Lords Sitting of 22 April 1999

Preamble
The House met at three of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Ely.

Fissile Materials: Proposed Treaty
Lord Archer of Sandwell Lord Archer of Sandwell asked Her Majesty's Government:
What steps they are taking to encourage the negotiation of a fissile material cut-off convention.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, we have had useful discussions in recent months on the substantive issues involved in a fissile material cut-off treaty with a range of interested countries. We are frustrated that actual negotiations on such a treaty have yet to begin at the Conference on Disarmament in Geneva. Our Ambassador there has been working hard to find a way of breaking the deadlock in the Conference on Disarmament over this year's programme of work.
Lord Archer of Sandwell: My Lords, I share my noble friend's disappointment that her enthusiasm has not met with greater encouragement. However, the Government announced in their strategic defence review that they proposed to place surplus stocks of weapon-grade plutonium under international control and have therefore declared their confidence in an international authority. Despite the set-backs, does the Minister foresee a time when all weapons of mass destruction will be placed under the control of an international authority? May we then look forward to a more law-abiding and safer world for our grandchildren?
Baroness Symons of Vernham Dean: My Lords, I believe that the Government have set a good example. We now publish information about all United Kingdom stocks of plutonium and highly enriched uranium. We have announced that all fissile materials surplus to defence requirements will he placed under EURATOM safeguards and made liable to inspection by the IAEA.
There are a number of priorities. One is the fissile material cut-off treaty, as we discussed. However, we also wish to see entering into force the Comprehensive Test Ban Treaty, which 152 countries have so far signed, the ratification of Start 2 and negotiations on Start 3, which is of great importance.
Baroness Williams of Crosby: My Lords, can the Minister say how far matters have proceeded in Russia, particularly in relation to factories and research centres producing nuclear material, following the visit by the
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Foreign Secretary a few weeks ago during which he raised the matter in Murmansk, where he was concerned about the deterioration of nuclear submarines?
Baroness Symons of Vernham Dean: My Lords, the noble Baroness is right in saying that the Foreign Secretary has raised these issues. The Government have also done everything they can to encourage the Russian Duma to ratify Start 2. I am bound to say to the noble Baroness, with all the sensitivity I can on this subject, that at the moment the Duma is probably not entirely in a receptive frame of mind on some of these issues.
Baroness Rawlings: My Lords, what steps have the Government taken to build on the progress made by the previous administration, which announced the UK's cessation of the production of fissile material for explosive purposes at the non-proliferation treaty review and extension conference in April 1995?
Baroness Symons of Vernham Dean: My Lords, I had hoped that I had answered that specific point when dealing with the supplementary question asked by my noble and learned friend Lord Archer. It is true that in 1995 the then Foreign Secretary announced that we had ceased production of fissile material. It is important to note the additional steps taken under the current administration to publish information on UK stocks of both highly enriched uranium and plutonium, to put fissile material surpluses under the EURATOM safeguards, and to enable the IAEA to carry out inspections. Therefore, we have built on the useful start made by the previous Foreign Secretary in 1995 in a way in which I hope the noble Baroness will find constructive.
Lord Avebury: My Lords, with the reduction in the number of nuclear weapons in the British arsenal, do we have a surplus of fissile material, both enriched uranium and plutonium, and would not the best method of disposal be to recycle it through our civil nuclear reactors?
Baroness Symons of Vernham Dean: My Lords, as I have indicated, there is a surplus which, as regards our defence requirements, will be placed under EURATOM. We will also ensure that the IAEA has access for inspection purposes. Yes, there is a surplus, but it has been placed under the safeguards that I have indicated.
Lord Kennet: My Lords, can the noble Baroness inform the House which, in the opinion of the Government, of the following three groups of countries are most to blame for the delay in setting up a regime? First, is it those which hold nuclear weapons legally under international law, including ourselves? Secondly, is it those which hold them illegally? Thirdly, is it those which do not hold them at all but look as though they would like to?
Baroness Symons of Vernham Dean: My Lords, I really do not believe that it is sensible to apportion blame, as my noble friend urges me to. Her Majesty's

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Government have built on the very useful start that was made in 1995 in relation fissile material. They have signed up to the CTBT and are urging all other countries to do so. Moreover, we are also urging other countries which have not yet become signatories to the conventions on biological and chemical weapons to do so. It is better for those of us who want to see the elimination of those weapons of mass destruction to concentrate on the positive elements which we can take forward and not to look too much at who we can blame most.
Lord Elton: My Lords, will the Minister confirm that the nuclear fleet at Murmansk, referred to by the noble Baroness, Lady Williams of Crosby, represents a large and increasing threat of a major environmental disaster? Is it not possible to move to reduce that danger without waiting for everybody to sign up to that convention?
Baroness Symons of Vernham Dean: My Lords, when we discussed this issue before, I was able to tell your Lordships that it is a matter of very great concern to my right honourable friends the Home Secretary and the Prime Minister. We are looking at ways in which we can try to help the Russians deal with what we all recognise may be a very great environmental threat.
Baroness Park of Monmouth: My Lords, I recognise that the Duma finds this a delicate moment to pass the Start treaty, but it has succeeded in finding delicate moments for the past four years at least. The Americans, the European Union and ourselves have given money to the Russians over the past six years, as far as I remember, to reduce those dangers; for example, the nuclear submarines. Have any accounts ever been put forward in respect of that money? Have we received any explanation for the fact that it does not seem to have worked?
Baroness Symons of Vernham Dean: My Lords, I shall have to write to the noble Baroness about accounting for the money which has been spent. However, we are considering positive measures to try to help the Russians with what we all perceive to be a possible environmental danger which would affect not only that country but other countries too. Of course, there are delicate moments but some really are more delicate than others.

Burma: EU Common Position
3.10 p.m.
The Earl of Sandwich The Earl of Sandwich asked Her Majesty's Government:
What progress they have made with their European Union partners in strengthening the European Union Common Position on Burma.
Baroness Symons of Vernham Dean: My Lords, EU Foreign Ministers will discuss renewal of the EU Common Position at the General Affairs Council on 26th April. The Common Position was strengthened
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when it was last renewed, in October 1998. We have regular contacts with EU partners about possible changes to the Common Position but there has been no recent consensus on further measures.
The Earl of Sandwich: My Lords, I thank the Minister for that refreshingly honest reply. Will she join me in paying tribute to Aung San Siu Kyi, the legitimate Burmese leader, who has shown remarkable and exceptional courage in the past few months, especially following her bereavement? Will the Minister also join Aung San Siu Kyi in saying that the position in Burma has deteriorated continually in the past few months: 120 members of parliament are in detention. Will she agree also with Aung San Siu Kyi that concrete measures and more urgent attention should be given to that by both the European Union and the United Nations?
Baroness Symons of Vernham Dean: My Lords, I agree with the noble Earl. There has been no improvement in the political or human rights situation in Burma. The SPDC continues to detain democracy activists and to force them to resign from their political parties. In January about 200 students and about 50 LLD youth members were sentenced to up to 52 years. Ethnic minorities continue to cross into Thailand. There are now about 115,000 people in the refugee camps. I am sure that the whole House will agree with what the noble Earl said about Aung San Siu Kyi's courage and would wish to send her our great sympathy on the death of Michael Aris. I am sure we all agree that both she and Michael Aris were quite extraordinarily brave in the stand that they took.
I am happy to say that our ambassador has been in close touch with Aung San Siu Kyi in recent months over the tragic humanitarian case of Dr. Aris. At one point, he was seeing her almost every day.
Lord Eden of Winton: My Lords, since there has been no sign of any change of heart on the part of the Burmese regime, and since the people of that country continue to suffer under repression, might it not just be possible that a change of policy would yield better results and that some form of dialogue and international contact with the regime would lead to a more favourable solution, rather than a continuing policy of sanction and ostracism?
Baroness Symons of Vernham Dean: My Lords, we must bear in mind what the elected leader of Burma, Aung San Siu Kyi, urges upon other countries which favour democracy. The course of action suggested by the noble Lord to your Lordships is not the course of action chosen by the elected leader of that country.
With our partners we are working hard on a draft resolution on Burma for adoption at the session of the UN Convention on Human Rights. We are taking a number of different actions, such as supporting, as I have indicated, the EU Common Position and looking

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at ways of tackling the issue through the ILO. However, it behoves us to listen to what is said to us about the position in Burma by its elected leader.
Lord Marsh: My Lords, does the Minister agree that countries in the region that hold no brief for the military rulers in Burma, are extremely sensitive about interventions by former colonial powers, and that ASEAN has a much greater opportunity of producing some sort of bridge? Does she also agree that while no one argues against the bravery of Aung San Siu Kyi, many of her former supporters believe that she is a stumbling block to any sort of dialogue?
Baroness Symons of Vernham Dean: My Lords, while I am sure that we all wish to see eventually the same outcome on the ground in Burma, we hold rather different views on how that will best be achieved. We firmly believe that any Burmese representation to international bodies—the noble Lord mentioned ASEAN—should not breach the spirit of the EU Common Position. We believe that the Burmese Foreign Minister should not be granted a visa to attend the ASEAN meeting. We take a very different view from the one articulated by the noble Lord.
Baroness Williams of Crosby: My Lords, does the Minister realise that many of us do not accept the views expressed by the noble Lord, Lord Marsh, and believe that the democratic forces in Burma, which have reasserted themselves over many years and won a clear election victory, should be supported? In the light of her last reply, will the Minister consider working closely with the new committee for the representation of the people's parliament which has the support of a clear majority of the elected members, including many who are now in detention, and encourage, for example, the International Parliamentary Association and others to work with that committee to represent our support for democracy and the democratic forces in Burma?
Baroness Symons of Vernham Dean: My Lords, I thank the noble Baroness for her support of the Government's position on this. Earlier I mentioned the work we are undertaking with our partners on a UN Commission on Human Rights draft resolution. We hope to ensure that such a draft resolution includes a reference to the committee representing the people's parliament. We hope that will be a positive step which will give proper encouragement to those who support democracy within Burma.
To the noble Baroness and the noble Lord, Lord Marsh, I would say that in many ways our policy is working. We have seen, for example, our policy on trade working. During 1998 UK exports to Burma decreased by about 18 per cent. compared with 1997. The action we are taking together with our EU partners is having some effect, we believe, on the Burmese economy.
Lord Pearson of Rannoch: My Lords, the Minister has said that she would like the UK to strengthen the EU's Common Position on this matter. Can she say by
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what mechanism that would be achieved in the working group concerned? Would it be by some form of Euro majority, or by unanimity?
Baroness Symons of Vernham Dean: My Lords, we shall be looking at all sorts of ways to try to strengthen the position, depending on the particular action that might be agreed. Sadly, as I said in my original Answer to my noble friend, at the moment there is no consensus. Were there to be a consensus, of course, the way in which it would be achieved would be a question of what the subject of that consensus was.

"Banana War": Effect on Trade
3.23 p.m.
Lord Renton Lord Renton asked Her Majesty's Government:
Whether the action of the United States regarding the "Banana war" affects adversely various industries of the United Kingdom, in particular the carton manufacturing industry; and whether they will take: steps to negotiate with the Government of the United States with a view to ending the punitive action which it has taken.
The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, the action of the United States Government in targeting various EU industries in the dispute over the EU's banana import regime has been having an adverse effect on all the sectors concerned, including the folded carton industry. That is why the Government and the European Commission have been working hard to get a resolution to the dispute. The publication of the World Trade Organisation panel reports on 12th April means that there is now a fresh opportunity for the EU to work with the US and the other interested parties to avoid unnecessary damage to our industries and to our trade relations generally.
Lord Renton: My Lords, I thank the noble Lord for that helpful Answer. While I welcome the help that the Government have already given to the cashmere exporters, mainly in Scotland, will the Government also assist those who export cartons? In my former constituency, they have been hit severely, causing unemployment on a large scale. On the question of getting the European Union to observe the World Trade Organisation arbitrators, will the Government insist that the banana quotas must be revised so that the United States will end their discriminatory tariffs?
Lord Simon of Highbury: My Lords, the scheme that the Government brought forward to guarantee the bonds requested by US Customs in respect of cashmere knitwear was developed in response to a particular feature of the cashmere industry, which is, of course, of a highly seasonal nature. Now we are working hard to see whether we can displace the remaining US retaliation by other means, possibly by an interim solution linked to a definitive new regime which is clearly and irrefutably WTO compatible. That is the

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direction of the negotiations now under way. To conclude them speedily and to obtain an EU alignment as early as possible is most important.
Lord Bruce of Donington: My Lords, without in any way prejudicing the efforts being made by the institutions of the European Union to deal with this matter, will the noble Lord agree that this country, as the sixth most powerful trading nation in the world, has its own rights, on its own account, to pursue its own interests and to supplement those made by the European Union acting as an organisation?
Lord Simon of Highbury: My Lords, it is clear by the decisions of both Houses of Parliament, which represent our democracy, that we have decided to give certain powers to the EU to negotiate on our behalf. My opinion is that that was an extremely sensible thing to do because negotiations in international trade should be made at the level at which most people are likely to see successful outcomes. In issues of that nature, Europe has continued and will continue to serve us well. That does not stop us making our views on which to build a consensus position clear to our partners, as necessary.
Lord Pilkington of Oxenford: My Lords, can the noble Lord say whether or not the reports that have been issued that the European Union's policies benefit the producers of bananas rather than the Caribbean islands are true statements?
Lord Simon of Highbury: My Lords, the agreements that are in place currently are to ensure that all producers are given as fair a position as possible within a complex, multi-national negotiated scheme. In the next round of negotiations we shall try to ensure that the appropriate balance for all consumers is maintained.
Lord Monson: My Lords, can the noble Lord confirm that the substantial quantities of bananas exported from Guadeloupe and Martinique are not the subject of this dispute, as those two Caribbean islands are legally part of the French Republic and, therefore, the United States has no valid basis for objecting to their exports? Is it not only the English-speaking Caribbean islands which stand to suffer?
Lord Simon of Highbury: My Lords, it is true to say that there are different definitions of producer within the complexity of the agreement currently in place. In trying to resolve a complex, multi-national negotiation between two large powers—Europe and the USA—I am sure that the interests of all consumers will be taken into account.
Baroness Miller of Hendon: My Lords, as the Americans were forced by the World Trade Organisation to reduce their exorbitant sanctions, will the Minister tell the House why the Secretary of State for Scotland was sent to negotiate that those releases be allocated mostly to Scotland? Given that the Government said that they would fund the deposits for
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the cashmere trade, why could not those funds be allocated to other United Kingdom industries, such as those mentioned by my noble friend, which are suffering greatly? Or is it because of the Scottish elections and there will be very few Labour votes in Huntingdon?
Lord Simon of Highbury: My Lords, I said in answer to an earlier question, as I am sure the noble Baroness heard, that the specific release granted temporarily for the cashmere industry was based on the fact that it is a seasonal trade. It is surprising that the Opposition find it necessary to laugh at or be confused by a successful operation by a British Minister to alleviate damage to any sector of industry in Great Britain, or that they feel it is something to be wondered at.
Baroness Ludford: My Lords, is the Minister finding any understanding in the United States that while many of us want the European Union to be committed to free trade, there is some unease that there is too much domination of corporate power in some of these interests, whether it is bananas, GM food or hormone-treated beef? Is there any understanding in the United States that this is not just a free trade issue? There are also environmental concerns and concerns about corporate power.
Lord Simon of Highbury: My Lords, I agree that these are complex issues and do not just reside on the relationships in trade, which in general terms are very good between the USA and Europe. To ensure that I do not stray too far into a long answer on environmental issues of sustainable development, perhaps the noble Baroness will read the excellent Hansard report of the debate last night which went into these issues for at least four hours.

Govan Shipyard
3.32 p.m.
Lord Rowallan Lord Rowallan asked Her Majesty's Government:
What progress has been made by the task force set up to find a buyer for the Govan shipyard, in view of its planned sale by Kvaerner.
The Minister of State, Scottish Office (Lord Macdonald of Tradeston): My Lords, since its formation, the task force has had a round of exploratory meetings with a range of interested parties, including the management and workforces of the Govan shipyard and Clydebank engineering works, the local enterprise companies, local authorities and other organisations with an interest in the future of the companies. These meetings will, I trust, be the start of a process which will allow Kvaerner to dispose of its operations on Clydeside through arrangements that ensure continuing employment on the present scale in shipbuilding and engineering.
Lord Rowallan: My Lords, I thank the Minister for that reply and wish the task force well. Will the Minister

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comment on Swan Hunter's interest in the yard, and in particular press speculation that it is only interested in the yard for small ship manufacture? As this is the last major large shipbuilding non-military yard left on the Clyde, and we already have two small yards further down the river in the form of Ferguson's of Port Glasgow and Ailsa at Troon, does not the Minister feel that we have an over-capacity of small shipbuilding and that we should be concentrating on getting a large builder to take over the Govan yard to ensure the long-term future for the workforce of that yard?
Lord Macdonald of Tradeston: My Lords, there have been a number of expressions of interest in the Govan shipyard since the task force was formed, and no doubt other expressions of interest have gone to the Kvaerner company as the owner of the assets. We were pleased, as was everyone on Clydeside, that Swan Hunter came forward with a proposition. At the moment that is in rudimentary form. It does not contain a business plan. It has gone away to think about aspects of operations on Clydeside in more detail, having met the task force; and no doubt that will be subject to commercial negotiations with Kvaerner at the appropriate time.
Lord Monro of Langholm: My Lords, are not the Government concerned about their economic policies in Scotland, in that under their policies we have lost 14,000 jobs in two years? Also, can the Minister tell me whether there is a possibility of advancing orders by the Ministry of Defence for roll-on roll-off ferries, which I understand are not subject to European Union competitive policy? That might be an important way of enhancing the bids for the new yard.
Lord Macdonald of Tradeston: My Lords, the figure quoted is not one that is familiar to me. From the statistics produced yesterday, the civilian workforce job series suggested that 25,000 extra jobs were created in 1998 in Scotland. Total employment has fallen over the year by 16,000. Noble Lords will be interested to hear that, based on ILO unemployment statistics, there was a decline of 5,000 in the unemployment figures in Scotland over the year, down to a figure of 7.2 per cent.—less than that of the North-East, Merseyside, Wales or indeed London.
On the second point, my understanding is that we have in prospect the possibility of building six ferries. These are commercial vessels. They need not be built; they could be supplied as part of a PFI order, and therefore the noble Lord is incorrect in asserting that they could be directed and would not be subject to European restrictions. I shall investigate that and if I am wrong I shall write to the noble Lord.
Lord Mackay of Ardbrecknish: My Lords, is the Minister aware that I, at least, sympathise with the position in which he finds himself of possibly being the Labour Government Minister who presides over the demise of the last major shipyard in Scotland, especially
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as I know he started work in that very yard many years ago? However, I hope he will be able to tell the House that the Government's objective is to save a shipyard that builds major ships, as my noble friend Lord Rowallan asked. That is vitally important. Is the Minister aware that any diminution of that role for Govan would mean a huge reduction in jobs? Is he further aware that that would add to the 16,000 fewer jobs we have in Scotland since this time last year? Lastly, does he appreciate the positive and sympathetic attitude of the Opposition in this case in contrast to the attitude taken by the then Opposition when Conservative governments had to face dramatic closures in Scotland.
Lord Macdonald of Tradeston: My Lords, as a point of correction, I started my working life in a small shipyard with only 5,000 men next door to the shipyard in question. But we take seriously the threat to the building of large vessels in the Clyde. That is not in any way to diminish the achievements of Ferguson's shipyard further down the river which has been extremely successful in winning new work. But it would be the ambition of the task force—ably led by Sir Gavin Laird who has a great deal of engineering arid shipbuilding experience on the task force—to try to ensure that we find employment through arrangements that maintain work at its present level. But I wish to stress that, although 800 jobs are threatened in Govan, almost 800 further jobs are threatened in Clydebank, not in shipbuilding but in engineering. We will therefore make every effort to try to get a positive outcome for both sides of the Clyde.

European Parliamentary Elections (Amendment) Bill [H.L.]
3.38 p.m.
The Earl of Dartmouth: My Lords, I beg to introduce a Bill to amend the European Parliamentary Elections Act 1999 so as to disqualify staff and employees of European Community institutions from standing in United Kingdom elections to the European Parliament. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Earl of Dartmouth.)
On Question, Bill read a first time, and to be printed.

University College London Bill
Read a second time, and committed to an Unopposed Bill Committee.

Liaison: Select Committee Report
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the first report from the Select Committee be agreed to (HL Paper 49).—(The Chairman of Committees.)
Following is the report referred to:
FUTURE COMMITTEE ACTIVITY

1. The Committee has given further consideration to the future committee work of the House. Our Second Report, Session 1997–98, noted proposals including:

(1) a new committee on Overseas Trade to review developments since the last committee on that subject reported in 1985;

(2) the retention of a sixth sub-committee of the European Communities Committee, added experimentally in 1996;

(3) a committee with functions relating to human rights;

(4) the introduction of pre-legislative scrutiny.

2. In addition, the following further proposals have now been put to us:

(5) a joint committee on House of Lords Reform, after the Royal Commission has reported;

(6) a committee to scrutinise treaties;

(7) a select committee on the Obscenity Bill [HL] introduced by the Earl of Halsbury.

3. We understand that the Clerk of the Parliaments plans to strengthen the staff resources available to serve committees, but that recruitment of additional clerks will not be possible before the autumn. Moreover, the availability of Lords to serve on committees and of accommodation to house additional staff are factors which limit the possible expansion of committee activity.

4. We propose to meet again before the summer recess to consider further what new committee activity to recommend.

OBSCENITY BILL
5. At this stage we recommend that the Obscenity Bill [HL] should not be referred to a select committee. In view of the competing pressures we consider it inappropriate that resources should be devoted to a committee on a bill with no realistic chance of becoming law.
SCRUTINY OF TREATIES
6. A strong case was put to us for the appointment of a committee to scrutinise treaties. But we have noted that the Royal Commission on Reform of the House of Lords has, in its consultation paper issued earlier this month, explicitly posed the question whether the second chamber should play a greater role in the scrutiny of draft treaties. We have therefore concluded that it would not be timely to appoint such a committee in advance of the recommendations of the Royal Commission.
PRE-LEGISLATIVE SCRUTINY
7. A joint committee on the draft Financial Services and Markets Bill was appointed at the beginning of March, with terms of reference requiring it to report by the end of April. We understand that the Government is likely to propose further pre-legislative scrutiny of this kind, for example in relation to the draft Local Government (Organisation and Standards) Bill published with the White Paper Local Leadership, Local Choice (Cm 4298).
8. In principle we welcome the involvement of this House in pre-legislative scrutiny. But in view of the pressure for other committee activity we hope that it will be possible to co-ordinate the appointment of similar committees in future and to give reasonable notice in each case. Because of the variety of subject matter of draft bills, we endorse the appointment of an ad hoc committee for each draft bill.
9. We were informed by the Chairman of the Delegated Powers and Deregulation Committee that that committee had accepted an invitation from the joint committee on the draft Financial Services and Markets Bill to submit a memorandum on the delegated powers in the bill. We welcome this development, and we hope that the example may be followed in future. When a draft bill is made available for pre-legislative scrutiny, it can only be beneficial for the delegated powers to be subject to scrutiny at an early stage.
GOVERNMENT REPLIES TO REPORTS FROM THE DELEGATED POWERS AND DEREGULATION COMMITTEE
10. We have considered the recommendation made in paragraph 50 of the Special Report from the Delegated Powers and Deregulation Committee, Session 1997–98. That recommendation related to the examination of bills by the Delegated Powers and Deregulation Committee. After welcoming the practice of some Government Departments of responding in writing to the Committee's recommendations, the Committee went on: "We invite the Liaison Committee to consider whether all Departments should, in future, respond succinctly in writing to those recommendations from this Committee for which they are responsible. We consider that it could assist the House's deliberations if such letters were routinely made available to front-bench spokesmen on the Bill in question, and placed in the Library of the House".
11. We endorse this recommendation, including the proposal that copies of responses should be provided to front-bench spokesmen and placed in the Library of the House. Whereas responses to reports from other committees are expected to be produced within two months (or six months in the case of the Science and Technology Committee), it would not be appropriate to lay down a time limit for such responses. They need to be made in good time for amendments to be tabled to the bill in question. In some cases that will require Departments to act within a few days, and we recognise that occasionally the timetable for the passage of a bill may make the provision of a written response impracticable.
Lord Jenkin of Roding: My Lords, perhaps I may just say how pleased I am that something is not in this report. I know that it was recommended to the Liaison Committee that, in order to make room for new committees, some of the existing work of the current committees should be cut back. In particular, I make reference to the work of the Select Committee on Science and Technology. As I understand it, there was a suggestion that it should have only one, and not two, inquiries a year.
I should very much like to support the decision of the Liaison Committee that the latter Select Committee should continue to undertake two inquiries a year. I say that because, long before I became a member of it, outside the House it was regarded as one of our most respected committees. At a time when we are discussing the reform of the House, it really would be very sad if the work of that committee were to be cut back. So: three cheers for the Liaison Committee!
Lord Dean of Harptree: My Lords, I welcome the proposal from the Liaison Committee for pre-legislative scrutiny of draft Bills. I have been suggesting for some time that it would be advisable to have a new Select Committee to look at all draft Bills. I see that the Liaison Committee is proposing ad hoc committees for each draft Bill in view of the variety of subject matters. I fully accept that that is a more satisfactory way of proceeding than my original proposal. However, I hope that there will be some continuity in the membership of these ad hoc committees and, in particular, of the chairmen. After all, it is a new procedure which is being developed. These ad hoc committees will have to work out ground rules for the best method of proceeding. I believe that some continuity of membership would be desirable. I hope that the noble Lord the Chairman of Committees will feel that that is a proposal which merits consideration.

