going ahead.
Several other points were raised and I shall answer them quickly. My noble friend Lord Graham asked about councillors resigning. They will not be required to resign immediately on losing their seats. They will be appointed for a range of qualities, including their experience as councillors, and not as representatives of the authority. The record for the economic planning councils was good. In 1979 the Conservative Government decided to wind them down. I must gently correct my noble friend Lord Sefton in that they were neither directly accountable democratically, nor were they as small as in the present proposals.
Regional people should decide their own affairs. Regional planning councils were a good thing in that sense, but we want to move on. There is a framework within the Bill for guidance for the work of the RDAs. That allows the Secretary of State to issue guidance and directions to the RDAs in relation to the development of their strategies and the exercise of their functions.
During the passage of this Bill I hope to able to discuss in particular freedom and access to information and how that will be dealt with. The question of sustainable development was raised by the noble Baroness, Lady Thomas of Walliswood, and the noble Baroness, Lady Young. I can reassure your Lordships that the Bill is drafted to ensure that an RDA takes full account of the needs of sustainable development at all times. It will be incumbent on it to do so.
The noble Baroness, Lady Young of Old Scone, mentioned the valuable contribution of the environment industry. That underpins the importance of having wide discussion and consultation on guidance with those organisations that have a role to play.
Many other points were raised, many of which will also be mentioned in future debates. Transport, planning and delivery for the RDAs are important elements of regional competitiveness. Although RDAs will have no specific transport delivery role, they will want to influence the planning services. That was a point dealt with by my noble friend Lord Sefton.
The power to raise private capital was mentioned by the noble Lord, Lord Wade of Chorlton, and the noble Baroness, Lady Cumberlege. In particular, the noble Earl, Lord Arran, and the noble Baroness, Lady Cumberlege, stated the importance of helping small companies, of seedcorn investment and of development for the future.
There are other points which need to be covered. I am conscious of the fact that I have spoken for a long time. In summary, the Government will be establishing with this Bill nine new development agencies which will put our regions and the country generally into a better position to maximise our economic performance. The noble Lord, Lord Wade, my noble friend Lord Dormand
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of Easington and the noble Viscount, Lord Oxfuird, raised points on higher and further education and the importance of the interface at regional level, including the close collaboration proposed between RDAs and the Further Education Funding Council and its regional committees. These are an important and integral part of the scheme.
The Government are committed to promoting policies which pursue jobs, growth and competitiveness, but in a way that is compatible with safeguarding the environment and with social progress. These were important points raised by my noble friend Lord Graham of Edmonton and the noble Baroness, Lady Cumberlege. The Bill ensures that RDAs will similarly take a broad view of their economic remit. As we have made clear, they will be required to have regard to the needs of all their regions, including sub-regional, local, rural and urban areas, in fulfilling their statutory purposes. They will be required in all they do to consider the need for sustainable development. We want the RDAs to make their full contribution to the Government's aim of achieving sustainable growth and bringing to an end the economic deficit faced by our regions for so long.
The Government's proposals for RDAs in this Bill have been widely welcomed in all our regions. They form an integral part of the Government's objective of decentralising decision-making and creating a Britain better equipped to deal with the challenges of the global market. They are the backdrop for our vision of a more consensual partnership approach to regional working as a means to achieving a sustainable, prosperous future for all our regions. It gives me great pleasure to commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Police (Northern Ireland) Bill
7.50 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs): My Lords, I beg to move that this Bill be now read a second time.
The aim of the Bill is to make the policing of Northern Ireland more efficient, more effective, more accountable, and, as a result, more acceptable, thereby commanding increased confidence across the whole community.
The proposals in the Bill are drawn from two main sources. In April 1996 the Labour Party published a consultation document on the future of policing in Northern Ireland. That paper, in turn, drew on recent experience of police reforms in Great Britain.
The other source is Dr. Maurice Hayes' comprehensive report on the police complaints system in Northern Ireland.
Since the Bill was first introduced in the other place in December there have been two significant developments which have a bearing on the future of the Bill. These are the lengthy consideration and amendment of the Bill in the other place, and the conclusion of the Good Friday Agreement between the

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British and Irish Governments, and political parties representing the vast majority of the people of Northern Ireland.
The first of these has fine-tuned the Bill so that as well as achieving its main aims it also takes account of the views expressed by a wide range of individuals and groups. At Third Reading in the other place it attracted wide-ranging support.
In this context I should also mention the police authority, the Royal Ulster Constabulary and the Independent Commission for Police Complaints which have all made valuable contributions to the Bill during its progress through the other place.
I should now like to say something about the Good Friday Agreement. This Bill is passing through the House at a particularly historic time for Northern Ireland. We have the referendum on Friday and, if the Good Friday Agreement is endorsed by the people of Northern Ireland, one of the results will be the setting up of an independent commission on policing.
Many of the key features of this Bill are identified in the principles set out in the agreement and in the terms of reference for the independent commission. The commission will be considering these essential ingredients of sound, effective and widely supported policing arrangements for Northern Ireland.
The question, then, is what is the relationship between the Bill and the establishment of the independent commission? The answer is that this Bill is a paving provision. It is a building block on which other improvements to policing can be made.
The independent commission will, no doubt, look at some of the areas identified in this legislation, as they are areas covered in its terms of reference. I am sure, however, that when it does it will take account of the debates we have had in this House and those that have happened in another place.
In particular, I hope that they will take account of the positive comments made about the Bill at its Third Reading and Report stage in another place.
Before I move on to describe exactly what it is the Bill does, and at a time that Northern Ireland is contemplating more peaceful, more positive times than those it has enjoyed in the past, I should like to pay tribute to those who have formed the shield which protected the people of Northern Ireland from the scourge of terrorism. I refer, of course, to the men and women of the Royal Ulster Constabulary, and those who work alongside them, in safeguarding the community and upholding the rule of law.
Over the past 29 years, 301 officers have lost their lives as a result of terrorist attack; and many thousands more have been injured. All officers, and their families, have had to live with the constant danger of terrorism.
I should like to mention especially the families and dependants of those who have died; and those officers who survived terrorist attack but whose injuries are such that they will have to live with severe disabilities for the rest of their lives. We have not forgotten their sacrifice.
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Indeed, the Secretary of State will be meeting members of the Disabled Police Officers Association next week, and will be listening to their concerns.
We should remember that the threat of violence, which led to so much physical suffering and emotional trauma in the past, has not yet gone away. The RUC, in providing a community police service for all the people of Northern Ireland, continues to face unique and all too often dangerous circumstances as its officers go about their daily duties.
Despite this, they continue to uphold the rule of law and safeguard the lives and the property of all the people of Northern Ireland. I believe that this Bill's proposals will aid them in that task.
I should also ask noble Lords to remember the service provided to the people of Northern Ireland by the members and staff of the Police Authority for Northern Ireland. They have stood shoulder to shoulder with the RUC in the fight against terrorism, and have also had to operate under the shadow of threat and attack. The Government and the community in Northern Ireland are indebted to them as well.
I should also like to mention the past and present members of the Independent Commission for Police Complaints, and the staff of the commission, who have played an important part in the accountability framework for the police, again in difficult circumstances.
I have mentioned the Good Friday Agreement and the policing commission; perhaps I could say something about the Government's overall strategy for policing, particularly at a time when there is such uncertainty in people's minds.
Certain things can be taken as read. There is no question of disbanding the RUC. I quote the Prime Minister in an interview on 18th April,
"We want to get to the stage where the RUC—the Police Service in Northern Ireland—can be a police service that has the consent of both parts of the community doing the job of a normal police service".
Nor is there any question of allowing anyone who has been involved in paramilitary activity to police Northern Ireland.
Change will come, of course. We need only look at Great Britain to see this where, for example, many of the police planning and efficiency arrangements contained in the Bill are already in place. These arrangements have clearly improved the community/police partnerships within policing in Great Britain.
I know that changes such as these will be welcomed by the RUC. As the Chief Constable said recently,
"If we reach a point where the threat of violence faced by my officers and faced by the public is dramatically reduced, people will see a dramatic change in the way we go about our business. We stand ready for change to see us as more representative of all our communities".
I should now like to move on to the proposals themselves. In essence, the Bill has four main strands. First, it clarifies the relative responsibilities of the chief

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constable, the police authority, and the Secretary of State in the governance of policing in Northern Ireland, otherwise known as the tripartite structure.
Secondly, it introduces measures to enable the wholly independent investigation of complaints against the police in Northern Ireland, by establishing the office of the police ombudsman for Northern Ireland.
Thirdly, the Bill introduces a range of measures intended to make the RUC and the police authority more accountable. Fourthly, the Bill consolidates existing Northern Ireland policing legislation, with the exception of the police and criminal evidence provisions.
Turning to the detail of the legislation, the Bill introduces to Northern Ireland police planning and objective setting mechanisms, similar to those introduced to England and Wales in the Police and Magistrates' Courts Act 1994. They will allow the Secretary of State and the police authority to set the priorities for policing in Northern Ireland on an annual basis, while safeguarding the chief constable's operational independence.
The chief constable will draft a policing plan reflecting these priorities. That plan will be approved and published by the police authority. Within six months of the end of the year for which the plan was written, the police authority will provide a public assessment in its annual report of the chief constable's performance in carrying out the plan.
The police planning and objective setting provisions have already been brought into effect in Northern Ireland on a non-statutory basis. The plan for 1998ߝ99 was issued by the Police Authority for Northern Ireland at the end of March. The matters dealt with in that plan are important, and it is necessary to ensure they are tackled efficiently and effectively if we are to secure our goal of making life better for everyone in Northern Ireland by reducing the disruption, distress and fear crime brings to the lives of ordinary people.
The Police Authority for Northern Ireland will receive the funds for policing from the Secretary of State and will have the power to determine how those funds are allocated as part of the overall policing strategy. The authority will then delegate the day-to-day management of all the resources needed to deliver the policing service to the people of Northern Ireland to the chief constable, who is empowered to act on its behalf. That includes the civilian staff who work in support of the Royal Ulster Constabulary.
One of the innovations of the Bill is to introduce a new term, the "Northern Ireland Police Service", to describe all those, police constables, support staff, and traffic wardens, who will come under the authority of the chief constable as a result of the provisions of the Bill.
I should also note that the title of the Royal Ulster Constabulary will remain. It will continue to describe the police force, the body of constables who form an essential part, but only a part, of the overall organisation needed to supply a policing service to the community in Northern Ireland.
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The police authority will hold the chief constable to account for the delivery of the policing service, and for his stewardship of resources. These proposals will bring policing in Northern Ireland into line with policing arrangements in the rest of the United Kingdom, with clearly defined and logically structured responsibilities and lines of accountability.
The creation of the office of police ombudsman is another important feature of the Bill. It is one which I am particularly delighted to see as, when a Member in another place, I introduced a Private Member's Bill which sought to introduce an independent system for investigating police complaints in England and Wales. Perhaps I should add that that measure did not become law at the time. It does not surprise me that we have now reached the stage where legislation is being introduced in Northern Ireland, and I believe it will be a model system which the Home Secretary will be looking at to see how it operates.
The provisions in the part of the Bill, Part VII, dealing with police complaints, reflect the recommendations by Dr. Maurice Hayes in a report into the police complaints system in Northern Ireland. This report received widespread support in Northern Ireland and, having looked at the report of the debate on Third Reading in another place, it is clear that there was unanimous support for the proposals there. They are extremely important.
Dr. Hayes concluded:
"The overwhelming message I got from nearly all sides and from all political parties was the need for the investigation to be independent and to be seen to be independent. While there were systematic failings in the present arrangements they lacked credibility because of lack of independence, because it was the Chief Constable who decided what was a complaint, because there was no power of initiative, and because the complaints were investigated by police and others".
I found this particularly interesting given my view 20 years ago and, indeed, the comments of the noble and learned Lord, Lord Scarman, in 1981 in his report (Cmnd. 8421) into the Brixton disorders. He said:
"My own view is that if public confidence in the complaints procedure is to be achieved any solution falling short of a system of independent investigation available for all complaints (other than the frivolous) which are not withdrawn, is unlikely to be successful".
Almost two decades later, this Bill gives effect to his recommendations.
The key point stressed by Maurice Hayes and the noble and learned Lord, Lord Scarman, was independence. Another key point stressed in Dr. Hayes' report is that while public confidence is paramount, it should not be gained at the expense of police confidence. I believe that our proposals will enjoy the confidence of the police and the community.
The Bill's provisions include the establishment, as I have said, of the police ombudsman. This person will be appointed for a period of seven years, or until the age of 70, whichever is the shorter period. Crucially, he or she will have control of the process, deciding what a complaint is, how it is to be investigated and by whom. Unlike at present, the ombudsman will be able to call himself or herself in to investigate cases.

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There will be a requirement that the ombudsman should conduct investigations into the most serious cases. In addition, he or she may investigate any other case. What this means is that the ombudsman will be able to conduct not only disciplinary investigations, but also criminal ones. Obviously, his staff will need to have appropriate powers to do this, and the Bill provides for these.
The staff of the body will be drawn from different areas. The Government believe that, initially at least, there will be a small number of police officers on temporary service drawn from forces across the United Kingdom. These officers will be selected by the ombudsman and will be under his or her direction and control. There will also be other "civilian" staff and these will include the current staff of the ICPC, as well as others recruited by the ombudsman. The office clearly needs to be adequately resourced. The Government do not want to see the body's effectiveness hampered by a lack of resources.
I see these provisions as establishing an office which will undoubtedly engender public confidence in the police complaints system, while also, and importantly, providing reassurance to the vast majority of dedicated, hard-working police officers that their work for the community will not be undone by malicious allegations or innuendo. Where a complaint is made, they will have the advantage of being examined not by the police, with the attendant problem of a lack of independence and public trust in the system, but by the ombudsman who by his or her very nature will be independent.
As I have said, these proposals have attracted widespread support, they have been improved in another place, and I hope that this House will support them.
The Bill also changes the declaration of office made by RUC constables to a form broadly similar to that used to affirm constables in office in Scotland. That is in line with a series of other changes in recent years to oaths or declarations of office throughout the criminal justice system in England and Wales and in Northern Ireland. Outdated and overly complex language has been eliminated and clear, simple wording used. The new declaration states:
"I hereby do solemnly and sincerely and truly declare and affirm that I will faithfully discharge the duties of the office of constable."
This is clear, simple wording.
The role of the police in Northern Ireland, as in the rest of the United Kingdom, is not to uphold one political view or another. It is impartially and effectively to protect life and property, to preserve order, to prevent crime, and to bring offenders to justice. That is to what the declaration of office commits RUC officers. They are also aims to which all right-thinking people ascribe.
The Bill also gives the Secretary of State the power to issue codes of practice to the police authority relating to the discharge of its functions. The purpose of that power is to enable the Secretary of State to ensure that the authority follows best practice on openness, community consultation and financial oversight.
The Bill also gives the Secretary of State power to issue guidance to the police in Northern Ireland, enabling her to issue circulars detailing best practice to
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the RUC, just as the Home Secretary issues such circulars to police forces in England and Wales. That will make relationships between the Secretary of State and the police authority and the RUC more tangible and transparent.
One of the main underlying purposes of the Bill is to improve links between the police and local communities. As part of that, the Government want to ensure that district councils in Northern Ireland are better informed about policing arrangements there. The Bill therefore makes provision for district councils to ask questions of the police authority, and requires the authority to send one or more members to a meeting of the district council to answer such questions, provided suitable notice is given. I am sure that that important step will be welcomed by all who serve on district councils and by the wider community.
As I have already said, the provisions in this Bill are the building blocks on which other sensible improvements can be made if found to be necessary in the future.
I can advise your Lordships that, subject to the House giving the Bill a Second Reading this evening, it will be the Government's intention to seek to have the Committee stage of the Bill considered in the Grand Committee in the Moses Room at an appropriate point in the future.
This Bill introduces sensible, moderate and timely measures which will enable the police service in Northern Ireland to evolve to face whatever challenges the future holds, including the threat of resurgent terrorism. The Bill will ensure safer communities, and better policing for everyone in Northern Ireland. I commend it to the House.
Moved, That the Bill be now read a second time.— (Lord Dubs.)
8.8 p.m.
Baroness Park of Monmouth: My Lords, I welcome much in the Bill, particularly the provision for the complaints procedure which can only do good. However, the Bill comes before the House at a critical moment in the days immediately preceding the referendum and it provides both our own Government and the Irish Government with another opportunity to reassure, not Sinn Fein/IRA, but the ordinary law-abiding people of Northern Ireland by its presentation of the future envisaged by them for the RUC. This will be a touchstone for not only Unionist but moderate Catholic opinion.
The Bill is clearly intended to demonstrate the intention of the Government to meet the commitments set out in the section of the Belfast Agreement on Policing and Justice to,
"a new beginning in policing in Northern Ireland with a police service capable of attracting and sustaining support from the community as a whole",
and,
"a new political dispensation which will recognise the full and equal legitimacy and work of the identities, centres of allegiance and ethos of all sections of the community as a whole, and which, in a peaceful environment, should he routinely unarmed".

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Mr. Ahern, commending the agreement to his government, said that the RUC would need to change and that it should be, as the agreement says,
"professional…accountable…and have public confidence".
He added that its "military trappings"—that slightly mystified me—"must be removed" and that,
"it must be removed…it must be unarmed as the Gardai is".
Many noble Lords in this House have pointed out in recent debates that it is no fault of the RUC that it has so few Catholic members, since the whole world knows that a Catholic has to be brave indeed to join, in the knowledge that his life and that of his family will be under perpetual threat from the IRA. I raise this again because I did not quite understand—now that the Minister has spoken I understand much better—why the Bill proposed in Clause 7 to consult the public widely on their views concerning policing, but in Clause 37 issued a statement of policing principles, including the express principle (in lines 23 and 24) that the policing of Northern Ireland should be conducted in an impartial manner. I could not understand why that was coming forward now.
Surely, the RUC has earned the respect of the public for its war against crime, drugs and so forth. I believe that even the paramilitaries of both persuasions who have murdered, bombed and maimed so many would admit that the RUC had done its duty at great risk to its members in bringing criminals from both sides to justice. This Bill implies in much of its language that only after consultation with the people will impartial policing be achieved. Why is this to be done now before the Patten Commission has examined the position and reported; or is the Bill a mechanism put in place so that it can be implemented when the commission has reported? How do we know what the commission will recommend?
I respect the wish of the Government to ensure that nothing should delay the implementation of the agreement if the referendum gives—as we must hope that it will in the absence of any alternative—the go-ahead to proceed with some positive and valuable plans. But I believe that the last thing that will reassure the many doubters, who already see yet further confidence-building measures being given to people whom they have good cause to fear and reject, making possible such scenes as the disgraceful triumphalism at the Sinn Fein/IRA celebration of the release of prisoners, is for the Government to appear to be prepared to politicise the force of law and order.
The Minister's explanation of the Bill has very much calmed my fears in that direction, but I am not sure that the people who are frightened will be calmed. I give one small example of how not to reassure the Northern Ireland majority. This is a matter that has already been referred to by the Minister. Schedule 2 to the Bill sets out a new form for the declaration or affirmation that
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newly-joined members of the police force will use. The notes on the Bill state:
"The new form of declaration is modern, clear and simple"—
it is—
"and does not contain any reference to the Sovereign or any reference to Her Majesty's subjects. This formulation goes some way to meeting nationalist concerns. At the same time, the fact that it is copied from another UK jurisdiction should soften the impact for Unionists".
That is exactly the kind of thin end of the wedge—the weasel words—which will be seen to be designed to propitiate Sinn Fein/IRA and which takes little account of the message sent to the people to whom the Crown still means, as it does to the forces and to the police, something deeply valued and above party. I believe that that issue is very important. The Minister rightly said that there must not be political allegiance, but the Crown is above that.
The Catholics who are in the RUC—there are some brave men and women who are members of that force—have had no difficulty with the existing form of declaration. The Government speak often of respecting other cultures. Why should that mean rejecting the majority view in favour of the brutal and aggressive paramilitary minority? The Queen has many loyal Catholic subjects who have never thought it incompatible with their religion to serve the Crown, whether in the forces or in the police. It is only Sinn Fein/IRA that has had a significant problem in that direction.
The RUC is likely to view this as a significant step, and the general public may very well share that view. Reasonable though most of this Bill is, this is a time when people feel threatened. This is one more issue on which the Government need to pay greater attention to the deeply frightened and angry majority and less to the militant minority. Without a majority of that majority there will be no effective agreement. Although I share the widely held view that an agreement that must be taken as one package but contains no binding and effective commitment to decommissioning is deeply flawed, nevertheless it must be given the chance to work.
The Government need to make it absolutely clear that the RUC is trusted and valued, as it now is; that HMG will not use this Bill to pre-empt the report of the commission which is to be set up under the agreement; and that consultation with the people means all the people and is not a codeword for asking the IRA to provide its own blueprint and its own thought police. I believe that there is scope for real and valuable co-operation with the Garda. I have great respect for very many of its recent actions. Perhaps in future we shall not see the Slab Murphys of the IRA able to defy it by stepping across the border into Northern Ireland, and vice-versa. Meanwhile, surely we must be seen to be taking every opportunity to support and take pride in the RUC as a magnificent force.
In the past year I have had the privilege to learn something about the difficult and heroic lives led by members of the RUC's Disabled Police Officers Association, many of whom have been maimed and mutilated and their lives and those of their families