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However, as far as concerns the principle, I believe that this proposal will greatly improve the efficiency of parliamentary scrutiny of Bills. The Bills will be considered in draft before they are set in concrete. It is that much easier at that stage to meet criticisms, and thereby eliminate weaknesses, than would be the case later on. Further, I believe that your Lordships' House is very well fitted to fulfil that role. There is knowledge and experience in this House of virtually every subject under the sun. Indeed, your Lordships' House will have more time to do this job than the departmental Select Committees in another place. They have been allocated the job there but they are already heavily loaded with their existing work. Therefore, it would be an extremely valuable new function for your Lordships' House. I also hope that, when taking evidence, the committees will not only take evidence from Ministers and the departments concerned, but that they will also involve outside interests who are knowledgeable of the subjects concerned.
As I said, I greatly welcome the proposal. I give great credit to the Government for introducing draft Bills. I believe it is generally accepted throughout the House that this is a good move. There is no doubt in my mind that this early scrutiny of Bills, before they are set in concrete, will eventually save time on the Floor of the House when the proper Bill is introduced, especially as regards the Committee and remaining stages. It will produce better Bills and, above all, it will lead to better parliamentary scrutiny of legislation.
The Chairman of Committees: My Lords, I am very grateful to the noble Lord, Lord Jenkin of Roding, for his kind words about the work of the committee. I am sure that members of that committee will also be most grateful for what he said. Perhaps I should remind your Lordships that the Liaison Committee is sympathetic to the general point which the noble Lord makes. I certainly endorse all that he said about the reputation and excellent work of your Lordships' Select Committee on Science and Technology.
However, the Select Committee on Committee Work of the House chaired by the noble Earl, Lord Jellicoe, on which I had the privilege to serve with other noble Lords, reported in 1992. It recommended that there might well be occasions, because of the demands from your Lordships' House for committee work, when the Select Committee on Science and Technology should undertake only one inquiry a year. I would not want it to be thought—I am sure that the Liaison Committee is of this view—that that possibility has been ruled out. We must measure our work by the resources available. Nevertheless, as I have already indicated, the committee is very sympathetic to what the noble Lord has said about the splendid work done by that Select Committee.
I am also grateful to the noble Lord, Lord Dean of Harptree. for his kind words about the recommendations made today by the Liaison Committee. It was characteristically kind of him to let me know before the House sat today that he was proposing to raise this point. As regards the noble Lord's point about continuity of membership, that is a matter for the Committee of Selection when the moment arises and
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then for your Lordships' House. However, I shall certainly ensure that the point he has made about continuity is borne in mind.
The Liaison Committee was most grateful to the noble Lord for the suggestion that he made back in the autumn of last year and which he renewed in time for us to consider it at the recent: meeting of the committee. As the noble Lord has seen from the recommendations made this afternoon by the committee, it was very sympathetic to the points that he has made.
On Question, Motion agreed to.

Local Government Bill
The Parliamentary Under-Secretary of State Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an instruction to the Grand Committee to whom the Bill has been committed that they consider the Bill in the following order:

Clauses 1 to 29,

Schedule 1,

Clauses 30 to 33,

Schedule 2,

Clauses 34 and 35.—(Lord Whitty.)

On Question, Motion agreed to.

Criminal Cases Review (Insanity) Bill [H.L.]
Read a third time, and passed, and sent to the Commons.
European Parliamentary Elections (Gibraltar) Bill [H.L.]
Read a third time; an amendment (privilege) made; Bill passed, and sent to the Commons.
Scottish Enterprise Bill
Read a third time, and passed.
Scottish Parliamentary Constituencies Bill [H.L.]
Read a third time; an amendment (privilege) made; Bill passed, and sent to the Commons.

Water Industry Bill
3.49 p.m.
Lord Whitty: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Whitty.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 [Disconnection for non-payment of charges]:
Clause 1 agreed to.
Schedule 1 [Schedule to be inserted in the Water Industry Act 1991]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 1:
Page 12, line 23, leave out from ("applies") to end of line 25
The noble Baroness said: In moving Amendment No. 1 I wish to speak also to Amendments Nos. 2 and 3 with which it is grouped. I appreciate that it may seem a little odd to jump straight in with amendments to the first schedule to the Bill but that has occurred because there is such widespread acclaim for Clause 1, which will in future prevent disconnection for the non-payment of charges. Schedule 1 applies certain provisions in that regard.
Amendment No. 1 seeks to remove from the definition of "accommodation for the elderly" in paragraph 3(2) the words,
"but which is not a dwelling within the meaning of paragraph 1 above or a house in multiple occupation".
I believe that residential accommodation for the elderly could constitute a dwelling. If it is not, what is each unit of that accommodation? I ask the Minister whether any harm is done by the deletion that I seek? I am curious to understand the reason for the qualification. That is a short point.
Amendment No. 2 seeks to reduce the age in subparagraph (3) from 60 to 55 with regard to the definition of residential accommodation for elderly people. This is not a personal application on my part; it simply reflects the realisation—which appalled me—that sheltered accommodation and accommodation for elderly people, particularly in the private sector, tends to accept people of 55 and over. Therefore I believe it may be more appropriate to include the age limit which now appears to be increasingly applied, particularly by firms such as McCarthy and Stone.
The most serious amendment in this group is a probing amendment. I have no doubt that it should be couched in far more technical terms. Will the Minister confirm that premises used by local authorities to house homeless people will be included in the premises which are protected by this schedule? In another place on 10th February the Minister addressed amendments which listed various premises to be protected. He mentioned children's homes. He referred to premises providing personal care and said that,
"very strong arguments have been made for protecting children's homes".—[Official Report, Commons, 10/2/99; col. 404.]
He mentioned the importance the Government quite rightly attach to protecting children. He added, also at col. 404,
"I am erring on the side of caution, but there are no absolute guarantees that the relevant local authority would become aware immediately that a home had had its water supply disconnected … On due reflection, we propose to extend protection to residential care homes".
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He said that it was right to provide added reassurance in this regard.
The Committee will be aware that concern has been expressed about the standards of some bed-and-breakfast accommodation which, simply for lack of more appropriate accommodation, sometimes has to be used by local authorities to carry out their duties to house people who are homeless. Many of the people who find themselves in such accommodation are families with children. In order to be entirely sure that the kind of protection the Government clearly want to see provided is provided, this amendment seeks to include that kind of accommodation in the schedule. I shall be happy to be assured that this kind of establishment is already covered by the provisions of the schedule. I beg to move.
Lord Whitty: The amendments which the noble Baroness has discussed seek to extend the provisions with regard to protected premises. I understand the reasons behind the amendments but it is our contention that the Bill as drafted meets virtually all of the cases which she has mentioned.
Amendment No. 1 is a technical amendment, as the noble Baroness has said. It would not in fact add any protected premises to the list. The words that the amendment seeks to delete are there simply to prevent overlap between paragraphs 1, 2 and 3 in the schedule. All private dwelling houses are protected by paragraph 1, and all houses in multiple occupation are protected by paragraph 2. Therefore we do not need in paragraph 3 to protect accommodation for the elderly that is either a private dwelling house or a house in multiple occupation. The amendment is therefore unnecessary. This points to one of the problems we have had in drawing up Schedule 1; namely, that of ensuring that everyone who should be protected is protected, without duplication or overlap. In identifying as a separate category for protection "accommodation for the elderly", we responded to concern in the other place that there might be some such accommodation not otherwise protected although we expected the vast majority of sheltered accommodation to be protected under paragraphs 1 or 2 of the schedule. That is why we included paragraph 3 in the schedule for extra protection. Indeed, the Government met every single concern that was raised in another place about the scope of protection. However, the further this process of adding protection is carried, the more remote the circumstances and the more difficult it is to see that there is a gap in the protection. I do not think there is a gap in this regard.
As regards Amendment No. 2, I suppose I should declare approximately the same interest as the noble Baroness. I do not really believe that there is likely to be a category of sheltered accommodation for the over-55s which is not already protected against disconnection by reason of paragraph 3, or by another provision of this schedule. If there is a particular highly specialised form of such accommodation which is not included in the provision, perhaps the noble Baroness will discuss that with me and I can consider the matter. However, on the face of it, even if there is such accommodation,

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sheltered accommodation will not be excluded from protection simply because there are some occupiers under the age of 60. Under the wording of the paragraph it is the letting practice of the landlord that matters, and that is sufficiently elastic to permit a few younger inhabitants, or perhaps I should add, relatively young inhabitants. Of course, water companies will be well aware of the prohibition of disconnection set out in this Bill. In paragraph 3 there is full protection for sheltered accommodation for the elderly in the sense that the word "elderly" is generally understood. I ask the Committee to leave paragraph 3 as it stands.
Amendment No. 3 is slightly more complicated. It seeks to protect accommodation for the homeless. This is clearly another case of overlap with existing provisions. Rented dwellings, including council houses, are protected by paragraph 1. Houses in multiple occupation, (HMOs) are covered by paragraph 2. Between them, those two provisions must cover most if not all premises in which a local authority houses homeless people. In particular, the definition of houses in multiple occupation has been interpreted widely by the courts. For example, a hostel has been held to be an HMO, as has a hotel accommodating homeless persons.
However, we recognise the point behind this amendment; namely, that some accommodation provided for housing the homeless might not be protected. In our view most such accommodation is likely to be deemed an HMO and is therefore already clearly protected. There may be a residual problem in that, depending on the type of property, some hotels may not be classified as HMOs, although they may sometimes be used by local authorities to house the homeless. But some of those same hotels may also have other guests of all kinds on all terms and conditions. Water companies do not have the information to differentiate between the different status of different guests.
Unfortunately, if we extended protection in that way to all premises accommodating the homeless, the effect would be to prevent disconnection of all hotels. We do not believe that is appropriate. Indeed, taking that view, it would also be quite protective. Accommodation provided for the homeless must by law be suitable for the homeless. If disconnection were threatened the result would be the same as if the premises were threatened by closure for reasons of health and safety; in other words, the guests would immediately have to be moved and the local authority would have to find another place of accommodation. It is not realistic to specify hotels in general under this clause, which is the implication.
The welfare of homeless people is safeguarded by the existing clauses. Hotels are competitive commercial establishments and they should be subject to the same rules as regards their water supply as other such commercial premises. I believe that we have covered the concerns that lie behind the three amendments. I hope that the noble Baroness will feel able to withdraw Amendment No. 1.
4 p.m.
Baroness Hamwee: I thank the Minister for that reassuring response. I take the point that the accommodation, the subject of Amendment No. 3, must be suitable, but there is a short period—one would hope very short—between a potential cut or disconnection and the authority discovering that the premises had been disconnected. That seems to underlie the Government's reasoning on children's homes and so on—it was referred to in another place—and is why I thought it was worth airing this matter.
I am reassured to know that most establishments of this type will be covered; it is the minority which are a cause for concern. Perhaps I should rely on the fact that an establishment which is so badly nut that disconnection might happen would not he likely to attract guests on a commercial basis. I thank the Minister for his comments on the other amendments. I beg leave to withdraw Amendment No. 1.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 and 3 not moved.]
Schedule 1 agreed to.
Clauses 2 to 4 agreed to.
Clause 5 [Regulations concerning charges schemes]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 4:
Page 3, line 16, after ("principles") insert ("(which shall include affordability)")
The noble Baroness said: In moving Amendment No. 4, which stands in my name and that of my noble friend, I shall speak also to Amendment No. 5 and to Amendment No. 6, standing in the name of the noble Baroness, Lady Miller of Hendon, which is in the same grouping.
Amendment No. 4 deals with the charges schemes' regulations. Clause 5 enables the Secretary of State to specify the principles to which undertakers must have regard when calculating charges to customers. But what those principles should be are not stated on the face of the Bill. No doubt many of your Lordships could produce a list of principles, and I may be told that that could cause difficulties because once one starts describing detailed principles one might be knocking out others with an equally good claim. However, it is worth airing the principle of affordability. It is something of a truism perhaps, but it is accepted that water is a human necessity. I am concerned that access to water will continue to depend to an extent on ability to pay.
Although it is not perhaps accepted that the objective of the Bill is extended metering, that will certainly be an outcome. It is the theme behind the Bill. That in itself imposes cost pressures on consumers. Those who argue for metering often say that it is the increased costs which will lead to some reduction in the volume of water used. I accept entirely the steps that the Government have taken to protect vulnerable groups. The protection is to limit the bills of vulnerable groups to the cost of the average measured bill. That is not the same as the bill being affordable. It could be that the average bill will be high in a particular area and still not be affordable, and poorer customers will still be under pressure to economise in their use of water. By bringing the

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amendment forward today I am hoping that the Minister will be able to give the Committee some assurances about the principles likely to be included by the Secretary of State and that we will not have a problem of water charges being in any way unaffordable.
Amendment No. 5 seeks to ensure that the regulations are practicable for the undertakers. Having looked in the first amendment at the position of certain consumers, I am now turning to the position of the undertakers. This clause and the previous clause allow charges to be modified by the regulator so that the bills of vulnerable customers will, in effect, be subsidised by other customers. That is a change to the way the industry is regulated. The noble Baroness, Lady Miller, will table an amendment later about consultation. I agree with her that it is vital that the Government consult very widely on regulations to ensure that they are practicable and reach the groups in greatest need.
I am told that the water industry is very keen to be involved in the debate on how best to implement the proposals. The regulations must be the subject of wide consultations with expert groups. They should also—this is the point of the amendment—reflect the categories of customers already recognised by the DSS. We should consider whether the system should be implemented by the Government. Admittedly, the water industry is very profitable, but we are loading new regulations upon it and we should pause to consider what the overall effect might be. I beg to move.
Baroness Miller of Hendon: I wish to speak to Amendment No. 6, grouped with Amendments Nos. 4 and 5 which have been spoken to by the noble Baroness, Lady Hamwee. The noble Lord, Lord Elliott of Morpeth, is in hospital at the moment and, although the amendment stands also in his name, he regrets that he is not able to speak to it today.
At this stage, this is a probing amendment, but one to which we feel it may be necessary to return at a later stage depending on the response from the Minister. My honourable friend the Member for Meriden raised a similar issue in the other place, but the Government's response was unconvincing, to say the least. I hope that they will either produce a more convincing reply today or, alternatively and preferably, having had longer to consider the matter, they will now concede the point.
The Secretary of State or, by delegation, the director general, has power to set the terms of an undertaker's appointment—in other words, his licence to do business—by virtue of Section 6 of the 1991 Act. This includes the general basis of an undertaker's charging scheme. Section 143 gives the undertaker wide rights to produce a charging scheme, but that is subject to the terms of his appointment by the Secretary of State or, by delegation, by the Director General of Water Services. There is a model instrument of appointment which includes a specific obligation to ensure that a charging scheme is in force, especially in relation to domestic supplies, drainage and infrastructure. All those existing powers should be entirely sufficient. No evidence has been proffered that the existing arrangements are not working satisfactorily.
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Clause 5 inserts a new section, Section 143A, in the Water Industry Act 1991, giving the Secretary of State power to make any regulations—I stress the word "any"—in relation to the provisions of charging schemes. No adequate reason has been given for that proposed shift of powers from the director back to the Secretary of State.
Subsection (1) of the new clause gives the Secretary of State absolutely unlimited power as to the regulations, subject to one small restriction in subsection (4) to which I shall refer. Subsections (2) and (3) add to the already unrestricted powers of the Secretary of State, specifying the matters in relation to which he may issue regulations. But I stress that that is in addition to the wide powers that the Secretary of State will already have under subsection (1). The small restriction in subsection (4) to which I referred is that the Secretary of State's regulatory powers may not be used to limit the total revenues of the water companies, fixed in accordance with approved charging schemes. In other words, the only restriction that the Secretary of State offers on the new, sweeping powers that he seeks is that the total income of water companies may not be reduced by him, but the sources of income can be shuffled around between different categories of consumer.
The water industry is supposed to be deregulated, industry, with the public interest being protected by a totally independent regulator. This clause, particularly subsection (1), gives the Secretary of State overriding powers that are so wide that one wonders what future function the regulator will perform, except to stand in the firing line when anything goes wrong with the day-to-day operations of the industry.
The short and simple amendment that I propose simply prevents the Secretary of State, in exercising the powers that he seeks under Clause 5, from interfering with any charging scheme validly approved by the director. The powers in the 1991 Act to impose conditions on the original licence or appointment of an undertaker are not affected.
As I said, a differently worded amendment, but one to similar effect, was proposed by my honourable friend the Member for Meriden in the other place. The amendment replaced the draconian power to make regulations in relation to charging schemes with one requiring an undertaker to have regard to guidance as regards the various elements of any charging scheme. In other words, the Secretary of State was not to be able to move the goal-posts, either in relation to existing schemes or for future schemes which it is deemed should be identical. I commend my amendment to the Committee.
4.15 p.m.
Lord Whitty: It may be helpful if I outline the system of protection that is reflected in Clause 5. The protection will be aimed at two groups: large families on low incomes, and those with medical conditions requiring a high use of water. It will take the form of eligibility for a bill based on average measured use.
We propose that protection should be available for, in the first protected group, families with three or more children in receipt of specified benefits; in the second

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group, we propose that protection should be offered to those with particular medical conditions. We wish to ensure that the same protection applies right across England and within Wales, so that we do not end up with a patchwork of different entitlements. That has implications for the regulations, which will enable Ministers to ensure that the right arrangements are in place and that the same protection will indeed be available. It has implications also for the less prescriptive guidance.
Turning to the amendments, the requirement is for a director-general to have regard to such guidance in carrying out his responsibilities. In relation to the first amendment, I assure the Committee that the Government would not want to provide for a conflicting approach between regulations and guidance. And of course the Government will be working closely with the regulator, Ofwat, to ensure that the introduction and operation of the new arrangements spelt out in the Bill go as smoothly as possible and that that relationship will continue.
One effect of the amendment tabled by the noble Baroness, Lady Hamwee, would be to prevent the Secretary of State from issuing regulations to apply to a charges scheme that had already been approved. I understand the anxiety expressed, but I assure the Committee that we have no intention of making regulations which would, for example, come into force in the middle of a charging year. Such a course of action would clearly not be helpful. That may be the kind of situation that lies behind this amendment.
I also assure the Committee that we are concerned about the question of affordability. Since privatisation in 1989, customers have seen water bills in England and Wales rise by over a third. The House will no doubt be aware that we have recently told water companies and their regulators that an ambitious programme of environmental improvement needs to be accompanied by a significant reduction in average bills. We shall certainly wish to consider the principle of affordability in relation to customers' charges. Indeed, it is already an important principle behind our proposals for regulations. I assure noble Lords that we share their concerns about affordability. We have demonstrated that we have already gone further than merely expressing concern and are taking steps to make water bills affordable.
Nevertheless, we believe that it would be unduly prescriptive to make the change that is suggested in the amendment. It would unnecessarily narrow the scope of regulations that could be laid under the provision. While recognising the importance of affordability, other factors must always be taken into account in calculating and imposing charges. I refer, for example, to the effect of changes in the environment, the impact on sustainable development and other issues. I do not therefore believe that this amendment would be the best way of carrying forward the concerns that lie behind it.
The effect of Amendment No. 6 would clearly be to shift administration of the scheme to protect the vulnerable groups of which I have spoken and charge the costs to the Government. There is clearly a role for
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government in this area. I have already spoken about the need for uniformity. But water companies also have a major role to play. Companies reflect more closely their customers' concerns than the Government can. They send out information about charges and charging methods; they know who their customers are; they know the basis on which customers pay their bills.
The noble Baroness asked for an indication of how we envisage the system of protection working. We have explained previously whom we expect to be covered by the protection. We shall expect water companies to ensure that such groups are aware of the protection to be afforded under regulations. Water companies, with their closer contact with customers, are in a better position than the Government to ensure that customers are aware of all the charging options open to them. Customers having been made aware of the protection, we should then expect those who are eligible for it to apply to the water company. The checking procedures that are to be carried out by the companies will be set out in regulations that are under preparation.
It would be neither possible nor appropriate for the Government to identify all the various individuals who are eligible for protection. For example, there is no central record of all those suffering from particular medical conditions. Meeting the costs of protecting vulnerable customers must be an essential part of the new water charging system proposed under the Bill. It is not an optional extra, but a key measure to protect customers from severe hardship. It is therefore right that the costs of the scheme should be met by water companies. We are keen to keep to an absolute minimum the bureaucracy involved in the proposals; for example, by identifying pre-existing documentation, which should make eligibility easier to establish. Also, the proposed protection—a bill based on average measured use—is easy to administer.
We shall continue to work closely with the water industry and others to ensure that the arrangements for offering protection fit as effectively as possible with existing water charging administration and so minimise the costs to all concerned. But I do not think it would be right to pass the costs on to the taxpayer and away from the water charge payer.
I hope that that goes some way towards making clearer the intentions of the clause and the regulations that we would issue under it. I hope that, at least at this stage, the two noble Baronesses who moved and spoke to the amendments will feel able to withdraw them.
Baroness Miller of Hendon: I will read carefully what the noble Lord said in respect of Amendment No. 6. I am concerned because the powers that the Secretary of State seeks are rather wide, but at this stage I shall not move my amendment.
Baroness Hamwee: I urged the noble Baroness to speak before me so that I could withdraw my amendment, which is part of the group. Before I do that, I believe that the Minister referred to Amendment No. 5 as being Amendment No. 6. After he had been speaking for a moment, I realised that he was addressing Amendment No. 5.

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We could discuss at some length—but I shall not encourage the Committee to do so—who, at the end of the day, bears costs and whether customers and taxpayers are the same people.
I, too, will carefully read what the Minister said and perhaps return to the subject. The one point I wish to make is that the DSS has information about those on benefits, one of the two groups to which the Minister referred. I take the point that there may not be a central record of those with medical conditions, but as regards eligibility arising from benefits, central government, through the DSS and the various agencies, has those records.
As for Amendment No. 4, the Minister said that the Government do not wish to end up with a patchwork of regulations, but we have perhaps not a patchwork but a quilt, with rather large sections of undertakers. So it is not as though we were dealing with only one undertaker. There may be an argument for some slight flexibility of approach. However, I take the point about being careful not to restrict the principles by starting to list them. I shall carefully read what the Minister said on that. For the moment, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 5 and 6 not moved.]
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 7:
Page 3, line 44, at end insert—
("() The power to make regulations under this section shall only be exercised after consultation with such persons and bodies as the Secretary of State considers it appropriate to consult in relation to the proposed regulations."").
The noble Baroness said: As we have already discussed, Clauses 4 and 5 of the Bill allow the Secretary of Sate to make regulations which must be taken into account by the director when companies' charging schemes are approved by him. As the Minister said, the regulations will protect vulnerable groups such as those on low incomes or those who use higher than average volumes of water for such reasons as age, ill-health or disability.
I remind the noble Lord that during the Second Reading he gave the noble Lord, Lord Ahmed, an undertaking to pass on to the appropriate quarter the question of possible special provisions for those who need to use large quantities of water for religious purposes, especially the Moslem community. We have already made it clear that we fully support the protection of vulnerable groups and I understand that the water companies also do so.
Clauses 4 and 5 alter the whole ethos of the regulation of the water industry. Since privatisation in 1989, the regulator has been entirely free of short-term political pressures. Under the two clauses, some authority over the industry is to be taken back into the hands of government. I am not making any political point here, but it is right to note that under these clauses the regulator will be compelled to take into account guidance from the Secretary of State. It is, I submit, important that the regulations should not erode the
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independence of the regulator; nor should they lead to undue and short-term political or populist interference in the regulatory system or in the operation of the industry. It is essential that any regulations will be acceptable to all parties concerned, especially the vulnerable groups and groups who wish to be considered as such. The Moslem community mentioned by the noble Lord, Lord Ahmed, is an example of a group which should be enabled to make representations, irrespective of whether its claim is ultimately accepted.
Obviously, to avoid total anarchy, claims and representations will mostly be made by the organisations representing the interests of such claimants. It is essential, especially when the first set of regulations is published, that we do not find that a certain group has been left out or that one group has been included but a similar but slightly different one has been overlooked. It is no less essential that the regulation should be correct from the first, rather than that the Secretary of State should have to revise his guidance.
Finally, it is equally essential that the implications of the regulations are fully understood by everyone affected by them, whether it be the water companies, their customers, or the special interest groups that have been given protection or refused it. I suspect that decisions made after detailed consultation will protect the Secretary of State from potential proceedings for judicial review. Like the noble Baroness, Lady Hamwee, I believe consultations of that kind are absolutely essential.
In the debate on Clause 5 in Committee in the other place, the Minister for the Environment said:
"We shall, of course, consult on the regulations in the draft".—[Official Report, Commons, Standing Committee A. 12/1/99: co1.68.]
I unreservedly accept that the intention of the Government is that the regulations be practical, fair and agreed by all interested parties. The amendment I propose simply implements and goes no further than the promise made by the Minister which I have just quoted. I trust that the Government will accept it.
Amendment No. 8 is in the same group, and perhaps while I am on my feet I may speak to it. It is a short, simple amendment, to insert into this clause a common provision. But although it is short and simple, I must tell the noble Lord that it is absolutely necessary. Indeed, it is a type of provision which is recognised to be more and more necessary these days when so many of the statutes that we pass are simply enabling Acts which place increasing legislative power. in the form of secondary legislation, in the hands of Ministers—legislation which does not receive the full scrutiny of Parliament by passing through the three stages in both Houses.
The Committee knows well that there is a vast difference between statutory instruments subject to negative resolutions and those which require positive or affirmative resolutions, which at least ensure that there is an opportunity in each House to discuss the proposed order just once in place of the three times for a full Act of Parliament. To do them credit, in the last Bill with which I was extensively involved, the National

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Minimum Wage Act 1998, the Government accepted the principle of positive resolution procedures for orders that were made under that Act. In this case, we simply ask for that same procedure to apply to the orders made by the Secretary of State under this vital, indeed key, clause of the Bill. When this point was discussed in Committee in the other place, the Minister for the Environment rejected the amendment on the grounds that,
"the Water Industries Act 1991 contains a number of regulation-making powers that are subject to negative rather than affirmative resolution".—[Official Report, Commons, Standing Committee A; 12/1/99, col. 69.]
Indeed it does. But the regulations referred to relate to highly technical matters such as preventing contamination of water supplies and safeguarding the water supply itself. This section and the amendments to be made under it deal with the highly personalised matters of protecting the interests of vulnerable groups. To give an entirely fictitious example, perhaps persons with one type of skin complaint are treated no more or no less favourably than those with a different one and neither is treated differently from those undergoing dialysis at home. There will be Members of both Houses who will want to advocate or even oppose the case of one or other group or to question Ministers about the proposals. From a practical point of view, those are matters which should be subject to the scrutiny of Parliament and adequate debate, if necessary.
The Minister in the other place also claimed that the regulation-making power is already constrained by Clause 5(4). I invite the Committee to glance at that subsection. It merely prevents the Secretary of State limiting the total revenue of the water companies. That has nothing at all to do with deciding whether a person suffering from weeping skin diseases, incontinence or intestinal diseases, should receive special consideration. Restricting the power of the Secretary of State to limit the revenue of water undertakings has nothing to do with what protection should be given to large families or those in receipt of various benefits.
When the Secretary of State produces his draft regulations, it is right and proper that Parliament should scrutinise them in a positive way rather than letting them slip through more or less by default as a result of the negative procedure. There can be absolutely no reason why the Secretary of State should resist this requirement that regulations to be made under this clause, which will affect so many people in a highly personalised way, should not receive the benefit of proper debate on a proper resolution. I trust that he will now accept this request for open government. I beg to move.
4.30 p.m.
Lord Whitty: As regards the first of this group of amendments proposed by the noble Baroness, we have, as she indicated, made a number of commitments to consultation on the regulations. We have made it clear that we would be prepared to consider proposals for targeted protection where there is a real risk of hardship and with regard to any other related issues. That is a clear indication of the Government's desire to engage in constructive dialogue with all those involved in the
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system of water charging. I can assure the Committee that we shall, of course, continue this consultative approach in preparing the regulations made under this Bill. We attach considerable importance to consultation so that those most in need of assistance can be properly identified and so that we can also identify the best means to deliver assistance and protection. That consultation will be a key part in ensuring that we get the regulations right.
However, we already have clear assurances from my colleague, Alan Meale, in the other place, to consult on any regulations made under this Bill. I do not believe that we add particularly to that commitment if we put consultation on the face of the Bill.
Amendment No. 8 deals with the affirmative or negative resolution. We have explained why the powers for the Secretary of State are needed and why they are perfectly proper in terms of the role of the Minister in the regulation of the water utilities. We have spelt out in some detail what we intend to put into the regulations and how we will consult on them.
The power referred to by the noble Baroness in Clause 5(4), which circumscribes the powers of the Secretary of State, relates to the distinction between the powers of the director general and those of the Secretary of State. The director general is the economic regulator. The limitation on the Secretary of State's power makes it quite clear that, in using regulations, he should not tread on the toes of the director general in his function as the economic regulator.
We have also given a clear indication that the scope of the use of the regulations will be within the Government's legitimate social and environmental concerns, including those for the protection of vulnerable groups. That seems to us to be a normal function of regulations. After their initial use, it is extremely unlikely that any subsequent changes would be more than minor and technical updatings of the scope and nature of the protection offered for which the use of the affirmative resolution would not normally be considered proportionate.
Before making the initial regulations and in making any subsequent ones, we have clearly undertaken to consult publicly. As the noble Baroness said, but did not seem to accept, the use of the negative procedure is very much in line with the other regulation-making powers covering the water industry and in particular Section 213 of the 1991 Act, which I believe the noble Baroness referred to as being mainly technical matters exercisable under a negative resolution. They include much wider issues than merely technical matters, such as measures to ensure the delivery of water quality and that there is no contamination of the supply. There are also some technical matters relating to water fittings and so forth. A whole range of regulatory—making powers in the water industry, introduced by the previous government, are dealt with by the negative procedure.
It is also worth noting that the Delegated Powers Scrutiny Committee of your Lordships' House has examined the proposals for delegated powers in this Bill. It has concluded that there is nothing in it which the Committee wishes to draw to the attention of the

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House. Therefore, there is no recommendation that we upgrade the regulatory-making powers under this clause so that they are taken by affirmative resolution. I do not believe that in this area the affirmative resolution procedure would be appropriate and I hope that the noble Baroness will withdraw her amendment.
Baroness Miller of Hendon: As I said previously, I shall look very carefully at what the Minister has said. However, I am disappointed by it. I commented on the fact that other regulations in the earlier Act are subject to the negative proposal, but here we are talking about vulnerable groups and possibly competing groups. I even mentioned to the noble Lord the problem that his noble friend Lord Ahmed had raised. I understand from the noble Lord that to date he has not received an answer on the matter. He believes that this matter should be considered. I shall not press the amendment at this stage. I believe that the Minister should consider the difference between this clause and those matters which are subject to the negative resolution procedure in the earlier Act. There is a distinction and it is a matter to which I shall return. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 8 not moved.]
Lord Addington Lord Addington moved Amendment No. 9:
Page 3, line 44, at end insert—
("Highway drainage charges.
143B. Without prejudice to the generality of section 143A (2)(a), regulations under that section shall ensure that items for which customers are not liable to pay a charge shall include highway drainage."").
The noble Lord said: This amendment is as straightforward as it appears on the Marshalled List. It merely states that a water company shall not be able to pass on costs for the drainage of roads to the consumers. If one has the privilege and the financial rewards of supplying water to a series of customers and something goes wrong, it is not unreasonable to ask the water companies to make sure that the highways of the nation stay clear of great deluges caused through a failure in the supply system. I beg to move.
Baroness Hamwee: I support my noble friend. In doing so, perhaps I may refer to the Government's paper on decisions following the consultations on water charging. I should like to place this on the record. I particularly welcome the comments made in paragraph 47 of that paper in which Government state that they believe it important to set out the charges in customers' bills in as transparent a manner as possible so that customers can see where their money has been spent and are aware of the individual elements which make up the sewerage charge. The Government expect water companies' bills to identify separately the foul drainage, surface water drainage and highway drainage elements.
That is not to say that I am not interested in hearing the response to the particular amendment. I am encouraged by the Government's keenness for transparency. If this amendment is not accepted, at least
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we shall know—I invite the Minister to confirm the words that I have just read—that the Government are keen that the individual elements of the bills are made entirely clear to the customers so that they know for what they are being charged.
Baroness Farrington of Ribbleton: This amendment would ensure that water consumers could not be charged for highways drainage as part of their water bill. As the noble Lord, Lord Addington, said, there are some interesting arguments for removing liability for payment of highway drainage charges from water consumers, but any such changes would involve considerable upheaval. Transferring the funding obligations to highway authorities would mean most of the expenditure moving to local authorities and to the local authority finance system.
The vast majority of water customers pay unmeasured charges, generally related to the rateable value of their property. While there is not an exact parallel between rates and council tax, there would be very little difference between paying a property-based charge to a water company and paying a property-based charge to a local authority. It is therefore far from clear that any significant benefits would be associated with the change proposed in the amendment. Of course, any such change would need careful consideration by all interested parties and would need to be an issue for the longer term. However, we will keep this matter under review.
I am pleased to be able to confirm to the noble Baroness, Lady Hamwee, that we believe it is important for customers' bills to set out charges as transparently as possible so that customers can see where their money is being spent and are aware of the different elements which make up their sewerage charge. We look to water companies to ensure that customers are aware of how much they pay for the separate elements of their sewerage bills. In the light of my response, I hope that the noble Lord, Lord Addington, will be happy to withdraw the amendment.
Lord Addington: I thank the noble Baroness for that reply. I shall want to study it carefully to see whether we have run this issue totally to ground. At the moment, I am quite prepared to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6 [Right of consumer to elect for charging by reference to volume]:
4.45 p.m.
Baroness Hamwee Baroness Hamwee moved Amendment No. 10:
Page 4, line 15, after ("below,") insert ("on payment of the cost of the meter and of its installation")
The noble Baroness said: In moving this amendment I wish to speak also to Amendments Nos. 12, 14 and 21 standing in my name and that of my noble friend Lord Addington, which are grouped together.
Amendment No. 10 takes us into Clause 6 of the Bill which deals with the consumer's right to elect for charging by volume; in other words, paying for what is

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consumed rather than paying on the basis of the rateable value of the property. The first amendment raises the question of the cost of metering. The Bill provides for free meters. However, I suggest to the Committee that there is no such thing as a free meter. It will have to be paid for.
Meters cost money to buy and to install. Ofwat has said in the past that it costs up to £200 for a basic meter in an external box. That payment has to come from somewhere or from someone—the "someone" will be the remainder of the customers, the majority of whom will not be metered. Therefore, in moving the amendment, I am raising the issue of whether there is a justification for such a subsidy.
The cost of meters is simply hidden. Households which prefer to stay with the rateable value basis will be subsidising those which opt for meters. In the short term, unless the undertakers absorb the charges, the bills will be inflated by an element that is unrelated to consumers' consumption. Indeed, one might say that, however it is dealt with, either the cost will feed directly into the bills going to the unmetered customers or will feed indirectly to them because the amounts being absorbed by the undertakers would otherwise have been available to reduce bills. I am concerned about the possible skewing of customer choice that might result from this.
Amendment No. 12 raises the issue of what will happen if it is not practicable to fix charges by reference to volume or, if by doing so, an increase in charges to other customers would take place. The amendment seeks to promote fairness and rational choice in charging, which is the Government's declared aim, in the face of the dice being loaded against the unmeasured consumer in an attempt, I suggest, to speed conversion towards metering. The Government's logic is that metering saves the industry money by avoiding the need for investment in new resource development. If that were so, there would not be a need for a redistribution of revenue and there could not be an objection to the amendment. If the Government are opposed to it, that might go to support the argument that metering—at least voluntary metering—does not save money over all.
Amendment No. 14 seeks to deal with the period of time within which a customer who has opted to use the freebie to move to a measured basis has to evaluate whether or not to stay with metering or to revert to unmeasured charges. The amendment seeks to allow consumers who are giving a meter a trial to revert to unmeasured charging without such a limit. Two points arise: first, whether there should be any limit at all; and, secondly, whether, if there is a limit, it should be the 12-month limit.
I suggest that 12 months is insufficient. Consumption year on year can be affected by a number of factors, not least by climate. The reason advanced for introducing the option to change—fitting the charging method to a consumer's circumstances—seems to justify an arguably indefinite period because people's circumstances vary over the years. If there is to be real choice—during the proceedings on the Bill we have been talking about real choice for the consumer—it cannot be time-limited.
There is a more technical point. If the trial period is exactly a year, the customer will not have a full year's bills on which to make a judgment. I am seeking through the amendment to achieve a better balance between consumer protection and the other concerns that are raised in the Bill.
Finally, Amendment No. 21 seeks to amend Clause 7, which deals with the restriction on change in the basis of charging. The amendment seeks to allow consumers who use meters, by way of serving an unmeasured charges notice, to experiment with an unmeasured charge and find the tariff which best suits them and so enjoy the same protection as unmeasured consumers against an unsuitable tariff. At the Committee stage of the Bill noble Lords spoke of the difficulties for consumers who are already metered, perhaps because they live in a house which was built after 1990—since 1990 rateable values have not been available—or who will in future move into a house which is metered. Those customers are not given the same choice as the occupants, for instance, of houses built before 1990.
Again, I seek some equality. The argument has been advanced that the presence of a meter would be known to a purchaser of a house. Indeed that is so. But I cannot believe that that would be the factor which sways a decision about whether or not to buy a house. The known presence of a meter does not in itself make it appropriate to deny choice to that consumer. I beg to move.
Baroness Miller of Hendon: Before the Minister replies to the noble Baroness's points, I wish to make a brief remark on Amendment No. 10. Can the Minister comment on the practicality of having a meter in every flat, for example, in a terraced house? I am not sure how that would work. I shall be pleased to hear his comments.
Lord Whitty: As the noble Baroness, Lady Hamwee, said, we are now in the area of consumer choice. The intentions, although in some cases not the effects, of the noble Baroness's amendment is to extend that further. However, before I address the amendment I remind the Committee that the Bill already represents a substantial increase in consumer choice. At present consumers have few rights over the basis on which they are charged. As the law stands, there is no statutory choice. The basis of charging is up to the undertaker. The Bill presents a major step forward in consumer choice, albeit not unlimited. Increased consumer choice is one of the objectives of the Bill. It means that we give customers the option of a measured as well as an unmeasured charge where we can.
However, some of the implications of the noble Baroness's amendments would restrict consumer choice and the benefits of making metering more generally available. For example, dropping the free provision of a water meter would restrict many customers' choice. My department receives a significant amount of correspondence from many people who would like themselves to have a meter fitted. They believe that they would benefit from having a meter fitted. The environmental and water usage would benefit. But they

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cannot afford the upfront cost of perhaps £200 or £150. Single pensioners and many others cannot therefore gain the benefit of a meter being installed. Our analysis suggests that up to 54 per cent of all people on benefits would have lower water bills if they pay on a measured basis. Yet many of them are put off by the £150 or so charge.
It is true that meters are not the only way to reduce consumption, but they are important. One of the arguments used against the provision of free meters by the noble Baroness is the passing on of costs to other consumers. It is important to recognise that we do not regard these costs as unmanageable if spread across the range of consumers. Under the present regulations, around half of all water companies already offer a free meter option. There are the additional costs of ensuring that all customers, rather than just those who live in an area served by a water company which already provides a free meter option, have a real choice to pay on the basis of volume. The total numbers are not expected to be excessive. Therefore, spread across other water company users the cost is not enormous.
The director-general estimated in Prospects for Prices that the cost of all metering over the next five years would be £300 million. That is small in comparison with the total turnover of the water industry and its commitment on environmental and other fronts.
Water companies will not be expected to fit meters where it would be unreasonably expensive or impractical to do so. The example of a terraced house, broken up into several flats, could in certain circumstances mean that it would be unreasonable, too expensive, or too technically awkward to do so. In such cases, in order to meet some degree of consumer choice, companies will be able to offer customers an alternative basis of charging such as an assessed measured charge.
Amendment No. 12 again cuts across the desire of the noble Baroness to give greater customer choice. If one combines the effects, Amendments Nos. 10 and 12 make it more difficult and more expensive to choose metering. It is simplistic to say that a programme of metering should not be allowed unless the cost of switching to measured charging falls only on those customers who make the switch. It is a complex area. It is the responsibility of the regulator. I shall make a brief attempt to explain how the cost effects work so far as I understand them.
There are typically two adjustments in a balance between measured or metered charges and the unmetered charges so as to ensure that there is a fair distribution of charges between those groups. First, customers who choose to be metered tend to use less water than unmetered customers. The costs of metering are charged to those metered customers alone so that a customer with an average consumption will pay slightly more to be metered than to pay on an unmeasured basis. Companies make an adjustment to the unmeasured tariff to prevent that differential becoming so great that metered customers are in effect subsidising unmetered customers. Ofwat specified that it believes that the difference should be no more than £29 per customer with average consumption. That may mean an increase
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in average unmeasured bills to ensure an appropriate differential is maintained between measured and unmeasured charges.
The second and smaller adjustment is to take account of a change in the average rateable value of those properties remaining on an unmeasured charge. Where consumers in higher rateable value properties switch to a meter there will be a fall in the average rateable value for unmeasured properties. That requires some increase in tariff to ensure that the company receives the same average income. Therefore, an adjustment in the opposite direction is made in the circumstances where there is a preponderance of occupiers of smaller value properties.
The regulator is ensuring that the charge paid by those remaining on an unmeasured basis is reflecting more and more closely the average consumption characteristics of the group concerned.
Those adjustments are made on the basis of equity. These amendments are not an alternative to those adjustments. Quite apart from the new consumer rights under the Bill, switching to meters is already running at the rate of about 3 to 4 per cent annually. That is causing these rebalancing effects on the bill under the procedures outlined by the regulator. The precise distributional effects of the new customers' rights under the Bill, as well as the switch that is already taking place, will depend on how a director-general chooses to set the totality of a tariff basket. I am sure the director-general will want to work with the water companies to ensure that these new rights are introduced in a fair way.
It must be understood that every individual choice that allows a customer to minimise his or her charges, whether to go for measured charges or in the opposite direction and whether they benefit from a special tariff or a special charge for vulnerable groups, results in some loss of revenue to the water companies—revenue that must in some sense be recovered from the rest of its customers. It is no good saying that a customer saving should not fall on any other customer unless one denies everyone the chance to make any choice. That is why the Government have supported a balanced approach and why they believe that some of these adjustments have to be made.
I believe that in recognising that, this Bill delivers an important package of new consumer protection as well as greater consumer choice. I do not believe that Amendments Nos. 10 and 12 would improve that situation; indeed, there is a danger that they would do precisely the opposite in terms of consumer choice.
Amendment No. 14 proposes to go further than the choices offered in this Bill. It would allow customers to move in and out of measured charges at any time. I assume that that fits with the logic that they would have had to pay for that because there would be no free metering. We have made it clear that we want to increase customer choice. We have spoken about the importance of ensuring that the charging system provides enough water to everyone for their essential needs at a fair and affordable price.