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destroyed at a comparatively young age by the paramilitaries of both persuasions. I am particularly glad that the Government intend to provide some money to help them. I know that the Secretary of State is to see them. But they still receive threats even in that situation. These are the brave, dignified and loyal people to whom we should listen. They must not be given cause to believe that it was all in vain.
Sinn Fein/IRA has no problem with the agreement because it sees it as just another stage, this time political, in its struggle. It has achieved its object of acquiring political respectability, despite the fact that the IRA has made the extraordinary admission that members of Sinn Fein who are also members of the IRA may stand for election to the assembly. Everyone seems to be able to swallow that. It will suit it splendidly to find itself in a crippled assembly because of the possibility of a Unionist split. The Prime Minister has seen the danger and made a fresh commitment to decommissioning and related issues to reassure the majority, and that is good. However, it is difficult to see how, given the impossibility of unpacking and repacking the agreement, he can deliver. Just about the only certainty at present in the lives of many is the continuing power of the RUC and, if necessary, the Armed Forces to guarantee law and order. They need to have and be seen to have unequivocal support. The Crown is an important symbol of that because it provides their link with the UK, in which they need to continue to believe.
believe that the Bill has much to commend it. Now that the Minister has spoken I understand better than I did its genesis. But I still believe that this is the moment when the way it is handled will have almost disproportionate political importance.
8.17 p.m.
Lord Molyneaux of Killead: My Lords, I am delighted to follow the noble Baroness's clear insight into so many of our problems. I am sure that we all join in her generous tribute to the Royal Ulster Constabulary. I also warmly support the words of the Minister in his tribute to those who improved the Bill in another place. We owe a particular debt to those who served on the Committee stage of the Bill in another place—which was rather protracted—and should record our appreciation of the care taken by Ministers and Members of the Committee to correct many drafting errors. That is no reflection on the draftsmen, because at Northern Ireland and UK level they are working under very great pressure. That would normally be expected in the first Session of a new Parliament, but superimposed upon that mechanism has been the unexpected burden of many items of new legislation arising from what has been called the Northern Ireland peace process, which it is not. Rather, it is a political process which at most may improve the prospect of peace in Northern Ireland.
Ministers have been very prudent in resisting quite unnecessary structural changes in the Royal Ulster Constabulary when the level of terrorism constitutes grave concern. The IRA has bequeathed to its sub-contractors the capacity to launch attacks at any time and at any point of their choosing. Such
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perpetrators may pretend to be at variance with the main contractors—namely, the Provisional IRA—but their differences are really limited to the speed of the conveyor belt delivering concession after concession. The so-called sub-contractors want the belt speeded up; the main contractors realise that that may not be possible; but they are all agreed that at least it should be kept moving.
While the whole fiendish game is being played out, as the Minister said, lives will still be at risk and Her Majesty's Government's Ministers recognise that they have a continuing responsibility to protect the lives of the citizens. The life-preserving instruments in Northern Ireland are the Royal Ulster Constabulary, the Army and we should not forget other forces of the Crown, in particular as I have a vested interest as a former member of the Royal Air Force. The Minister has conceded very wisely that now is certainly not the time to tamper with the efficiency of any of those forces.
Whatever the course of political events, there will be confusion and instability and it is essential that such anxieties be not increased by the unnecessary removal of familiar landmarks. That is a very important lesson which we should bear in mind.
During past months, we have had more than enough of confidence-wrecking measures. A lengthy pause in that operation would be beneficial to all. One is reassured by the Prime Minister who, in his revised list of disqualifications, included those who practised intimidation and targeting of persons in public life. In particular, I am thinking of members of the Royal Ulster Constabulary, their wives and their families. While such activities have not deflected policemen from doing their duty, it is something which would not be tolerated not only in any other part bf the United Kingdom but in any other part of the European Union, with the possible exception of "Mafia land".
As regards the propaganda campaign for change of title and replacement of cap badges, I must ask whether anyone really believes that the Republican sub-contractors who planted that huge bomb at the police station in the city of Armagh just a few days ago would have stayed their hand by reason of a change in headgear of the occupants of the station. The sad reality is that the Royal Ulster Constabulary and the Army will always suffer attacks because they are seen to be the upholders of freedom and democracy. Therefore, they are automatically the enemies of evildoers of all categories.
8.23 p.m.
Lord Blease: My Lords, to follow the noble Lord, Lord Molyneaux, the noble Baroness, Lady Park of Monmouth, and the Minister at this stage is a very arduous task. Their words will certainly be read with great interest and with a great sense of solace, to some degree, by many people in Northern Ireland tomorrow morning.
The Minister has gone into some detail in explaining this legislation to the House this evening. I am really heartened by the words and thoughts expressed so clearly by the noble Baroness, Lady Park, and the noble

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Lord, Lord Molyneaux. They have made the Bill, which is a massive piece of legislation, more easy to understand. It is a difficult piece of legislation to understand both in relation to its content and its application to the situation in Northern Ireland.
Perhaps I may turn to the issue of this House dealing with the legislation. It will be noted that in general terms of parliamentary legislation, the Bill is a formidable piece of legislative work to undertake. It has eight parts, 77 clauses, and six schedules. As has been mentioned by the noble Lord, Lord Molyneaux, there was purposeful debate on the Bill in another place. Since its First Reading on 5th December and its Second Reading, there have been 15 sittings of the Commons Standing Committee. Therefore, there is a tremendous burden on us to deal with this legislation in the context of daily events which may influence certain decisions concerning the Bill.
It is interesting to note also that it was debated in the Northern Ireland forum during the month of March. It is interesting to observe how this Bill shaped up with the elected representatives there. On reading the debate this evening, they may change their views to some degree. However, there are deep-rooted attitudes which have been formed over the years by many in public life.
I cannot add to anything that has been said by the Minister, the noble Baroness, Lady Park, or the noble Lord, Lord Molyneaux, in the tributes which they paid to the RUC and to all those involved in the policing services. Those people have stood on the bridge and will continue to do so unless dramatic changes take place in the democratic process in Northern Ireland.
The Minister was right at this stage to refer to the impact which may arise from the appointment of Chris Patten to preside over the commission dealing with policing in Northern Ireland. There is bound to be an overlap and changes are bound to take place. I do not know how flexible we can make the legislation to deal with policing and the new commission which is to be established. It needs to be flexible so that it can adjust to the needs of the particular situation in Northern Ireland. Those needs must be met with certain standards. Standards of law and order must be maintained in Northern Ireland, including the way it is financed. The RUC has upheld those standards over the years by trying to make life there worthwhile and to bring hope and prosperity to the community.
The proposal to take this Bill in the Grand Committee is a worthwhile step forward. It will meet the needs of the changing circumstances which we shall probably meet as the weeks pass by during the passage of this legislation. As I say, I pay tribute to the RUC in Northern Ireland. That point has been well made by the Minister and there is nothing I can add to that. I am sure that it is the wish of this House that the Bill should go forward in a manner which will help the situation in Northern Ireland, and will help in particular those who must stand on the bridge on a day-to-day basis.
8.30 p.m.
Lord Vivian: My Lords, I rise to speak briefly in this debate. I must apologise to your Lordships in that I shall be unable to stay until the end. I make this contribution as I have served on two occasions with my regiment in Belfast and in the country areas. Although it was many years ago, my memories and impressions are very vivid. I shall not refer to the technical aspects of the Bill, which I found most interesting as explained by the Minister, as I wish to concentrate on the Royal Ulster Constabulary and to make some wider and more general comments on policing in Northern Ireland, which is difficult to do anywhere outside the confines of this Bill.
Policing in Ulster is a joint matter between the RUC and the Army, with support from various intelligence agencies. I should like to make the point here that it is vital to continue to have a co-ordinator of intelligence drawn from either the RUC or the Army to disseminate intelligence in a timely manner so that it can be acted on with success. The Army is in support of the civil power and the success of these combined operations is due to the close working relations between the RUC and the Army, established and developed over many years, although there have been periods when this relationship has not been as close as it should have been. The policing of Northern Ireland is essentially a combined operation and the conditions of any forthcoming agreement must take that into account. The authority of the security forces must not be undermined, particularly during any transitional stage resulting from any political agreements.
There are concerns emanating from the present agreement, which will be voted on by the people of both Northern Ireland and Ireland on 22nd May. Without the necessary guarantees, some people in the north might not cast a "Yes" vote. It is of the greatest significance that Ireland has rescinded its territorial claim to Northern Ireland—a fact that should be recognised and clearly understood before people vote in the referendum. There are three major concerns, which have much commented upon in press reports and indeed some have been mentioned in your Lordships' House tonight. They are matters which will be the responsibility of the police. First, is the release of prisoners; secondly, the handing over of weapons; and, thirdly, the review of the RUC. All these three matters are of the utmost importance and I wish to stress that the timing of any review into the policing of Northern Ireland could be critical to the successful future operations of the RUC.
Without a fully functioning and efficient police force the monitoring of the release of prisoners and the handing in of weapons would be impossible to achieve. It is for this reason that no independent inquiry should be instigated into the future of the RUC until the release of prisoners has gone smoothly and according to plan; and weapons have been handed in. It is vital that the Prime Minister's four measures to clarify whether the term and the spirit of the agreement are being met and whether violence has been given up for good are put into legislation and placed before Parliament. He said that the first test was a clear commitment that there was an end to violence for good and that the so-called, "war" was finished, done with and gone. Secondly, the

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ceasefire had to be complete and unequivocal, and this condition included punishment beatings and the need for dismantling para-military organisations. Thirdly, there had to be full co-operation on the decommissioning of weapons and ammunition with the independent commission. Fourthly, no other groups were to be used deliberately as proxies for violence.
How can the police ensure that those conditions are monitored if, at the same time, an inquiry into their organisation, roles and responsibilities is to take place? Any inquiry will lower morale and affect the confidence of all ranks of the RUC at the very time when all their skills will be required to ensure the prescribed conditions are met if there is a "Yes" vote in the referendum next Friday. Now is not the time to carry out a review of the RUC.
The men and women of the RUC are quite rightly considered to be some of the bravest people in the world, displaying immeasurable courage and, on many occasions, acts of gallantry that go unreported. Their devotion to duty and loyalty to the Crown have been and remain at the highest levels. They have lived continuously for about 29 years in extreme danger and under threat throughout their lives, many of them living in the same places all the time. They have performed their duties in the face of the most difficult circumstances, upholding law and order, preventing Northern Ireland slipping into anarchy. Now is not the time for their morale to be dented but rather for the Secretary of State to be seen to be visiting police stations and Army locations very much more frequently than in the past, where her lack of interest in visiting the RUC and the Army has been noticed by the forces of law and order, and has rightly angered members of the security forces.
I started my comments with the fact that successful policing of Northern Ireland is a joint matter concerning the RUC and the Army. Until there is a police settlement, that will continue to be the case. It is vital that the morale of these two organisations is kept at the highest possible level and that their performance should be no less than excellent at all times. In this context, and without going into any great detail, I wish to bring briefly to your Lordships' attention the cases of Guardsmen Fisher and Wright. I do so because, as I have already said, the Army is part of the policing equation and without it the RUC would not have been able to manage. I believe that there has been a gross miscarriage of justice and that these two guardsmen should be released immediately.
There are many reasons to substantiate this claim, which has recently been submitted to the Ministry of Defence. I will not tire your Lordships tonight with the reasons for this, but perhaps two of the most striking are the facts that the other two soldiers in their patrol—namely, Sergeant Swift and Guardsman Williams—were not called to give evidence and that, on behalf of the prosecution, the RUC questioned Sergeant Swift in a hostile manner in a military barracks at Windsor shortly before the trial. I am led to believe that the Secretary of State has the discretionary power to release any prisoner at any time. In view of the circumstances prevailing in Northern Ireland today, and because it seems that there
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has been a miscarriage of justice, both these soldiers should be released forthwith. The imprisonment of those two soldiers has had, and is having, a most unnerving effect on soldiers carrying out policing and anti-terrorist duties in Northern Ireland.
In conclusion, I believe that there is a case for a review of the RUC during which the chief constable should address all the changes that he may wish to make. The review should be in two phases. Phase I could start once the result of the referendum is known and should establish the terms and conditions of reference; the official nomination of a chairman, members and secretariat support; the methodology to be adopted; and the systems for reporting and discussion. Phase 2 should consist of the actual inquiry, but, not before violence has ceased; weapons have been handed in; a smooth release of prisoners has taken place; and the guarantees given by the Prime Minister have been implemented.
8.38 p.m.
Lord Monson: My Lords, I must, first, apologise for not having put down my name on the speakers' list. I calculated that this debate would start between 6 and 6.30 p.m. and I knew that I had to be at a meeting elsewhere in the Palace of Westminster until 7 p.m. Most of the points that I wish to make can in fact be made in Committee, but I have three specific questions for the Minister. The first one may seem trivial and I suppose that it is. However, as it relates to the contents of the "Explanatory and Financial Memorandum" of the Bill and not to a clause or schedule, this is the only forum in which I can raise it. The explanatory memorandum states:
"The Bill will give effect in Northern Ireland to certain proposals for police reform…set out"—
not in a government White Paper or Green Paper but—
"in the Labour Party consultation paper".
I may be exceptionally unobservant, but that does seem to me to be a trifle unusual. As I said, it is not terribly important, but it would be interesting to hear the Minister's response on that point.
Secondly, and more importantly, I was delighted to hear the Minister say that the name of the RUC would not be changed—or, at least, that there are no present plans to change its name. Therefore, can the noble Lord assure the House that there is absolutely no substance in the prediction made by that respected elder statesman, Dr. Conor Cruise O'Brien, while taking part in an "Any Questions?" programme in Belfast on Friday, which was repeated this Saturday lunchtime, to the effect that not immediately, but before very long, the word "Royal" would be dropped as a result of pressure from the pan-nationalist front?
My final point concerns the revised form of declaration which is rightly criticised in my view by the noble Baroness, Lady Park of Monmouth. Is the Minister in a position to tell us what form of declaration there is in the Irish Republic for those who join the Gardai? Is the form of declaration there phrased in such

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a way as to be wholly inoffensive to the tiny handful of Unionists left in the Republic? In other words, is sauce for the goose sauce for the gander?
8.40 p.m.
Lord Lyell: My Lords, I apologise for not having added my name to the speakers' list as I did not think I would be in your Lordships' House today. I have two questions for the Minister. Did I hear, in what I believe was about the 15th minute of his speech, that the total number of members of the Royal Ulster Constabulary who had met violent deaths as a result of the troubles was in the region of 300?
It may interest the Minister to know that one day when I was in Northern Ireland I had to write letters to the widows of the 199th and 200th members of the Royal Ulster Constabulary. That was 14 years ago. At a rough calculation, over 30 years and 300 deaths, an average of 10 men and women have met violent deaths each year. Will the Minister let me know at some stage the total number of men and women of the Royal Ulster Constabulary who have met violent deaths since the start of the so-called peace campaign of September 1994? The figure of 10 per year does not sound an awful lot, but in mathematical terms that would equate to about 300 to 400 members of the police force on the mainland murdered every year.
Clause 27 of the Bill is headed,
"Members of RUC engaged on other police service".
That appears to me to be rather an odd phrase. The explanatory and financial memorandum states that Clause 27,
"makes provision for members of the Royal Ulster Constabulary engaged on service outside the RUC".
That is perfectly clear to me. I believe that the terms of this clause may be taken from Scottish or English and Welsh police procedure. I hope that the Minister will confirm that, perhaps at a later date. Perhaps we can discuss this in Committee if I am allowed to participate in the Grand Committee. The phrase "other police service" is interesting. It makes me wonder what other activities are included in the phrase.
The Minister referred to the Royal Ulster Constabulary's duties. As he spoke a shiver went down my spine. I have heard those words used by paramilitaries on both sides of the community in terms of keeping order—as they term it—in their respective communities. They have used precisely the same words to justify their actions as the Minister used. As I said, that sent a shiver down my spine. However, we can discuss that in Committee. Above all, I hope the Minister will inform me how many members of the Royal Ulster Constabulary have been murdered or have met violent deaths between 1994 and today.
8.43 p.m.
Lord Alderdice: My Lords, it is impossible to refer to policing in Northern Ireland without acknowledging the extraordinary risks that have been run by members of the RUC, by their families and by other public servants who have supported their duties over many
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years. We often think of those who have died—the noble Lord, Lord Lyell, has mentioned them—and of course their families. We think, too, of the many who have been disabled. Their situation has been drawn to your Lordships' attention.
It is almost impossible to overstate the strain and difficulty that have hung over members of the RUC, the RUC reserve and their families over the past 30 years. Indeed, it is only when things begin to improve and the strain starts to lift that many of them realise the great cloud that has hung over them. When they leave home in the morning they leave behind partners and families who wonder whether they will return in the evening. Members of the RUC have often been uncertain whether they would return or whether they would return to find their own families had fallen victim to paramilitary attacks. That is an extraordinary kind of service which is unequalled in almost any part of the democratic world, not only as regards its difficulty but also its prolonged nature. We cannot pay full enough tribute to those who have served in this way.
It is important to ask why these people have found themselves in that situation. It is because of the extraordinary responsibilities that the RUC has shouldered. The responsibility of most police services is to ensure good community policing and the maintenance of law and order within society. That is the responsibility of the RUC within Northern Ireland, but its responsibility goes far wider than that. From the very beginning it has been its responsibility to act in defence of the state. The very state itself has been under threat from the beginning. That is the nub of the problem for members of the RUC in terms of the size of their responsibility, and the nub of the problem for Nationalists joining the RUC.
It has been suggested that it is really only those who are extreme in their republicanism and violent in their operation who find it difficult to play a role in the RUC. I wish that was so. However difficult we may find it to acknowledge, it is precisely because the RUC has found itself in a political position in the maintenance of the state that a much greater difficulty has arisen. It is sometimes thought that the police could be improved in this way or that so as to obtain the confidence of the community as a whole. A Member in another place with whom I have considerable political disagreements pointed out recently that when the RUC has to deal with burglary, car theft, rape or all kinds of other issues, there is no lack of confidence as regards the propriety with which it deals with such a matter or the professionalism it brings to that. There is an appreciation right across the community that the RUC brings a degree of professionalism to the job which is second to none. However, the problem for Nationalists is their perception that the RUC exists to defend a state to which—at least until now—they have not been able to give allegiance. That is an awful burden which the RUC has borne on behalf of the community and which we must not forget.
I believe that there is an opportunity in the next few days and over the next few months—as this is not so much an event as a process—to bestow a legitimacy (through a referendum throughout the island of Ireland)

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to a political settlement which may begin to remove some of that burden from the RUC. It is not a burden which the RUC created for itself; it is a burden it has borne for the community. Allegiance could be given to a settlement which would enable matters to begin to change, but only if that settlement is supported widely throughout the community.
Those who have deep in their hearts a commitment to support the RUC must understand that one of the greatest things they can do to cancel the invidious position in which the RUC finds itself would be to ensure an agreed settlement throughout the island of Ireland. That would inform Irishmen North and South that the RUC does not exist to defend and maintain a state from which they are alienated. The RUC exists to ensure good rule of law and order for all sections of the community. I believe that is what a "Yes" vote would achieve for the RUC. I believe it is within the terms of a settlement that things can begin to change.
While I support many of the provisions of this Bill, it is rather extraordinary that it comes to your Lordships' House at this time—and indeed that it came to another place when it did, in December of last year. I say this, having said so at the time to the Minister with responsibilities in another place. At that time you will recall that we were right in the heart of negotiations about the future of Northern Ireland, and policing was to be one of the very central issues that we would have to address. Yet this Bill was already passing through the other place. When I raised the question, it was said to me by the Minister—I do not think I am breaching any confidence here—that now that we have a legal instrument going through the House, if it is the case that matters should arise in the context of the negotiations, they will of course be able to be brought in.
That seemed to be a not unreasonable proposition at the time but it has not turned out to be so, because in the agreement we were not able to come out with a series of agreed propositions of what could be done with policing. I have to say that, had such an outcome come about, it would have removed a good deal of the fear that is now in the community about issues of policing, prisoners and other matters. Instead, what we have is a proposition for a commission on policing. I do not suggest that the commission is an inappropriate vehicle. In particular it is good news that it may well be chaired by Chris Patten, a man of great distinction, who is held, I may say, in great respect and affection in Northern Ireland. I do not pour any cold water on that at all, but it does mean that this legal instrument now going through the House cannot itself contain any of the propositions which might be consequent on the settlement itself.
So we have a curious device going through, which makes some changes of a kind that could have been made at any time in the last dozen years or so. Indeed, many of the propositions here are propositions for which my colleagues have striven for quite some time. I refer to matters like an ombudsman; a completely independent process for dealing with complaints. I wonder, referring to that matter, whether I may ask the Minister to confirm that the ombudsman will himself be able to employ officers to proceed with investigations.
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One of the great difficulties with the police independent complaints commission was having to use officers operating within the RUC. That cast some kind of doubt on whether the officers could in fact operate in an entirely independent fashion. This is no reflection on the individual officers, but it simply concerns the fact that they were operating within the police, and continuing to do so.
It is not the case that all the propositions were inappropriate but simply that it is curious that they come at this particular juncture, when it can hardly be doubted that within a year or 18 months we shall find ourselves having to explore some further provisions. Of course, when these provisions are already in law the question will arise for many people in Northern Ireland: what more do you think should be done?
There are also some issues concerning the structure that is proposed. It is rightly said that this piece of legislation clarifies relationships between the components of the tripartite structure: the Secretary of State, the police authority and the chief constable. The current chief constable, I may just say to your Lordships, has performed sterling duties on behalf of the people of Northern Ireland as a whole and has played a remarkable role in carrying out his responsibilities as chief constable recently. However, it does seem to me that at best there has been a lack of clarity between the three elements of the tripartite structure at times in the past, and particularly under one previous chief constable, when the responsibilities and rule of the police authority appeared to be somewhat in doubt, certainly in the mind of that particular chief constable. I think it is helpful that that matter has been clarified.
However, I have to say that I really do not see the structure as being a very satisfactory one now. It seems to me that, if part of the problem for the police has been that they have been seen to be maintaining a political institution with which part of the community did not feel a kinship, the best way of dealing with such a situation is not just to have a political settlement but to ensure that the police are entirely accountable to all the people of Northern Ireland. And this could be done quite simply. We are talking about devolution. We are exploring the question of how many government departments there ought to be. If the Government were to put in place a department of justice which took responsibility for policing, prisons and all such matters, then it would be able to be accountable to all the people of Northern Ireland.
There would be a minister for justice. He would he scrutinised by an assembly committee of representatives of all the people of Northern Ireland. It is my belief that such a development could be of enormous value. I accept that it may be difficult to pursue this line immediately at this point, but I would like to ask the Minister, first of all, is it possible to construct a kind of "infant" department of justice, as it were, based on a minor expansion of the office of law reform, which could subsequently take on these other areas of responsibility without major change? Or at least can I have the Minister's assurance that, when the settlement Bill comes to us, it will be constructed in such a way that devolution of responsibility for policing and other

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matters will be something that can be done without further primary legislation? And can we have some clarification as to how that might be agreed to come about?
If, for example, a new assembly, voting by the cross-community procedures which are to be put in place were to agree that it wanted to take that responsibility, would that in itself be sufficient to persuade the Government that those matters should be devolved? This is important, because it is the way we could really get some accountability and some assurance for all the people of Northern Ireland that their affairs will be considered properly. I have to say that in some ways the conduct of matters of justice in the last couple of weeks, conduct primarily by those in positions of responsibility outside Northern Ireland but with an interest in Northern Ireland—and I say it plainly: the Governments in London and Dublin—has been profoundly unhelpful and would not have taken place if the responsibility had been that of politicians of almost any frame of mind within Northern Ireland. That is why this whole area of accountability in Northern Ireland is supremely important.
Then, a police authority would be something completely different. There would be the opportunity for, as it were, a regional police liaison committee, something which did not have on it appointees from the Secretary of State but rather representatives coming up from police liaison committees, so that one had a regional advisory body for Northern Ireland, advising an assembly with its roots in local government and advising a minister of justice with responsibility for policing.
I point all this out because it seems to me that we are putting in place here a structure which, if things go well, ought not to be in place in a couple of years' time. That poses to me the question: why are we going down this road if it is something that can only have a relatively short lifetime? I would emphasise that in no way do I want to see the operational independence of the RUC chief constable tampered with. That is absolutely crucially important, whatever structure may be established.
There are a number of other issues to which I would wish to advert. In particular, may I ask the noble Lord the Minister: when there is reference in paragraphs 8 and 27 to the opportunity for police officers to operate outside the Northern Ireland context and perhaps in an international context, would that be sufficient authority for police officers from the RUC to work with officers of the Garda Siochana in a joint body established by ministers of the north and south, or indeed by the British and Irish Governments? Would this be sufficient authority for that kind of work to be done? I believe that people of all types and descriptions north and south would be happy to see the RUC co-operating with the Garda Siochana on issues such as drug trafficking, terrorism and organised crime? I think we should leave open the opportunity for that to be done.
There is much more one could say about these matters, because policing has been such a central issue in Northern Ireland affairs and in Northern Ireland life. It is an extremely sensitive one. I hope that when we
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debate the legal outcome from the Patten Commission, if we may presciently describe it as such, it will be in a context where, because we do not have a terrorist campaign under way, it will be possible to have fewer police officers. Where it is possible for us to have adequate policing without the current number of police officers, can the Minister assure us that government money will be forthcoming in substantial amounts to ensure proper financial recompense for those who will be taking early retirement or otherwise will no longer need to continue in the RUC?
For those who are younger, and have the ability to take up other careers, can the Minister assure us that there will be proper retraining, and that investigations will be taken up in the remainder of the United Kingdom and other places? I refer, for example, to the Government of the United States, and others. I have recently been talking with the Tanaiste in Dublin about the possibility of using the PHARE project, fully paid for by the EU, for members of the RUC and the Garda Siochana to help to train police services in central and eastern Europe which badly need the level of professionalism, experience and skill of the RUC. Can the Minister assure us that the Government will go to great lengths to ensure that RUC officers who are no longer needed will still be valued, recognised, recompensed and their abilities and skills well used outside Northern Ireland when they are no longer needed inside Northern Ireland because matters have improved so much in the way that we wish to see?
9.1 p.m.
Lord Cope of Berkeley: My Lords, we have had an interesting and wide-ranging debate. However, the Bill is about the management of the Royal Ulster Constabulary. The first point that we should remember with due modesty here in Westminster is that we at both ends of this building have been in overall charge of the RUC for nearly 30 years. People sometimes speak as though Ulstermen, in particular Unionists, have been in charge of it. But Whitehall and Westminster have been putting in place the legislation, appointing the chief constables, deciding how much money it should have, and so on, for years. Some of those functions have been exercised through the police authority (PANI), but that was set up and appointed by the Government. They were doing so at one remove. Therefore any criticisms of the way in which it works now are criticisms of ourselves, of Ministers in the Northern Ireland Office, and are not so much criticisms of the Unionist community or anyone else in Northern Ireland. If the tripartite structure is unclear and needs reform, so be it, but it is Whitehall and Westminster which put it there in the first place.
The Bill's aim was described as making policing in Northern Ireland more efficient, more effective, more accountable and, as a result, more acceptable, increasing confidence across the whole community. We can all agree with the idea of improving efficiency and effectiveness. But, as has come out in the debate, acceptability is more complicated. In the Northern Ireland situation, it is difficult to make something more acceptable to one group of people without making it less acceptable to another. But it is also axiomatic that no

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police force which does its job is acceptable to everyone. Criminals and terrorists want a weak, inefficient, unacceptable police force. That is much the best for them. A police force which was acceptable to criminals and terrorists would be hopeless. It would be a disgrace and worse than useless in performing its function. So I believe that everything said about changes to the police by political representatives of terrorists should be treated with the utmost suspicion.
My next point is that acceptability is not the same as accountability to a political entity. Some police forces, including, for example, the Garda, are answerable to a much greater degree to politicians for their operations, the appointment of officers to a quite low level, and so on. That is not a good way to run a police service. It is well outside the British tradition of the operational independence of the chief constable, about which the noble Lord, Lord Alderdice, spoke a moment ago.
The noble Lord also spoke of the possibility of the assembly, or a committee of the assembly, taking over responsibility. Even if everything goes as well as we all hope, I think that that should not be rushed. It is a long-term programme, not a quick one. But of course it does and will depend on the way the security situation develops over the next few months and years.
The noble Lord, Lord Alderdice, criticised some decisions of recent days. If I have guessed correctly which they were, they were essentially operational decisions. They were not decisions which should have been taken politically but from an operational base. I think that they may have been taken politically, and that may have been part of the problem. But acceptability is about both symbols and mechanics. The Bill affects both. I shall come back to the mechanics—the complaints procedure, and so on—in a moment. Part of the nervousness about tinkering with the symbols is that, as the Minister stated, this is said to be the start of an ongoing process. That makes people nervous about the next thing that will be tinkered with in this way.
The Bill tinkers with the name of the police, introducing the concept of the Northern Ireland police service. That makes people nervous that the name of the Royal Ulster Constabulary might be changed. The Minister was precise that the name will not be changed. I am grateful for that assurance. No other force has remained as steady and has improved its reputation under such appalling pressure from terrorist criminals, as we heard tonight from several noble Lords. The RUC has a proud record of service and an excellent reputation. It would be wrong to change the name when so many have died and been mangled and disabled in its service.
The Bill also changes the form of the oath and affirmation. That was presented by the Minister as a simplification of the wording: a modernisation to make it rather more straightforward. However, as we know, the changes crucially remove the passages about loyalty to the Crown. The idea that the present oath incorporating the notion of loyalty to the Crown somehow deters Catholics from joining is a mistake. The oath taken by a Member of Parliament when joining the other place does not stop many Catholics from
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Northern Ireland and indeed other parts of the United Kingdom becoming Members of Parliament. The same is true of this House. The present RUC oath was used in exactly the same form by the Royal Irish Constabulary, the gallant predecessors of the RUC. That force had a majority of Catholics. So I do not believe that the oath itself has deterred Catholics from joining.
Many may have been deterred, as the noble Lord, Lord Alderdice, said, by unwillingness to support the idea of the present system of government of the Province. But the major reason deterring Catholics has been the targeting of Catholics by the IRA. I refer not only to the murders, though they are a part, but to the fact that they are effectively driven out of their communities. My noble friend Lady Park of Monmouth referred to that. I remember meeting an inspector from the RUC and speaking about this problem. He told me that he was a Catholic. If I recall the conversation correctly, he had been married for 17 years, and had never yet been able to visit his in-laws because they lived in a difficult area. His concern was not so much that by visiting his in-laws he might risk exposure himself, but that he would expose his in-laws if he were recognised as an inspector by somebody with whom he had had to deal. He also drew my attention to the difficulties of ordinary parish life. He could not take mass in the same church each week. He had to move about; otherwise he would have been greatly at risk of exposure. That is the sort of thing that deters Catholics from joining the force, not the oath. Incidentally, it is also a tremendous measure of the dedication of those who do join.
The reason why people shoot at members of the Royal Ulster Constabulary is not that it is largely a Protestant force—in fact, Catholics in the force are targeted more than Protestants. After all, the Royal Irish Constabulary had a majority of Catholics and was attacked just as fiercely. It is that the RUC upholds the democratic right of the people of Northern Ireland to choose which state they wish to belong to and how they are governed. The RUC has defended democracy and the people of Northern Ireland against ferocious terrorism of all kinds. It has held the line for the Government and for the people against all comers—at times from both traditions. It is worth recalling that the clear-up and conviction rates of the RUC are higher for crimes committed by Loyalist terrorists than for crimes committed by Republican terrorists. Therefore the Government should be careful not to damage the symbols of the Royal Ulster Constabulary.
The Minister recognised that, even if everything goes as well as we all hope, the RUC will still be needed—supported by the Army—with high morale and high efficiency. As the Minister said, the dangers have not gone away; nor are they likely to do so. The dangers are from political terrorism by those who do not accept the settlement and also from the financial rackets, which have a momentum of their own quite separate from the political momentum—which will tend to mean that the RUC has an important job to do over and above the job done by every other police force.

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Turning to some of the mechanics that are being changed, the post of ombudsman is being set up. I certainly accept and welcome the basic recommendations put forward by Dr. Maurice Hayes, which are translated into legislative form in the Bill. It is good to have the independent investigation provisions in particular.
There may be difficulties over the definition of a serious complaint and a less serious complaint. We can return to that matter in Committee. Clearly, the seriousness should be judged as objectively as possible and should be related to the substance of the complaint rather than the person making it. I am unhappy about the definition being left, as it is in part, to regulations.
The Bill also restructures the tripartite structure. I believe it is not unfair to characterise it—to cartoon it, as it were—by saying that it devalues the police authority and builds up the relative position of the Secretary of State and the chief constable. The whole point of PANI was to provide an independent link in the chain. Cutting it out or reducing its scope means that there is a more direct route from the Secretary of State to the chief constable, which leads to the dangers of more political control—or what might be thought to be more political control, which is just as damaging.
The brings me back to the point I made about acceptability and accountability to the Secretary of State being different things. I do not believe that greater accountability to the Secretary of State will make the RUC more acceptable to people. After all, individual Secretaries of State go up and down in the public estimation and are held in different degrees of estimation by different groups among the public. Nor do I believe that it is particularly desirable that politicians should be thought to be controlling the police. We shall have to look carefully at those provisions when we come to the Committee stage. Incidentally, I am content that that should be through the Moses Room procedure which was suggested by the Minister.
Overall I find the Bill acceptable; but, as has been pointed out, its timing is odd and I think likely to lead to misunderstanding and mistrust. The Minister of State said in another place at Second Reading, at col. 46 of Hansard, that, if necessary, the Bill would be used to implement appropriate parts of the agreement. I gather from the Minister's remarks that that is no longer envisaged and is not what we are expecting, but it shows the rather curious background which exists to this Bill at this particular time.
The Royal Ulster Constabulary is a most effective force, with a high reputation for courage and resilience. Every society owes a debt to its police force, but I find it difficult to envisage a society which owes so much to the dedication of its police force as does Northern Ireland. That does not mean that nothing should be changed, but we must always remember what an excellent force it is now and tread with great care.
9.16 p.m.
Lord Dubs: My Lords, perhaps I may say, first, how grateful I am for the many tributes that have been paid
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to the RUC throughout the debate, tributes richly deserved by a force to which we all—we here and the people of Northern Ireland most of all—owe an enormous debt.
A number of themes have run through the debate and I shall refer to them in dealing with the various questions that have been raised. One of the most important is the need to reassure ordinary people in Northern Ireland that they will be made safer through any changes that take place to the RUC, and to reassure the members of the RUC that they have nothing to fear from the changes that are contemplated in this legislation.
I am aware from the time that I served in the other place that there are frequent changes to policing—for example, the Police and Criminal Evidence Act and many other measures. I do not think that they were seen by the police or the people in England and Wales as being a particular threat. I think they were seen as ways in which the police were responding to changes in society, ways of responding to the changing demands on the police, and so on. I should like to feel that changes to how the RUC operates or to the context in which it operates would also be seen in that way and not as posing a particular threat either to members of the RUC or to ordinary people who depend upon the RUC for their sense of safety in their homes and when they go about their work. I hope that the House will accept that changes may often be helpful and necessary, without being threatening,
I remember that in the early 1980s there was much criticism of the Metropolitan Police. I referred earlier to the work of the noble and learned Lord, Lord Scarman. There were two waves of rioting in Brixton and other places. There was a general feeling that all was not well. I should like to pay tribute to the Metropolitan Police for the way in which, as a force, it adapted rapidly to changes in order to cope with very difficult situations as regards inner-city policing. It became more sensitive to local communities and more effective. Looking back upon it, it was a period of change for the Metropolitan Police but it was change from which both the Metropolitan Police and the communities it policed benefited. I say that simply as background. But one of the main elements running through the debate was the need to reassure ordinary people, and changes need to be seen in that context.
Perhaps I can deal now with the many specific points raised by noble Lords. The noble Baroness, Lady Park, referred to the fact that Protestants and Catholics all need good policing. Of course they do. The majority of people in both communities appreciate the work done by the RUC. However, it must be said that in some areas the RUC is less acceptable than in others. If we can achieve changes to make the RUC equally acceptable among both communities, that will improve the efficiency and effectiveness of the RUC in dealing with crime.
I was told many years ago by the police for England and Wales that their success in clearing up crime depended on the level of co-operation that they received from local communities. One of the aims of this Bill is

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to enable the RUC to achieve a higher level of co-operation from ordinary people in some of the communities where there has not been quite that level of co-operation up until now.
The noble Baroness, Lady Park, and the noble Lord, Lord Cope, referred to the change in the oath, as did other Members of your Lordships' House. The change in the declaration for the RUC was recommended by the Police Authority for Northern Ireland—the body responsible for putting forward the views of the community in Northern Ireland on policing. We have considered it carefully and believe that it represents a sensible change, clarifying what a police constable is undertaking when he or she takes up office.
I understand the sensitivities of those who would prefer not to see changes. But, as I said earlier, change is the essence of policing and, given that the Police Authority for Northern Ireland made the recommendation, it is proper that we should respond to it.
The noble Lord, Lord Molyneaux, also referred to that in the wider context of policing symbols and said that such changes would not stop Republican attacks. Of course not; nobody suggests that they will. But the Government are changing the oath and introducing the new term, Northern Ireland Police Service, in response to requests from many groups in Northern Ireland, including the Police Authority for Northern Ireland, whose members and staff have stood shoulder to shoulder with the RUC during years of terrorism.
The noble Baroness, Lady Park, asked about the use of the term "impartial". The requirement as regards impartiality was put into the Bill during consideration in the other place. It was a request from a number of parties, including the body which represents the Police Authority for Northern Ireland. The noble Baroness also asked whether the Bill was a mechanism for implementing the agreement. The Bill is a paving measure. It makes modernisation of policing possible. The commission may recommend further changes and I should point out that the Bill conforms with the terms of reference for the policing commission set out in the Good Friday Agreement.
If I can make the link in response to other questions which were asked, we have a Good Friday Agreement from which stems the Commission on Policing. However, the Bill paves the way to make the conclusions of the Commission on Policing effective, otherwise we would have to wait even longer to have the Bill after the Commission on Policing set out its support. The two go well together.
The noble Baroness asked why we should press ahead now. The text of the Good Friday Agreement and the terms of reference for the independent commission were predicated in the passage of the Bill on its early implementation. It is regarded by the Government as a foundation order; as a paving provision. It puts into statute a number of structural changes which we expect the Commission on Policing will want to build. It shows that sensible, evolutionary change is possible and will produce real benefits within a finite timescale providing, essentially, assurance for the community as a whole.
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The need for this Bill is amply demonstrated. Had we waited until later, we would have been accused of not getting on with the job of making changes, many of which have been asked for in Northern Ireland and which are sensible.
The noble Lord, Lord Vivian, asked about Guardsmen Fisher and Wright. Perhaps I may say for the record that Mr. Justice Coghlin has indicated that the reserve judgment on the judicial review will be delivered on 22nd May, which is this Friday. It would not be appropriate for me to say any more on that at this stage.
The noble Lord also suggested that there should be no independent inquiry into the RUC until prisoner releases and decommissioning had been completed. But we are bound by the terms of the agreement to complete the Patten review within one year. The agreement specifically stipulates that the terms of reference of the policing commission include maintaining a police force capable of responding effectively to any terrorist threat. It will also, if I may quote the Chief Constable of the RUC,
"allow the RUC to counter the bombardment of propaganda levelled at us and will see the true value of what the men and women of the RUC have done and are doing and will continue to do".
The noble Lord, Lord Monson, asked about the Labour Party paper. I do not know whether it is unusual. However, we put on the record what the origins of the Bill were; namely, a Labour Party consultation paper and, indeed, the Hayes' proposals as regards the ombudsman. The changes to the governance of the police in Britain were made in the Police and Magistrates' Courts Act. The Bill replicates that measure. So I think the Labour Party was right to say that this was a sensible measure to extend to Northern Ireland. I do not think there is any harm in the Labour Party actually admitting to the origins of a measure now that we are in government.
The noble Lord, Lord Monson, referred to a comment made during the "Any Questions?" programme, which I missed, at the weekend. It concerned the use of the word "Royal". The Government are aware of the sensitivity of this issue. However, it is something that the independent commission will no doubt want to consider. I think I had better leave it at that.
The noble Lord, Lord Lyell, asked what the declaration was for the police in the Republic. I am afraid I do not know. I shall see if I can find out and write to him. He also asked about the meaning of the phrase in Clause 27 "other police service". That allows members of the RUC to serve with the National Criminal Intelligence Service, which is a UK-wide service. It also allows them to serve on other bodies—the other bodies are listed in Clause 27—and it provides for the RUC to send members abroad—say, to Bosnia—to assist police forces and to provide RUC expertise worldwide. That is a wholly new provision and reflects the provisions of the Police Act 1996 that apply to England and Wales. That gives part of the answer to the question posed by the noble Lord, Lord Alderdice, about the RUC being used in training police forces elsewhere. The RUC will now be able to do that as a result of the phrase incorporated in Clause 27.

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The noble Lord, Lord Lyell, asked how many RUC officers had been killed in the course of duty since 1994. Since the Provisional IRA ceasefire in September 1994, I believe that five members of the RUC have died as a result of terrorist action. However, I hope the noble Lord will bear with me if I say that I will write to him if there is any difference between that figure and the truth if by any chance I have made a mistake.
The noble Lord, Lord Alderdice, very aptly described the dilemma of policing in Northern Ireland that has been faced by the RUC for many years. I can do no more than say that he has put it better than I could. He raised a number of specific questions. He asked about the process or mechanism by which the Government might decide to devolve responsibility for security and justice to the assembly, as the initial proposals for the assembly are that responsibility for these matters will stay with the Secretary of State. It is not on the immediate agenda. It is an issue that we shall need to return to at a later stage.
The key points that I would like to note are that the issues are likely to be determined very much by the level of terrorist threat. As long as the security situation requires the active deployment of the Armed Forces in support of the RUC, underpinned by emergency legislation, then I anticipate that the matter will remain the responsibility of my right honourable friend the Secretary of State. But it is a matter that we shall want to return to as the circumstances permit. Obviously, the Secretary of State will be able to take the initiative in any changes suggesting a transfer of these responsibilities to the devolved assembly.
The noble Lord also asked about the possibility of establishing a department of justice. As I believe the noble Lord knows, the Good Friday Agreement provides the terms of reference for a review of the criminal justice system. They are put in the following terms:
"The structure and organisation of criminal justice functions that might be devolved to an assembly, including the possibility of establishing a department of justice while safeguarding the essential independence of many of the key functions in this area".
So the review of the criminal justice system would be able to engage in the issue of whether there might be a department of justice in Northern Ireland.
The noble Lord also asked about the ombudsman's ability to employ police officers to conduct investigations. Clearly, in establishing a police ombudsman one has to start from somewhere. Initially there will be a need to find people who have the necessary investigative skills and experience. It seems to me that one need look no further than to the police force for the whole of the United Kingdom as providing some people for that purpose. However, the police ombudsman will also wish to recruit other people without a police background. Gradually, over time, I imagine that those other people will form a larger proportion of the investigative staff than the police ombudsman will have. As I have said, the staff could be police officers from any United Kingdom force or civilians such as lawyers and Customs and Excise staff who have investigative experience. They will all be
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firmly under the direction and control of the ombudsman. They will be responsible entirely to him or her.
The noble Lord, Lord Alderdice, also asked about the timing of the Bill and that has already been referred to by other noble Lords. This Government introduced these changes—which, as the noble Lord said, are much needed—as soon as they could. I do not want to speak for former administrations, but modernising policing is important. I believe that paving the way for the policing commission will begin to introduce real benefits. It would have been wrong to deny to the people of Northern Ireland, for the time it will take to review, consider, draft and implement further changes resulting from the commission, the benefits contained in this Bill, especially given the widespread support for these provisions.
The noble Lord referred to the settlement Bill and whether certain measures could be included. I have heard what the noble Lord has said. I am sure that his comments about what it might contain will be brought to the attention of my right honourable friend the Secretary of State and the Minister for Political Development in another place. I do not believe that it would be proper for me to make any further commitment here and now.
The noble Lord also asked whether the Bill will allow RUC officers to serve in the Garda Siochana. The provisions of Clauses 8 and 27 will allow that in appropriate circumstances and with the approval of the police authority and the Secretary of State. So it is a possibility that we envisage.
I wish to pay tribute to the comments made by the noble Lord, Lord Blease, about the police and I thank him for his support for the measure. The noble Lord, Lord Cope, said that there was a nervousness about change. I understand that. Of course, there is nervousness about that in the particular circumstances that are faced in Northern Ireland, but I hope that what I said earlier will reassure him that we see these changes as bringing the police up-to-date—I am not saying they are out of date and perhaps I should re-phrase that. I hope that what I said earlier will reassure him that the police can move forward as the changes in circumstances in Northern Ireland suggest and in the hope that there will be long-term peace in Northern Ireland enabling the police to adapt to that situation, given that for 30 years they have been the targets of several vicious terrorist organisations. So I hope that there will not be this nervousness of change. I welcome the support of the noble Lord, Lord Cope, for the concept of an ombudsman to deal with complaints. I can give the noble Lord and the House the assurance that political control of the police is not what is intended and will not be the case.
We want to improve the links between the police and local communities in order that local communities have confidence in policing and in order that the RUC gets the maximum support in its work from local communities.
The Bill should be seen in the context of sweeping changes which are being made in policing thoughout the United Kingdom. The prosect is opening up for the

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police in Northern Ireland of finally being able to make the transition from a force geared and equipped for safeguarding the community from a vicious and long-running terrorist campaign, to a service which, like police forces throughout the rest of the United Kingdom, can concentrate on delivering ordinary policing to all parts of the community.
That is a great opportunity, and I believe these proposals will equip the RUC to exploit it to the full, prepare properly for the changes it will bring, and enable them to continue to deliver a police service of the highest standard to everyone in Northern Ireland.
That is something which will be to the benefit of the whole community in Northern Ireland. I commend the Bill to the House.
Lord Alderdice: My Lords, before the Minister sits down I wonder whether I could recall to him that I sought some reassurances that the Government would make available the necessary and, I hope, generous resources, retraining and other measures which will be required if there is peace and if it is then possible to reduce the size of the RUC. I think there is a real nervousness that their value and their future may not be so high up the priority list as the requirements of some others.
Lord Dubs: My Lords, I am happy to do that. We certainly value the contribution the RUC have made. If it were possible because of peace to have a somewhat smaller RUC in Northern Ireland than we have had during the difficulties of the past 30 years, the Government would want to ensure that there are adequate redundancy provisions for those who might be declared redundant; that there are opportunities for retraining, and that we would use the RUC for training other police forces where that was also appropriate. I am happy to give that assurance.
On Question, Bill read a second time, and committed to a Grand Committee.