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However, it is not just a question of customer needs. We also have to recognise the needs of the industry. In order to function efficiently, the industry has to have some revenue stability. That is important for the forward planning of the industry and for the environmental and capital investment which we are expecting to see from it.
It is not only the water company that needs that stability. It is also important that consumers know broadly what they will be expected to pay for their water. If large numbers of customers were allowed to revert to unmeasured charges at any time, a significant amount of stability would be removed. Presumably such customers would only do so if they were convinced that their bills would thereby fall, and that could mean charges rising very sharply for those customers who had not changed either the pattern of their use of water or their charging system. It does not seem sensible to allow a system of constant shifting of forms of charging which would cause that degree of instability to other customers.
Amendment No. 21 offers the prospect of continuing to opt in and out of measured and unmeasured charging from the same premises (theoretically, at least) over and over again for the indefinite future. I have already indicated the problems that could arise from a very high incidence of switching between measured and unmeasured charging. The noble Baroness and noble Lords will recognise that there has to be some restriction on the customer's right to choose where that would have a knock-on effect on the total pricing and charging system. Amendment No. 21 apparently invites us to open up even greater opportunities for customers to choose an unmeasured basis—in other words, to move in that direction. We believe that a responsible policy must strike a balance between consumer choice, stability of income for the water companies and stability which enables customers to understand the pricing.
I hope that the noble Baroness will see from what I have said that the amendments may well not achieve the intention that lies behind them, but in any case other considerations besides the simple maximisation of consumer choice must be taken into account. I underline the fact that this Bill greatly increases consumer choice, but there is a limit.
5 p.m.
Lord Williams of Elvel: My noble friend did not seem to respond wholly adequately, if I may say so, to the point made by the noble Baroness, Lady Miller, from the Opposition Front Bench on the question of putting meters into premises in multiple occupation. I understand what he said in so far as he said that if it were unreasonable not to do so, it would not be done. Could he explain exactly who would decide what was reasonable or not reasonable and whether those in such premises would be consulted on any decision?
Lord Whitty: It depends in the first circumstance on who is requesting the metering. It could be the landlord; it could be individual customers; or it could be a group of customers, some of whom want a different system. Sometimes the landlord will be paying the bill,
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sometimes the individual tenants, so it is not quite as straightforward as all that. In the case of a terraced house—the noble Baroness raised this example—or a block of flats, it might not be practical from the company's point of view to fit meters in every flat even if the landlord or the tenants wanted that, particularly if they had a shared water supply. That is why, when faced with a request for a different system, we are giving the power to companies to offer customers in those circumstances an alternative to metered charging; that is, being charged on the basis of an assessed measured charge based, broadly speaking, on the average of metered charges for similar properties in the area.
As far as the potential for conflict is concerned—my noble friend envisaged such conflict in the circumstances, and I accept that it might well arise—there are provisions for disputes over whether metering is practical. If they cannot be settled, those disputes will have to be referred to the director general.
Baroness Hamwee: I wonder whether the Minister is prepared to comment further on Amendment No. 14. He dealt with it on the basis (which is entirely fair because that is the way the amendment is drawn) that the ability to give another notice would be entirely unlimited. I said that 12 months may be too short. The Minister will readily appreciate that I may be tempted, at Report stage, to suggest a period of two years. If it would be helpful to look at that now it might save us a little time. One of the points I made was that if the trial period were exactly a year, there would not be a full year's bills for the customer to compare and on which to base a judgment.
Lord Whitty: I did not comment on the particular provision because the clause as drafted obviously leaves it completely open-ended. We would not want a general provision which gave at any future time the ability to revert. Indeed, in new premises there is no other basis for charging than metering. As a general right, therefore, we could not accept such a provision, whatever the figure or date the noble Baroness suggested.
Baroness Hamwee: I am not quite sure that I understand that, but I shall read what the Minister has said, as indeed I shall with regard to Amendment No. 12 which he said was very detailed. He will readily understand that I was not wholly serious in Amendment No. 10, but that I wanted to flush out, if that is not an inappropriate expression, comments on the real cost of the exercise.
The Minister suggested that my amendments restrict choice. I do not agree with him on that. What I particularly do not accept is that one should necessarily read all amendments in a group together. We happily do not have a procedure which takes one amendment at one stage and another amendment at another stage so that by the time we have got through 25 amendments we have had 25 stages of the Bill. In order to raise a variety of aspects, one has to table a variety of amendments, so I do not think I want to let the Minister get away with that. Having made that point, I beg leave to withdraw Amendment No. 10.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee moved Amendment No. 11:
Page 4, line 18, at end insert—
("(2A) In determining the period within which effect must be given to a measured charges notice under its charges scheme in accordance with subsection (2) above, a water undertaker shall be entitled to take into account—

(a) the environmental impact of furnishing the supply of water in question; and

(b) the cost to it of providing and installing the meter in question,

taking into account the cost to it of complying with all the other measured charges notices that have been or may be given to it.")
The noble Baroness said: Amendment No. 11 seeks to ensure that the installation of free meters is taken forward in a way which might be more sensible and cost-effective than could be the position under the Bill. I believe that metering will only have a positive environmental effect if the industry can take a strategic approach. It may well be sensible for it to target specific geographical areas and specific types of property which will best deliver water savings and which relate to the water resources which are most stretched. The point is similar to that made on Second Reading by the noble Baroness, Lady Young of Old Scone.
It cannot be sensible to have a scatter-gun approach with an instant or almost immediate response to each customer when requesting metering. That will not be in the interests of the industry and therefore of customers. Companies must have investment programmes with wider considerations. The Minister referred to environmental obligations and managing resources and I am concerned that there is an element of chance which will skew the different works programmes of the different undertakers. I beg to move.
Baroness Farrington of Ribbleton: The amendment would give companies considerable freedom in how long they can take to install meters when issued with a measured charges notice. I should like to start by assuring the Committee that we do not wish to be unduly restrictive on the timescales in which companies must install meters. To demand that a measured charges notice must be complied with within, say, a month in a large company would be in the best interests of neither water company nor consumer, since it would be unlikely to be the most cost-effective way of carrying out a meter fitting programme; and there may be particular environmental benefits to be gained from giving priority to metering customers in areas with fewer water resources.
However, as was explained earlier, one of the main aims of the Bill is to increase customer choice, providing those customers who wish to pay on a measured basis with a real choice on whether to do so. I am concerned that this right would be eroded with this amendment. Water companies would have scope—perhaps too much scope—to leave considerable gaps between the receipt of a measured charges notice and fitting a meter, perhaps even several years, provided that they could justify this with reference to water resources or costs. This could substantially erode the rights conferred under the Bill.
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Furthermore, the amendment does not address the needs of less well-off consumers, many of whom could make savings from having a water meter, and for whom the savings could be particularly important. In any meter fitting programme we would expect to see priority being given to such customers.
This, however, does not mean that we do not take seriously concerns about cost effectiveness and environmental benefits. We have no intention of enforcing a blanket requirement on water companies to fit all meters within exactly the same timescale. But, at the same time, consumers should not be expected to have to wait for very long periods of time for their meters to be fitted. There is scope for that guidance on the timescales for meter fitting to be included in the Secretary of State's guidance to the director general on his function of approving charges schemes. We would not envisage such guidance to be overly prescriptive and it would, of course, leave scope for local flexibility, with the director general approving the precise arrangements. We believe that this approach offers more protection to customers than allowing timescales to be decided solely by water companies, while allowing companies to ensure that their programmes are as effective as possible.
I should point out that water companies will not have to fit meters where to do so would be unduly impractical or expensive. In these cases, we propose that they will have to offer customers an alternative basis of charging; for instance, an assessed measured charge.
The noble Baroness raised the issue of costs. The Director General of Water Services has indicated in Prospects for Prices that in the five years from 2000 to 2005, £300 million would be allowed for the capital costs for optional and selected metering across England and Wales. This includes the metering which the companies were already programming in the absence of Government policy on this issue. At present, 3 per cent of customers across England and Wales are switching to meters each year, and that number is growing. The cost is small in comparison with the £8 to £8.5 billion environmental programme which we want to see delivered and which will still allow significant reductions in the average bill in 2000. We do not believe that the water companies will be faced with an unmanageable task.
I hope that I have now made clearer our intentions in this area and that the noble Baroness will feel able to withdraw the amendment.
Baroness Hamwee: There is not a great deal between us and the Minister and I shall read her reply carefully. We do not seriously suggest total freedom; we were seeking a common sense approach. I thank the Minister and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 12 not moved.]
5.15 p.m.
Baroness Seccombe Baroness Seccombe moved Amendment No. 13:
Page 4, line 25, at end insert—
("In either of those cases, the undertaker may instead fix charges in respect of those premises on the basis of average consumption of water in premises of comparable size.").
The noble Baroness said: This is a drafting amendment designed to clear up an omission from subsection (3). That subsection relieves the water suppliers from the obligation to install a meter at the request of a customer in two specific instances; if it is not reasonably practical to do so or if it would involve the supplier in unreasonable expense.
A practical example might be a block of flats in which only some of the tenants want meters, but the layout of the pipes means that all have to be fitted or none. Unreasonable expense might be when extensive infrastructure work was required to comply with a request for a meter.
It is not for us to have to discuss the theoretical instances when these two exemptions which we are giving to the water undertakers would operate. If a supplier wants to rely on either exemption in a given case, the onus of proof will be on him, with a right of appeal to the director general if the customer is aggrieved. However, the clause does not specify how the water should be charged under the new regime.
All parties agree that the old system based on rateable values is no longer viable and will become even more unsuitable as time goes by. In any case, it is the rateable value of charging from which the customer will be trying to escape by electing for a meter. The Government have accepted the fact that we ourselves would have introduced a Bill similar to this one and we, too, would have been faced with the problem of dealing with cases where rateable values were not an appropriate basis for charges, or where a figure for the rateable value was not available.
This amendment provides for the charges to be fixed by comparison with similar cases where an undisputed level of charges can be calculated. It will, of course, be up to the director general to instruct the suppliers as to how they are to make their comparisons and which factors are to be included and which are to be excluded. For example, it may be that different considerations apply between different areas. The customer who is aggrieved by the calculation will still have a right to appeal to the director general and the onus of proving that comparisons are fair, reasonable and relevant to the particular case will still rest on the supplier.
During the Second Reading in the other place, when discussing a different aspect of the Bill, the Minister of State for the Environment, Transport and the Regions stated that groups of vulnerable people should be given the option of a bill based on an average measured supply. During the Committee stage in the other place the Parliamentary Under-Secretary of State for the Environment, Transport and the Regions repeated that in certain hardship cases the charges should be based on average measured consumption.
If, in some instances, the Government agree that average and comparable consumption is a fair and reasonable way of charging the customer, then that is an established principle. That principle should be extended to cases where a customer wants to have a meter supplied but the water company establishes that it is not practical or economically possible to comply with his request.
It is not right that if either of the exemptions applies, the customer should be penalised. As I said, this amendment merely tidies up an omission from the Bill in its present form. I trust that following the precedent already established in the other place, the Minister will accept it. I beg to move.
Lord Whitty: We touched on those circumstances when discussing the previous two amendments. It is clearly the Government's intention that, where it is not practical or economic to set up a separate meter, there should be an alternative basis of charging.
We have indicated in another place and elsewhere that some concept of average, measured comparable usage would probably be appropriate. Nevertheless, the noble Baroness's amendment does not allow the water companies any flexibility in those circumstances. The protection that we have offered and which can be delivered through the mechanism which we propose by Clause 4 is that the director general will approve the companies' charging schemes and, therefore, he will be responsible for checking the fairness and equity of a charging scheme which provided an option in those circumstances. The flexibility would allow options to include charges based on average consumption across the board, an assessed consumption based on the number of occupants in the premises or, as the noble Baroness's amendment indicates, an assessed consumption based on the size of the property.
Different forms of charging may be appropriate in different circumstances and different types of premises and areas. Provided that the director general's responsibility for the equity of the charging scheme is preserved, as it would be under our measures, there would be no need to be prescriptive on the face of the Bill as to how the precise form of charging would be assessed. The noble Baroness can rest assured that it is our intention to avoid the inequity which has been identified in those circumstances. We intend to provide the alternative assessment option to the customer.
Therefore, I support the principle, but I do not believe that there is a need for us to be too prescriptive. Other mechanisms are in place to ensure that an alternative is available.
Baroness Seccombe: I should prefer to see a little more clarity on the face of the Bill. However, I shall read with care the Minister's reply and at this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 14 not moved.]
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 15:
Page 5, line 12, at end insert—
("(7A) In any case where—

(a) the premises had been let for residential purposes for a term not exceeding 21 years, whether commencing before or after the commencement of this Act,

(b) the lessee for the time being had given a measured charges notice to the undertaker without the express written consent of the lessor for the time being, and

(c) the premises have reverted to the original lessor or his successor in title, whether upon the expiry of the term, or upon forfeiture or abandonment or disclaimer or surrender of the lease or by any other means, the consumer (here meaning the original lessor or his successor in title or, if the premises have been re-let, any new lessee of the premises) may within 12 months of the premises reverting to the original lessor or his successor in title, give a notice to the water undertaker revoking the measured charges notice.")

The noble Baroness said: In moving Amendment No. 15, I shall speak also to Amendment No. 16. The latter amendment is entirely consequential on the main amendment which seeks to insert a new subsection. The main amendment is a non-controversial drafting amendment to clear up an anomaly to which I drew attention on Second Reading. I expressed the hope that the Government would correct it at this stage but they have not tabled their own amendment, hence this amendment.
Clause 6(5) provides that a consumer can, within 12 months, revoke the measured charge notice and revert to being charged on the basis of the rateable value. It emerged in debate in Committee in the other place that a new purchaser of a house with a volume-charging system which had been in operation for more than 12 months was stuck with that system, whether he liked it or not. Everyone agreed that that was fair enough on the basis of caveat emptor. A purchaser would be able to find out what the charging situation was before he signed a contract. If he did not like it, he would be able to withdraw from the negotiations. In the case of leasehold homes, Clause 11 expressly forbids a landlord from preventing his tenant choosing to have a metered supply if that suited him. As that would be in cases where the tenant was paying an exclusive rent and was responsible for the water bill, that too seems eminently reasonable.
We now come to the anomaly which I invite the Committee to correct with, it is hoped, the Government's co-operation. However, first, I remind the Committee of a declaration of a minor interest which I made on Second Reading. I am the part-owner of two rented residential properties. A family company, of which I am a shareholder, owns another two such properties. I take no part in their management and my adviser tells me that it is a matter of complete indifference whether the tenants do or do not decide whether to have water meters.
The anomaly arises if a tenant exercises his right, under Clause 11 to have a water meter and then 12 or more months later, the tenancy comes to an end. As the Bill now stands, the landlord must keep the meter even if it is not in his interest to do so. He may, for example,
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be an expatriate worker who is returning home after a couple of years abroad. The tenant may have enjoyed a tenancy which had continued for several years. The needs of the outgoing tenant may be quite different from those of the landlord or the successor tenant.
My amendment merely permits the landlord, under what is called a "short tenancy", which I have defined as being less than 21 years, to cancel the measured charge notice within 12 months of the premises reverting to him. Some Members of the Committee may find it strange for a lease originally for a term of up to 21 years to be described as "short". However, in the world of the law of landlord and tenant, particularly in the case of residential property, I understand that 21 years is regarded as a demarcation line.
In reality, I imagine that most purely residential leases, other than flats on very long leases at ground rents, are for very much shorter terms than that. The amendment does not apply where a landlord has expressly consented to a meter because it would clearly be unreasonable for a landlord to resile from it after the initial 12 months from when it was installed. It applies only when the meter is installed without his consent and when it has, in effect, been imposed upon him.
Quite rightly, the general law does not permit a tenant to prejudice his landlord's interest in the property by accepting some burden that extends beyond the terms of the lease. He cannot, for example, grant a sublease for longer than his own term. He cannot grant a right of way or a right of light. So there is no reason why a tenant should be able to saddle his landlord with an unwanted meter.
It may be argued that it would somehow be onerous on the supplier for the meter to be cancelled after the initial 12 months or if a landlord who had exercised that right then let the property to a new tenant who, again, elected to have a meter. That is an entirely specious argument. There is no question of the supplier having to rush back and forth, removing and then reinstalling a meter at the same premises. It would be simple commercial sense to leave the meter dormant and ignored on the premises rather than incurring the uneconomic expense of disconnecting and collecting it.
I believe that this uncomplicated amendment does not affect in any way the principles of the Bill. It does not prejudice the consumer; nor does it prejudice the supplier. It simply protects the landlord from having his long-term property rights being prejudiced permanently by the action of someone with only a short-term, transient interest in the property. That would be quite inequitable. I beg to move.
Lord Whitty: These amendments deal with a particular sector. Some of the general points which I made to the noble Baroness, Lady Hamwee, apply also in this regard. In this case, if we accepted these amendments, water companies would have to accept a notice of reversion from subsequent tenants or property owners into whose property a meter had been installed at the instigation of a tenant without the express permission of the landlord, even when that may have occurred more than 20 years before.

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I have remarked on the general provision of being able to revert at any time, but giving rights of reversion to subsequent tenants or to property owners who were not involved in the original request opens up the prospect of opting in and out of measured and unmeasured charging for the same premises over and over again, potentially for an indefinite period.
I made my views clear on how that would apply to the generality of consumers when debating the earlier group of amendments. Potentially, there would not only be administrative costs, but unconstrained switching could cause uncertainty for the industry and changes in prices for the generality of consumers who would normally expect to know what they would have to pay for their water.
To that extent, each successive tenant could exercise the right to minimise his or her own bill—in either direction, depending on water usage—so the diminished revenue would have to be made up from the general customer base and overall charges would have to rise. That would arise from any switching but, through unconstrained switching, would be dramatic.
For that reason, we consider that the provisions in the Bill provide a balanced approach, substantially extending consumer choice, but also maintaining some degree of certainty for both consumers and companies.
In a landlord/tenant relationship, it does not seem to me that the general point has any less validity. There is no reason for treating different forms of tenures in different ways. The right to demand a meter, or to change the basis of charging, accrues to the person who pays the bill, irrespective of any other status. When the landlord takes on the role of consumer and pays the bill, tenants do not have any direct responsibility for the water bill, although it may be included in their rent, but the landlord will decide whether or not to have a meter and the consequences that flow from that. However, if the tenant has direct liability for the water charges, subject to certain practicalities, it is a matter between the tenant and the water undertaker.
Therefore, we consider that the same regime should apply in tenanted premises as it does in owner-occupied premises. I hope that in relation to the general point—in relation to the effect that it would have on the charging structure in general and in relation to the lack of clear reason for treating tenanted premises differently—the noble Baroness will feel able to withdraw the amendment.
5.30 p.m.
Lord Skelmersdale: I have been glued to this discussion on Clause 6, but, of course, silently. However, the Minister may not have considered one particular point: the change of use of a dwelling. My noble friend Lady Miller spoke about a property in which she has a partial interest, which I understand is divided into two maisonettes. It may be that the owner of the property—in her particular case I suppose that it would be the property company, but in other circumstances it may be a private owner of a property—may decide to amalgamate the two maisonettes into a single dwelling. What then is the position of the person who occupies that property, either as a tenant or, if the property is sold, as the new owner, in
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relation to what the noble Lord described as "switching"? He was talking about unrestrained switching, but I believe that in this case it would be rational switching. What is the attitude of the noble Lord to that particular situation?
Lord Whitty: If it is an unmeasured charge, of course, that will be a major change to the building and, therefore, that will be reflected in the charging system in any case. If one part of the building is metered and the other part is not, it would be a matter for the new landlord, if he is paying the bill, whether a measured charge is opted for or not. If a measured charge is already established in such premises, in normal circumstances the measured charge would prevail. There may be other circumstances in which there is a more dramatic change of use—what is technically a "change of use" as distinct from a merger of dwellings—and that may involve a change in the charging regime. However, in a straightforward case, when two flats are knocked into one, it would be a matter between the landlord, if he were paying the bill, and the water undertaker.
Baroness Miller of Hendon: The Minister is always extremely courteous. I shall certainly give him the courtesy of reading carefully what he has said. However, having listened to him, I feel that I do not agree with anything he has said. I want to be sure of my understanding of what he has said and to ensure that I do not find a different view when I read it.
With regard to the last line of the amendment, I believe that if the clause stands as it is, and my amendment is not accepted, the position would be still inequitable. The Minister has not addressed the position of the normal rules of landlord and tenant; that a tenant cannot change a property beyond the length of the lease. That has never been the case before in English law, but this clause would allow that.
If someone were to go abroad for 18 months for work and he let his apartment while he was away, the tenant would have the right to put in a meter—perhaps because he has only one child and it is convenient for him—but the landlord would have no say in it whatsoever. However, the landlord may have three or four children and would not want to have to pay his water bills on a volume charge when he returns. As the landlord has no say whatsoever—that is agreed; fair enough, in my view—it is inappropriate that this clause should extend the right of the tenant beyond the length of the tenancy against the wishes of the landlord. As I said, at this stage I shall do no more than read carefully what has been said. I ask the Minister to take another look at this. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 16 not moved.]
Lord Addington Lord Addington moved Amendment No. 17:
Page 5, line 28, leave out ("that")
The noble Lord said: The purpose of the amendment is to allow companies to install meters for measuring waste water discharges from premises where that is deemed to be appropriate. Water companies are concerned that where water is charged for on a measured basis, the effect

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of Clause 6 would be that the sewerage charges would have to be related to the amount of water consumed. Of course, charges schemes already contain provisions to that effect, but they also allow for the decoupling of the measured water charge and the measured sewerage charge where there is no relationship between the two—that is the crux of the matter—for example, where water is supplied from a private source but the foul water is discharged into public facilities. Water companies can, of course, separately meter sewage discharges. I beg to move.
Baroness Farrington of Ribbleton: The amendment moved by the noble Lord, Lord Addington, would remove the direct link that currently exists between the volume of water paid for by customers paying on a measured basis and their sewerage bill. I understand that the argument behind the amendment is that the undertakers may not wish to be tied, when charging with reference to volume, to the volume of water supplied to the householder. That may be because the householder has an alternative water supply, for example, a well.
Water companies' existing charges schemes provide that, where a consumer pays for their water on the basis of volume, their sewerage charge will be based on the volume of water consumed, usually less 5 or 10 per cent for personal consumption. The provision in the Bill is, therefore, consistent with current charges schemes. The Bill would give stability to customers, who would be clear about the method by which the foul water element of their sewerage charge would be calculated.
If there are a small number of properties—involving very small sums—in this situation, it is unlikely to be cost-effective for the water company to provide sewerage meters as an alternative way of assessing measured waste water charges. However, I would be prepared to look more closely at the proposition if the noble Lord were able to provide evidence that that was a significant problem which required such action. As I indicated earlier, based on companies' current charges schemes, we are unable to conclude that that is the case. I would, therefore, ask the noble Lord to withdraw his amendment.
Lord Addington: That answer raises the question of what is a significant number. That depends probably on where one is standing. If one happens to be one of the few people concerned, I am sure that it is a significant number. But having heard the Minister's reply and the fact that the Government are leaving the door slightly ajar, even though they are threatening to slam it, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Clause 7 [Restriction on change in basis of charging]:
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 18:
Page 6, line 4, leave out ("either")
The noble Baroness said: In moving Amendment No. 18 I shall speak also to Amendments Nos. 19 and 20. These amendments are in fact probing amendments.
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Amendment No. 18 is purely a paving amendment leading to Amendment No. 19, which is the insertion of a new paragraph (c) to Clause 7(2).
As at present drafted, subsection (2) prohibits an undertaker from installing a meter unless the consumer has requested it, or has consented to it, or unless there has been a change in the occupation of the premises and the new occupier has not yet received a bill based on a non-metered basis.
There is one other set of circumstances where the continuation of an unmetered charge would be inappropriate because a continuation of the use of the rateable value would itself be inappropriate. This is in cases where the premises have been so substantially altered that the rateable value should have and would have been increased but for the repeal of Part V of the General Rate Act 1967.
Since rateable values were last set in the late 1970s, many properties, especially houses, have been substantially modified. Extensions and garages have been built; attics have been converted into extra rooms, and so forth. In many cases—indeed most cases—the ever-vigilant district surveyor will have caught up with the owner of the property and the rateable value will have been increased, thereby triggering an increase in the water rates. But in cases where the rateable value has not yet been increased, and in future cases where there are substantial alterations to a property, the owner could be paying an unduly low water bill because the rateable value does not reflect the enhancement of the property.
The addition to subsection (2) removes that anomaly by allowing the supplier to switch to a metered supply. It is only logical that if a newly built property is automatically to have its supply metered under the terms of this Act, then what to all intents and purposes is a newly converted or substantially altered property should be dealt with in the same way. It is also consistent with the Government's acknowledgement that eventually all properties will be on a metered charge basis, as was made clear by the Minister for the Environment during the Committee stage in the other place when subsection 2(b) was debated at some length.
The purpose of this amendment is to ensure that persons whose properties have increased in value because of substantial alterations do not pay disproportionately low water charges because there is no longer any machinery to increase their rateable value. That casts an unfair burden on the other customers.
Amendment No. 20 provides for disputes under this clause to be referred to the director under the appeals procedure set up by Section 30A. Of course disputes can arise, especially when the water company may say that it has discovered that a substantial alteration has been made to the property which would have resulted in an increase in the rateable value, and doubtless the owner will want to argue that the alteration is so insignificant that there would have been no increase.
How big is "substantial"? I do not believe we have to trouble ourselves too much with trying to define how big substantial is; the director can puzzle that one out. That is part of his job. As I said earlier in my remarks,