New Northern Ireland Assembly (Elections) Order 1998
9.37 p.m.
Lord Dubsrose to move, That the draft order laid before the House on 11th May be approved [33rd Report from the Joint Committee].
The noble Lord said: My Lords, this order is to be made under the Northern Ireland (Elections) Act, which passed through the other place and received Royal Assent last week. Of course the Act and this order under it are entirely dependent on the result of the referendum which will be held in Northern Ireland on 22nd May.
It is important that this order be passed before the referendum. The timetable agreed by the parties in Belfast on Good Friday is an extremely tight one. If the referendum is to be held on 22nd May, and the initial assembly elections on 25th June, we clearly need to have the legislative arrangements for these elections in place before the House rises for the Whitsun Recess.
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The basis for this order is Section 2(5) of the elections Act. This provides that the
"Secretary of State may by order make provision about the election or any matter relating to it".
Clause 6 makes it clear that the power to make this order shall be exercised by statutory instrument, using the affirmative resolution procedure.
There has inevitably been a very tight timetable for preparing this order. We have not been able to consult in as much detail as we might have liked. My honourable friend the Minister for Political Development has been able to discuss the elections with representatives of most of the Northern Ireland parties, and the order reflects quite a considerable number of the points they made to him. Many of the issues covered in the order were also discussed during the debates we had on the main Bill, and I have taken serious note of the points raised there too.
As noble Lords can see, the bulk of this order consists of applying existing electoral legislation for the assembly elections, with some modifications reflecting the particular circumstances of this election and of elections in Northern Ireland generally.
It might be helpful, however, if I run through some of the main features of the electoral legislation as it will apply to these elections. As provided for in the Belfast Agreement and the elections Act, the June elections will be by proportional representation (single transferable vote) with each of the 18 Westminster constituencies returning six Members. The order includes the usual provisions on how STV elections are to be conducted. The system is, of course, familiar to both politicians and electors in Northern Ireland.
The order provides that vacancies in the assembly be filled by substitution, however. This slightly differs from local authorities in Northern Ireland, where replacement is either by co-option or by-election. The way in which substitution will work is quite simple. At the same time as returning their consent to nomination, candidates at the election will be invited to submit to the chief electoral officer a list of up to six substitutes, in order of preference. In the event of a vacancy, the CEO will contact the names on this list in order of preference until one declares himself willing and able to take up the seat. In the event of none of the six being able, or if the original Member did not submit a list of substitutes, the vacancy will be filled through a by-election.
We have consulted widely on this issue, and have concluded that substitution is the fairest and most widely supported option. The Northern Ireland assembly will be returning members by STV, but if vacancies were filled through by-election, these seats would effectively be filled by a first-past-the-post contest. Smaller parties which won the fifth or sixth seat in a constituency would have little chance of winning it again in a by-election.
Given the stress in the agreement on the need for proportionality in elections to the assembly, and in decision-making within it, we feel this approach is the most appropriate, and have accordingly included provisions in Article 6 and 7 of the order, and made

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some necessary modifications to the election rules under Schedule 1 of the Representation of the People Act 1983.
Noble Lords will be well aware that the 25th June elections in Northern Ireland may be the most fiercely contested for many generations. Perhaps the strongest impression Ministers took away from the debates on the Act both here and in another place was the strong desire for firm action against electoral fraud. It is unfortunate that electoral fraud has a long tradition in Northern Ireland, but being a long-standing problem does not make it any more tolerable. Electoral fraud strikes at the very roots of democracy and of confidence in the democratic system, and the Government are determined to do all we can to eradicate it.
We have been looking for some time with the chief electoral officer and others at changes which can be introduced both in the legal framework and in practical arrangements to make his task easier. I would like to take this opportunity to express the Government's gratitude for the excellent work Mr. Bradley has done over the years. His decisions are sometimes criticised, but on the whole I think only my right honourable friend the Secretary of State has a more difficult job in Northern Ireland.
As with the referendum campaign, we have decided in the assembly elections to extend the period the chief electoral officer has to scrutinise absent voting applications from the usual 11 days to 14. There is obviously a difficult balance to be struck here between not putting unnecessary obstacles in the way of legitimate applicants and the need for time to examine and detect the undoubted examples of fraudulent applications.
In addition, the order also tightens up the procedures for applications for absent votes on medical grounds. It will now be necessary for all medical practitioners attesting such an application to have seen the applicant in connection with the illness or injury in question. I think this is an obviously sensible change. After all, if anyone is really unable to get to the poll on medical grounds, it stands to reason that they are likely to have visited their medical practitioner in connection with their ailment.
Two other amendments to usual provisions on elections may be of interest. On the issue of deposits, we have set the level at £150 per candidate. Although £500 is normal for parliamentary elections, this was felt to be rather steep in a multi-member campaign where many parties would be intending to put up a slate of candidates in a large number of constituencies.
We have also chosen not to apply Section 93 of the Representation of the People Act 1983 to these elections. As many noble Lords may know, this section lays an obligation on broadcasters to offer participation in any local item during a constituency election to all the candidates, and gives candidates the right to withdraw their consent from broadcasts.
After careful consideration, we do not think these provisions are appropriate in multi-member elections of the sort proposed here. We are likely to see 15 to
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20 candidates in many seats. Only one of those (if he or she chose to be obstructive) could effectively veto broadcast coverage of the campaign in that particular constituency. Even if that did not happen, I suspect that items on constituency contests would simply become unwieldy and make for dull listening and watching. None of this will detract from the duty which will remain on broadcasters, both from the BBC and the commercial sector, to present the campaign in a fair and even-handed manner. Nor should our decision here be seen as a precedent since the type of election for the Northern Ireland assembly has no clear parallels with those being envisaged elsewhere in the UK.
The New Northern Ireland Assembly (Elections) Order is another piece in the jigsaw. Much more work will need to be done if the people of Northern Ireland ratify through the referendum the agreement reached by their political representatives. I believe that this order is both necessary and useful and I commend it to the House.
Moved, That the draft order laid before the House on 11th May be approved [33rd Report from the Joint Committee].—(Lord Dubs.)
9.46 p.m.
Lord Alderdice: My Lords, I hesitate to raise any questions at this particular juncture, but it is clear that the result of the referendum is unlikely to ensure that those who are opposed to the settlement will set their concerns to one side and not indulge in a re-run of the referendum during the election campaign. In considering briefly the provisions of the order I should like to seek a response from the Minister on one or two items. On almost all of the issues that he has raised we are very satisfied and believe that the Government have done the right thing.
I am concerned largely with the question of substitution which is a new provision in elections in Northern Ireland. The proposition is that at nomination a candidate will put forward a list of up to six people. Given that there are considerable divisions in at least one major party, which are not entirely constant, it is entirely possible that a candidate may put forward a list of six but subsequently no longer approve of all of them, even though they are members of that candidate's own party. They may take a different line on something of considerable importance. Can the Minister clarify whether it will be possible subsequently for a candidate, presumably a successful one, to remove names from the list? I accept it is unlikely that names can be added to the list, but is it possible that names may be removed from the list because they no longer hold the same views as the elected member? The purpose of substitution is to maintain the balance found at the election. That balance may not be changed on party political grounds but other grounds.
The legislation is not entirely clear, but I assume that it is possible for an assembly member to resign, in which case a substitute will be appointed from the list. Can a candidate stand in more than one constituency and then resign if he is elected in more than one constituency, thus putting in the next one on the list?

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Although it may seem a curious and somewhat mischievous act on this side of the water, I assure your Lordships that if it is possible it may well become the practice on the other side of the water for a candidate, perhaps a well known one, to stand in a number of constituencies at the same time and then if elected in one to resign from the others, thus enabling candidates who are less well known to substitute for that well known name.
Perhaps the Minister can also clarify whether or not such a well known candidate can be put at the top of the list of substitutions in all constituencies? Would that fact be published in nomination or election papers?
I do not raise these points mischievously from my point of view, but I entirely concur with the Minister who said that this would be a highly contested election. Since substitution is a new measure, I feel it only right to raise these questions because they are not matters that have been explored with the noble Lord's honourable friend the Minister for Political Development.
9.50 p.m.
Lord Molyneaux of Killead: My Lords, the noble Lord, Lord Alderdice, has made a very valid point because at the other end of the building it is possible for a candidate to stand in more than one constituency and to be elected in more than one constituency. As I understand it, when Parliament assembles after a general election, the Speaker challenges all the Members present to declare which constituency they wish to represent because they cannot represent more than one. Therefore, that is a valid point.
I apologise for intervening, but there are two matters which came to light over the weekend that I wish to raise this evening. I know that Ministers are determined to stamp out vote stealing. The Minister referred to electoral fraud. In that regard I have been asked whether prisoners released before polling day can be prevented from voting and thereby adding to the numbers voting illegally. They will not be on the electoral register if they have served a term of imprisonment, but the presses are already producing forged documents of identity to enable released prisoners and various terrorists on the run to swell the Sinn Fein poll in West Belfast, for example, as they did very effectively at the general election against the SDLP candidate and former Member, Dr. Hendron.
My second point is rather more worrying, because it looks as though there is already a flaw in the system for the referendum on Friday. Over the past three days, seven separate electors on a register of under 2,000 electors have received—and they have reported this to me—two polling cards each. It is safe to assume that there are probably far more on that register who did not report the situation to me. Given that the authorities are very efficient in depriving electors of their votes on mere technicalities—and I am dealing with one particularly difficult case at present—will the Minister take speedy action to ensure that the same diligence is observed by the Chief Electoral Officer in countering what appear to be his own errors?
9.52 p.m.
Lord Dubs: My Lords, I thank all noble Lords who have contributed to this brief debate. I shall deal first with the questions asked by the noble Lord, Lord Alderdice. He is concerned about the principle of substitution through the single transferable vote system. It will not be possible subsequently to remove any names from the list of up to six of those who were put forward initially as substitutes. One of the difficulties is that we do not yet have a system of party registration. The Government are considering whether that is appropriate. If we had a system of party registration, the noble Lord's questions would be more easily answered because it would then take account of his concerns.
Yes, it is possible to stand in more than one constituency, as it is possible in relation to Westminster. However, I must say from my own experience that it is difficult enough to get elected in one constituency, never mind trying to be elected in more than one. But as the electoral rules stand, it is possible for an individual to stand in more than one constituency. Moreover, it is possible for an individual to be top of the list of substitutes in more than one constituency. That is the position.
However, that is a matter which the Government would wish to look at again in the light of the experience of this election. If necessary, we shall have to make changes for the longer term future. However, for this election, the position is as I have described it.
The noble Lord, Lord Molyneaux, asked two questions concerning the possibility of fraud in the elections. Anyone wishing to vote would, of course, have to be on the voting list. If prisoners are not on the register, they are unable to vote at present. Therefore, it would be difficult to envisage any prisoners who might be released before polling day being able to vote because they ought not to be on the register.
Lord Molyneaux of Killead: My Lords, I apologise to the Minister. Perhaps I did not make myself clear. They will not be attempting to vote in the normal way or to claim a vote. They will be provided with forged documents of identity. They will then go along and steal other people's votes as, for example, happened in West Belfast in times past.
Lord Dubs: My Lords, the only answer to that is for all those concerned with the conduct of elections to be diligent and to stop such electoral fraud. I do not know that there is any other answer that I can give to the noble Lord. However, I can assure him that the electoral registration authorities, and those presiding over elections, are aware of the type of fraud which it is alleged has been committed and of which the noble Lord has given us examples. Indeed, everyone will be on the alert during the coming elections. As regards the example of voters who received two polling cards each, I can assure the noble Lord that I shall certainly draw the matter to the attention of the appropriate authorities to see whether quick action can be taken to prevent that becoming the basis for electoral fraud.

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I should like to thank noble Lords for their contributions to this debate—
Lord Cope of Berkeley: My Lords, before the Minister sits down, there is one aspect of the debate that I should like to pursue. The point made by the noble Lord, Lord Alderdice, seems to me to be extremely serious. I urge the Minister to look at the matter a little more swiftly than the timetable he envisaged; that is to say, waiting until after the elections. It seems to me that he should ensure that the matter is given urgent consideration to ascertain whether we need to modify these provisions in the order. I shall not attempt to detail them this evening, but we need to modify them so as to deal with the stated position.
I seem to remember reading somewhere that in the last century it was possible to stand for several constituencies for election to the other place. People did so and the voting took place on different days in different constituencies. Sometimes people were elected for two constituencies. Sometimes they were defeated in the first one but, nevertheless, were successful in taking up the seat for the second constituency. Memories are extremely long in Northern Ireland. It is quite possible that this device, which the noble Lord, Lord Alderdice, suggested, has already occurred to some people and that it may be used. I believe that the Minister should reconsider this as a matter of urgency.
Lord Dubs: My Lords, the reason for my saying that we would look at the matter if there was further legislation is that I have no powers to change the measure now before the House. Indeed, once we have the measure in place, that will determine the conduct of the election, assuming that the referendum comes out with a positive answer. We are talking about an election which is only a few weeks away. I do not think that it will be possible to contemplate changing the statutory basis for that election after the House has passed this measure. That is why I said that the Government would watch what happens in the election and that, if it was found necessary to make further changes for subsequent elections, we would do so when the legislative opportunity presented itself—presumably in the settlement Bill which will be coming along later in this Session.
Lord Alderdice: My Lords, I crave the Minister's indulgence. I believe the Government would be well advised to look at the matter rather more urgently. Now that it is possible for Peers to stand for election, I can assure the Minister that, if the noble Lord, Lord Molyneaux, were to stand, not only would he have no trouble in getting elected, but, on his record in another place and bearing in mind the most extraordinary majorities that he piled up, he would also be able to take in a clutch of people all across Northern Ireland.
If the application were under the name of the noble Lord, Lord Molyneaux, that would be one thing. However, if it were under the name of a number of other Northern Ireland politicians in another place, it might be an entirely different matter. Given the experience that
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we had in respect of the elections to the Northern Ireland Forum, I have to say that there will be little point in trying to work out what would happen in subsequent elections to an assembly; indeed, such a mistake could ensure that that was something one did not have to trouble oneself about. I hope that the Government will take the matter seriously, although I understand there are parliamentary problems in this regard.
Lord Dubs: My Lords, obviously we take seriously the points made by the noble Lords, Lord Alderdice and Lord Molyneaux. We are talking about an election where candidates will have to try to attract public support. If people are thought to be playing games with the voters of Northern Ireland—I suggest that in 1998 a candidate who stood for more than one constituency would be viewed as not taking the electorate seriously and as being contemptuous of the electorate—I would hope that the voters of Northern Ireland would give such people the short shrift they deserve. That may not be the case, but I would expect that to happen. We expect that people who stand for election intend to take their seats, and they can do so only in one constituency. As I said, I hope that the electorate will give short shrift to people who try to be silly about this.
It is my understanding that the Government would have no power to change the legislation regarding the election that is to take place at the end of June in the few weeks that remain. I hope that the House will approve the legislative basis for that election. The Government can consider only the administration that follows the election. We cannot change the legislative basis of the election. It would be wrong of me to pretend that I shall reconsider the matter, when that could not result in the kind of changes that the noble Lord wishes. I believe we should leave it to the good sense of the people of Northern Ireland, who will not allow themselves to be manipulated in this way. If the people of Northern Ireland show that determination, candidates will not stand in more than one constituency and the problem will not arise.
On Question, Motion agreed to.

CAP Reform: ECC Report
10.1 p.m.
Lord Reayrose to move, That this House take note of the Report of the European Communities Committee on CAP Reform in Agenda 2000—The transition to competition: measures for rural development and the rural environment (18th Report, HL Paper 84).
The noble Lord said: My Lords, I start by declaring an interest as a farmer. Next I thank the other members of Sub-Committee D for their assiduous work in conducting our inquiry into rural policy in the light of Agenda 2000. The amount of reading provided was—as is so often the case—gargantuan, and they accomplished prodigies of assimilation in preparing a report which covers in effect several disciplines. I also express my gratitude to all those who provided us with the evidence,

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both written and oral, without which the inquiry could not have begun, and which was often outstanding. As usual, they all gave up valuable time without demur.
Finally, I thank the two men who worked harder on the report than any others: first, the redoubtable Professor John Marsh CBE, just retired from Reading University, with whom it is always such a pleasure to work, who has done so much to help Lords' committees over the years, and whose brilliant clarity of thought and expression, while sometimes soaring out of the reach of mortal committee members, nevertheless eventually enables us all to find within ourselves opinions we never knew we held. Secondly, at the opposite end of his career, I thank our clerk, Andrew Mackersie, fresh out of Oxford University, for whom this report was a baptism, gruelling but I hope instructive, into the conduct of inquiries and the writing of Lords' committee reports, and from which he happily emerged with, as far as I could tell, undiminished enthusiasm and resilience.
I am sorry that a report of such scope as this, touching as it does one of the most fundamental problems facing Europe, is not being taken as first business in your Lordships' House. Faced with the choice between an earlier time, but not until the autumn, and this evening's position, ahead of next week's Agricultural Ministers' Council, when "preliminary conclusions" are due to be reached on the Agenda 2000 proposals, it seemed on balance preferable to have the debate tonight. But this outcome is far from ideal, and undoubtedly deprives the House and a wider public of the considered views of some of those who have thought hardest and longest on the subject.
The main focus of this report is on the environmental and rural aspects of the European Commission's Agenda 2000 proposals, which were first introduced to the world in Brussels last July. Thin in themselves, they nevertheless seem to be a pointer to what was likely to become an increasingly important aspect of or adjunct to any further reforms of the CAP: environmental measures to provide a more acceptable method of making public funds available to farmers and other land managers in the countryside than are CAP payments today; and the focused development of the rural economy to provide a necessary counterweight to balance any loss of employment in, and withdrawal of capital from, farming which might come about as a result of further CAP reform.
In preparing our report, we did not look in any depth into Agenda 2000's central product-related proposals, which at the time were being considered by the Select Committee on Agriculture in another place. We welcome, however, those proposals as a development of the 1992 MocSharry reforms and a further step towards a more liberal market-orientated CAP. Nevertheless, we express our disappointment that they do not go further than they do. Their failure to prepare the Community's agriculture either for enlargement or for the next WTO round will only mean, in our view, that further reform will he required later, with all the turmoil and misdirected investment that this promises for years ahead.
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We were particularly dismayed that no end is discussed for quotas and no suggestion made that compensation payments should be either degressive or finite. We also record our objection to the Commission's proposals for modulation and for ceilings. The Commission's proposals for work-unit related modulation and for payment ceilings for individual farmers, apart from penalising this country's interests, also run counter to the spirit of encouraging efficiency, which after all purports to be the main guiding principle of the reforms.
The Government, however, have been reported in Agra Europe as having said that they "might be ready to consider an approach based on subsidiarity", which would allow member states to set their own ceilings. This, I must say, causes me some concern and I should be grateful if the Minister could say why this would make a policy of modulation any more acceptable.
It must be said that the Commission's thinking has progressed immeasurably in recent years. The Commission talks the language today of CAP reform, and where it fails disappointingly to propose reform this seems to be the result of a political calculation of what the Council is ready to hear rather than any lack of awareness of what in truth is required. The Council's reactions to the Commission's proposals must only encourage the Commission to feel how right they were not to be more adventurous. The modesty of the Commission's reform proposals does not leave much scope for any dramatic switch of expenditure from farm support to other objectives. The Commission's plan for compensation payments for their proposed cuts in price support will result in an increase of some 4 billion ecu in the CAP budget before any additional funds are made available for environmental or other rural purposes.
Doubts about the scale of funds that can be made available in the foreseeable future for environmental purposes have led some to argue for the attachment of environmental conditions to existing arable area and headage payments. There are arguments for and against cross-compliance, as such conditionality is known, and they are set out at length in paragraphs 80 and 81 of the report.
The committee was united in its opposition to cross-compliance for the long term but, for some, the needs of the environment were too urgent to wait for the eventual release of funds from other sources and they would like to see environmental conditions attached to existing farm payments as an interim approach. However, the Sub-Committee as a whole was very concerned that attaching environmental conditions to existing CAP payments would only serve to compound the difficulty of reforming the CAP in the longer term by lending the current subsidy regime a false legitimacy.
Much of the opinion section of our report is concerned with setting out what we consider to be the principles and objectives which should lie behind the funding of rural development and the environment. We argue, for example, that the eventual emergence of savings on commodity regimes is not by itself an argument for spending more on environmental policy. Such an outcome must depend on political decisions

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taken at the appropriate level within the Community. We argue that there should be a basic minimum regulatory framework of environmental rules applied uniformly throughout the Community to avoid the distortion of competition, and on top of that that public payments to secure environmental goods can be paid.
We argue that Community co-financing is justified by Community interest; and that its degree should reflect the degree of Community interest and not, as often today, some cohesion policy objective as a result of which the Community co-finances at a higher rate in a member state with lower average GNP per capita. We argue that care should be taken to ensure that, as far as possible, schemes with an environmental objective are fully decoupled from production and do not form covert production subsidies. In place of today's bewildering array of schemes, we welcome the Commission's and the Government's intention to offer a single menu with a simplified access to European Union funding.
We are in favour of the idea of developing a horizontal approach, which means schemes in principle accessible to all farms and other land managers as opposed to schemes which are geographically targeted. We therefore very much support the Government in their stated intention to develop the Countryside Stewardship scheme as their main incentive programme. It is horizontal in application. It also has considerable scope for expansion. It covers less than 1 per cent. of all agricultural land in this country, compared with 10 per cent. covered under the 22 existing ESAs, which are of course geographically targeted. It is popular, with a high uptake and a backlog of apparently worthwhile applications for which funding is currently not available.
We also ask that EC co-financing should be available under the scheme for capital as well as current expenditure. Restriction to current expenditure has limited the Community contribution to Countryside Stewardship to less that 10 per cent. of total funds expended under the scheme.
We draw attention to the unsatisfactory state of policy confusion that operates with respect to Less Favoured Areas. Here, to offset natural handicaps, additional headage payments are made available, in this country under the Hill Livestock Compensatory Allowances, which simply encourage the overgrazing of a highly prized environment. The Commission now wishes to introduce specific environmental objectives for farmers in these areas. We believe that the public wish to see a living countryside in these regions, which means the survival of agriculture, and Community policy must allow that. It should be the task of Community policy makers ahead of the next WTO round to devise a policy for such areas that is environmentally friendly and permits the survival of extensive farming. I agree with the Government that subsidies for such areas can never be wholly decoupled, but it must be doubtful to say the least whether such farmers impinge to a great degree on world markets. WTO should turn a blind eye to them.
When it comes to rural development, we appreciated the Commission's intention to concentrate structural spending on a smaller percentage of the population, to be reduced from 51 per cent. to between 35 and
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40 per cent., although we had a taste, in the tabloid reaction to the publication in March of the Commission's detailed implementing proposals, of how difficult it is to shift vested interests once they are established. Throughout the Community, press headlines in each member state concentrated on what that member state was likely to lose from the new proposals. The tendency of the Community subsidy regimes to establish powerful and vociferous clients whom it requires a giant effort of will ever to disappoint again in the future, is one of the more depressing recurrent features of the Community's agricultural and structural policies.
Of course experience in one part of the Community is often very different from that in another. In this country, our movement from the land took place in the 19th century. Our experience over the past three decades has been of a net immigration into the countryside, though that does not mean that rural areas, even in this country, are without problems and could not benefit from a well-targeted Community policy.
We have tried to put forward some constructive suggestions, mentioning tourism, local computer training courses, funding for travel to retraining courses, and the conversion of redundant post-war farm buildings for light industrial use as providing opportunities where progress might be made. On the last point in particular, we received compelling advice from Strutt & Parker, who provided us with outstandingly good evidence and in this instance recommended the Rural Development Commission, or what now survives of it, as an authority which could vet applications and stimulate planning bodies into a more sympathetic attitude.
Despite more liberal recent planning guidance such as is contained in PPG7, planning authorities are still widely viewed as being unnecessarily reluctant to grant planning permission in cases like this. The Government, incidentally, seemed to misunderstand us on this point. To the extent that we take up that suggestion, we emphatically are not proposing that a new agency should be established for the purpose, but that an existing agency should be considered for that responsibility.
We conclude by saying that any rural development policy should be temporary. I am glad to note that the Government agree with us on that point. While we welcome the intention of the Commission to give support for the rural economy instead of maintaining agricultural price support, nevertheless the test of the success of such policies is that eventually they should become unnecessary. It is the transition to a less agriculturally dependent rural economy that we have in mind to facilitate, not replacement of one dependency culture with another.
We were very much aware, while we conducted the inquiry, of the critical state in which British farming currently finds itself, largely as a result of the effect of the recent strength of sterling on subsidies calculated in ecus. However, it is to be hoped that that will not be a permanent phenomenon. Reform of the CAP remains essential, not least in order to give competitive agriculture, of which there is much in this country, unrestricted access to world markets.

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A greater emphasis on the environment, supported by the transfer of funds saved by the reform of the commodity regimes, can both mitigate the effects of the introduction of a more competitive agriculture, where that occurs, and also support the environment and those who manage it in those areas where the withdrawal of support would not leave a viable agriculture. Support for rural development, both on and off farm, can help provide alternative economic opportunities in rural areas as agriculture is restructured.
Those are the directions for agricultural policy in the future, and it is encouraging to see the Commission at least address them. I only hope that the Council as a whole will follow its lead and, in so doing, encourage the Commission to be more adventurous next time. I beg to move.
Moved, That this House take note of the Report of the European Communities Committee on CAP Reform in Agenda 2000—The transition to competition: measures for rural development and the rural environment (18th Report, HL Paper 84).—(Lord Reay.)
10.19 p.m.
Baroness Young of Old Scone: My Lords, I begin by declaring an interest as the chairman of English Nature. I also commend the noble Lord, Lord Reay, for his excellent chairmanship of a rather intellectually unruly bunch. I think it was probably the intellectual equivalent of herding squirrels; however, he brought us through to a conclusion. Perhaps I may also join the noble Lord in his thanks to Andrew Mackersie for supporting us in his first duty as committee clerk. I also thank the Government for a very prompt response, though there are elements of it that perhaps many of us would take issue with.
The one thing that there is no doubt about is that agricultural policy in Europe is broken. In fact, the folly of the CAP strains the loyalty to the European ideal, even of Europhiles like me. Perhaps I may give two examples. The hill livestock compensation arrangements, to which the noble Lord, Lord Reay, referred, have not only reduced the number of jobs in the uplands and increased the level of overgrazing and environmental damage, they have also resulted in many of our upland farmers living on a subsistence income, with their only real profit being represented by subsidy.
In the richer arable areas we see huge reductions in the wealth of biodiversity. There is probably something like a 60 per cent. reduction in some of our bird, arable plant and invertebrate populations. That number is only narrowly missed by the reduction in farm incomes over the past 18 months. There is a long-term decline in the number of jobs in the countryside related to agriculture. We are in a position now where, probably for the first time, all farmers are miserable. We usually get to the point where some farmers, but not all, are miserable. We are now in a position where all farmers are miserable.
This is a policy that cannot be sustained. The Commission's proposals, alas, signal the right direction but do not do enough to take us very far. The approach outlined in the report—that is, market prices for commodities, with no direct subsidy and with separate
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decoupled payments for social and environmental benefits—is supported, but the Commission's proposals do not go far enough in that direction. They continue to indicate large sums of compensation wherever there is any approach towards a more market-related price. As a result, little is released for the kind of rural development and agri-environment schemes which we would want to see as a fundamental part of agricultural reform. The Government's response to the report recognised that.
Some opportunities have now been outlined in the more detailed work that the Commission has put forward. The idea of national envelopes in some of the commodity regimes would allow national redirection to rural development and environmental schemes and might even, I would advocate, allow some funds for smoothing the path of the restructuring of the agricultural industry in those areas. But, alas, those national envelopes do not refer to the sheep regime, which is comparatively unreformed.
There is to be reform of the less favoured areas, with a stronger emphasis, as the noble Lord, Lord Reay, pointed out, on environmental objectives, but again the fact that the sheep regime is largely untackled means that we shall continue to have thousands of woolly "maggots" in the uplands destroying the upland environment by overgrazing.
There is one element that only just scraped into the proposals by a squeak. It was not there at one point and only sterling work by the Government managed to bring it through. I refer to the requirement that the rural development regulation will be applicable not just to farmers but to a wider rural community. I hope that in the forthcoming months the Government will seek to ensure that that should remain, because I believe it will again be severely under stress.
The Commission's proposals do not go very far. They do not release much for environmental and social benefit. We shall have to wait for that for the next round of reform, which inevitably the world trade round will require. But we cannot wait that long. This will not be quick. The political reality of a fast approach to a genuinely market-led agricultural industry in this country will be very slow. We know that Germany is not even willing to talk until after its elections. The vested interests in both southern states that have received large quantities of structural funding and in France and Germany, where the farming lobby is extremely powerful, will mean that change will take a very long time.
In the meantime, the kind of social and environmental decline that we are seeing in the countryside will continue unabated. I do not believe that we can continue to see that happen. At present, only 3 per cent. of the agricultural budget is spent on environmental schemes. I believe that if we are to see continued payments in the medium term, particularly compensatory payments that will not reduce as quickly as all of us would like, some minimum environmental conditions must be applied to those to try to stop the decline that we see occurring day by day.
I recognise that it is difficult for the Government, in the delicate tactics of Europe, to demonstrate their hand too early on this matter, but I urge that they should keep

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very much at the back of their mind, if not at the forefront of their words, the view that, as soon as the dust has died down around this particular negotiation, it should press for environmental conditions to be placed on all medium-term payments to farmers.
An alternative would be regulation and the Government, in their response, talked of environmental regulation. Indeed, I have heard many farmers declare support for environmental regulation as a basic minimum rather than seeing conditions applied to compensation payments which, a few years ago, I would not have believed I could experience. However, the reality of minimum environmental regulation is that it would have to be minimum. It can deal with issues like pollution and water use, but not with fine tuning and the encouragement that incentive payments give, particularly in the field of biodiversity.
I therefore urge the Government, in taking forward these delicate negotiations in the European Union, to look seriously at environmental conditions as a measure for the medium term until such time as we reach market conditions. A number of things can be done in the negotiations, particularly at home on a domestic basis, to improve matters for the environment and for the social regeneration of our rural areas. But time is running out for both of those factors in the face of this juggernaut of European agricultural policy.
10.26 p.m.
Lord Mackie of Benshie: My Lords, first, I congratulate the committee, particularly the chairman, on the report. Naturally, because this is a complex subject, I do not agree with everything in the report, but it is thorough and goes over the ground extraordinarily well. One must agree with many of the conclusions.
The whole of the CAP has gone wrong. When the common agricultural policy was set up, it was set up with good objectives. There was a reasonable relationship between the Council and the Commission. Gradually, the Council destroyed the thinking of the Commission. Time and again in days gone by the Commission wanted to reduce prices in order to follow the market as well as guaranteeing a certain security. But the Council, led by France and Germany with large agricultural interests and a sympathetic attitude towards agriculture, went the opposite way. They put up prices and thereby raised all the stakes—the costs and everything else—with the result that an excellent policy, much needed at the time, has now been totally destroyed and people do not know what to do with it, including the Commission.
I doubt very much that the Commission will make a great deal of progress against Germany and France, which have such a close connection. Added to that is Austria, which has a problem with its small farms and tourist industry. It wants agricultural money to back that. It will be extraordinarily difficult. We have extraordinary policies, such as supporting the production of bad tobacco—all tobacco is bad, but the stuff that we are supporting is even worse. Money is being spent on that and we also have the ridiculous case of olive oil
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which is still ongoing. That is the subject of extraordinary deviations in relation to the purpose and direction in which the money goes.
I agree that we have a situation about which something must be done. The Commission produced a set of new objectives and they are right and proper. They are to increase competitiveness internally and externally in order to ensure that EU producers take full advantage of positive world market developments. Other objectives are improvements in food safety and food quality; the integration of environmental goals into the CAP; the creation of alternative job and income opportunities for farmers and their families; and the simplification of EU legislation. There is one that is not quoted in the report: ensuring a fair standard of living for the agricultural community and contributing to the stability of farm incomes. That is an important objective and one to which we really need to pay attention.
The noble Lord, Lord Reay, has already referred to the state of agriculture in this country. It is in a desperate state. Income has dropped by 45 per cent. and there is no question in my mind that a great many farmers will go out of business. They do not go bankrupt; they sell up and get out; but they get out with very little. The measures which have led to this are to a large extent the fault of the Government. They could not perhaps help the rise in the pound but they did not take as much advantage as they might of the funds available from the EC to alleviate the situation. If one bears in mind the fact that the high pound has made imports ridiculously cheap and that BSE has prohibited exports to our former customers, the situation has become really desperate for a large number of farmers.
People talk about competitiveness and the great opportunities that are available to farmers. However, as I have said in the House many times, in eastern Europe—in Hungary and Poland in particular—the standard of living is such that a man working in agriculture will be paid for four or five weeks with a tonne of barley, sold at the present price, whereas in this country it takes three tonnes of barley to pay a man for one week. That is not a competitive situation for the countryside.
We have to look at this business of total world competition. We had it in the 1920s and 1930s. This country had to compete with the prairies, with Australia and with the Argentine, and so there was a total break-down in agriculture. I doubt whether it did very much good. Primary producers' prices will fall in a free market to a degree which is not bearable for the good of the countryside or for the country as a whole. One needs some form of protection against the world's evils.
I agree that we have to become more competitive. There are many things that we can do. The farming community is paying close attention to marketing and the stock has been standardised so that people know exactly what they are buying. A great many of these things are happening now.
A lot of people are working very hard on making a living and doing a good job. I have a nextdoor neighbour with 50 acres of good land. He is making a living. He is doing that by diversification. He has turned part of

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his steading into loose boxes so that girls who have horses are able to stable them there and he receives an income from that. He grows turnips for marketing. He has an arrangement with a local man who has built up the market with the supermarkets. He has the proper standards. That brings my neighbour an income far above what he would get from growing normal crops on that portion of his farm. He has a flock of Suffolk Downs which are very good sheep. He sells a ram or two. On 50 acres he works like the devil and makes a living.
But not everyone can have Suffolk Downs or take in horses. Some people have to rely on the average crop of grain, potatoes or whatever it may be. Therefore, there have to be many part-time farmers in the country. If he has a good job to go to, the part-time farmer has a solution: he can enjoy his farm and make some money from it because his basic standard of living derives from elsewhere.
I have quoted examples on other occasions. The Highlands and Islands Development Corporation has shown what can be done. Today I received a paper from it which states that in the Western Isles 50 jobs will be created by the establishment of a tele service centre. I have no idea what that is, but if it provides 50 jobs in the Western Isles it is the sort of thing that needs to be encouraged.
People stress how important environmental payments are. They are important, but they cannot support the whole of agriculture. What does one do about the Fens? Does one give them environmental payments along with the uplands of Cumbria? Such payments cannot replace support of some sort for agriculture. Admittedly, I hope that the support will be only temporary, but it may not be all that temporary. Environmental payments are necessary, proper and well-directed expenditure but they cannot substitute for other forms of support.
It is interesting that the RSPB has produced a paper. Both it and the report say that some sort of order has to be introduced. The paper points out that in Scotland 5 million hectares are farmed. Of that figure £9.2 million go to environmental schemes. In England there are 9 million hectares and £60 million goes to England. In Wales there are 1,400 hectares and £16 million goes there. Farmers in the Argyll Islands ESA in Scotland can claim a maximum of £6,000 per annum whereas the average farmer in the Lake District ESA would claim around £14,000 per annum.
If all the farmers in the country could get that sort of money, it would not be bad and it would be a distinct help. But that would be impossible. We have to put environmental payments where they belong; they are excellent but are not a substitute for supporting agriculture. Agriculture can face fair competition in this country, but I have never known a period when one has had entirely fair competition. The European Union has been the perpetrator of more unfair competition than probably any other body.
This is an excellent report and I greatly enjoyed it. I agree with the paragraph on modulation, except that I am against it as it applies to the calculations of the Commission in what may come to this country. I am not
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against a form of modulation in this country in support of the smaller farmers, as long as it does not go to a ridiculous extent. I think it is a weakness of the report that it does not say that some form of protection is necessary for agriculture and the primary producer. I still think it is. But it is an excellent report. With that, I sit down.
10.40 p.m.
Lord Rathcavan: My Lords, as a member of Sub-Committee D I should like to thank our chairman, the noble Lord, Lord Reay, for the fair and firm way in which he directed our deliberations. Our inquiries led to some cul-de-sacs, but I think it was remarkable that we reached more or less unanimous conclusions and that we have been able to identify some ways to move forward and to bring together the interests of farming and the rural environment.
I am pleased to note that in their official response the Government have, in large measure, agreed with our conclusions. Any conflicts of interest on the way forward are, on the whole, much more marked within the European Union itself.
At our meeting with Commissioner Fischler he gave us an insight into the difficulties of squaring this circle of CAP reform. It is unfortunate that these difficulties have prevented him from going further in the Agenda 2000 proposals, although our own Government have been a lot more supportive than most towards the goal of restructuring European agriculture to make it fully competitive in world markets.
There are still far too many obstacles which frustrate and delay this process. There is still no clear timetable or strategy for the removal of price support, quotas or compensation payments linked to production. There is still so much uncertainty which prevents farmers from identifying the scale and direction of adjustments and changes in policy that they may need to make in the next decade.
This uncertainty leads to false expectations and sometimes wrong investment. It is only when we can plan ahead more seriously and more securely that good decisions can be made about how to help the environment in the long term and how to create, and I quote from the Report,
"a vibrant and economically self-sustaining rural economy".
There is much about that in the Report, and I believe we have listed some important priorities.
I wish to speak in particular about the smaller or not so small family farms, upland and lowland, and what is for them, in this mood of uncertainty and in a period of reducing incomes because of the strength of sterling and of changing markets, a period of crisis. I speak with particular reference to the farmers of Northern Ireland, whom I know best. This generation of farmers may have had a somewhat sheltered life over the past few decades of guaranteed prices and price support, of quotas and financial premia on stock and some periods of profligate assistance from the CAP schemes.

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Now they face a crisis, not just financial as their bank balances go from black to red, but of great uncertainty about whether, or where, there is a future for the smaller or marginal farmer who because of climate, terrain or size can never be competitive at world prices.
It is normal in most businesses today to do strategic planning and to have a three-year rolling programme. I am sure that some of our highly competitive UK farmers do just that. But in the case of this other group of farmers they can hardly plan a one-year programme at the moment, and they are often not in a position even to make a cash-flow projection to support a loan from their bank. They face a period of survival and drastic change, and Government must help farmers to try to identify the new options and move into new territory.
I am greatly encouraged by the formal response of the Government, in which they clearly recognise the need to target and improve agri-environmental and rural development measures such as ES As and the countryside stewardship schemes. I hope that the new measures can be brought forward as quickly as possible.
I should have declared an interest in a hill farm in a less favoured area (LFA) in Northern Ireland, which lies partly in an environmentally sensitive area (ESA), in an area of outstanding natural beauty (AONB), and partly zoned as an area of special scientific interest (ASSI), so I do not think that one can get more environmental than that! We found the ESA programme of enormous benefit and have been able to diversify into some tourism activity. It is just—only just—a viable business, but without ESA support it would be in the red. I wish that I could get rid of the sheep. I very much share the view of the noble Baroness, Lady Young, about sheep which destroy the uplands. I have seen them do that over several decades. If there was a way of reducing our sheep, we would grab it.
I was also involved in setting up a new scheme called Rural Cottage Holidays, which helps farmers to convert and operate redundant farm cottages and dwellings as holiday self-catering accommodation and trains them to do so. The scheme involves support from EU Leader programmes which, in my experience, have been of enormous help to remote communities. I am glad of the Government's continuing support for those programmes.
Our scheme also acted as a stimulus to show what was possible and that there was life apart from cows and sheep. I know of one farmer who stopped fanning, let his land and decided to make a business out of his holiday cottages. The noble Lord, Lord Mackie of Benshie, gave another example. In my experience of Northern Ireland, there is now a move towards part-time or half-time farmers. Markets which take place in the evenings or at weekends support that.
There is also a proposal somewhere in the Agenda 2000 pipeline for a scheme to encourage early retirement. Our report highlights the need to stimulate alternative economic opportunities to give aid to small-scale enterprises and to make available more education and training. In that context, I was interested
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to see the opening today at one of Northern Ireland's agricultural colleges of what is called an "incubation unit" to help farmers with new enterprises.
There can be a good future for the rural economy and for the marginal fanner. This report lists many ways in which we hope that the challenge can be met, if government can provide the support and direction. Time is short and everything in the EU seems to take an immense time to incubate, but as Agenda 2000 does incubate I hope that the Government will bring forward as fast as possible new measures to help the farming community, which is in crisis at the moment, to plan for a more stable future.
10.48 p.m.
Lord Willoughby de Broke: My Lords, this debate covers a broad canvas and in view of the late hour I propose to touch on only one aspect of the report. Before doing so, I thank my noble friend Lord Reay for his considerate and effective chairmanship of our sub-committee and for helping us to reach a consensus on this timely report.
The proposals trailed by Agenda 2000 are intended to move the CAP towards reality. As the noble Baroness, Lady Young, pointed out, there seems general agreement that the CAP is largely discredited, hugely expensive, inefficient, bureaucratic, environmentally damaging and, in many respects, even downright fraudulent. However, if there is general agreement on that, there is no agreement on what to do about it and on what the reform is to be, with European agriculture Ministers all too often hostage to political or social considerations.
However, given that EU member states have signed up both jointly and severally to the World Trade Organisation agreement, change there must be—and this will mean changes and challenges to the rural economy in general and to farm incomes in particular.
I declare an interest as a farmer and dedicated filler-in of IACS forms. One of the consequences of the proposals contained in Agenda 2000, about which the noble Lord, Lord Mackie, spoke eloquently, is the strong likelihood that direct farm incomes will fall even further. Inevitably, this must have an impact on the time and effort that farmers are prepared to put into environmental improvements on their land unless more resources are made available to them. "Resources" is such a useful word; it is so much more impersonal and less grasping than "cold cash".
The Minister will recognise that farming is under the whip at the moment, with lower commodity prices across the board, lower IACS payments and more pain promised in future if the Commission's proposals are accepted in anything like their current form. Where will that leave the rural environment? As a farmer, I am maddened by the prominence given in the media to some of the views of the more extreme eco-loonies about the effect of farming on the countryside. According to those Jeremiahs, it is a disaster area—a lifeless arable wilderness drenched in pesticides, pondless, treeless and hedgeless, and the victim of greedy farmers keen to extract the last penny from the