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this amendment seeks to draw attention to that anomaly. If this group of amendments is not acceptable to the Government, perhaps the Minister will not only tell the Committee why not, but also tell us what alternative solution they have to resolve this specific problem. I beg to move.
5.45 p.m.
Baroness Farrington of Ribbleton: As I have said before, we are concerned to give customers who currently pay an unmeasured charge the right to continue to pay on that basis except in certain circumstances to be set out in regulations under Section 144B (1)(c). We shall consult on the detail of the regulations in due course but it may be helpful if I repeat the indication we have given previously of the premises for which we consider water companies should be able to require measured charges. Those are premises which are used for commercial purposes; those where a garden sprinkler is used; those with a swimming pool; those where a power shower consuming more than 20 litres per minute is used, and those where a water softening unit is used which requires back washing.
This would be an enabling power. Nothing in the Bill places an obligation on water companies to impose meters in any cases. Where water companies want to identify customers using water for discretionary purposes, we look to them to do so without taking an approach which is unduly intrusive. A number of other circumstances where companies should be able to impose meters have been suggested to us, including those in the amendment tabled by the noble Baroness.
During the debate at Second Reading I explained the Government's aims for this Bill. One of the key aims is to promote greater customer choice in the basis of water charging. This amendment would be contrary to that spirit. It would be perfectly possible under this amendment impose a meter on someone whose home had been altered many years previously.
Many people would believe that that is unfair. Indeed, we have already received many letters supporting that view from people who are having meters imposed on them for making, in many cases, relatively minor changes to their home. They do not believe, and I agree with them, that simply because they added a garage to their house or a playroom for their children, that their water consumption will increase. From personal experience, if it is provision for young teenage sons over the garage, as they move further away from the bathroom the water consumption may go down.
Of course, there may be situations where altering a property does increase water use; for example, if extra bedrooms are added so that more people can live there. We do not wish water companies to be tied to outdated rateable values in those situations. We believe that the fairest system is to allow water companies to update their charges without taking away customer choice.
Under the Bill as it stands, water companies would be able to start charging people who had altered their property such that the original rateable value was significantly out of date on an alternative unmeasured
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basis of charging, provided it is set out in their charging scheme. Companies would be free to use licence fees or assessed rateable values, as indeed some companies do already. Companies would, of course, be able to require meters for extended properties where the household is using water for purposes prescribed in the regulations under Section 144B (1)(c), as I mentioned earlier, such as sprinklers.
We believe that this amendment would drive a coach and horses through the right for people to remain on an unmeasured charge in their current home and hope therefore that the noble Baroness will withdraw her amendment.
Baroness Miller of Hendon: I did say that these were probing amendments. I shall certainly take them away and think about the Minister's answer. I bog leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 19 to 21 not moved.]
Clause 7 agreed to.
Clause 8 [Charging by reference to rateable value]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 22:
Page 6, line 28, at end insert ("during the period beginning 1st April 2000 and ending 31st March 2005")
The noble Baroness said: In moving Amendment No. 22 I shall speak also to Amendments Nos. 23 and 24. These are amendments to Clause 8 of the Bill which, though it is buried in the middle of the Bill, is in a sense the most important provision in the Bill. It is the clause which prompts the bringing forward of the Bill at this time and indicates the urgency of the situation; that is, that under the 1991 Act reference to rateable value is not to have effect after March of next year.
Clause 8 provides that Section 145 of the 1991 Act shall cease to have effect altogether. The first amendment in this group proposes that the reference to the year 2000 be moved on for five years rather than being taken off the statute book. Although there is no alternative to extending the use of rateable values, which are based on notional rental values, they increasingly lack any basis in fact. No general revaluation has been carried out since the early 1970s and there is concern that those issued since then are out of step with those issued previously.
I do not seek to knock the system which was effective in its day, but I suggest that rateable values are obsolete and that, on grounds of logic and fairness, should not be allowed to be used indefinitely. As we have already discussed this afternoon, no rateable values have been issued at all by the Inland Revenue since 1990. Therefore, in this amendment I am seeking to encourage the development of an alternative basis for unmeasured charges within a period of five years. Of course, I am open to negotiation to extending that period a little, but I seek to put a period on the face of the Bill.
Amendment No. 23 proposes that district valuation offices of the Inland Revenue shall, when requested, give occupiers the rateable values for dwelling houses,
"of which no value currently appears on the valuation list".

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Occupiers of houses built since 1990 for which there is no rateable value have, as has been said, no choice as to how they pay for their water. This amendment seeks to extend fairness and equality to such occupiers and to apply choice. I take the point made by the Minister previously, that the Bill cannot be only about choice and that there are a number of other factors to be balanced.
However, I should like to repeat the view put forward earlier that if one is thinking of buying a house built since 1990 and discovers that it is metered, that is not likely to be the factor that determines the decision about whether or not to go ahead with the purchase. If one buys a house knowing that it is metered, I do not believe that it means that one should be denied the choice simply because, as the noble Baroness, Lady Miller, said, caveat emptor. I believe that a question of balance is involved.
Finally, I turn to Amendment No. 24, which refers to the possibility of charging by reference to council tax valuation bands. The amendment does not seek to introduce such a system but rather to introduce the possibility for it. It would enable undertakers to obtain information. Access to council tax bands could provide the industry with a comprehensive, readily available and quite cheap alternative method of charging. However, at present, council tax data is not available to companies that wish to have it. It is possible to find out the council tax for individual properties, but that means asking for such information property by property.
The report on the consultation to which I referred earlier says, at paragraph 23, that although,
"the Government will continue to consider proposals that come forward [that] does not rule out the possibility of releasing Council Tax data in the future if proposals are refined to address the difficulties inherent in any change".
I understand that those difficulties include sensitivities about the use of information collected for taxation purposes. I also understand that there would be a burden on local authorities as regards providing the information. Nevertheless, I tabled this amendment because it will enable me to ask the Minister whether, without such a provision, it would be possible for the Secretary of State to ensure that undertakers have access to this sort of information so that they can make the judgments; and, indeed, so that the debate can go forward about an alternative system. In other words, can the Secretary of State do what I am seeking to allow him to do without my amendment appearing in the Bill? I beg to move.
Lord Whitty: These amendments deal with the consideration of rateable value. Amendment No. 22 would delete the deadline of the year 2000 as set out in the Bill, and replace it with the year 2005. By resisting this amendment the Government are not saying that we have a preference for the rateable value system for unmeasured charges, or indeed, any other system. By deleting the reference to the year 2000 we are not indicating that rateable value should be the only or the main way forward in the longer term.
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We are prepared for water companies to introduce other forms of charging, including as the noble Baroness would seem to prefer, charges based on council tax bands. However, we would not wish to rush into anything approaching a mandatory system or a requirement whereby such unmeasured charges would be based on council taxes. The effects of that on individual consumers would be differential and it would not necessarily be desirable either to customers or supplying companies.
We believe that we need to retain a range of measures for unmeasured charges, which would include rateable value, taking into account the problems that have been recognised. At present, it is still the case that the vast majority of households pay a charge which is based on the rateable value of the property. We have no objections to different forms of calculation; indeed, we are encouraging the water companies and others to come forward with such alternatives. However, to cast in stone a date by which time water companies must find a replacement system does not seem to us to be a sensible way forward. We want to retain as much flexibility as possible and a new arbitrary deadline would not help.
As I said, that does not mean that we are inherently hostile to the use of council tax bands as the basis for unmeasured charges. Clearly we want to explore, and encourage others to explore, the possibilities in that respect.
Amendment No. 24 relates to the information that water companies would use if they wanted to examine the possibility of going down the council tax-based road. The noble Baroness's amendment would provide a system which, in many ways, parallels what the Government are proposing in any event. We do not believe that we need the amendment to deliver our policy. Indeed, the information on council tax bands is already public. It is simply a question, as the amendment recognises, of it being available in computer-readable form. However, as well as being available through individual local authorities, information on council tax banding is also held centrally by the Valuation Office in an electronic form.
As I said earlier, we are open to proposals for the use of council tax banding as a basis of charging. The amendment also seems to envisage that the Secretary of State should be able to make regulations empowering undertakers to charge on the basis of bands. That is unnecessary. The way in which we propose to proceed is to encourage companies to devise such schemes. When satisfied with the proposal of a particular company the data on banding would be made available and arrangements for using it as a basis for charging could be included in the company's charges scheme, along with any changes. There is already a power to give guidance and make regulations as to what may or may not be in a charges scheme. That power could be used to govern what would be acceptable in a council tax band based charges scheme. Therefore, we do not consider that Amendment No. 24 is necessary.
Amendment No. 23 addresses the situation where a property currently has no rateable value available for measured charging. This amendment would allow a

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notional rateable value to be drawn up. Of course, most properties built since 1990 and some others whose characteristics have changed over recent years do not have current or available rateable values. In practice, that is not in fact as great a constraint as might appear to be the case. In particular, there is no justification for saying that companies are forced to meter new properties by the absence of rateable values. Most companies meter new properties because they choose to do so and they are free to devise and propose unmeasured alternatives if they prefer.
Under the Bill as it stands, existing occupiers using water for normal purposes in existing homes will have a right to remain on an unmeasured basis of charging once they are on one, without needing the amendment proposed by the noble Baroness, Lady Hamwee. But because water companies have been fitting meters to new houses, most properties that do not have a rateable value are in practice already metered. As I read it, this amendment does not propose to give the occupier of a property that is already metered any right to be charged on the basis of rateable value. That seems a little illogical because, without that right, obtaining a notional rateable value would be of limited use.
In the future, as regards properties built after this Bill comes into force, companies might continue to be attracted to metering. If a home buyer particularly objects to metering, it is up to him not to buy a particular property. There are circumstances where new properties are subject to a different form of unmeasured charge. As we explore other possibilities in this context, including council tax bands, that provision may be more widely available. At least one company, Welsh Water, widely uses an unmeasured charge which is not based on rateable value for those properties where no rateable value is available and in circumstances where neither the company nor the occupier wishes to meter.
We do not think that creating a new range of notional rateable values—as Amendment No. 23 seeks to do—would in reality create any new rights for consumers. Water companies can already devise and propose what unmeasured bases of charging they wish. I hope that I have addressed most of the points raised by the noble Baroness's amendments. I hope that she will consider they are either unnecessary or do not achieve the point she seeks to make. I therefore ask her to withdraw the amendments.
6 p.m.
Baroness Hamwee: The Minister says that Amendment No. 23 would not create a new right for consumers. However, the amendment is designed precisely to create a new right for consumers. However, it is perhaps one of the less important amendments in this group.
As regards Amendment No. 22, the Government are being open about not being great fans of using rateable value as a basis for charging. However, the Committee is well aware of the pressures on legislative time. It is a quite human response of any government, to address other matters if no time limit is in place and a system shows no sign of breaking down and has been examined
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in the past two or three years. I understand that position. I said that I was open to negotiation with regard to the time period involved. However, I should like to see some framework established in which the programme could move forward. That is the point of Amendment No. 22.
Amendment No. 24 may seem a detailed provision which does not directly address the point of this Bill. I am concerned to ensure that we do not miss the opportunity to allow companies fully to explore what other methods may be available to them. The Minister said that the relevant information is already in the public domain. My concern is that although that is the case it takes a great deal of effort, and therefore cost, to extract that information as one has to ask questions on a property-by-property basis. I assume that applies to information held by the valuation offices as well as to information held by local authorities.
I shall read the Minister's comments in Hansard. However, as regards making the relevant information available in the way I propose, I am not sure that the Secretary of State can undertake to do that at present, or whether that requires some legislative provision to be introduced. If such a legislative provision is required, we should introduce it in this Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 23 not moved.]
Clause 8 agreed to.
Clause 9 agreed to.
[Amendment No. 24 not moved.]
Lord Addington Lord Addington moved Amendment No. 25:
After Clause 9, insert the following new clause—
REQUIREMENTS FOR RESELLING WATER SUPPLIED BY UNDERTAKER
(" .After subsection (5) of section 150 of the Water Industry Act 1991 (charging for services provided with the help of an undertaker), there is inserted—
"(6) An order under this section may—

(a) require any person who resells water supplied by a water undertaker to furnish the purchaser with such information as may be specified or described in the order; and

(b) provide that, in the event of his failing to do so, the maximum price applicable to the resale shall be such as may be specified in the order, or shall be reduced by such amount or such percentage as may be so specified."").

The noble Lord said: This amendment seeks to provide certain information to people who live in rented accommodation or on a mobile home park and whose landlord has already purchased the water that they use. Ofwat wants more information to be supplied to such people to enable them to ensure that they are not being overcharged. Ofwat seeks the imposition of an order under Section 150 of the Water Industry Act 1991 to control the price charged for water supplied to customers of a water undertaker; that is, someone who resells the water to third parties. Although perhaps not common, this situation occurs, as I have already mentioned.
This kind of provision exists in other utilities regulation. Indeed, this entire formula has been lifted from Section 37 of the Gas Act 1986. All this

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amendment seeks to achieve is to ensure that the third party knows exactly how much his water initially cost. Thus he can take action if he is being overcharged for it. I hope that the Government will look favourably on this amendment. I beg to move.
Lord Graham of Edmonton: I rise to speak to Amendment No. 26 in my name which is grouped with the amendment we are discussing. I am grateful to the noble Lord, Lord Addington, for explaining our concerns. I declare a non-financial interest in that I am the honorary secretary of the All-Party Group on the Welfare of Park Home Owners. The Minister's department will be aware that people who live in mobile homes are sometimes taken for a ride in the context we are discussing. The all-party group includes in its membership David Rendel, the noble Baroness, Lady Maddock; Roger Gale and John Butterfill. We were delighted recently to persuade the Minister, Hilary Armstrong, to establish a ministerial group to examine the views of site owners, residents, local government officials and others who seek to improve the lot of the people we are discussing.
People consider mobile homes as being outwith the normal range of provision. However, there are more than 200,000 mobile homes throughout the country. At a modest estimate, that means half a million people. Often those people lose out in terms of the protection afforded to them in this regard. Most mobile home parks are well run and most of the residents are happy. But some site owners are very reluctant to play the game by their residents. I do not deny that it is a commercial business, but some owners take advantage.
When a water charge is to be met and, by agreement, it is shared by those who use the water, one would think that reasonable—it does not always happen—and one would think it reasonable that the site owner seeks to make a profit. However, it is not unreasonable that the individuals concerned should raise the issue. But it is a sad fact that many of the residents of mobile homes are elderly and vulnerable. They are disadvantaged in many ways. Sometimes they have difficulty in raising the issue with the owners of the sites. One solution would be for them to take the owners to court—of course they could, at a cost—but, with the increasing pressure on legal aid, they would have difficulty in finding the money to do so. I am talking about site owners who know that they are doing wrong—and persist in doing so—and the vulnerable individual is the one who suffers.
As my noble friend Lord Addington said, steps are being taken to remedy that. Ofwat is bringing in a remedy under Section 150 of the Water Industry Act and consultations are taking place. The gravamen of the amendment is to ask the Government whether they are aware of the problem and whether they have a better solution than the ones proposed. Is there a good reason why vulnerable, inarticulate and sometimes poor people should have to rely upon their own cash and the courts to seek redress? I do not believe that that is the case.
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Yesterday in the other place my good friend Hilton Dawson, the MP for Lancaster and Wyre, raised the issue of the need to address more seriously the problems of mobile home residents. The problem concerns others, but it particularly concerns those who buy mobile homes for retirement. They believe they have bought a piece of paradise—very often it is true—but sometimes it becomes a nightmare. I hope that the Minister recognises the problem and that the Government will try in any way they can to make it easier for people who live on mobile home sites to enjoy the same advantages as others. People who live in council flats and many other places are able to rely upon landlord and tenant legislation to protect them against harassment. A whole range of legislation protects them but it does not protect the mobile home owner.
I move this as a probing amendment. I am anxious to hear what the Minister has to say. If it is a sympathetic answer I am prepared to consider not putting the amendment to the vote.
6.15 p.m.
Baroness Farrington of Ribbleton: Amendment No. 25 proposes an addition to the powers of the Director General of Water Services when making a water resale order. The amendment would allow the order to force the disclosure of information by the person reselling water to the purchaser. This is a subject slightly outside the scope of the Government's water charging review and the other measures in the Bill, in which we have concentrated on the charges paid to water undertakers.
The use of the powers in Section 150 is, so far, untried. The director has recently proposed to make an order to limit resale prices and that has been widely welcomed. I welcome this proposal too. But my immediate reaction to the amendment is that it is surely premature to ask for an extension of powers to make an order before the existing power has been used even once. The Government would prefer first of all to take stock of how the order works within the present available powers. These already enable the director, as he is proposing, to limit water resale prices to the fair recovery of the sums paid by the reseller to the water undertaker. Once the order is in operation, if we were confronted with evidence that it was not entirely effective, then we would consider legislation or some other measure. But we would prefer not to accept an amendment that assumes that the presently proposed order will not be effective in forcing water resellers to charge only reasonable prices.
I turn to Amendment No. 26, which was spoken to by my noble friend Lord Graham of Edmonton. I pay tribute to the work which he and those to whom he referred have done in support of the interests of those living in mobile homes. I am certainly aware that my honourable friend Hilton Dawson, with great justification, has taken up the matter. However, Amendment No. 26 would go even further in creating a criminal offence to enforce the terms of the resale order. This seems to be out of proportion to a problem that we do not yet know we have. I would point

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out that the director general's regulation of the water undertakers, including the setting of price limits, is not supported by criminal offences. I do not think it appropriate that criminal sanctions should apply to water resale either.
At the moment the Government are not persuaded that either amendment is necessary. I hope that the noble Lord, Lord Addington, will feel able to withdraw his amendment.
Lord Graham of Edmonton: I accept with appreciation the Minister's sympathy for what we are seeking. I acknowledge that there has been no case history in the matter. We know the nature of some of the owners of mobile homes sites. We support the amendment because we fear that when the Bill comes into force it will lead to the kind of anomaly, misuse and disgrace we have spoken about. As my noble friend will know from her wide experience of local government, there are many people who remain silent rather than, as it were, cause trouble. If you have a bad site owner who does not care tuppence about upsetting people, then the situation I envisage will arise. I accept that this may not be the right occasion to pursue the matter. I think the Minister is saying that we need hard evidence in front of us. If the all party group provides evidence of wrongdoing, I am satisfied that that will be looked at.
Lord Addington: I have a question for the noble Baroness. How will the Government acquire the information? The amendment I propose—I accept it may not be exactly right—allows the ultimate consumers of the water to know what the intermediary is charged and what they are being charged. It is a way of gathering information. If people are being swindled they tend to talk about it and will report it. Even if they do not all report it, some will. If we do not have that means of information gathering, ultimately no form of legislation will ever be effective.
Baroness Farrington of Ribbleton: It will be effective through the power of the director to limit the resale prices.
Lord Addington: I do not think that has answered my question at all. I do not propose to take the amendment to a vote at this point. It is something we will have to come back to. The noble Lord, Lord Graham, made a very powerful speech. If that was a gentle probe, I shudder to think what a thrust from him is like. The noble Lord is definitely my friend, although I think he made a mistake by referring to me as his noble friend. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 26 not moved.]
Clause 10 [Extension of power to carry out works in connection with metering]:
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 27:
Page 7, line 28, at end insert—
("() After subsection (9) there is inserted—
"(10) In this section, to "premises", "building" or "house" shall be taken as also being refereners to—

(a) any private dwellinghouse forming the whole or any part of any premises, building or house; and

(b) any premises, building or house excluding any private dwellinghouse forming part of such premises, building or house".").

The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 35 and 36 to Schedule 3. They are all minor technical amendments to the same effect and for similar purposes and can be simply explained.
The amendments all cover the situation of what may be described as "mixed" premises; that is to say, a building that is used both as someone's principal or only home and for business premises. Particular examples are: living accommodation forming part of a public house, a flat over a shop, or even the caretaker's flat in a commercial building.
Amendment No. 27 to Clause 10 is to ensure that in such mixed premises the water company will be able to provide a metered supply for the part of the building used for business purposes, irrespective of whether or not the occupier of the residential part opts for a meter. It also means that once the business premises are separately metered, the waiter supplier will not be prevented from disconnecting the business premises because the residential part of the building forms a kind of shield.
I need not take much of the Committee's time in explaining Amendments Nos. 35 and 36. They simply cover the technical problem of premises which have a mixed use—partly residential and partly business. We are all agreed that the residential part should have protection against disconnection. What needs to be avoided is a situation whereby the fact that part of the premises is residential prevents appropriate remedies being taken against the business premises. If, for example, the building were a public house or a restaurant with living accommodation over it, there could be a very substantial use of water for commercial purposes.
Amendment No. 35 is intended to ensure that in mixed premises the water company can require separate service pipes for the parts that are used for private purposes and those that are used for business purposes.
Amendment No. 36 follows from that. It seeks to make clear that the ban on disconnections which is provided for in the Bill, and which we support, does not extend to premises that are used both for business purposes and as a dwelling house, and where the water supply is used for business purposes. That would ensure that, for example, a public house could be cut off, even though the landlord lived on the premises. It does not cover the situation whereby someone lives over the shop

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and the water supply is used only for the residential accommodation and not for the business. That would still be protected from disconnection. I beg to move.
Baroness Farrington of Ribbleton: Amendments Nos. 27 and 35 appear to be intended to extend the powers that water companies already have to carry out work on customers' supply pipes, although the amendments as drafted actually add very little. At present, companies have the power to separate out supply pipes where they have given notice that they intend to install a meter in the relevant property. Under Clause 10, we are extending those powers to enable companies to carry out the necessary works to fit a meter.
The amendments, if the intention behind them is as I have outlined, would mean that water companies could go into anyone's home, whether or not the householder had requested that a meter be installed, and carry out works to separate supply pipes. They could even charge the householder for the work involved. That extension of powers is neither desirable nor necessary. We can see no reason why companies should be able to enter people's homes in order to carry out work that the customer neither wants nor needs doing.
Neither do we agree that the companies need such powers. They will already have sufficient powers to separate out supply pipes in order to fit meters, either where they are imposing a meter on someone who is using water—for instance, for filling a swimming-pool—where they may be entitled to charge according to volume in the future, or where the customer requests a meter.
We cannot accept that it is right to allow companies freedom to impose on their customers in that way, and then to charge for doing so; nor do we accept that companies need that power for the legitimate carrying out of their business. I therefore ask the noble Baroness to withdraw her amendment.
Turning to Amendment No. 36 tabled by the noble Baroness, I spoke at Second Reading about the importance of the protection included in the Bill against disconnection for non-payment of bills. Our approach to protecting premises against disconnection has been to target it as far as possible, while ensuring that those whom we wish to protect are covered. I believe that the end result is a balanced approach, which protects potentially vulnerable people, and premises which play a vital role in the community, while not unnecessarily impeding water companies in the day-to-day carrying out of their business.
We therefore cannot agree with this amendment, which would seem to reduce the extent of protection currently included in the Bill. Perhaps I may explain why. The term, "private dwelling house" is not currently defined in the Bill because we believe that the use of the term alone suffices in describing those premises that are to be protected. It is our view that a private dwelling house cannot be one that is used predominantly for the carrying on of a business. However, we believe that it does cover people's homes where they may carry out
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some activity that is not purely private. For instance, it would cover homes where people work occasionally, as an alternative to their offices.
This amendment would remove the protection against disconnection for such premises. It would mean, for example, that a Minister taking home the Ministerial Box would not be covered, simply because the home was not being used solely for private purposes. Simply because someone is working at home in that way does not mean that that person is using water for purposes, or in amounts, that are any different from a home where the occupants do not take their work home with them or where they go out to work. I do not believe that that is within the spirit of the provisions to protect against disconnection to reduce protection in this way. I hope that I have convinced the noble Baroness sufficiently for her to withdraw her amendment.
Baroness Miller of Hendon: I am by no means sure that the Minister has convinced me. I shall not divide the Committee now, but I shall certainly take the matter away for consideration.
The Minister will know that I have withdrawn Amendment No. 28 to Clause 11 because I was advised that Clause 11 covers the situation to which my amendment related. However, the legal officer of the water company concerned does not consider that it is covered. In exactly the same way, the Minister feels that Clause 10 of the Bill already covers the situation, for example, of a public house; the legal officer does not consider that to be the case. I shall need to examine this matter carefully and take further advice as to whether the matter is or is not covered.
Baroness Farrington of Ribbleton: If it would help the noble Baroness to write to the department on that point and to receive an answer in writing for consideration, that can be arranged.
Baroness Miller of Hendon: I thank the noble Baroness. I shall accept her offer of a letter. There has been great concern about the position of public houses and so on. I shall make sure that a letter is drafted and sent to the noble Baroness. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 agreed to.
Clause 11 [Rights of tenants in relation to metering]:
[Amendment No. 28 had been withdrawn from the Marshalled List.]
Clause 12 [Water Industry Commissioner for Scotland]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 29:
Page 8, line 21, leave out ("Consultative") and insert ("Consumer")
The noble Lord said: I am surprised to be standing at this Dispatch Box discussing a clause relating to water in Scotland. I say that because, in exactly a fortnight's time, the people of Scotland will elect a Parliament, which, from 1st July, will be entirely and totally

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responsible for these matters. I therefore find it as surprising in relation to this issue as I did in relation to health that the Government are choosing to put legislation through this Parliament which may not even come into force until after the Scottish Parliament has been elected or takes over these powers on 1st July. I should have thought that this matter could comfortably have been left to the Scottish Parliament for consideration. The water industry will be one of the important issues over which it will preside. I suspect that most people in Scotland have now made the assumption that all these matters will be dealt with in Edinburgh and that they are not paying much attention to legislation that is being tacked on to English Bills that are presently passing through both Houses of this Parliament.
I am grateful to the Scottish Consumers' Council for drawing to my attention some defects which it considers are in the Bill and to which it has asked me to speak. I am happy to do so because the council makes some good points. I know that the Minister has had notice of all of them, I make no complaint about that because even though I do not think we should be dealing with this, it is still incumbent on us to try to get it right. Then, when the Scottish Parliament takes over on 1st July it will take over issues which are in as good order as we can make them.
I shall therefore speak to Amendment No. 29 as well as Amendments Nos. 30 to 33 which are grouped with it. They are all to do with the consultative committees which the Government propose to set up to replace the current system in order to deal with consumer-related problems and issues, and to allow the consumer to have a voice. That is the first amendment.
The new structures are here supposedly to strengthen consumer representation. It is a little odd, therefore, that the title of each local committee is to be the "Water Industry Consultative Committee". I do not believe "consultative committee" sounds nearly as good as "consumer committee". "Consumer committee" sounds positive and proactive, whereas "consultative committee" gives a more negative message; that it only deals with any issues on which it is consulted by, I presume, the water authority or water industry commissioner. It will not be a body which represents the interests of the consumers and makes their points known to the water industry commissioner.
Amendment No. 30 refers to Schedule 2 and Part II of the Bill. It is an important amendment, probably the most important one. The current proposal is that for each of the consultative committees (which in my view should be called "consumer committees") the water industry commissioner for Scotland—I must get my tongue round that so that it trips off the tongue; at the moment I find it a rather heavy title—is to be the chairman of the body. Yet it is to the commissioner that the body will wish to make comments. Occasionally, the body may not agree with what the commissioner is doing, yet the commissioner is to be the chairman. Amendment No. 30 suggests that an independent chairman should be appointed by the Secretary of State.
I believe that consumer representation needs to be strengthened in the proposed structure. Frankly, I believe it should be no different from the independent consumer representations proposed for the privatised utilities. Economic regulation and consumer representation should be kept distinct. Experience in the privatised utilities has shown that there is a need for a strong independent consumer voice, and that would be difficult for a regulator to provide.
The Government seem to agree because in their response to A Fair Deal for Consumers, published in July 1998, the Government confirm that they intend,
"to establish consumer representative bodies on an independent statutory basis, responsible for pro-actively promoting and advocating the interests of all consumers … and will have an important role in representing the interests of disadvantaged consumers".
In the absence of a national consumer body on the subject of water, the local committees—the Government call them consultative, I should like to call there consumer—will have a central role in the articulation of consumer concerns. Appointing the commissioner as the chairman of all three committees in Scotland is likely to send out the wrong message as to the function of the committees. They will be perceived not to be genuinely independent, whereas an independent chairman with no connection to the regulatory body will be less likely to inhibit the development of a genuinely independent consumer voice.
The functions of the commissioner as the economic regulator will involve him or her in striking a balance between the interests of the consumers, on the one hand, and those of the service providers in setting charges. There would be greater transparency in the process if it could be clearly seen what the interests are. The commissioner will find it easier to reach a balanced decision if each party is able to articulate its own interests strongly and clearly.
The role of the committees is to advise the commissioner on the promotion of the interests of the customers of that authority. To do that effectively, they need to be able to explore those interests independently and in the light of the circumstances in that area of Scotland. There is a danger that if they are chaired by the commissioner they would feel constrained as to what they could do and say, especially when it came to the position of the commissioner. I suspect, as these things happen, he would feel obliged in the committee to defend his position. Therefore, I believe the committee would not be able to send to the commissioner, as the regulator, its independent views on behalf of consumers.
Amendments Nos. 31 and 32 are much less significant than Amendment No. 30, but they basically come from the same position. Currently, the Bill as it stands suggests not fewer than six and not more than nine members of the committee. Amendments Nos. 31 and 32 make modest increases so that that subsection would read "not fewer than 7"and "not more than 11" members.
By reducing the size of local committees—which is what the Government propose to do—when we compare them with the existing size of the three area committees of the Scottish Water and Sewerage Customers'

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Council, it will be increasingly difficult for the committees to represent the wide range of interests of consumers; for example, those from rural areas and those with disabilities. The three water authorities cover large areas—the whole of Scotland. Dividing Scotland into three makes pretty wide areas and I suspect that with as few as six members it would not be possible for the Government to ensure that they represented the wide interests of consumers in a widely dispersed geographical area. They would probably need much nearer 11 members. It may not need to be 11 in all three areas; but, for example, in the north of Scotland, which delivers water services to consumers over a wide area, they would need about 11 members to bring in proper representation from the islands as well as the mainland areas. I quote the Government's document, A Fair Deal for Consumers, which said, in March 1998:
"The government believe that consumers should have an effective and powerful voice within the regulatory system, charged exclusively with representing the consumer interest".
I believe that a reduction in the number of people on the committees is not a good sign as regards representing the consumer interest.
My last amendment echoes something currently in the Local Government etc. (Scotland) Act 1994. That Act requires the local area committees of the Scottish Water and Sewerage Customers' Council to hold at least one of its meetings in a year in public. It is not clear to me why the provision has not been carried forward into the new Bill. Mine is largely a probing amendment to establish why the Government have not brought forward that provision from the 1994 Act into the new Bill. It seems to me to be important that public meetings of the bodies should be encouraged so that consumers can see that their interests are being properly and openly represented.
I am sorry if I have gone on a little, but the amendments were bundled together and that suited me because they all relate to the same point. I hope that the Minister, who is with me at the Dispatch Box for the second time today, will be able to give me the kind of assurances and answer that might satisfy those of us who are interested in such issues in Scotland. If not, he might consider bringing forward his own amendments to deal with at least some, if not all the points I made. I beg to move.
Baroness Hamwee: I support these amendments. If my noble friend Lord Mar and Kellie were here, I know that he would speak to them. He is involved in other activities in Scotland. He has asked me to give his support and I give mine as well. Like the noble Lord, I was surprised when I read the Bill and saw the provisions for Scotland. I believe I said at Second Reading that it seemed somewhat impertinent and patronising for this Parliament to be seeking to legislate for the new Parliament so close to its formation. I understand that the Government's stance is that they are not imposing on the new Scottish Parliament, but merely making legislation available should it wish to use it. Nevertheless, I find it a rather odd situation.
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My noble friend has asked me to say that he believes that the new committees must be beefed up to give them the role of an advocate for the consumer. As regards Amendment No. 30, he makes the interesting point not simply that there is a conflict of interest as regards the chairman if he or she is to chair meetings, but that the commissioner will be in a better position in not having to chair a meeting because he or she would be able to speak more extensively from the floor. That is not a point which would have immediately have occurred to me, but I believe that he is right. Generally, we support this group of amendments.
6.45 p.m.
Lord Macdonald of Tradeston: The noble Lord, Lord Mackay of Ardbrecknish, and the noble Baroness, Lady Hamwee, asked why we have not waited until there is a Scottish Parliament in existence to legislate. But the consensus in Scotland is that the existing regulatory regime is unsatisfactory. Therefore, the Government want to provide the Scottish executive with a chance to introduce a better regime as quickly as possible. Waiting until the Parliament and the executive are in place might, given other priorities, have meant a year's unnecessary delay. I believe that the proposals will not pre-empt the Scottish Parliament. I do not believe that they are in any way patronising. The legislation will provide the Scottish executive with the option to introduce the new system, but it will not be bound to do so.
The proposed changes to the arrangements for the consultative committees contained in Amendments Nos. 29 to 33 appear to be motivated by concern that customer representation in the new regulatory system needs to be strengthened. I shall try to demonstrate that this concern is misplaced and that consequently the amendments are unnecessary and run the risk of undermining what we believe is a coherent system.
I shall preface my remarks on individual amendments with a few general comments about the new system and how customers are already at its heart. Concern about the strength of customer representation appears to be based on the assumption that the commissioner will be required to strike a balance between the interests of water consumers on the one hand and those of the water authorities on the other. However, there is no question of the commissioner having to perform any such balancing act. Clause 12 places on the commissioner the general function of promoting the interests of the water authorities' customers. That function is not qualified by a requirement to balance the customers' interests against those of the authorities. That reflects the fact that the Scottish water authorities remain in public ownership and control. As such they do not, and should not, have any interests of their own that might be at odds with those of their customers, the public. Unlike privately owned companies, they have no shareholders' interests to be considered. So in such circumstances the commissioner's only concern is to ensure that the customer gets the best possible deal, quality of service and price.

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I now turn to the individual amendments. Changing the name of the consultative committee, which is what will happen under Amendment No. 29, if that is accepted, could have the effect of undermining the integrity of the approach adopted in the Bill.
The Bill is quite clear that it is the commissioner who has the function of promoting the interests of customers. The role of the committees is to support the commissioner in that task. The committees are not intended to be separate consumer bodies posing as independent voices of the customer. Therefore, the title given to them in the Bill is an accurate description of their intended role.
The alternative title suggested by the noble Lord, Lord Mackay, would not be helpful in that it could lead to confusion about the role of the committees and could even result in the commissioner's role being undermined. We do not believe that would be in the interests of customers. Moreover, it would be misleading and unhelpful if the committees were to be given a title which suggested a role for them, which in fact does not exist.
I trust that the Committee will accept that the title given to the committees is suitable to their role and function as contained in this Bill.
As regards Amendment No. 30 and the proposal for independent chairmen, the Bill deliberately provides for the commissioner to chair each of the three consultative committees. There are several reasons for this. First, the committees need to have a good working relationship with the commissioner if their views are to carry proper weight with him or her. Making the commissioner chairman will help to achieve that. Secondly, it will ensure that the commissioner gets direct exposure to the issues that come before the committees. Finally, given the commissioner's central role in the system, the committees' standing and authority are likely to be greater under his or her chairmanship. Those benefits would be lost were the amendment to be carried. Perhaps more significantly, however, the amendment would pose a risk to the effectiveness of the new system. Let me repeat: the commissioner is the central figure in the system. We do not intend that the committees should act independently of the commissioner.
Separate chairmen would run the risk of the committees attempting to expand their role beyond that provided for in the Bill. Were they to do so, the clarity of the system would be lost and the commissioner's position within it undermined. That would not be in the customers' interest.
The Bill defines clear roles for the commissioner and the committees in the interests of the customers. It is important for these roles that the relationship of the committees to the commissioner is clear. We believe that having the commissioner as chairman will help to achieve that.
The noble Lord, Lord Mackay, argued for an increase in the membership of the consultative committees. Setting the size of bodies such as the consultative committees is a matter of striking the right balance. A body whose membership is too small is unlikely to contain the necessary experience or spread of interests
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to be able to speak for the whole range of customers. A relatively large membership can be unwieldy and lack the focus of a smaller group. In settling for a membership of between six and nine in this case, the Government believe that they have got the balance right.
There is a further point. The committees are there to form a view on the interests of all the water authorities' customers—that is to say, non-domestic customers, large and small, as well as domestic customers. It would not be feasible for every category of customer to have its own representation on the committees. Thai would need a much larger membership than is being proposed in the amendment. Instead, the Government's intention is that the members should try to take a view of the interests of the whole range of customers. What we are keen to avoid is the position where, for example, a committee member from a rural area sees his or her duty as simply advising on the interests of other rural customers.
I do not believe that increasing the membership of the committees by two or three is likely to result in more effective expression of customers' views. It is, however, likely to make the committees more unwieldy.
Finally, I am grateful for the opportunity which this amendment gives me to explain the position of the consultative committees holding meetings in public. This is an issue on which Scottish Ministers may wish to give guidance to the commissioner. We fully expect that they will wish to be consistent with the present Government's position on meetings held by public bodies. Broadly speaking, this means that we would expect most, if not all, meetings to be held in public. Clearly, there are occasions when sensitive matters, for example, relating to named individuals or commercial confidences, need to be considered in private. But these should be relatively rare occurrences, particularly in bodies whose purpose is to determine and then advise on issues that concern the public.
In conclusion, I hope that I have demonstrated to the satisfaction of the Committee that the arrangements for the consultative committees contained in the Bill provide a coherent and consistent means of protecting the customers' interests. Further, I hope that I have persuaded the Committee that the amendments of the noble Lord, Lord Mackay of Ardbrecknish, might weaken these arrangements to the detriment of the customer. Accordingly, I hope that the Committee and the noble Lord, Lord Mackay, will be content for this amendment to be withdrawn.
Baroness Hamwee: Before the noble Lord responds, perhaps I may press the Minister for a moment on his comments that a committee of 11 plus a chairman is unwieldy. I am sure that the Minister has far more experience than I of chairing committees. Twelve committee members does not strike one as an unmanageably large number, particularly when one must assume that occasionally one or two people will be absent. I agree that it is important to have the right size of committee so that there can be a wide-ranging debate but a conclusion can be reached, and ensuring that a large group does not spend all day expressing a great many individual views. While I entirely take that

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point, this is a very modest amendment. I would be very surprised if any noble Lord on the Government Front Bench and Back Benches could not handle a committee of 12.
Lord Macdonald of Tradeston: I take the general point just raised by the noble Baroness. During some of the more dejected periods of my life I have chaired bodies for a living. It depends very much on the individual circumstances of the particular committee. There are times when one will want larger representation. But it is the judgment of the people close to the industry that in this case they have the right size of committee and they will be able to achieve what they want effectively. Therefore, I defer to the professionals involved in the water industry and the officials whose advice they take.
Lord Mackay of Ardbrecknish: That reply was a bit like the curate's egg: good in parts. I shall deal first with the good bit and get it out of the way. I was grateful to the Minister for his assurance that most if not all of the meetings would be held in public. Knowing how ministerial assurances are examined, that will probably tie down firmly not only the new Scottish executive but the commissioner and consultative committees and they will hold most of their meetings in public. I welcome that assurance, but that is about as far as it goes.
When the Minister described what these bodies would do I began to wonder whether it would be worth anybody's while being a member, let alone any member of the public going along to listen. I am as amazed as the noble Baroness, Lady Hamwee, by the argument against going from a membership of between six and nine to one of between seven and 11. I find it hard to believe that a committee of seven to 11 people is unwieldy when one from six to nine is not. I have chaired meetings of more than 11 members. I accept that as the number approaches 20 it becomes unwieldy. For three years I chaired the board of the Sea Fish Industry Authority, which had 12 members. I would not have described it as unwieldy. Although the board reflected the whole of the United Kingdom it was concerned solely with the fishing industry. One of the greatest difficulties was to achieve, even within 12 members, a board properly representative of both the various parts of the industry and its geographical spread. I am not entirely convinced by that argument.
But it almost does not seem to matter when I hear the description of what the Consultative Committees will be asked to do. At the end of the Minister's remarks on the first four amendments I was left wondering whether the whole intention was that the committees should be the lapdogs of the commissioner. Therefore, "consultative" seems to me to be too strong a word for what the Government envisage. It also appears to be perfectly proper to allow the Commissioner to be the chairman. Presumably, he would control the agenda and everything else. I was not convinced by it. The Minister's remarks indicated that I was wrong to assume that they would be consumer bodies. I shall study the Minister's words in detail to see whether my impression is justified by the text.
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I find it odd that the Minister should say that there will not be any conflict at any time between the water authorities' position and that of the consumer. Even though the water authorities are public bodies they will have problems to resolve which consumers believe should have been dealt with differently or better. There will be conflicts. If not, why bother to have these committees at all? For example, one can argue that because local authorities are public bodies none of us has any complaints about council tax or the delivery of services. Members of the Committee are aware that I live in the people's republic of Glasgow where the council tax rate quietly goes through the roof year on year, except in those years when the comrades have to face the electorate. Then, for some strange reason, they manage to keep down the council tax. I believe it is time that parts of the council face the electorate every year. In that way I have little doubt that the council tax will be hugely lower. The idea that because the City Council is a public body we have no problems or complaints as consumers, let alone payers, is rubbish. Water users are in exactly the same boat.
I did not intend to make the following point but I feel that I must now do so. Recently at Question Time I mentioned additional costs to be imposed on rural abattoirs and agricultural markets as a result of the new meat inspection regulations by the North of Scotland Water Authority. Over the next four years that authority intends to increase its charge to Stornoway abattoir from £10,000 to £51,000 a year. The same authority intends to increase its charges to Perth Auction Mart from about £24,000 to £150,000 a year. Frankly, those consumers are not best pleased and the regulator will have his ear bent by them. No doubt the water authority will tell the regulator why it intends to do that.
The idea that there will not be a conflict between the water authority and consultative committee is just cloud-cuckoo-land. That is why it is important that the chairman should be independent. If I were a member of any of the organisations that I have mentioned I would not look at this body with any great hope that it would represent my views, because it appears that the chairman is not there to represent consumers' views.
I am not very pleased with the answers. I found it odd that the Minister began by saying that there was a consensus that the present regime was unsatisfactory. That may or may not be so. From my discussions with the Scottish Consumers' Council, there is not a consensus that what the Government are doing is satisfactory. Together with the Scottish Consumers' Council I shall take away what the Minister has said and examine it. I hope that the Minister will take away what I have said and think about it and perhaps return to this matter at Report. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 agreed to.
Schedule 2 [Schedule to be inserted in the Local Government etc. (Scotland) Act 1994]:
[Amendments Nos. 30 to 33 not moved.]
Schedule 2 agreed to.
Clause 13 [Commissioner's advice on charges]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 34:
Page 9, line 29, at end insert (", and
(f) the impact of charges on consumers, and especially on vulnerable and disadvantaged consumers.")
The noble Lord said: I rise to move Amendment No. 34. In Clause 13 one sees a list of items under the general rubric "Commissioner's advice on charges". Subsection (3) lists a number of items:
"In preparing his advice the Commissioner shall have regard to—

"(a) the economy, efficiency and effectiveness with which authorities are using their resources in exercising their functions,

"(b) the likely cost to each authority, for the period of the advice, of exercising the functions mentioned in subsection (4) below".

To return to the previous point, inevitably that will mean that the commissioner must balance the complaints of the consumer on price against the needs of the water authority to raise money. The subsection continues:

"(c) the likely borrowing capacity of each authority for the period of the advice,

"(d) any guidance issued to authorities by the Secretary of State, and

"(e) any directions issued under section 116 or 117 of this Act".

My amendment seeks to add another item: the impact of charges on consumers, especially on vulnerable and disadvantaged consumers. The Water Industry Commissioner is to be given the general function of promoting the interests of customers of the new water and sewerage authorities. That is what we have been discussing. It should be explicitly stated in this clause that he or she must have regard to the interests of consumers in giving the Secretary of State advice on charges. In particular, he should be required to have regard to the interests of vulnerable groups of customers; for example, those on low incomes, or those with a medical condition who require access to a plentiful supply of water. He should have regard to the impact on non-domestic consumers whose business may be adversely affected by the huge hikes in water charges which I mentioned in the last round of amendments.
I can see no reason why such words should not be added to the Bill to make clear the commissioner's duty to consumers in general, and to the vulnerable and disadvantaged in particular. I beg to move.
Lord Macdonald of Tradeston: In addressing this amendment, I am afraid that I shall have to repeat much of what I said a few moments ago. Let me take the opportunity of replying to the jibes of the noble Lord about my Glaswegian origins and the behaviour of my party in my home town. If members of the party have any complaints about the council tax, they are not nearly as strong as the complaints they had about his poll tax!
Much of what he said may have baffled others listening who were not aware of the fact that in a month's time there will be a Scottish Parliament with 129 MSPs who will no doubt give very detailed scrutiny to many of the important issues in what is a huge industry planning a £1.5 billion capital investment.
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I think that he both underestimates the scale of the challenge that will be there for the committees, and the public-spirited nature of his fellow Scots.
When framing advice for Ministers on charges, the commissioner's only concern will be the interests of the customers as a whole, as it will be in all aspects of his or her work. Clause 13, in dealing with charges, establishes the framework within which the commissioner will formulate advice for Ministers. That framework will enable the commissioner to deliver an objective assessment of the minimum charge levels needed by the authorities.
Clause 13(3) specifies a number of factors the commissioner must consider in framing the advice. Thus the commissioner is required to take account of the duties placed on the authorities, of the various standards they must meet, and the costs of doing all that. Crucially, he or she must also have regard to the economy, efficiency and effectiveness of the authorities and the way in which they are managed.
The purpose of these provisions is to ensure that the customers as a whole pay no more than is necessary for the service they receive. More particularly, they will give the commissioner the power to stop the cost of any inefficiency on the part of the water authorities being passed on to the customers.
Against that background, I do not believe that the amendment could add anything to the way in which the commissioner serves the customer in this area. As the Bill stands, everything that he or she will do in relation to preparing advice will be with a view to minimising the impact of charges.
Requiring the commissioner to consider the impact of charges on particular groups of customers would fundamentally alter the commissioner's remit. The commissioner's task is to come to an objective view on the income requirements of the authorities. Expanding the remit, as the noble Lord suggests, would involve the commissioner in matters not directly related to the efficient operation of the water and sewerage industry.
In such circumstances, the commissioner would be expected to reach judgments on whether customers, or particular categories of customers, were able to afford particular levels of charges. That would draw the commissioner into an area of wider social policy which is for the Government to address.
The Government believe that by concentrating efforts on keeping prices as low as is consistent with a high quality service, the commissioner will be able to serve the interests of all customers.
This amendment, rather than advancing the interests of customers or groups of customers, is likely to blur the commissioner's role and make the commissioner less effective in promoting the interests of customers. Accordingly, I hope that the noble Lord, Lord Mackay, will agree to withdraw it.
Lord Mackay of Ardbrecknish: I am grateful to the Minister for that reply. Perhaps he has more confidence in the various bodies he mentioned than I have. I am not entirely sure whether he is still a resident of the city of Glasgow. In that regard, he is unlike some of his noble

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friends who have taken the precaution of living outside it where the council tax is lower. I am surprised that he is not complaining about the size of the council tax, as I am. I realise his salary nowadays is modest compared with what it used to be. My salary is much more modest than it used to be, and the hourly rate must fall well below the minimum wage!
We have had a good run on this issue. I shall reflect on what the Minister said. I remember having often to make similar answers from the Dispatch Box to his noble friends on this side of the Chamber who wanted this, that or the other group taken into account. I find it interesting today that, as regards amendments mentioning the disabled and disadvantaged, the usual suspects are not present to add their voices to mine. I suppose that has something to do with the change of government. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 13 to 15 agreed to.
Schedule 3 [Minor and consequential amendments]:
[Amendments Nos. 35 and 36 not moved.]
Schedule 3 agreed to.
Remaining schedule and clauses agreed to.
House resumed: Bill reported without amendment.