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last half-acre of holding. Where do the people who make these reports come from? Where do they compile them—on the Hammersmith flyover?
As any noble Lord who has recently—for example, last weekend—spent any time in the country will know, the truth is very different. Farmers are not environmental vandals. It is largely their efforts and dedication to improving their particular patch that have made the British countryside a magnet to millions of people, whether they be holidaying, walking, riding, cycling or even parking their cars in lay-bys to read the Sunday papers. The landscape that we all enjoy in the country has not been created accidentally by farmers and landowners over generations. The question is whether this will continue when Agenda 2000 bites. On this point, I find the Government's response to the committee's report somewhat encouraging. Paragraph 10 states:
"The Government agree that, subject to public spending constraints"—
are those Conservative public spending constraints?—
"funding should be available to secure rural environmental goods which the market alone will not provide".
That must be the right approach given our WTO commitments, which mean that future agricultural support will have to be decoupled from production. Effectively, that means goodbye to acreage payments and also cross-compliance. Here, I differ from the noble Baroness, Lady Young. I believe that those are little more than support payments wearing a green jacket.
Paragraph 12 of the Government's response mentions some of the voluntary incentive schemes that they are currently operating. There is a suggestion that some of these will be amalgamated. I encourage the Minister to pursue this with his renowned energy and persuasiveness. One has only to glance down the list of agencies and organisations which are involved in almost any government environmental initiative to see that one needs fingers and toes to count them: English Nature, the Wildlife Trusts, English Heritage, the Environment Agency, the CLA, CPRE, NFU, the county councils, district councils, FWAG and RSPB, to name but 11. We need a toe or two.
I am supported in the request for simplification by several of those who gave evidence to the committee, notably the CPRE and the NFU witnesses. At the moment, there is a truly bewildering array of schemes on offer, many with overlapping objectives and duplicated and complex bureaucracies which make life unnecessarily difficult for the poor peasantry. We would prefer something much simpler. One example of the way that the Government might move forward, which was referred to by my noble friend Lord Reay, is the Countryside Stewardship scheme. I believe that this is a model for the kind of environmental schemes that we will need in future—schemes that are clearly in the "green box" and are entirely decoupled from production subsidies, however well disguised.
The Countryside Stewardship scheme offers an a la carte menu of environmental good, the sort of things which most people would agree would enhance the landscape—tree and hedge planting, water features,
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stone wall restoration, stiles, grass margins to arable fields, and so on. But they are labour intensive and will detract from rather than add to the bottom line. They will not happen unless there is a cash incentive. The problem is that, as much as many farmers would like to participate in the Countryside Stewardship scheme, they are simply unable to do so. I speak as a disappointed applicant. Perhaps I did not have initials in front of my farm area as the farm of the noble Lord, Lord Rathcavan has.
The Countryside Stewardship scheme is a victim of its own success. It is over-subscribed by 50 to 60 per cent. according to officials we interviewed from MAFF, while there is a paltry £5 million per year available for new schemes. Indeed, the financing of environmental programmes in the EU accounts for only 3 per cent. of total CAP expenditure. So much for the environment. But the very fact that the Countryside Stewardship scheme is over-subscribed is a testimony to its success and, incidentally, a testimony to the desire of farmers to do something for their own farm landscapes, for, as one of our witnesses reminded us, regulations never planted a hedge.
Perhaps I may add a few words of caution. The Countryside Stewardship scheme is financed by public money and, inevitably, the question of public access arises. As the Minister is aware, the opacity of the Government's intentions on access was one of the major concerns of many of the 0.5 million or so people who took part in the Countryside Rally on 1st March.
Of course, where public money is involved, so is the question of public access. But I merely wish to remind the Government, if they did not know it already, that access is an extremely sensitive subject and it would be a great pity if over-prescriptive access agreements were to be tied to Countryside Stewardship schemes in the future. You can always do more with volunteers than with conscripts.
I conclude by repeating my plea to the Minister to do all he can to press for a Countryside Stewardship scheme Mark II which would rationalise some of the present overlapping arrangements and which would be much better funded to allow for the expansion of the scheme, which is in great demand. Could the necessary resources not be found from savings on acreage payments to farmers which, if we are to believe the Commission, will have to be vastly reduced, if not eliminated, in the future? Were the Government to do that, they would be taking a positive step towards ensuring that our British landscape would be something which we should be proud to hand on to future generations.
10.57 p.m.
Lord Grantchester: My Lords, the debate tonight is timely, as next week the meeting of EU Council of Agriculture Ministers presents the last opportunity for the UK Government to make any real progress in CAP reform during their presidency. I declare an interest as a dairy fanner in Cheshire. I should also like to thank the noble Lord, Lord Reay, for the excellent way in

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which he chaired the discussions and conducted the inquiry and, indeed, for the way in which he summed up the report this evening.
The committee's report and the Agenda 2000 proposals come at a time when UK agriculture and its related industries are suffering from the strength of sterling, increased costs, especially within the livestock industry, and a lack of concern as regards its relative competitive position within the food chain. That underlines the need for reform, as a constrained agriculture reduces the ability of farmers to diversify or to act effectively as stewards of the countryside.
Although the Commission claims to be continuing the reforms started in 1992, it does not go far enough. Despite clear statements made at Cork in 1996 and by the Agriculture Council in Luxembourg last year, a more prominent role has not been given to rural development. EU policy must do more to diversify the economy in rural areas and to deliver environmental land management through rural communities as a whole.
In Agenda 2000, the Commission has gone for a piecemeal rather than a coherent approach. It has introduced the further complexity of national envelopes which is likely to lead to more market distortions. It fails to understand the importance of agri-environmental and rural development and fails to recognise that rural areas demand an integrated approach.
Agriculture has been in long-term decline as an employer and generator of wealth for many years. The challenge is to sustain communities while they identify fresh opportunities. I should like to highlight this evening just one area of the committee's report immediately relevant to the process of change from funding commodity support to funding, even as a temporary measure, the environment; namely, cross-compliance. It is essential that contradictory messages are not given out through the linkage of environmental conditions to production support. Community funding of environmental policy should relate to community benefits. The attachment of environmental conditions is misconceived. If the aim is to reduce production support, cross-compliance will be of little long-term benefit—it may be cheaper to forgo the aid and not to comply.
Once environmental policy is tied to existing farmers, that will be used as an argument to resist change on the grounds that the environment would suffer. Cross-compliance is not cost free, as it will result in substantial expenditure in setting up and policing schemes so as to avoid massive fraud of the sort that helped bring the CAP into disrepute. Further, it does disservice to competitive agriculture by distorting common market conditions, especially if it becomes devolved through national envelopes.
What is needed is a commitment by the Commission to phase out production compensation payments and to use a substantial part of the funds released to underwrite an effective rural environmental programme. That will stand on its own merits and apply to all who could contribute to enhancing the countryside, not only existing producers in receipt of CAP support payments.
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Thus, the proposal to cancel support payments to farmers who do not respect given environmental standards is fundamentally flawed.
It is encouraging that the latest OECD report entitled, The Environmental Effects of Reforming Agricultural Policies, supports the committee's views, saying:
"Agricultural environmental measures appear to have been effective when: the environmental goals were clearly specified and the actions required of farmers closely linked to the goals; the lands accepted into the programmes had a high conservation value; the measure were adapted to the environmental, economic and social situation prevailing in a given area; farmer compliance was closely monitored and the effects on farming practices and the environment continuously assessed against the stated objectives; and training and advice was provided to ensure that the measures were appropriately implemented".
The challenge of the future is to provide a clear pathway to change in the rural economy. Part-time farming will need to be encouraged. Planning policies must become sympathetic. Agriculture must begin to integrate with wider economic activity. The process of reduction in Community support must proceed in unison throughout the EU, and governments who wish to go faster must resist the urge—frustrating as it may be—to act unilaterally. Rural development will need encouragement and investment in job creation to return prosperity to agricultural communities.
11.3 p.m.
Lord Geraint: My Lords, the House of Lords' report places emphasis on investment and on new job opportunities in rural areas. I hold the same view as the leaders of the Farmers' Union of Wales. We argue that this will be achieved—given that agriculture is the core activity in rural areas—only by ensuring that agriculture is a viable proposition. Farming is the heart of the rural areas and many of the ancillary industries are dependent on it for their future. As is presently so obvious, the potential to add value to primary produce is enormous in order to create job opportunities that are compatible with rural communities. These employment opportunities have to be created off the back of a viable farming industry and not instead of agricultural jobs.
I am sure that noble Lords will forgive me if a stray a little from the report by referring to our domestic problems in my native country of Wales. At the end of the day, I take it that in our deliberations we all want to see a viable farming industry in the whole of Britain. As European monetary union approaches, the United Kingdom must not be locked into a new agri-monetary system that puts Welsh farming at a competitive disadvantage. Will the Government's approach be to ensure competitive equality for Welsh agriculture? What will be the Government's position on agri-monetary compensation if sterling strengthens again in the second half of 1998?
Farm incomes fell 45 per cent. in 1997 and incomes are unlikely to recover in 1998 or in the foreseeable future. The profitability of farming is under enormous pressure. In many areas this in turn threatens the ability of farmers to look after the countryside. The key question will have to be asked on the way to support the competitive position of Welsh agriculture now.

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When can the beef producers expect the beef ban to be lifted and opportunities to export re-opened for the quality end of the Welsh beef production? I hold the view that the Office of Fair Trading investigates the supermarket role and the way supermarkets deal with suppliers and consumers alike. The future destiny of the agricultural industry is in the hands of the supermarkets. We now have 1,000 hypermarkets in Britain selling 50 per cent. of all food in the country. There is little doubt that the supermarkets have done the consumer a huge favour. But in the process auction marts, high street butchers, bakers and greengrocers' shops have closed. That represents a huge diminution of buying power. In its place we have eight to 10 supermarket chains offering identical products at similar prices.
Not only are the majority of Welsh farmers desperately worried about their current situation, but also about their fate come the 21st century. Currently there exists great dissatisfaction, namely because of the proposals outlined in Agenda 2000. These will create a transition which will be detrimental to the long-term future of farming in Wales. Once again I urge the Government to establish a Royal Commission to look into the present state of the agricultural industry and the countryside. My request was turned down last time and I wonder whether the Minister has reconsidered what I stated on that occasion.
The insecurity among the young farmers in particular creates great misery in the rural areas, with their future looking exceptionally bleak. It really would be a great loss if we were to allow these small farms to disappear. After all, they are and have been the backbone of the Welsh economy and language. I agree with the views expressed by the Country Landowners' Association, which states,
"The Commission has gone for a piecemeal, rather than a coherent approach. It has introduced further complexity, not simplification. It fails to accord sufficient priority or resources to agri-environmental and rural development, and fails to respond to the needs of rural areas for an integrated policy based on three pillars: sustainable agriculture; sustainable environment; sustainable rural economy. So far, Agenda 2000 is a wasted opportunity".
Yesterday I bought the Sunday Times and I was depressed when I read an article by Peter Conradi in Brussels. I wonder whether the Minister can say whether this allegation is true or otherwise. It reads as follows:
"It was an all too typical example of the European Union's efforts to help the Third World. In an attempt to boost the poor farmers of the southwest African state of Namibia, the EU promised a £2.5m grant to build abattoirs that would supply meat to the lucrative market of neighbouring South Africa.
By the time the money finally came through more than a year later, some Namibians were wondering why Brussels had bothered. The country's meat industry was in crisis, devastated by subsidised European beef 'dumped' on South Africa at half the price of locally produced meat. The newly built abattoirs are running at only a quarter of their capacity.
'It was a bit nonsensical,' said John Leroux, marketing manager of Namibia's meat hoard, last week. 'The EU has been giving money to these plants and then sending their own subsidised meat in to compete'".
It is a very sad day if that story is true.
Finally, I should like to turn to my hobby horse: I have raised this matter many times during the past 25 years and have had the same replies from Ministers
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of different political persuasions over that period of time. Many noble Lords in this House profess, as I do, to be Christians. There are millions of people starving every day in the third world and we pay farmers in this country for not producing food. It is all wrong and I believe that we should do something to help those people who are starving. Many Ministers have said in the past that if we do that we will spoil their economy and stop their own farmers from developing their land. But that is not an answer when you are starving to death.
I believe that we, as Christians and as people living in the western world, can do a great deal to help these people who are dying for lack of food. It is food for thought for the Minister and for everyone within the Community. I believe that we could build processing plants and deliver to the starving millions food in a form that could be carried to the third world; and we could employ many people who are now unemployed to do that work on our behalf.
Having said that, may I thank the chairman, the noble Lord, Lord Reay, and the other members of the committee for the excellent way they have carried out this report. I am sure that the Minister, in his wisdom, will do his very best, as he has promised in the past, to help the farmers, who have a major problem on their hands at the present time. I hope that in his deliberations within Europe in the months to come we will benefit from the contents of this report.
11.12 p.m.
Lord Palmer: What a pleasure it is to follow the noble Lord, Lord Geraint. I think it is the first time I have done so since I had the honour to congratulate him on his maiden speech many years ago, and exactly on the last subject he has mentioned: the starving, particularly in Africa. It is an absolute scandal that one is discussing Agenda 2000 with all this food going to waste when one looks at the television screen and sees those children literally starving to death. We are living almost in Cloud-cuckoo-land and I am sure the noble Lord, Lord Donoughue, will want to respond positively on this when he comes to wind up.
I too would like to add my tributes to the sterling work of the committee and it was pleasing to note the important role that the six hereditary peers played on that particular committee. Somebody saw me carrying the large red document and said, "Gosh, that looks like good bedside reading." In fact it made the most incredibly easy reading.
It is very interesting, when one thinks that the Government are keen to reform this House, that tonight there are nine out of the 12 speakers who are hereditary peers, and who are at "the coalface" of agriculture and who really know what we are talking about. I have to say that this is the most reader-friendly report and I congratulate the noble Lord, Lord Reay, and his committee most sincerely.
I must declare an interest. For the past 19 years I have tried to farm in the Scottish Borders. I was fortunate enough to inherit a small farm and a workforce of 17. Today I am farming a bigger acreage with just four men, three of whom are the second generation of their

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families to work on the farm. From 1986 to 1992 I represented Scotland on the European Landowning Organisation. I had the honour to ask the ELO president to come to Scotland on a fact-finding mission. I shall never forget taking him up to Glen Shee. We looked at that barren, snow-covered mountain face; and it was extremely difficult to convince him that that was home to 3,000 black- faced ewes.
I think it is important to reflect on what the situation was those 19 years ago. We were told that more food was required—drain the wetlands, pull out the hedges, buy bigger tractors and here is a grant to do so, and of course most of us had to borrow the shortfall. And—this is hot off the press this morning—indebtedness by UK farming today is at a staggering £5.5 billion, £900 million of which relates to Scotland. Had the captains of industry run the CAP, they would have all been sacked years ago for gross incompetence. And to think that we are now being told, "Stop—set it all aside" is quite unbelievable.
I am disappointed that the noble Lord, Lord Mackie, did not use his normal wonderful analogy about the price of milk in relation to how many hours one has to work, and how many miles one has to drive to get a pint of beer, and so on. I looked up Hansard over the weekend. I remember the noble Lord saying that he had walked many miles, but never to buy a pint of milk! Going back those 19 years, a 100 horsepower tractor cost £15,000. Today that same tractor would cost £35,000. Nineteen years ago, wheat was selling at £100 per tonne. Today, if one is lucky, one will get £80 per tonne. A 15 foot-cut combine cost £25,000. Today that same combine, admittedly with many refinements, would cost £93,000. Those figures are very telling. One thing is for sure. The price of a loaf of bread and a pint of beer is not the same as it was 20 years ago!
I am also glad that the report emphasises the acute problem that the United Kingdom's agriculture is facing today. Most of Britain's farmers are professional farmers and not part-time farmers like many in Germany and France.
In the Scottish Borders arable farmers last year suffered a 70 per cent. drop in income, and I believe that many hill farmers in Scotland and Wales saw their income drop by 89 per cent. I do so wonder how a European Commissioner would feel if he were suddenly told that his take-home pay was going to fall by 89 per cent.
Farmers have not only done what they were told to do but also what they were financially encouraged to do. It must not be forgotten that farmers have little idea what their crops will cost to grow, to harvest and to dry, or what they will yield per acre—and, most importantly of all, what the wretched things will be worth. That is an incredibly important point for the Minister to take on board. It must be a unique situation. Farmers, unlike any other industry, have no control of their destiny. This in itself is a terrifying situation, as I hope the noble Lord, Lord Donoughue, and his Cabinet colleagues will appreciate.
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Turning directly to Agenda 2000: any price cuts should be fully compensated by the new direct payments scheme. Modulation must be resisted at all costs. I am horrified that there is no reference at all to currency revaluations and it is indeed frightening to think that in the past two years alone sterling has risen by 33 per cent. against the German mark. It really is quite frightening. We must have a new agri-money system up and running by January of next year if the dreaded euro really is coming into operation.
There is also no mention of the sheep industry which is so vital to Scotland, and indeed to the noble Lord, Lord Geraint's native Wales. Another glaring omission, about which I feel passionately, is industrial crops. North Sea oil is not going to last forever and I would urge Her Majesty's Government to increase the 2.1 per cent. of GDP which is currently spent on research and development into bio-fuels, straw bio-mass chemical production, which includes lubricants from oil seed rape, biodegradable plastics and paper from cereals and sugar.
Every speaker has mentioned the Countryside Stewardship scheme. I could not agree more. However, without a thriving and profitable agricultural industry, we cannot look after the countryside in the way people in this country expect us to do. It is simply not possible.
Finally, the CAP is a mess, a shambles and an utter disgrace and I urge Her Majesty's Government to do all they can in the last few weeks of their presidency to rectify the ludicrous situation in which particularly UK farmers find themselves through absolutely no fault of their own.
11.22 p.m.
Lord Middleton: My Lords, I, too, congratulate my noble friend Lord Reay and his committee on producing an excellent report. My noble friend has paid tribute to the work of his committee clerk. Perhaps I may take this opportunity to extend that tribute. Having had some 12 years' experience on Sub-Committee D, I cannot praise too highly the clerks with whom I worked. Without their skill and diligence, the European Select Committee simply could not operate. The House owes them much.
In the introduction to this report it is stated that it was the decision of Sub-Committee D to focus on the rural development and rural environment aspects of the Commission's Agenda 2000 communication. I understand the reason for that decision.
But in order fully to do justice to the all-important subject of the CAP and the pressing need for reform, one has to look at the whole Agenda 2000 package. A balanced assessment cannot be made by concentrating on only a part of it. Reading between the lines, it is clear that my noble friend's sub-committee came up against that difficulty at the outset of its inquiry. Its report is all the more valuable for an inevitable broadening of the scope of the inquiry. A good deal of evidence was heard on the agricultural content of the package, and there are six paragraphs in the opinion section of the report devoted to that aspect.
The sub-committee was entirely right to emphasise the need to link the rural environment and rural prosperity with the need for a clear strategy for the

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removal of price supports and quotas and a timetable for degressive production-related compensation. It rightly criticises Agenda 2000 as a whole for not going far enough to prepare European agriculture for the kind of reform that would encompass such a strategy.
Turning to rural environmental and development policies, when Sub-committee D reported in 1996 on the Fischler reform proposals, we supported in principle the idea that CAP reform should contain what is called "an integrated rural policy". What were then lacking were any detailed relevant proposals. What we have now is still somewhat sketchy.
On environmental policy, the report sets out the arguments for and against "cross compliance", about which we have heard something tonight. It makes a compelling case against its adoption. This is slightly weakened by a wobble at the end of paragraph 82; but I listened to what my noble friend Lord Reay said about it in justification.
On rural development policy, our Sub-committee D's 1990 report on the future of rural society called for encouragement for rural-based, non-agricultural businesses, both on and off farm premises, for supportive planning policies and for a continuing role for rural development agencies. These recommendations are reiterated here, and rightly so.
The sub-committee reports the concern of witnesses who fear that the Commission proposals for the reform of the structural funds will be to the disadvantage of rural areas, particularly in the UK. Having heard my noble friend Lord Reay, I think I now understand what is meant by a "horizontal rural development policy". Whatever that implies, I share the worries of witnesses about the demands of both rural and urban areas being fused into the orbit of a new objective 2.
I share the concern of the Rural Development Commission when it gave evidence that the transfer of its responsibilities to regional development agencies may be to the disadvantage of rural England. My noble friend Lady Anelay developed this theme in an earlier debate today. I hope that the Government will take on board the points made in the report in this connection.
I also share the fear expressed in the report that the proposal to fund the objective 5(a) and 5(b) type measures from within the guarantee section may be too restrictive.
On the question of LFAs, I remember that when we were looking at the MacSharry proposals we were firm in advocating decoupled support where compensation was required. At the same time, we wanted continued funding for hill farmers. It was difficult to recommend undecoupled HLCAs, though we did so, in defiance of logic. I am glad to note that the report sees a logical way forward in the Commission's new proposals and recommends a degree of subsidiarity in operating this essential support. Great attention will be needed in creating an effective system to ensure the survival of our upland farmers in the UK.
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Turning to the question of funding, the report advocates a more sophisticated method of funding, pointing out in paragraph 110 that:
"There should be no presumption that savings produced by CAP reform should automatically he used in other ways in rural areas."
There appears to be support for the principle set out in Part III of Volume I of the Agenda 2000 document which says that a new horizontal measure is needed to be,
"implemented in a decentralised way at the appropriate level at the initiative of Member States".
I can see the merits of applying the principle of subsidiarity where agricultural environmental measures are concerned, the needs being so different across the community, but I am bound to say that alarm bells started to ring when I saw the word "appropriate". I wondered what kind of initiative might be taken by the UK and what level of contribution would be considered appropriate by a UK government under Treasury pressure at a time when support for rural communities was low on the spending priority list.
Finally, I am all too aware of the Commission's apprehension about trying to get member states to agree to the kind of radical CAP reform measures that are necessary. Of course, the political obstacles are huge; but it must be recognised that even these watered-down proposals will take a long time to negotiate in Council—several noble Lords referred to that. Ideally, it would be better to cut out that stage altogether and for the Commission to embark now on a full and radical new reform package on the lines recommended in our CAP reform report of 1991. It is accepted that such proposals will be more difficult to negotiate, but time wasted on the current, unsatisfactory Agenda 2000 would be saved. A spur towards agreement would surely be provided by the challenges of the WTO and enlargement.
The report on Agenda 2000 by the Agriculture Committee of another place concludes by saying,
"Though it prepares the ground for an integrated rural policy to he established in the future, Agenda 2000 is a missed opportunity".
That I believe to be an understatement.
11.30 p.m.
Lord Moran: My Lords, I must declare an interest in that my wife has a small hill farm in the Radnorshire environmentally sensitive area and belongs to the ESA scheme. I can say to my noble friend Lord Rathcavan that we have got rid of our sheep, though we kept our pedigree Welsh black cattle.
I enjoyed this inquiry. I echo our chairman's tributes to our clerk and specialist adviser; and he was an admirable chairman. We were covering familiar territory; we had been there before in 1990–91 and 1995–96. But we have tapped some new sources of evidence. I should like to draw your Lordships' attention particularly to the evidence we had from Hampshire County Council and West Oxfordshire District Council, from Mr. Philip Merricks, who combines being a big farmer and a leading environmentalist, and from Strutt & Parker. All of them are well worth reading.