Civil Procedure (Modification of Enactments) Order 1999
7.7 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey rose to move, That the draft order laid before the House on 13th April be approved [15th Report from the Joint Committee].
The noble Lord said: My Lords, on behalf of my noble and learned friend the Lord Chancellor, I beg to move that the draft order laid before the House on 13th April be approved.
The most fundamental reforms of the civil justice system for over 100 years will come into effect on 26th April. The reforms aim to provide a single system of civil justice based on the fundamental principles of proportionality, clarity and efficiency. The civil procedure rules which will come into force on that day are a key aspect of the reforms, a new unified code of civil procedure to implement the expressed objectives of the new system.
There are other steps to be taken in this process of reform which, although apparently minor, still make an important contribution to the achievement of the modernisation of the civil justice system. One of those steps is the implementation of the Civil Procedure (Modification of Enactments) Order 1999 which is before the House today. The order is made under Section 4(2) of the Civil Procedure Act 1997, the Act which provided the machinery for the reform of civil procedure. It established the civil procedure rule committee and gave it the task of drafting the new rules of court. When the 1997 Act was passed, it was recognised that certain aspects of the reform might
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conflict with existing provisions of primary legislation. Parliament recognised that some changes of substance might be necessary in order to make the new reforms effective. However, it rightly wanted an opportunity to debate the changes before they were made. Section 4(2) of the 1997 Act therefore permits amendments to be made by order to primary legislation in order to facilitate the making of civil procedure rules. Those orders, such as the one before the House today, are subject to the affirmative resolution procedure.
The amendments which this order makes to primary legislation are small but significant. First, the order amends Section 11 of the Courts and Legal Services Act 1990. Section 11 permits the Lord Chancellor by order to provide that there shall be no restriction on the persons who may exercise rights of audience or rights to conduct litigation in relation to proceedings in a county court. That power is restricted to the types of proceedings listed in Section 11(2). Section 11(2)(e) currently provides that the power is exercisable in respect of proceedings,
"referred to arbitration in accordance with county court rules made under section 64 of the County Courts Act 1984 (small claims)".
These are currently the only proceedings for which an order allowing lay representation in county court proceedings has been made.
The civil procedure rules have moved away from treating small claims cases in the county courts as if they had been referred to arbitration. It is a fiction now to think of small claims as arbitration. Article 3 of the draft order amends Section 11(2) of the Courts and Legal Services Act 1990 by referring to small claims instead of arbitration. This will reflect the new rules and allow the current successful practice of permitting lay representation in small claims cases to continue.
The other amendment proposed is to the Civil Evidence Act 1995. This Act made new provisions for the admissibility of hearsay evidence and the proof of documentary evidence in civil cases. Before the implementation of the 1995 Act, the law on hearsay evidence was governed by the Civil Evidence Act 1968 which contained an elaborate system of notices and counter-notices to enable parties to adduce hearsay evidence. Parliament greatly simplified the procedures in the 1995 Act by providing that hearsay evidence should generally be admissible in civil proceedings and by providing for notification to be given to the other parties in accordance with the rules of court. Section 16(3) of the Act provided that transitional provisions could be contained in the commencement order but, subject to any such provisions, the Act would not apply to cases begun before the commencement of the Act.
The Act was brought into force on 31st January 1997 but, by an oversight, the power to provide transitional provisions was not exercised in the commencement order. As a result, cases commenced before that date were not brought under the new Act and had to continue to apply the cumbersome and expensive provisions of the 1968 Act. Part 33 of the Civil Procedures Rules (1998) contains the mechanism for the admissibility of hearsay evidence under the 1995 Act. The amendment proposed in Article 4 of the draft order allows for rules of court or practice directions to make transitional

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provisions for the application of the Act to cases commenced before the 31st January 1997. It is intended that such provision will be made, thus providing that there will be only one set of rules for hearsay in all cases. That in itself will be beneficial. The regime which the uniform rules will apply will be simpler and more economical for litigants.
I have explained why the various provisions of this order are necessary. Together they will help to contribute towards the achievement of the objectives of the civil justice reforms. I commend the order to the House.
Moved, That the draft order laid before the House on 13th April be approved [15th Report from the Joint Committee].—(Lord McIntosh of Haringey.)
Viscount Bridgeman: My Lords, as your Lordships will know, this programme of tidying up the civil legislation has been very much supported on this side of the House. Indeed, much of it was instituted under the previous administration. I therefore commend the order to the House.
Lord. McIntosh of Haringey: My Lords, I am grateful to the noble Viscount for his support. I commend the order to the House.
On Question, Motion agreed to.

European Parliamentary Elections Regulations 1999
7.13 p.m.
Lord Williams of Mostyn Lord Williams of Mostyn rose to move, That the draft regulations laid before the House on 24th March be approved [14th Report from the Joint Committee].
My Lords, the European Parliamentary Elections Act received Royal Assent on 14th January this year. It provides for future elections to the European Parliament in Britain to be conducted using a regional list voting system. The draft regulations are to govern how the election on 10th June will be conducted.
The key text in British electoral law is of course the Representation of the People Act 1983, which itself has a couple of hundred sections and several schedules including one containing what are known as the election rules.
The regulations and rules governing all other elections, including of course the European Parliamentary Elections, are based on the adaptation and application of the 1983 Act. So, although the European Parliamentary Elections Act sets out the broad framework for how the elections will be run, this secondary legislation provides the subsidiary detail. The Government have consulted widely and we are grateful to all those who took the time to comment.
I will touch on some highlights. I begin with nominations. In each region every registered political party will he able to put forward a list containing up to as many names as there are seats to be filled in that region. Independent candidates will, of course, be able
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to stand. Nominations will have to be accompanied by a signature from each candidate indicating that they consent to the nomination. The nomination will have to be accompanied by a deposit of £5,000, the same for party lists, however many names they contain, as well as individuals. The closing date for nominations is 13th May.
As regards expenditure limits, for an individual candidate or a party contesting a single region the maximum that can be spent on the campaign will be £45,000, multiplied by the number of seats in the region. So, for example, in the north east, which has four seats, the maximum would be £180,000. A party contesting every region will be subject to a limit of £3.78 million, the total of all 11 regional limits. 'The party's expenditure limit is to cover all of its election expenditure. There will no longer be the distinction between constituency expenditure and national campaigning. By virtue of the report of the Committee on Standards in Public Life, chaired by the noble and learned Lord, Lord Neill of Bladen, all expenditure has to be accounted for and be subject to the limit. This national limit of £3.78 million is in line with the Committee's recommendations. Parties contesting more than one region are free to spend their money where they choose. The Neill Committee has welcomed these general regulations governing party expenditure.
As regards counting arrangements, as in previous elections counting cannot begin until the polls close in the last EU member state on the evening of Sunday 13th June. Counting will be conducted at Westminster parliamentary constituency level, although the regulations allow an acting returning officer responsible for more than one Westminster constituency to combine them for counting purposes.
On recounts, the first point I make is that the regions which are being used for these elections are vast. There is no possibility of being able to count all the votes cast in one region in a single location. We have given a good deal of thought to that. It simply is not practical to transport the votes to one place from all over Scotland. We are therefore going to have a number of local counts across these regions in consequence of these regulations if they are approved. All the parties, and individual independent candidates of course, will have the right to be represented at all of the local counts. They will have the right to ask for a recount if they are unhappy with the way the count has been conducted.
Once each local count has been completed to everyone's satisfaction the returning officer will transmit the result to the regional returning officer who will in turn give him or her clearance to declare it locally. When all the local results have been passed to the regional returning officer he will perform a seat allocation calculation. The political parties and independent candidates will be allowed to be present at the regional centre where the seat allocation calculation is to be performed. They will be able to ask the regional returning officer to repeat the calculation if they suspect an arithmetical error. The regional result, therefore, is nothing more or less than the amalgamation of all the local results.
Your Lordships have already approved similar procedures in respect of the Scottish and Welsh elections and I am aware that my ministerial colleagues have undertaken that in the event of any real difficulty arising from those arrangements the provisions will be looked at again. I am happy to give a similar undertaking in respect of these elections and these arrangements. We have made repeated assurances, which I am happy again to confirm, that we will carry out a review of the operation of the new system following the election on 10th June and that this area is perhaps one that the review may need to cover.
The design of the ballot paper is based on the results of extensive research which the University of London Constitution Unit and Social and Community Planning Research undertook. The design has been well received and attracted little comment during the consultation process.
I turn to vacancies. This was discussed when we discussed the Bill itself. Where an MEP dies or resigns and thereby brings about a vacancy, if he was originally elected on a party list the vacancy will normally be filled by the next available person on that list. However, that person will need to produce a certificate from the party nominating officer indicating that the party is still content to be represented by that person. This is to guard against the possibility that a candidate on the list may have changed parties between the original election and the time of the vacancy. As I explained to your Lordships in Committee last June, it would be wrong if the next candidate on the list had left that party for another, or formed his or her own party, but was still automatically entitled to fill the vacancy. It was our intention to include in these regulations a provision which would enable the regional returning officer to reject such a candidate in favour of the next willing—I almost said certifiable, but I mean eligible—candidate further down the party list. That is what we have done.
Where an MEP dies or resigns and was originally elected as an independent, or where a party list is exhausted, a by-election will be held. Those arrangements are identical to those which the House approved for the Scottish and Welsh elections.
I appreciate that I have highlighted only one or two matters. These regulations will enable the next and future elections to the European Parliament to be conducted using the proportional regional list system, which Parliament approved—eventually—in the shape of the European Parliamentary Elections Act 1999. I therefore commend them to the House.
Moved, That the draft regulations laid before the House on 24th March be approved [14th Report from the Joint Committee].—(Lord Williams of Mostyn.)
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the Minister for his explanation. Obviously, he could touch on only one or two issues in this long piece of secondary legislation. I wish to make two general points first.
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This legislation underlines the problem that we in the legislature have of being unable to make any amendment to any provision in a piece of secondary legislation. I have no problem with the great bulk of this legislation, but I am concerned about one or two aspects. My dilemma, and that of my colleagues in the other place, is that we either accept it all or reject it all. I believe that as parliamentarians we must think long and hard about a better way of dealing with secondary legislation, especially when noble Lords see the size of this document.
My second point is that which I made on the equivalent Welsh and Scottish orders. Clearly, most of the legislation represents a complex series of changes to the Representation of the People Act in order to allow for lists. Lists are alien not only to that Act but to the British political tradition. I will leave that aside as we have already had that debate. However, I hope that the Government will consider the suggestion.
I appreciate that the answer may be that between the passage of the original Bill and these elections they had no time to bring forward primary legislation. However, I believe that they should consider bringing forward a Representation of the People Bill which deals with the list system, so that in future we need not go backwards and forwards from that Act to these regulations in order to work out all the changes which have had to be made to a first-past-the-post electoral system to bring it into line with a list system.
I hope that the Minister will take that on board. I speak only for myself—I have consulted no one—but while I do not like this system I believe that it should be properly regulated. The only way to do so is to have a self-standing Act so that we are not confronted with the bitty changes we see here.
My substantive points are in ascending order. I was surprised to see that the ballot paper, which appears on page 44, has been presented horizontally and not vertically. I am delighted to see the names—the Minister always made it clear that they would appear. I had some trouble with the Minister in respect of the Welsh Bill, but I was happy that he saw the force of the argument and that the change was made in subsequent Bills.
In Scotland—I am not sure about Wales—in two weeks' time I shall be looking at a ballot paper on which the list is delineated vertically; in other words, the parties are listed one below the other. Therefore, I was surprised to see a horizontal list. I do not think that there will be confusion, although a few eyebrows may be raised in Scotland and Wales when they find that they have yet another variation of ballot papers within a few weeks. England will not have the problem on 6th May, so people will not realise that there is a vertical potential. I am intrigued that the Government decided to make the ballot paper vertical for the European elections.
As regards the deposit, I shall make two different arguments, but there is a way to bring them together. I understand that £5,000 and merely the signature of the registered party's nominating officer is enough. No longer will people have to go out and compile a list of assenters of electors who are prepared to sign the

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nomination papers. Five thousand pounds is a hefty sum for a genuine independent or small political party which wants to stand for genuine bona fide reasons. I am assuming that it will lose its deposit. That is unfair. It would he better to have a lower money threshold and insist that a list of signatures is obtained by any party or candidate wanting to stand.
On the other hand, I do not believe that £5,000 will be enough to stop people using the system for self-publicity. In the Scottish parliamentary elections a restaurant—I shall not name it because it would receive even more coverage—has registered itself for £150 as a political party and is to stand. It is £150 to register yourself as—I shall be neutral—The Salad Days Party registered from The Salad Days restaurant and £5,000 to get yourself on the ballot paper. That may sound expensive, but it will appear on the ballot paper which will be seen by every elector in a very wide area. It will also get it on many of the notices surrounding the ballot. And, if it is prepared to pay for a leaflet, it will get a free delivery to every household. That is not a bad bargain. I do not know whether anyone will use it in the European elections, but I understand from the press that someone is using it in the Scottish parliamentary elections. I shall not mention the name of the restaurant because that may encourage people. However, I believe that for future elections the Government must reconsider their decision to have no assenters.
The Minister knows that I do not like the concept of registration. I believed that it is profoundly anti-democratic and he knows that there were some difficulties. I do not know whether there have been difficulties on the European scene; I suppose that we are not near enough to that election. However, the Scottish Green Party, for example, had to become affiliated to the English Green Party in order to be allowed to stand in the Scottish elections and probably the same will be true of Wales. That is not right and we must examine the system again.
The Minister clearly knew what my two substantive points would be and therefore he dealt with them. But, I am afraid, not to my satisfaction. He will not be surprised to hear that. Rule 46 on page 37 deals with recounts. As the Minister rightly said, the same applies in Wales and Scotland on the regional list. The count will be conducted in parliamentary constituencies. When the count has finished the people in the constituency will have the right to demand a recount. The results will go to the regional returning officer who will bring them together from all the constituencies and perform the magic of d'Hondt. As I am going somewhere tonight, and the speed of the Minister's delivery leads me to suspect that he is, too, I shall not bore your Lordships with d'Hondt. You can all be grateful for that, especially noble Lords who have already heard my exposition.
There is a problem which, to be fair, was acknowledged by the noble Lords, Lord McIntosh of Haringey and Lord Sewel, when we dealt with the Welsh and Scottish elections. It is only when someone comes to the last position—perhaps the second to last, too—in the calculation for d'Hondt that he will know whether he ought to have a recount. By that time, the horse has bolted and it is not possible to go back and
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have a recount. We were told that all one can do is to have an election petition. That is not a very sensible way to deal with the recount proposition.
I did not have the time today to draw together results from the last general election as they may come out in some of the Euro-constituencies. However, I have looked at the results of the last two general elections in Scotland. For example, in Glasgow at the last election. assuming that the second votes were the same as the. first votes, the very last seat was down to the Labour Party by only 730 votes over the next nearest candidate who happened to be from the SNP. Therefore, I have no great regrets in that regard. But 730 votes is not many when one considers the total number of votes.
In central Scotland it was even worse at the last election. When it came to deciding on the last vote position, which fell to the Conservative Party, I am happy to say, it fell to that party by only 137 votes over the Liberal Democrats. I believe that 137 votes is not many votes in an electorate of 400,000. It is just a few bundles. I believe that I can easily persuade your Lordships that recounts at that stage will clearly he felt to be needed to make sure that nothing happened at those original parliamentary counts to move ballot papers about.
That fact could not be known when the counts took place at parliamentary constituency level because in relation to most of the rest of the constituencies looked at in Scotland, for example, there was not much doubt about the last seat. But it was very close in two of them. In the previous election, as regards the Highlands and Islands seat, 466 separated the SNP from the Labour Party. The SNP won that seat. Therefore, the Labour Party may have an interest in trying to ensure that the original counting was right and that there was no confusion.
Over a large number of constituencies—and in this case it would be the whole of Scotland or the whole of the south east of England—not many individual. mistakes need to be made to make up a difference of 173.
Somebody may be quick enough to say that, on that number of counts, the chances are that the mistakes will all balance each other out. It may be possible to prove that to me mathematically but I suspect that a candidate from a party defeated by a handful of votes for the last seat, especially if it were the only seat he would win in that area, may not feel so neutral and balanced about a lack of a recount. Therefore, we must try to find a way to deal with recounts.
I know it will be difficult and I know what may happen. It may be necessary to delay the decision on the last seat in order to have a recount provision. Boxes would have to be reopened and the system gone through again. But the Government are conceding that that may have to happen in any event but only, much later, after an election petition. That is very unsatisfactory.
Lastly, I wish to raise the question of by-elections. I checked the Scotland Bill and I left it thinking that there were no provisions for by-elections. I have read quite carefully Sections 9 and 10 of the Act. It does not seem to me that there is any provision for by-elections.

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Perhaps I should have looked at the orders to see whether the Government have dealt with them in another way. Are the Government consistent between the three and are the Government sure that they are consistent between the three?
Secondly, is it possible to have by-elections in a proportional representation system. The position is that if a member dies or resigns, his seat goes to the next person on his party's list for the simple reason that the d'Hondt calculator is supposed to decide on proportionality. The seat goes to the next person on the party's list.
The noble Lord and I had many discussions about this and we reached a sort of middle-ground solution as regards what would happen if the next person on the list did not want to be elected. He may have found a job which is even better than being a Member of the European Parliament and no longer wished to be elected. He should then be able to say to the returning officer that he does not want to be elected and it would then be necessary to go to the next person on the list.
However, the other point I raised, which the Minister took on board, was in relation to the situation in which the next person on the list has left the party. He may want to go to the European Parliament—and who would not, given the salaries and conditions?—but he no longer represents the party. The Minister came forward with the provision that the party must certify that the person is still in the party.
I am glad that the Minister underlined that point because one difficulty I had was that while it was clear to me that it would be quite wrong for the person, if he were no longer in the party, to receive the seat, equally, it would be quite wrong for the party to decide that it no longer liked the colour of his tie, his face or that it preferred a candidate lower down the list. I am glad that the Minister put on record that the only reason would be if the person had left the party. That is fine and right and retains the proportionality.
Let us say that the Labour Party gains one seat in the south. I do not know whether or not it will do so. It will probably gain more than one seat, but let us say that it gains only one seat. I grant to your Lordships that it is unlikely but let us assume that the problem occurs in relation to the Labour Party's list. It goes down the list and has no other candidate. That means that there must be a by-election. That by-election is not held on a proportional system at all. It is held on first-past-the-post. Holding an election in those large regions using the first-past-the-post system means, inevitably, that the party which won the first seat on the d'Hondt calculator will win the by-election. It is nothing to do with proportionality. It may be a member of one of the other parties who wins. It may be the party which gained only one seat. The Labour Party will lose the one seat to which it is entitled by proportionality.
It seems to me that there is a huge contradiction by holding elections using the d'Hondt system, which is looking for proportionality, and filling up places of retired or dying members from the party's list because, rightly, that keeps the proportionality. But if there are
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no more candidates on the party list, rather than leave the seat empty, which at least would be something, a by-election must be held in which that party is unlikely to gain back the seat. Therefore, the proportionality is shot through.
Perhaps I may say as a mathematician that, if we are to have proportionality, for goodness sake let us have some purity about it and let us not write these errors.
Holding the seat vacant is not the best solution but it is the only solution in a proportional system. We canvassed other possible solutions which were shot down by either the Minister or myself. I believe that I shot down one of my own proposals in mid-speech, because this is a difficult matter, but the solution of having by-elections where the party may lose the seat to which it is entitled is not the answer to that problem.
Otherwise, I am content with the regulations and I look forward to hearing the Minister yet again try to defend one or two of those positions.
7.30 p.m.
Lord Dholakia: My Lords, I am grateful to the Minister for his explanation of the regulations. My noble friend Lord McNally would have responded from this side of the House but, unfortunately, he is not well and it falls to me to respond on this matter.
We welcome many aspects of the regulations. We are pleased to see a national limit on party expenditure. That is right and the Neill committee was right to suggest it. We welcome also the change to take account of the Bowman case which allows for third parties—not political parties but individuals or organisations—who wish to show support for a candidate by expenditure which is more than the current nominal £5.
In the other place my right honourable friend Alan Beith expressed his concern about the appearance of the ballot paper. I am not particular bothered about whether it is horizontal or vertical but I am more worried about the arrow on the ballot paper which points straight to the Conservative box. I hope that it will not give that party any added advantage. I am sure that some research would have been carried out on that aspect and I am sure that the risk of confusion is very small.
I have some sympathy with the views expressed by the noble Lord, Lord Mackay of Ardbrecknish. I am afraid I find it difficult to pronounce his title; he probably finds it difficult to pronounce mine. The schedule provides for local recounts, as the noble Lord quite rightly pointed out, but not for recounts for the whole region in the event of a close result. Local returning officers can authorise a recount in the local counting centre, but the overall regional result will not be known at that stage.
The Government say that regional recounts will not take place because all staff would have to wait in the counting centres for the final result in the region to be declared. That would be costly and impractical. In the event of a close regional result the returning officer can recalculate, but cannot order local recounts.
We have no doubt that that will get us into difficulties. Returning officers, obviously, do not like recounts—in many cases, rightly so—as many of those

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who have fought elections will know. However, in the new circumstances there will be much more pressure for recounts in the light of regional situations. If a party, be it a leading party or a second party, thinks that it might have enough votes to gain one seat, a request for a recount is reasonable.
We need to avoid court actions, such as that at Winchester. I am certainly not complaining about the court's decision in that case. The arguments have been well put both here and in the other place. This problem needs to be addressed and I am sure that we shall have an opportunity, soon after the election, to look at the regulations. We would not wish, in any way, to hinder progress and we shall certainly support the regulations.
7.41 p.m.
Lord Williams of Mostyn: My Lords, I welcome the comments that have been made. Many points to which both noble Lords have referred are dealt with by the assurance that I gave, and I repeat, that we intend to review the running of such elections soon after the 10th June election. I am happy to give that assurance once more.
The noble Lord, Lord Mackay of Ardbrecknish, referred to his dislike of the list. We have held that debate on several other occasions and it is not fundamental to the content of these regulations.
The noble Lord makes the point that there is a case for—I believe I can fairly paraphrase him—a codification of the Representation of the People Act, together with any subsequent and consequential regulations. I think that case should be made. I think your Lordships will know that it would depend on legislative time. If the legislative time of this House is to be unnaturally taken up with debates, which are extremely lengthy, about the reform of this House, it would be difficult indeed for me to please the noble Lord, Lord Mackay of Ardbrecknish, by introducing a codification Bill.
Lord Mackay of Ardbrecknish: My Lords, I thank the Minister for giving way. So, if I were to persuade my colleagues not to bring forward amendments to the House of Lords Bill, so that we complete it quickly, is the Minister suggesting that we may have a representation of the people Bill in the summer to be passed in this Session?
Lord Williams of Mostyn: My Lords, the noble Lord might have such a Bill and I shall wait for the offer. Not only would I carefully consider bringing forward such a Bill, but I would also be inclined to buy the noble Lord a large drink. However, I think my money is safe!
The noble Lord then turned to the ballot. I do not think that anyone seriously criticises the form of the paper. It is fairly plain and is capable of being used quite easily. Whether it should be vertical or horizontal—that is the ballot paper, not the voter—could be the subject of review after 10th June.
On the deposit, we think that the deposit is about right. The old deposit was £1,000, but the regions are significantly larger than the old constituencies. If the
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"Salad Days" political party—I take it that is not a coded reference to the Conservative Party in its present limbo-land—were to run, £5,000 is not a serious detriment. I do not believe that to find 12, 20, 30 or 40 signatures is a serious detriment either. It is difficult to check the bona fides of signatures on such a basis and we believe that £5,000 is about the right amount. It does not discourage, unnecessarily or unfairly, those who want to stand, but it is capable of discouraging those who are simply frivolous.
The noble Lord raised the question of registration but, as he conceded, that is something both he and I discussed at length during the passage of the Bill. We think it is about right.
The more important questions were the last two to which the noble Lord, Lord Dholakia, also referred. Those are the questions of recounts and by-elections. On recounts, they are available at local level by virtue of the regulations. I am happy to make it plain that it is perfectly reasonable for any party, or any independent candidate, to call for a recount in circumstances where they think it is appropriate, not simply where the result is close. That is the real answer to the problem of recounts. If the local party officials, who are very astute and well trained in these matters, are of the view hat a recount is justified locally, they are entitled to ask for one in the usual way. That being so, the remedy is there for them. It is not appropriate to wait and see whether on a regional basis and on the application of the formula, they may want to have a recount throughout the constituency. Their opportunity is there immediately and they must take it. I repeat that we shall pay careful attention to that in the review.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the Minister for giving way. Perhaps I can ask for clarification. Given sight of public opinion Polls and the results in an area, I might be able, with the help of a computer, to work out those areas where it is possible that my party may be in close combat with one of the other parties for the last seat and there may be areas where I can discount that for a variety of reasons. There are the first-past-the-posts and you do not get many top-ups.
If I decided in, say, Glasgow, that the last seat would be narrowly fought, would I be justified in instructing all my agents at all the parliamentary counts in Glasgow to demand recounts at that level just to make sure that the votes were correct so that on arriving at the calculation of the last one I would be certain that no mistakes had been made further down the chain?
Lord Williams of Mostyn: My Lords, the noble Lord would be perfectly entitled to remind all party officials, particularly those taking the decision locally, of the power that they have to call for a recount, irrespective of whether or not there is an apparent majority of about 44, as in Winchester, or an apparent majority of 10,000. It is the inaccuracy of the counting that matters. I believe that officials are astute; they know what to look for and I believe that there is plenty of safeguard there on a local basis.