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Once again we are considering the problem of reforming the common agricultural policy. It is indeed deeply flawed and unsatisfactory—almost but not quite as bad as the common fisheries policy. It spends around £3 billion a year on subsidising food production in the United Kingdom, largely devoted to maintaining and increasing production, regardless of other considerations, while failing to give all but the largest farmers satisfactory incomes or to prevent the movement of farmers out of agriculture.
The written reply of the noble Lord, Lord Donoughue, to a question from me on 17th June last year made it clear that this Government share the view of the previous government that the CAP is costly, inefficient and wasteful and does not pay proper regard to environmental considerations. Our report quotes the Prime Minister—who can hardly be described as a Euro-sceptic—as saying that the CAP is,
"a manifest absurdity which discredits Europe".
Nevertheless, the CAP has been with us for some 40 years, and despite the calls of British governments for its reform, very little has changed. That is because in the EU, as now constituted, so many countries like the Republic of Ireland do well out of the CAP and so many like France and Germany are in thrall to determined agricultural lobbies that radical changes have not so far been an option. The only modest changes were the MacSharry reforms of 1991. I was on Sub-Committee D at that time under the chairmanship of the noble Lord, Lord Middleton, when we considered those changes which, for the first time, introduced agri-environmental measures, though expenditure on them was only a tiny percentage of what was spent on production support. They did however give rise to some valuable schemes like the environmentally sensitive areas.
Eighteen months ago the Commissioner for Agriculture held a conference in Cork on rural development which came up with a declaration that presaged much better integration of the environment with agriculture and was widely welcomed. We went to Brussels in July last year, just after publication of the Agenda 2000 proposals. I had the opportunity to ask a question of Commissioner Fischler. I asked him, among other things, why Agenda 2000 had apparently gone back on what had been said in the Cork declaration. I had a very long reply from Herr Fischler, in which, however, he contrived not to answer any of the questions I had put to him. It was depressingly clear from that visit that the environment was not a priority either for the Commission or for the majority of member states.
Agenda 2000 said nothing specific about the expansion of agri-environmental schemes and offered almost nothing to reverse the decline in the environmental quality of Europe's farms. The Commission evidently regards environmental considerations as peripheral and of low priority and aims in effect to continue the present system, under which 61 per cent. of the CAP is spent on crop subsidies, 33 per cent. on livestock subsidies and just 3 per cent.
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on the environment. MAFF, for its part, is providing £500,000 a year for a valuable pilot arable stewardship scheme, but that compares with £1,350 million paid in the arable area aids to farmers.
Professor Alan Swinbank of the University of Reading, that powerhouse of agricultural expertise, has recently argued that the proposals made by the Commission will not be acceptable in the trade negotiations due to begin next year in the World Trade Organisation. They are, he says, merely a disguise for the continuation of the present CAP, largely unchanged; an attempt to continue a protectionist agricultural policy under a new green WTO-compatible camouflage. Even so, the Agenda 2000 proposals, modest as they were, were in March condemned by the EU Agriculture Ministers, who did not even want this small further reform, and since then no substantial progress has been made, though detailed negotiations have now begun.
A fundamental difficulty is that the proposed compensation payments appear to be intended to continue indefinitely, a proposal we attack in paragraph 65 of our report. Unless these payments are phased out, there are, it seems, unlikely to be any more resources to meet the real and urgent needs of rural development and of the environment. The Worldwide Fund for Nature has argued that over 25 per cent. of the current CAP budget should be redirected from price support to direct payments for environmental benefits. The CPRE proposed 20 per cent. Clearly, the 3 per cent. spent on the environment is totally inadequate.
All across western Europe, it is on farmland that the greatest declines of birds and other wildlife have been observed. In this country, farmland birds have been the victims of the intensive industrialised farming, promoted by the CAP—the autumn sowing of cereals and the consequent absence of winter stubbles, the disappearance of hay meadows, the greatly increased use of herbicides and pesticides, so eliminating weed seeds and reducing insect populations, and the passing of mixed farms. The results are well known. For example, an 86 per cent. drop in partridge numbers, and skylark numbers falling by 330 birds every day. We are turning much of our farmland into a birdless desert.
What can we do? In Brussels, we can only make progress by seeking allies among other member states and trying to form a coalition of members determined to give the environment a higher priority. I should like to ask the Minister whether the Government are doing this, or plan to do it. But I am not too sanguine about the prospects. I think, for example, that the RSPB is being wildly overoptimistic in saying in the current number of its magazine that our presidency has given the UK a unique opportunity to take a lead on environmental policy-making. I see very little sign of that.
More generally, we have to realise that the policy decisions on agriculture are now made in Brussels, where we are only one voice among many, and a weak voice at that. We have had the bitter experience of the shameful treatment of our beef industry. We see all around us the results of subsidy farming, whether it is the endless livid yellow tracts of oil seed rape, or the

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excessive numbers of sheep in the uplands resulting from headage based payments, about which the noble Lord, Lord Reay, spoke.
I do not myself believe that simply calling for the reform of the CAP, as this Government and their predecessors have done, has any effect. It is possible that the CAP may eventually be modified because of pressure from the World Trade Organisation, the needs of governments to keep expenditure within bounds and the eastward enlargement of the EU, if that comes about.
Some member states may realise that change may eventually be forced on the EU and be reluctant to give anything away until it is. It is, I believe, deeply unsatisfactory that we are chained to a system which our Prime Minister regards as a discreditable absurdity. I would a thousand times prefer that we were out of the system and on our own, but so long as we are in, I believe that we must do what we can to persuade other member states and the Commission to take the environment more seriously, as I am convinced that the people not only of this country but of Europe as a whole, would wish us to do.
11.41 p.m.
Lord Inglewood: My Lords, before adding a few comments of my own to this interesting and worthwhile report, which has been so lucidly introduced by my noble friend Lord Reay, I should explain to the House that I farm in Cumbria on my own account, both inside and outside the environmentally sensitive area. My experience there is that we have actually reduced the stocking on some of the fell and the heather is coming back. In addition, I am the owner of some let agricultural land.
In considering the common agricultural policy, it is important to look at it in two quite different ways and it is necessary to do both simultaneously. First, as an economic phenomenon and as a form of agricultural policy for western Europe in the second part of the 20th century, in particular when viewed from the United Kingdom, it is expensive, wasteful and in many respects unsuccessful. However, one must also look at it as a political phenomenon. It is the policy which created the Treaty of Rome and, as a result, in many quarters it has been ascribed an almost sacramental character.
What we have here is a combination which, when viewed from one perspective, is deeply flawed and, when viewed from another, is almost inviolable. Nevertheless, as the committee quite rightly points out, we cannot go on as we are. Even if we positively want to retain the status quo we cannot do so because we are seeing the development of World Trade Organisation policies digging further into the agricultural sector.
Secondly, the expansion of the European Union eastwards creates the need to draw eastern European agriculture into the western European market place. In short, in this respect we have to try to find a means of repeating in a different way what was done between France and Germany in 1956 but this time bringing eastern and western Europe together.
Against that background, I believe that it is important that we concentrate on principles and do not allow ourselves to be too hung up by detailed policy
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mechanisms, for I believe that if we get the principles right the latter will follow. There are more ways than one of skinning a dead cat.
What are the main principles and points which we should focus on in considering these reforms? I would like to enumerate one or two, although I do not wish the list I give to be perceived as exclusive. First, the policy is obviously too expensive and is very bad value for money for taxpayers and consumers. After all, support through intervention buying involves the taxpayers or consumers spending the total cost of production in order to confer the benefit of the value of the net margin in favour of the farmer.
Secondly, the policy is production focused at prices above world level. After all, in an era of EC surpluses it cannot be sensible to encourage surpluses at above world prices. This imposes quite unnecessary burdens on consumers, hinders world trade and hardly helps the hungry.
The third point has already been mentioned. We must oppose modulation, which has the effect of nullifying the benefits of the steps that farmers may well have to take when faced by the economic consequences of the reforms that they will have to make. Given that modulation will affect northern Europe quite disproportionately as against southern Europe, it is tantamount to discrimination on grounds of nationality and, as such, entirely at variance with one of the basic principles of the European Community.
It is also in practice a policy which discriminates in favour of farmer proprietors as against hired labour. As such it is inequitable and, I imagine, an aspect which I would expect Her Majesty's Government to be especially concerned about, not least of all from the Government who introduced the employment chapter into the Amsterdam Treaty.
Fourthly, as the report recognised, fluctuating exchange rates probably have a greater short-term impact on agricultural prosperity than anything else. The noble Lord, Lord Mackie of Benshie, pointed to the Government's shabby record in the recent past on this. Given the evolution of a Europe which its creators intend will be a stable currency area, can the Government confirm that for as long as support mechanisms calculate prices in a manner that does not protect the UK farmer from adverse currency movements, the Government will not permit UK agriculture to suffer from adverse exchange rates or be discriminated against for as long as we may remain outside economic and monetary union, for however long that might be?
As has already been mentioned, I believe that in parallel there are two wider policies that must be fully incorporated, as was spelt out in the committee's report. First, agricultural policy must be environmentally benign in its impact, promote environmental good practice and remember that policy must benefit not only those who earn a living from the land but the land itself. Secondly, agricultural policy must be integrated with wider rural policy both to ameliorate the effect of the inevitable changes on those squeezed and to diversify rural employment prospects and to underpin rural services.

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Finally, I believe that the present CAP is too Brussels centred. The policy should evolve more towards the model of, say, industrial policy and be delivered by mechanisms and paid for by money which do not necessarily go through the Brussels loop. That is entirely in accord with the wider principles of subsidiarity which are being entrenched in the workings of the Community.
I also agree with my noble friend Lord Middleton in his comments about the short-term problems posed by agricultural reform. In the longer-term it seems that the combination of the next round of World Trade Organisation trade liberalisation and the problems posed by the imperative of achieving the next stage of European Union enlargement eastwards provide as good an opportunity as we have had for many years for reforming the CAP in a direction which is appropriate for all of Europe in the next millennium. After all, we need to meet the needs of farmers and their families, who should not be accorded a peasant standard of living. It would indeed be ironic if the Government who are introducing the national minimum wage should impose standards lower than that on farmers and their families.
We must make sure that consumers should not have to pay unnecessarily high prices for their food and we should make sure that the land itself should be recognised as the source of future wealth and well-being and not merely a quarry to be worked out for today's needs. But I think it goes further than that. We are now seeing in the modern world a kind of seamless system across western Europe based around the European Union. The distinction between domestic politics and foreign politics, which has always been a bit blurred, is now becoming very fuzzy indeed.
As far as European Community policies have been concerned, the dominating position of the CAP, with its rights of pre-emption over so much spending, have unbalanced both policy-making and expenditure in the Community. That has always been perceived as anachronistic in this country. But as we are seeing, as a previous speaker mentioned, an increasing move from the land in many countries on the Continent, it is also being perceived as equally anachronistic there.
The central position that the CAP has in European politics has been a major contributor to public bewilderment and sometimes muddled, but far too often genuinely relevant, criticism of the European Union. If agriculture were to move away from the centre of the European political scene, I believe that that would very much be in the European Union's wider political interests.
11.49 p.m.
The Earl of Lytton: My Lords, I start by declaring an interest as an Exmoor moor hill farmer in one capacity and as a chartered surveyor in another part of the country in another, so I could be described as a "diversified rural businessman". I am also a member of the Country Landowners' Association and I declare that interest also.
I specialise in trying to make what could be described as silk purses out of sow's ears. In about 1989, I lost confidence both in the CAP and in rural policies
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generally and I set about diversifying my holding with serious intent. In addition to about 750 ewes, we now have a reasonably substantial commercial pheasant shoot. The ewes still employ one person, as they have always done. The shoot must account for at least six other employees, if not more.
I welcome the report and I pay tribute to the noble Lord, Lord Reay, and his committee. Although it will almost certainly make no difference to what the noble Baroness, Lady Young, described as the "juggernaut process" of Agenda 2000, in both what the sub-committee said plainly and in what it implied I believe that this is a milestone report. It is a great shame that this debate is occurring so late when so few noble Lords are present in the House to listen to our deliberations.
Agenda 2000 is, at best, palliative treatment. It does not address the disease or its cause. We all know the state of the bodily functions and the pressure from the World Trade Organisation. The removal of the distorting factors is fine, but what of exposure to world prices for an EC economy that increasingly has a quite different cost and social structure from those of many other competitor areas? It is a world that in many areas does not share, in particular, British concerns over food standards, additives and methods of production—and specifically that they are humane and meet environmentally exacting land-use standards.
There is the problem of enlargement and the pressures on the future distribution of Community benefits, especially in the light of the great discrepancies (for a long time to come) in the national GDPs of the central and eastern European countries. There are lumps and bumps in affordability, efficiency, the degree to which the playing field is—or will ever be—truly level, and in the compliance costs that we impose which others across the world may not.
There is sclerosis in terms of the political pressure to change. The objective should have been to reduce the burden of the CAP in terms of cost and complexity; Agenda 2000 increases both. The increase in product support and the real risk of intensification of agricultural production run counter to what most EU voters want. There is the growing UK trade deficit in temperate food products and the declining importance of agriculture in the UK rural economy.
The buffers are in sight. We have had years of uncertainty and the EC answer that we are given is to switch the train into a siding that ends in 2006, prolonging the agony and doubt, and creating loss of confidence for consumers and producers. As a result, the rural economy is on the shortest of short-term agendas when it needs long-term vision.
It is now beyond question that we cannot sub-contract rural policy on the assumption that the CAP will provide. It will not. We have BSE and the severe decline in all areas of livestock rearing, including sheep, and a poor outlook in many other sectors. That has shifted the whole economic picture. Marginal areas, predictably, have been the first to reach crisis point, including some of our loveliest, most environmentally cherished and most fragile uplands—the sort of country where I farm.

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Structural funds are to be consolidated with no ring-fenced rural fund and, critically—although at the moment the regional development agencies hope that they will help in this—there is no clear strategic vehicle to make use of them, a concern expressed to me by the Association of National Park Authorities.
There is not the time to get all this sorted out by Europe. Europe's policy, an example of which is modulation, is now fundamentally a social and not an economic one and may well discriminate against economic efficiency while failing to protect environmental imperatives.
What do we do? I suggest that we must build our own rural policy lifeboat while the CAP soldiers on for as long as it can. But we will not do it by job substitution, by which I mean urban-style commerce simply translocated to a rural environment, making abandonment of land use all the more likely; and we will not do it simply by adding houses for people who will have to travel elsewhere for jobs. That must be an affront to sustainability. Nor will we do it by discriminating against holiday home or second home owners without finding ways to harness their resources. This problem is one that vexes local authorities in the Lake District. We cannot discriminate against valuable sources of inward investment whatever its source, but we should start to link the management and use of rural land with worthwhile economic objectives. We should reduce bureaucracy and overall compliance costs. If necessary, we should look at our domestic fiscal measures to make objectives worth while and attract inward investment, not for speculative gain or property sales but for businesses employing people who add value to the primary produce of the land. For example, scenically valuable land should be worth making valuable also for the land managers. I have mentioned this on many occasions in the past in this House. Often economics and the environment have an inverse relationship, which is totally wrong, but, in creating vehicles to deal with this, whether they be stewardship or anything else, there must be flexibility. Above all, we need a long-term strategy.
I believe that it takes a generation to change rural perceptions and economics substantially. We are part-way through that process. A 20-year forward rural policy by consensus, not a grand central plan like that of the former Eastern bloc, is required. There need to be signposts in that direction instead of the chopping and changing that has gone on in recent times. We need to encourage low input farming, organic farming and the highest standards of welfare and environmental care and insist on those standards applying to the goods that we import. We need to create a culture of diversification wherever feasible. The noble Lord, Lord Mackie, said that it could not apply everywhere. He is right; it cannot. But wherever that is possible it should be met with a "can do" mentality on the part of government, particularly in local authority planning powers, but always in ways that foster the use and management of the land, not simply to asset strip it.
The noble Lord, Lord Palmer, referred to biofuels, industrial crops and fossil fuel substitution. That requires serious pump-priming and further
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encouragement, if only on grounds of sustainability. We also need to create greater open-mindedness without built-in prejudice in favour of the reuse of old buildings—for employment uses where employment is not wanted in the particular area, or against holiday or residential uses where that may be the only feasible alternative. The key is to tie the use to the land and create an economic lifeboat that inures to the benefit of the land management.
Further, we must stop perpetuating the "something for nothing" mentality in which countryside amenity, and possibly access rights, are regarded as public benefits but the management costs and risks that flow from them are those of the private owner. That is simply social discrimination and is unsustainable in its brazen inequity. We should make recreational land uses an intrinsic part of the rural economy and value it as such.
I thought that the noble Lord, Lord Geraint, would elaborate the following point. We also need to repatriate to rural areas a large part of the obscene differential between the value of primary produce to the producer and its cost to the consumer. That means more local processing and adding value at or near source to benefit the purposes of land use. We need to look at our temperate food imports and seek local substitution. Buying large percentages of imports simply exports the underpinning utility of our countryside and is also energy inefficient.
We need to make environmental payments a proper return on cost and risk of management, not some notional idea of opportunity cost on declining agriculture. Above all, we need to improve rural communications.
Agriculture and forestry uses are in decline, as a percentage of the economic rationale of the countryside. The Select Committee really seems to be highlighting the need for an alternative home-grown rural strategy, and as a matter of great urgency. Only in that way do we shield ourselves from future turmoil in CAP reform, and we must do it ourselves. The repatriation to member states of some ability within national envelopes gives rise to the suggestion that that may be a growing element.
Midnight
Lord Beaumont of Whitley: My Lords, Sub-Committee D, like the rest of us in the world who have anything to do with agriculture and the rural countryside—and that is everyone—found itself between a rock and a hard place. The rock is the WTO. It is a purely economic way of looking at things whereby eventually almost everything else will go by the board for the lowest economic price which the WTO can enforce.
The hard place is the desire to have a civilised combination of economic, environmental and social effects which we take for granted in everything else. If noble Lords cast their minds back about four hours, they will remember we were talking about regional reform. When that was being discussed, several times—and I noted at the time at least twice from the Government Front Bench—the necessity of having that tripod

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working was taken for granted: the environment, the economics and the social effects. That is in almost everything that we try to do.
In agriculture and in discussing the CAP over the past 30 or 40 years, we have started by discussing the economic side; recently, we have added the environmental side; and we have not added in the social side at all except through the much maligned—and quite rightly much maligned—CAP. It was extremely interesting that the report of Sub-Committee D did not, at any moment, discuss the social effects. It referred only to the economic and the environmental effects. I pay tribute to the members of Sub-Committee D because they had an extremely difficult job to do and they have produced a massive piece of work.
I pay particular tribute to the chairman who probably made the only speech this evening which represented the findings of his committee. He put them forward in an absolutely straightforward manner. But it was very much on the side of the rock and did not tend to go into the hard place.
It seemed to me that every speech since has tried to fill that gap between the two; has tried to bring out the matters which should be added to the basic WTO doctrine to produce something else which we all want. Different speeches made different points. There was almost always something with which I agreed as well as disagreed in every speech. But I do not believe that any speech stuck to the straight party line of Sub-Committee D.
In winding-up for my party tonight, I should like to acknowledge that we all suffer from that problem; indeed, my party is not separate from that in any way. We, too, are engaged in the work between the rock and the hard place and are involved in trying to find the things which we can do to give humanity and social effect to what is a very tough economic given.
I start from the assumption, as I am sure everyone in this Chamber does, that the rural environment is infinitely precious. I would also go on to say that I believe that it needs a high degree of population—although I know that I would part company with some in that respect—and that that population should be deeply connected in some ways with agriculture. The latter is not only an industry; it is also a vocation, an art and what ultimately gives rural life its character. In other words, one of the main charges that I level against this report is that while, thank God, the single-minded economic approach to agriculture and the countryside has by now taken on board, albeit grudgingly, the environmental factor, it still seems to be completely resistant to the social factor.
In paragraph 28 of the report the committee quotes with seeming approval the view that,
"nature and positive environmental benefits should be paid for as if they were crops",
but nowhere could I find the idea that social benefit should also be paid for as a crop. That is not terribly surprising because, admittedly, the trouble with the CAP was that it went too far in that direction. Indeed, we
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have all reacted strongly against it. Nevertheless, it is something that we need. It is true that the NFU said that it had a vision of,
"a strong and diverse rural economy with well-balanced rural communities".
However, in the light of the rest of its view, I feel bound to file that vision with one of "motherhood and apple pie"—admirable things about which we seldom need to do anything.
I believe, first, that food security is important for a nation and that we should grow as much of the food that we consume as possible—thus, incidentally, cutting down in the post-Rio world on the amount of wasteful international trade. Here I believe that I see eye to eye with the noble Earl. Lord Lytton. Secondly, in the over-populated world of the next century, it will be important for those parts of the world which are good at growing food to do so. As the method of growing the maximum amount of food with the minimum of harmful and resource-hungry inputs is through smaller holdings rather than larger ones, we must have a policy which will not bankrupt the family farm.
Again, your Lordships will be aware that, like the noble Baroness, Lady Nicol, and other Members of this House, I am deeply concerned about the welfare of farm animals. It is increasingly obvious that the way forward in civilised farming is towards more extensive methods applied in units, with a labour force which allows every cow, and almost every hen, to be known individually by those who tend them; as, indeed, was the case in most of our childhoods.
I found the evidence of Compassion in World Farming published in the report to be of extreme importance and was disappointed that the committee appeared to pay little attention to it. Other submitted evidence, to which it seemed to me that not enough attention was paid, was that from the Rural and Allied Workers section of the TGWU and, to a lesser extent, that from the National Federation of Young Farmers' Clubs.
One of the key paragraphs of the report seemed to me to be paragraph 16 on modulation, where the views of the European Landowners Organisation seemed to be given unnecessarily favourable treatment. It thought that modulation was opposed to efficient fanning and slanted towards small farms. The organisation was right about its second assumption; it is slanted towards small farms, and to a certain extent that is a good thing. I am not saying that there is a simple way in which this should be done. I am not saying that it should be a milch or cash cow. My noble friend Lord Mackie produced an extremely good example of a neighbour of his with only 50 acres who managed, by diversification, to survive. That is probably almost all that farmers ask these days; namely, that they should survive in the present economic situation.
We have fallen into the trap of measuring efficiency only as efficiency in cash. Efficient farming is that which looks after the countryside, treats animals well and produces the maximum food consonant with caring for the land and the environment. Of course it is important that farming provides a living wage for those

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who are involved in it, but the aim—as of all civilised life—must be to provide enough rather than to maximise income.
We have had a full day's work today and I shall not discuss at length many important issues I should have liked to touch on, such as the complexity of environmental schemes—where I agree that we should simplify—the need for better rural services, the need for social housing and the use of rural statistics.
I merely conclude by commenting that a world which tries to see that national agriculture is controlled by the GATT and the WTO, instead of by the need for a well fed population and a happy rural citizenry, is mad. The sooner we come to our senses the better for us, the countryside, our livestock and the world. I think this involves a certain amount of fudging and our finding a way through. It may involve a way which—as the noble Earl. Lord Lytton, said—takes advantage of what we think we can do in this country and the possibility of national envelopes.
I conclude by saying that I do not regard this report—though the work of a hard working and well meaning committee—as being a serious contribution to this essential aim. It is a statement of one of the two poles, and as such it is important because it shows us what we must make up our minds about. I do not think that anyone in this House has seriously made up his mind about it. I certainly did not detect that in any of the speeches I have heard. I look forward with great interest to hearing what the Government have to say.
12.12 a.m.
Baroness Anelay of St. Johns: My Lords, I too thank the committee and my noble friend Lord Reay for producing such a cogent and tightly argued report. When reading the committee's report I found myself agreeing with its views at just about every turn of phrase deployed to such good effect.
I shall not attempt at this late hour—it is actually an early hour of the morning—to cover every issue raised by the report as time simply does not permit that. I do not wish to undervalue in any way the importance of what the committee has to say by trying merely to comment briefly on each and every aspect. I hope that noble friends will be able to return to aspects of this report in debate and in Questions.
I note that the Government have published their response in advance of this debate. They have in large measure welcomed the report without, however, giving too much indication to the House of what they intend to do in practice to negotiate effectively to implement the committee's recommendations. Paragraph 2 of the Government's response states that,
"negotiations on the rural development regulation have recently begun".
I look forward to hearing from the Minister what the Government intend to achieve by those negotiations and what timescale they have set themselves for concluding them.
As other noble Lords have pointed out, the timing of this debate is indeed opportune. It falls before the Council of Agriculture Ministers' meeting next week. It
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will be the last chance that the United Kingdom has during its presidency of the EU to make any real progress on the consideration of Agenda 2000 proposals.
However, the debate is also set against a backcloth of a year of great hardship for those involved in Great Britain and Northern Ireland agriculture and its related industries. In the past year farm incomes have dropped by 47 per cent. The Government's policy of high interest rates has wreaked havoc on the industry because of green pound revaluations. The recent revaluation a couple of weeks ago means it is likely that direct arable payments will be further reduced by up to 6 per cent. later in the year. Output prices are well down in 1998 and the situation continues to deteriorate. Earlier tonight the noble Lord, Lord Rathcavan, referred to Northern Ireland agriculture.
On Friday I visited Belfast for the Balmoral Show and I congratulate the organisers of that excellent event. There the industry accounts for 10 per cent. of civil employment and 8 per cent. of GDP, but the farm income average is a mere £5,000. The Ulster Farmers' Union pointed out to me that:
"The single biggest industry in Northern Ireland, the agri-food industry, is currently in its worst crisis in living memory. This is having a profound impact on the entire economy within the Province. Already large numbers of small businesses are having to cut their workforce numbers, which is greatly reducing the prospects of alternative employment for farmers and their sons".
They also pointed out to me what they considered to be the possible severe impact that this could have on the outcome of any attempts at restoring peace to that Province.
The profitability of farming and horticulture is under enormous pressure throughout Great Britain and Northern Ireland. In many areas this in turn threatens both the ability of farmers to act as stewards of the countryside and their role of underpinning the economy of many rural areas.
We all had so much to expect from Agenda 2000, but when I read the committee's report I was not surprised to see that their main theme is one of disappointment. In paragraph 64 they say:
"We are disappointed that the Agenda 2000 Communication does not go anywhere near far enough to prepare the Community's agriculture for competition in world markets without continued protection."
In paragraph 94 they argue that the contribution which the proposals in Agenda 2000 make to the process of rural development—which needs to be encouraged if the valued fabric of rural society is to be maintained—is relatively minor. Overall, the danger is that Agenda 2000 will be a missed opportunity—an opportunity to set out coherent and effective proposals for ensuring the successful development of food production and the success of the rural economy in the next century. As paragraph 68 points out:
"Adjustment to a competitive market is not simply a question of what happens within the farm fence."
Paragraph 70 says:
"A move to a competitive agriculture will affect not only those products which are subject to the CAP but the delivery of environmental services which currently arrive (if at all) as a by-product."

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The rural development proposals are narrowly focused on agriculture. Will the Government guarantee to develop and implement an integrated rural development that is not based exclusively on agriculture? And how in practice will they structure this? Will the early retirement scheme, which was referred to earlier this evening, be extended beyond the beef industry? Will the Government undertake that they will not agree to any requirement that an increase in land holding should be a condition for qualification—as many of the holdings are economically viable?
The report highlights the importance of decoupling, as other noble Lords have mentioned earlier. It points out in paragraph 73 that United Kingdom environmental schemes are stringently drawn up and involve only a minority of farmers. Elsewhere in the Community, notably in Germany, funds have been allocated on "environmental" grounds to a very high proportion of farmers with very modest requirements in terms of changed farming practices. This raises the spectre that environmental policy may be perceived as a disguised form of support for production. Do the Government agree that it is essential that schemes are decoupled from production and do not form covert production subsidies?
The report also points out the dangers posed by cross-compliance. First, it can be used only in those areas where CAP provides direct income support—and these may often be neither the product areas nor the geographical regions in which the greatest gain from environmental expenditure can really be made. Secondly, the obligation on farmers to accept environmental restraints exists only so long as the policy survives. Other noble Lords have also referred to the problem that the cross-compliance would apply only to existing producers, and that once an environmental policy is tied to existing farmers it is likely to be used as an argument against change. Do the Government agree that this would seriously hinder a major restructuring of production which is needed to create agriculture which competes fully on the world market?
While all states are required in Agenda 2000 to implement environmental cross-compliance, it is neither clear what should be the standard of these conditions, nor how common levels of environmental protection will be achieved across member states. How do the Government seek to resolve this matter?
Finally on cross-compliance, member states may use savings generated by environmental cross-compliance, and by labour unit modulation, to fund agri-environment measures. But the detail of how funding may be switched from CMOs to agri-environment measures is unclear. For example, how reliable a source would such funds be to agri-environment measures?
It is also worth noting that the Commission proposes that member states should take appropriate measures to restrict payments in circumstances where recipients fail to demonstrate their active role in maintaining rural areas. How do the Government anticipate that this will be achieved without duplicating provisions for environmental cross-compliance?
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When I spoke to a representative of the Tenant Farmers Association last week, he drew my attention to the danger that tenants could be locked out of environmental and rural development policy. He pointed out that UK tenant farmers' activities are bound by the agreement that they have already entered into. If they do anything outwith its remit—for example, tree planting—they could risk losing the tenancy. He would argue that tenancy agreements lock tenant farmers into agricultural activities alone. What account have the Government taken of this point in their negotiations so far? What note have they taken of the variation in the nature of farm holdings throughout Great Britain and Northern Ireland and their variation from the pattern in other member states?
United Kingdom agriculture, despite all its problems, still has many underlying strengths which we need to preserve and promote. It is a well structured industry compared with most other EU states. It has skilled farmers, farm managers and a workforce who can apply new technology to maintain and enhance the industry, if we give them the chance and the future to do it. Our young farmers are our future. I am reminded of the frustration expressed recently by a 32 year-old tenant dairy farmer, Craig Cochrane, who farms Richardson and Dyke near Darvel in Ayrshire. He said, "More than anything else, we need to get back some pride and motivation in what we do. I would rather have no subsidies and earn a fair price for my produce".
We all have a responsibility to fight for a future for farmers like Craig Cochrane, to fight for a future for agriculture and the rural economy. Consumers and producers alike, wherever we live, whatever we do, depend on each other. We do not need the countryside to become a glorified theme park. We need it to be a living, breathing, essential part of the whole economy. In this House we have argument and influence at our disposal. Only the Government have power—and of course participation in Agenda 2000 negotiations. If they fail there, they fail us all.
12.23 a.m.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue): My Lords, this has been an excellent debate, with constructive comments from all sides of the House, greatly assisted by the contributions from five—or was it six?—members of the distinguished committee whose report we have debated.
I should like first to thank the chairman of the committee, the noble Lord, Lord Reay, for providing me with a welcome opportunity to respond on behalf of the Government to the Select Committee's report and on such an excellent opening speech. The Government have already replied fully to the committee, so there is no need to repeat those points in detail. However, I hope to expand on our formal response to the committee and reply to some of the points raised. I deeply share the regret expressed by the noble Lord, Lord Reay, that so important a topic is debated so late at night. The noble Lord will understand the pressures of government business. I myself had an attractive appointment in

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Chelsea at 6.30 tomorrow morning; however, that prospect has receded as this debate has continued into the night.
I begin by congratulating the committee. The report is an excellent analysis of the European Commission's Agenda 2000 proposals and their importance to the United Kingdom. The written evidence makes interesting reading and highlights the wide range of interests that have been consulted. The committee's report is also timely; detailed proposals following the Commission's Agenda 2000 communication have now been received and negotiations on rural development regulation have begun, though these negotiations have a considerable way to go yet.
I broadly agree with many of the criticisms of the existing CAP—the Prime Minister's description of it as a "manifest absurdity" was quoted; it is typically mild and generous on his part—and the criticisms of Agenda 2000 have been expressed in the debate. I appreciate the acute difficulties being faced by many sectors of British farming at this time—though I should point out that our currency, which has been a major factor, can go down as well as up, as is demonstrated by much of the history of sterling over the past 50 years.
Before responding to particular points, it may be helpful if I say a few words about the Government's views on the common agricultural policy reform proposals on rural development. This is a very important element of the Agenda 2000 package. It provides a framework, bringing together environmental, forestry, structural and traditional rural development measures. The key problem is that more resources are required to enable the framework to bring increased benefits to the countryside. That can happen only if resources are made available by phasing out production link subsidies in the commodity regimes.
The Government therefore agree with the committee that the Agenda 2000 proposals do not go far enough to develop an agricultural industry in Europe able to compete effectively in world markets without subsidy. However, the Commission's proposals are a step in the direction that the Government have been advocating.
The rural development proposal lays down a framework from which member states would be able to determine programmes for implementation based on local priorities and covering seven years, from 2000 to 2006. Agri-environmental measures are compulsory, whereas all the other measures are optional.
This proposal would also permit a degree of flexibility in how the measures could be implemented in the United Kingdom. That is a matter to which the Government will be turning their attention over the summer. The outcome of the Government's comprehensive spending review will be an important consideration in this process.
Turning to the detail of the report, we welcome the committee's support for the European Commission's intention to simplify policy, and we note its view that support for the environment should be offered via the single menu. The Government believe that there are advantages in integrating schemes where the schemes have proved their value and where amalgamation will
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bring efficiency benefits and assist farmers. We shall look at this in the forthcoming review which the Ministry will undertake of the habitat, countryside access and moorland schemes with a view to integrating successful elements into the countryside stewardship scheme. The English ESAs have proved effective, though we shall reflect on whether in the long term they too could be amalgamated with the countryside stewardship scheme. Similar reviews have been undertaken, or are planned, by the other agricultural departments.
We agree with the committee's view, put again by the noble Baroness, Lady Anelay, that environmental payments must not be production subsidies in disguise and that we should aim to decouple support both for its own sake and to meet the developing arguments of the WTO. The Government believe that the most effective way of providing environmental benefits is through specific, well targeted environmental schemes which are properly evaluated and monitored. However, the committee must be aware that full decoupling from production may not be possible as some schemes may require a particular form of agricultural production to deliver environmental goods. An example is the need for grazing to maintain heather moorlands.
The Government agree with the committee's view that there should be a synchronised process of reducing production-related compensation payments and building up an environmental policy justified by its own merits. We are committed to the phasing out of production-related farm support and the redirection of some of the savings on CAP expenditure towards support for the environment and rural development.
The committee highlights the role for rural development to play in easing the social and employment problems which result from the continued decline in agricultural employment as well as from wider changes in the rural economy. The Government are determined to pursue sound economic policies for the benefit of the country as a whole and to help ensure a healthy and diverse rural economy. The creation of employment is one of the Government's principal priorities, and rural development policy must assist in creating sustainable employment opportunities. This involves a combination of national programmes and specifically targeted measures. National initiatives such as the New Deal for the unemployed are intended to help both urban and rural communities.
Earlier today this House approved the Second Reading of the Regional Development Agencies Bill, to which a number of noble Lords referred. RDAs will be region-wide bodies which are intended to take a coherent and integrated approach to the development and regeneration needs of their regions. This should be of considerable benefit to rural areas by ensuring that rural issues do not become marginalised. The same Bill provides powers to enable the merger of the Countryside Commission and the Rural Development Commission. The new body will provide a national overview on rural economic and social issues and will play a central role in the Government's objective of developing a sustainable living countryside.

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The Government are pleased to note that the committee believes that the development of alternative economic opportunities must be supported. We agree that further diversification of the rural economy is a desirable objective. We have supported diversification of that kind under the Objective 5(b) programmes and domestic programmes. The Government will consider what further measures might be necessary in the context of the proposals currently being negotiated.
The Government are pleased with the committee's comments on the value of harnessing the enthusiasm of local partnerships and using the bottom-up approach to developing programmes. We note the committee's view on the need not to lose the expertise that exists in the Rural Development Commission. The Government recognise the valuable work of the Rural Development Commission, particularly at local level, and are determined to make full use of that expertise. RDC staff working on regeneration issues will transfer to the regional development agencies. RDAs will have a specific remit to serve the rural areas of their regions and, outside London, each board will have at least one member who can contribute a strong rural perspective. However, I note the concerns expressed by the committee and witnesses to it—emphasised by the noble Lord, Lord Middleton, with his great expertise in this whole area. I can assure him that we are negotiating for rural areas to receive a fair share of support from Objective 2 schemes.
The Government agree with the committee's view that the mark of a successful rural development programme is that after time it becomes unnecessary. The aim of rural development policy under Agenda 2000 should be to enable the rural economy to cope better with adjustments to the economic base of and quality of life in the targeted areas. As now, programmes will continue to be monitored for effectiveness and designed to be flexible to allow room for adaptation as circumstances require.
I should like briefly to turn to a number of points raised in the debate. Modulation was brought up, particularly by the noble Lords, Lord Reay and Lord Inglewood. The Government made clear in their reply to the Select Committee that they do not welcome modulation. We have forcefully opposed the proposal for a Europe-wide ceiling because that would have a disproportionate adverse effect on our own farmers. We have, however, signalled that if other member states want to modulate payments to their own farmers under subsidiarity provisions, the United Kingdom would not stand in their way. But that is firmly on the condition that our agricultural sector does not lose out.
The noble Lord, Lord Reay, referred to the need for a national body to advise on redundant building conversions. I am sorry if we appear to have misunderstood the committee's recommendation on the need for advice on planning applications for redundant building conversions; nevertheless I can assure the noble Lord that the merged Rural Development and Countryside Commissions will be well able to advise us on policy in relation to such applications.
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My noble friend Lady Young of Old Scone referred to the sheep regime not being tackled by the proposals and we agree that the Commission missed an opportunity to put forward proposals to reform the sheepmeat regime. But the Government will continue to press for reforms in that as well as other sectors where proposals for reform are equally absent or inadequate.
The noble Lord, Lord Mackie of Benshie, referred to green pound evaluations. I must point out again, as we often have to point out to commentators in this sector, that European money is simply not available for us to take in order to compensate farmers. The Fontainebleau abatement means that even European money represents a cost to the United Kingdom Exchequer of some 71 per cent. of the total available, and in this year alone that would have cost over half a billion pounds. We must take that into account. Other member states do not have to think about that effect and since Fontainebleau there has not been a level playing field in that respect.
I particularly agree with what the noble Lord, Lord Willoughby de Broke, said about simplification. I made a passing reference in my speech to the fact that we certainly need simplification both for the existing consultative bodies and for the environmental schemes on offer.
The noble Lord, Lord Grantchester, referred to the Cork conference. It is true that that conference in 1996 raised expectations of support for rural development which have not been sustained into the Agenda 2000 reforms. But it is still the case that the rural development proposal offers a framework within which, over time, resources can be shifted from the CAP to rural development or to environmental measures, as production support is reduced, as we believe it must be.
The noble Lord, Lord Geraint, referred to a newspaper report about European aid to Namibia. I shall need to check on that and will write to him about it. But I may not be able to comment on the detail of the story, and he will be aware that modern British newspapers are not strong on facts.
The noble Lord, Lord Palmer, referred to industrial crops and bio-fuels. I agree with him completely that it is an area which needs more work and more research. The department is currently looking at that and we have also used Objective 5(b) schemes to encourage alternative crops such as those for energy. He will be aware that there is a possibility for more of that under the rural development proposal.
The noble Lord, Lord Inglewood, referred to agri-monetary compensation, one of the most important points facing Europe, this country and this Government. I can only promise him that we will negotiate as vigorously as possible to protect our farmers from discrimination in any new measures proposed when the existing schemes terminate later this year. However, tie understands better than most how the business works out there. We are part of the minority—the out of the pre-entry minority—standing outside the single currency. That is not perhaps the ideal negotiating position.

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The noble Baroness, Lady Anelay, raised a number of questions at this late hour. I can promise her that I shall write to her when I am more refreshed.
In conclusion, I strongly commend the report to the House.
12.42 a.m.
Lord Reay: My Lords, the last thing that any noble Lord present will wish to do now is to listen to another speech from me. However, I should like to say how grateful I am to all those who took part in the debate and also for the fact that so many should have taken part at such a very inconvenient hour on a Monday night and with fairly short notice. It reflects the wide recognition of the importance of the subject.
There was a large measure of agreement in the debate. A few reservations and caveats were entered into with regard to the report. The noble Lord, Lord Mackie of Benshie, found a weakness, my noble friend Lord Middleton found a wobble and the noble Lord, Lord Beaumont of Whitley, found that we ignored the social policy. If my noble friend Lord Middleton still does not understand why there was a wobble, I will explain it to him afterwards. However, I feel that I should say something to the noble Lord, Lord Beaumont of Whitley, now.
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His criticism that we ignored social policy I do not find to be fair. In the evidence section, paragraphs 48 to 51 deal with rural services and rural communities.
"Social exclusion was a marked concern"
is the introduction to paragraph 51. We go on to quote later in that paragraph,
"There is no point in having jobs if there is no local affordable housing".
If one turns to the conclusions, paragraph 105 says,
"Rural development policy must seek to ease the social and employment problems which result from the continued decline in agricultural employment as well as from wider changes in the rural economy".
Other paragraphs also take up aspects of social policy. Therefore I do not believe that it can truthfully be said that we ignored social factors and considerations in the report.
I would like to thank all noble Lords who spoke kind words about me or the committee. I am also grateful for the support of the Front Benches and for our Front Bench speech which was very gracious towards the report. I also appreciate what the noble Lord, Lord Donoughue had to say. He gave a careful reply, not without some wit even after midnight. The reply will need further study. I am grateful to him for taking up the questions and points that I and other members of the committee raised. I commend the Motion to the House.
On Question, Motion agreed to.
House adjourned at fourteen minutes before one o'clock.