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On by-elections, it is important that the UK should maintain a full complement in the European Parliament. We believe that the schemes that we have within this regulation are appropriate. Earlier I said that this was the same as that already approved for Scotland and Wales. I do not have the orders on Scotland and Wales with me, for obvious reasons, but I believe it is a fair point for the noble Lord, Lord Mackay of Ardbrecknish, to have raised. I shall have that researched and shall write to him as soon as I have the details.
Those are the points raised by your Lordships and I hope I have dealt with them. I commend the regulations to the House.
On Question, Motion agreed to.

Tacis Programme: ECC Report
7.48 p.m.
Baroness Hilton of Eggardon Baroness Hilton of Eggardon rose to move, That this House take note of the report of the European Communities Committee on Partnership and Trust: The Tacis Programme (33rd Report, Session 1997–98, HL Paper 157).
The noble Baroness said: My Lords, this debate relates to a report from the environment committee of your Lordships' House in relation to one of our more interesting studies. It made a welcome change from landfill and drinking water. The report was published in January and concerns environmental aspects of the Tacis programme. The Tacis programme is the European Union's fund for technical assistance to the former states of the Soviet Union and Mongolia. During our inquiry, a few of us visited Ukraine and Russia. I resisted the temptation, which would have drawn heavily on the funds of the House, to suggest that we went to Mongolia.
The funding for Tacis has built up gradually over the past few years. In 1997, the last year for a complete picture of the finances, it was £342 million, which constitutes about half a per cent of the European Union's budget.
This inquiry was in some ways a sequel to the report of the committee in 1995 under the chairmanship of the noble Lord, Lord Lewis, when we examined the PHARE programme of the European Union and its aid to the east-European countries. Unlike the PHARE programme however, the Tacis programme does not have the environment as a separate budgetary heading; it is merely one of a number of objectives within the programme such as increasing levels of democracy. However, we found many similarities with our previous inquiry; for example, the lack of staff in the European Commission and the over-reliance on paper systems and outside consultants.
The Russian Federation consists of 15 per cent of the world's land mass and, if we include the other NIS states, it amounts to almost 20 per cent. It has an appalling legacy of environmental degradation, partly due to poorly managed industrial activity. This environmental degradation is of great significance to the
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whole world. It affects biodiversity, climate change and trans-boundary pollution. Economic growth is, of course, essential, as is the reduction of the disparity between rich and poor, not only within the Russian Federation but within and between other nations of the world. But it is vital that economic growth should not take place to the detriment of the environment.
As in our previous inquiry, we found a situation of considerable complexity, and there were other similarities. There was throughout too much reliance on western experts and insufficient use of local skills. Eastern Europe, Russia and the other countries of the old Soviet bloc have highly trained scientists and engineers; they are not, as they said bitterly to us, a third-world country. They resent the often patronising attitudes of western experts. We tend to assume that we have all the answers whereas in many ways there are parts of the old Soviet bloc which have aspects which we should perhaps be admiring—the tendency for group solidarity and, in the past, good public services.
The imposition of inappropriate off-the-peg solutions by western experts and the over-rapid introduction of a market economy in some ways has contributed to the current financial crisis in Russia. There has been a consistent failure to take into account social and psychological factors that have been brought about by a command economy.
Our inquiry and report last year was set against a background of growing crisis in the Russian Federation and a rapidly changing situation. Inevitably our report therefore can only be a snapshot which was more or less true at the time but will have less relevance as the months go by. One of the reasons for holding our inquiry last year was that the European Commission was drafting a new Tacis regulation to cover the years 2000 to 2006, a seven-year span, and we hoped to influence what went into that new regulation. The Commission's proposals were published shortly before our report, but we had made considerable efforts in Brussels and elsewhere to describe our findings to them and hoped that that would have some influence. However, there is little sign that we made much impression on the Commission, and that is deeply disappointing.
It acknowledges the existence of some problems we identified—too much bureaucracy and over-reliance on western consultants; secretive tendering procedures; and the swamping of other environmental concerns, especially in the Ukraine, by the problems of nuclear safety post-Chernobyl. In fact, when we visited Kiev, the only decently equipped office and government ministry we went to was furnished from Tacis funds. We were surrounded by computers and telephones and a whole host of modern technology. It was only at the end of the meeting that we realised that this in fact was the nuclear safety control centre and that was why it was so well equipped.
The Commission's proposed solutions to the problems that we found are to have fewer and larger contracts to western consultancies. We were firmly of the opinion that the small projects that we saw which built up individual trust in relationships were the ones that were successful. We were not happy about the way

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that funds are constantly circulated to western consultants and we felt that they do not have a great deal of effect within Russia or the other countries.
We were particularly impressed by the enthusiasm of some of the individuals that we met in NGOs and also the young manager of the water treatment plant at St. Petersburg who had been attached for several weeks or months to organisations in this country. We believe that the system of transfers and exchanges of individual experts in that way is the most promising way forward. We were also impressed by the small-scale so-called "Bistro" projects where funding could be arrived at with rapidity and be directly relevant to what was needed rather than the sometimes two or three-year timelag in getting other projects off the ground.
We were also impressed by those involved in the city-to-city projects where local authority officials with specific expertise in areas such as public transport or sewerage systems had built up relationships over many exchange visits with their counterparts in particular Russian cities. It is that development of trust and individual knowledge that seems to underlie the successful projects. In fact the leitmotif of our inquiry was the question of trust and distrust.
There remains the ghost of the Cold War distrust of each other hovering over many of the projects. In Russia and the Ukraine there was a natural suspicion of the motives of westerners and the assumption that there is an element of triumphalism, particularly relating to aid from the United States, which they bitterly resent. They have of course also been reared in a dictatorship, which makes them distrustful of authority, and in a command economy where on the whole orders came from above, and they have little experience of taking personal responsibility.
Many of the new colonialist attitudes of western consultants and western nations, and the tendency of western consultants to produce inappropriate remedies for their problems, have not helped. In fact, democracy and market economy are now insulting words in many quarters in Russia.
In the European Commission also there was considerable suspicion as to what may be happening to European funds. They are naturally worried about being criticised, but the consequence is that there are enormous bureaucratic controls, a reluctance to take risks and a fear of the sprawling confusion of the NIS and the possibility of Mafia corruption. The consequence is that the Commission in Brussels goes to ridiculous lengths with an excessive reliance on paperwork and on monitoring units in the Ukraine and Russia which rely essentially on ticking boxes on pieces of paper which are then sent to Brussels. They are placed on files which I am sure no one ever reads, but the system provides the comfort of the feeling that the situation is being monitored.
In the Ukraine, for example, there are 40 staff; 20 are western Europeans, 20 are local Ukranians. They are all responsible for monitoring the Tacis projects, not only in the Ukraine but also in Belarus and in Moldova. But having 40 people doing nothing but allegedly evaluating the projects in those countries seems an excessive use
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of Commission resources. Of course I have considerable experience of working in an elaborate and over-anxious bureaucracy and am familiar with the sense of comfort there is in building up a large file about something. But it does not mean that anyone ever reads it or that it actually serves any useful purpose.
The recent eco-scandals in relation to other aspects of European aid where money was diverted from the actual practical projects into payment for administrative staff is another indication, as we noted in the PHARE report, that the Commission does not have enough staff to manage projects properly and therefore has to resort to mechanistic form-filling or to hiving off its responsibilities to western consultancy firms, or to forms of creative accounting. Far better in my view, and I believe that of most members of our committee, that small amounts of western money should be siphoned off through fraud on a proportion of small projects in Russia than these over-elaborate attempts to control large projects to little end.
The Government's response to our report, which was received last month, is generally positive and welcoming, though reservations were expressed about the viability of small programmes and the Commission's need for more staff. One of our recommendations was that Tacis should have a comprehensive database of programmes of aid, with evaluation data of those programmes already completed. It is astonishing that there is no such proper comprehensive database so that they can look back at their past projects and examine them and from that learn to proceed to future projects. Also included in that comprehensive database should be the other forms of aid which are being given by various organisations such as the EBRD and also bilaterally to individual countries such as the know-how fund. At present, none of the donors actually knows what other projects are being funded. There is a considerable possibility of overlap, duplication and indeed gaps between funding.
Present knowledge of other aspects of funding and liaison seem to be dependent on individuals going to meetings about every two or three months and having ad hoc conversations about what other aid is being given. That does not seem to be a very organised way of developing aid, either to Eastern Europe or Russia, or indeed to other parts of the world. I have asked the Minister to give us the Government's view on this particular point, which was not covered in their original response. We welcome the Government's intention to ensure that the environment does not get squeezed out of the new Tacis regulation and their recognition that,
"economic policy reforms … can contribute to environmental improvement".
In a stressed and over-populated world with increasing levels of disparity between rich and poor, it is very important that we do all we can to reduce economic disparity and to increase democratic accountability. Unless we establish common standards of health and wealth and a pollution-free and thriving environment, the world will continue to become more degraded and more subject to political violence; and, indeed, to wars, probably, in the future, over water and scant resources.
It is a matter of enlightened self-interest to promote standards such as these, not only in eastern Europe and in Russia but also in other parts of the world as markets for our own goods, to put it at its lowest level, but also, at its highest level, to ensure that there is peace in the world and that we can obtain Russian assistance in places such as Serbia and Kosovo to ensure that the world continues.
Finally, I should like particularly to thank our Clerk, Tom Radice, who put together our splendid report and who was also responsible for the splendid photograph on its front cover. I should also like especially to thank our adviser, Mr. Andrew Convey, for arranging the Russian translation of part of our report, which we see as importantly symbolic of our recommendation that Russia and the other states should be treated as equal partners and not as dependent clients. I commend the report to the House.
Moved, That this House take note of the Report of the European Communities Committee on Partnership and Trust: the Tacis Programme (33rd Report, Session 1997–98, HL Paper 157).—(Baroness Hilton of Eggardon.)
8.2 p.m.
Baroness Park of Monmouth: My Lords, I envy and admire all those who are responsible for this most interesting and valuable report. I am grateful to the noble Baroness, Lady Hilton of Eggardon, for giving us the opportunity to debate it. It has many lessons for us which apply and have applied for a long time to the operations of the European Union in general. First, perhaps I may say that I agree with the report's claim that,
"the value of Tacis, as a means of building trust and mutual respect and as a vehicle for sharing know-how, may well outweigh many of the shortcomings of policy and administration to which attention is drawn in this report".
The measure of its success is the quotation from Mrs. Sue Mullan, European Service Manager, Southampton City Council, who said:
"One of the things they said at the very end of the project was, 'You didn't give us the fish but you gave us the net with which we could catch the fish'".
That struck me as very significant.
The report is full of fascinating accounts of the varied activity being carried out under the aegis of Tacis in the newly independent states (NIS). About them I shall only say that I strongly agree with the committee's preference for grass-roots participation, twinning, the building of trust between individuals, and the expansion of smaller programmes, with the people at the bottom of the heap having nowhere to go but up. After all, this is what subsidiarity should mean. The title that the committee has given to the report, Partnership and Trust, says it all.
As the report makes clear, one of the most important things that Tacis can do is to give the peoples of the NIS confidence in their capacity to shape their own lives—a position which would be the very antithesis of the command economy under which they lived for so long.
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For that, they need skills, and horizontal as well as vertical thinking: they have to believe that we and they are equals in the same world.
One of the most significant and positive things that the committee has done is to have its opinions—essentially its recommendations to Parliament—translated into Russian, so that the people whom they have met, and all those involved in the Tacis programmes in the NIS, may read them and, presumably, respond. I hope that they will. At the very least, this is a lesson in transparency and in subsidiarity.
However, much of the value of Tacis will be lost if the peoples of the NIS encounter in Brussels the very same faults of opacity, incompetent management, bureaucracy, sometimes croneyism, and even a degree of corruption, with which they have been all too familiar at home in the past and which Tacis purports, in promoting good governance, to be there to eradicate.
The committee, rightly, stresses the importance of reviewing and strengthening staff resources and competence, notes that there are too many generalists in DG1A, the responsibility directorate; and argues for more and better training. In arguing also for the need for the new Common Service Directorate to devise,
"a coherent and seamless relationship between monitoring and evaluation".
it is arguing for the need for really competent staff to carry that out. The Commission has always inclined in the past to skimp on permanent staff at the working level who are actually well informed enough to implement policy and to manage resources; and who stay there long enough to achieve both continuity and expertise. Quite a small core of long-serving and expert staff could go far to avert the delays and, indeed, total inertia which have afflicted so many ambitious and worthy new projects.
As Mr. Erkki Liikanen, the commissioner responsible for budgets, told Sub-Committee A on 26th January this year:
"When we analysed the situation in 1997 we found we had 47 different procedures for applications for external aid. Why so? Actually it was not always invented by the Commission. For instance, when the Commission proposed a Tacis regulation for Russia to make the procedures simpler and clearer, some southern countries wanted to make it more complicated. When we have a programme in the south, the northern countries may do exactly the same. The whole regulation can become so complicated it just cannot function. Then they want to create committees and so forth. So we had 47 different procedures, a huge number of committees, and everybody is happy, and travels, but nothing functions".
Fortunately, he went on to add that there was now a joint service for external programmes and that it might be possible to cut the procedures from 47 to seven, but then it was going to take between 18 and 24 months to get the revised regulations through the Council.
Fortunately, I note from the report of the committee, (HL Paper 23) on reforming comitology that there is only one comitology committee dealing with Tacis, the Tacis Management Committee, which met five times in 1997, reviewing Tacis operations. Perhaps I may point out that many of the comitology committees of the EU, in a list covering 62 pages, did not meet at all in 1997. I hope that the Tacis committee's deliberations were useful.

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One of the problems which so extensive a programme presents is the great diversity of peoples and situations in the countries of the NIS, as the report points out. They range from the very sophisticated, mostly urban, to the people in the remote country areas. While I agree that, because of the collapse of the whole Soviet bureaucratic highly centralised machinery of government, there is a strong case, as the new draft Council regulation (Corn (98) 753. Final) argues, for Tacis to move towards the reinforcement of democracy and the development of good governance, I believe that the Commission is wrong to wish to concentrate on high level policy advice and on large projects and that it is in some danger of hopelessly over-extending its remit in moving now to,
"institution building, social welfare and the rule of law".
It contemplates dealing with the social consequences of transition, including restructuring the social welfare system. As the Committee of Independent Experts on Fraud and Mismanagement says:
"The Commission has been transformed from an institution which devises and proposes policy into one which implements policy".
In effect, it is proposing to take on a kind of colonial administration's role and is, I fear, about as well fitted to do it as Belgium was to manage the Congo.
The committee's instinct, with which I whole-heartedly agree, is for,
"a very practical, pragmatic, individual approach which respects the people we wish to help".
It is exemplified by twinning, by attaching individuals to Western organisations, by small projects building from below or providing specific expertise and by local initiatives which involve citizens in improving their own environment. Every instance the report gives of the personal experience of such bodies as the Mendip District Council reinforces that view.
I digress for a moment to mention the important issue of the environment. I find it frightening to read that radioactive pollution affects 9 million people in Russia, the Ukraine and Belarus. Incidentally, according to a recent report from Novaya Zemlya, 120,000 tonnes of first-generation chemical weapons dating from World War II are buried in that region with disastrous effects on the health of the people. This is quite apart from the 40,000 tonnes of second-generation chemical weapons not yet disposed of. But as all those were part of the military chemical complex, little is known of the consequent damage to the environment and to health. I hope that Tacis will be able to pursue this.
The committee has identified another aspect of the Brussels environment in which DGIA operates which is only too familiar to us all; namely, the dangers of a lack of transparency. As the committee says, the directorate itself is remote, understaffed and lacking in transparency. This too will be all too familiar to many of the citizens of the former Soviet Union in particular. It must be fought and the committee's Recommendation 4 recognises that. Lack of transparency in its turn will foster suspicions of cronyism, if not corruption. Russians are sensitive and proud; they are also shrewd and they will observe the Commission closely. It is deeply unfortunate that the very size and complexity of
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the Commission makes it so difficult—even if the will is there—to make its fiscal credentials credible. It has been so obvious for so long that money is being mismanaged, at the least, and that will destroy confidence, not least that of the taxpayers of the EU. Our own contribution to the EU is £8 billion after abatement, yet we have little idea of what we are paying for, although I fervently hope that the new scrutiny committee will change that.
However, it is still deeply shocking that there have been major reports on financial control and fraud in the Community from this House in 1989 and 1994, all calling for the regulations to be simplified, for effective internal controls to be established, and for better training of staff. In 1994 a Treasury official actually believed that UCLA, the anti-fraud unit, was,
"powerful and determined to carry out DGXX's audit function".
As recently as 26th May last year, member states signed the convention on the fight against corruption involving officers of the European Community and officials of the member states of the EU. But, as a former British member of the Court of Auditors said as far back as 1994, and as the Committee of Independent Experts confirmed in its March 1999 report,
"the single biggest problem about financial management in the Community today is the lack of accountability at senior level in pretty well all the institutions of the EU".
That report also incidentally reinforces the committee's views on the dangers of too many temporary, short-term and agency staff, and about the evil effects of opacity in tendering. It is a sorry commentary on the elephantine, or perhaps I should say "sloth-like", progress of the Commission, even on the vital issue of the public perception of its integrity, that it took a courageous whistle-blower in late 1998 to get an inquiry set up. We have yet to see whether any action will be taken. Tacis is clearly a most valuable programme. It would be ironic indeed if it were to suffer from the very bureaucracy, lack of transparency and sheer inefficiency which were prime causes of the collapse of the social and economic structure of the former Soviet Union.
In the present rather fragile state of European relations with the Russians, it is important to retain their confidence. I think the report should be required reading for all diplomats intending to serve in the area, and perhaps for all new EU commissioners.
8.14 p.m.
Lord Berkeley: My Lords, I congratulate the noble Baroness, Lady Hilton of Eggardon, and Sub-Committee C on this report. I am not a member of that sub-committee although I am a member of the Select Committee on the European Communities, My interest in NIS countries and eastern Europe stems from my interest in rail freight travelling, east and west. I lived in eastern Europe for a time.
This is an excellent report. The cover is fantastic. All the statistics on the inside back page are useful for someone who has not heard the evidence. They give a snapshot of the challenges facing those countries and members of the EU which seek to assist them.

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Like my noble friend Lady Hilton I was concerned at the attitude of triumphalism and of patronising western consultants preaching. I was also struck by a sense of a lack of management. I am worried by this lack of empathy with local conditions and a professional approach as seen through western eyes which does not recognise the strong professional background of many people in the countries concerned, especially as regards engineering and the environment. I suppose I would say that as an engineer, but engineers are greatly respected outside this country. The attitude of the consultants smacks to me of old as well as new colonialism. We should condemn that in the strongest possible terms. However, I welcome the policy of technical assistance through partnership and I hope that this report will help to achieve that.
I wish to say a few words about transport, as the transport and telecommunications infrastructure is one of the six priority areas of the report. As we know in this country, transport and the environment are inextricably linked. The NIS countries, as in eastern Europe, have relied on railways for trade and travel for many decades. There was not much travel in times past, but freight was, and is, the big key to increasing industrial production in accordance with former national plans. It should have been the key to distribution although it did not always work very well. I believe that in the near future people in these countries will expect to own their own cars, and possibly trucks. Who are we to condemn people who want to own their own cars? In the future, they will probably be able to buy a car for an amount less than three years' net salary. When I lived in Romania the price was equivalent to three years' salary before tax. No government can deny people the use of their own cars or the ability to purchase them. However, problems will arise in relation to the state of the roads.
The story of railways and freight in these countries has a horribly familiar ring to it. I regret to say that this story applies to western Europe as well as to central and eastern Europe and NIS countries. Often railways fail to adapt to competition and the market economy. We hear stories all the time of unchanged working practices, countries being slow to introduce new technology, and lack of investment. As a market economy develops, rail freight becomes more complex, more expensive and probably more unreliable. It is the sad truth that railways in many parts of the world have tended to ignore the needs of their customers. However, with the introduction of the market economy in these countries, anyone will be able to buy a lorry and offer a door-to-door freight service with better reliability, and one that is probably cheaper than the railways. That is private enterprise. Whether that is private enterprise at its best or worst is debatable. The problem with that, however, is that the roads will not be able to support the volume of traffic.
We need to inquire whether the special consultants and advisers under the Tacis programme will advise the governments concerned to invest in massive road building. Will they advise them to close the railways because they can no longer compete as they are failing to reduce costs? People in these countries may still
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believe that the state will direct freight on to rail, but that will not be the case. Massive subsidies are paid to the railways in those countries, but the railways will carry less and less traffic. Governments will be short of money and will cut subsidies. Lines will then be closed and land will be sold off. That is what British Rail has done since the war and it is what some of the European Union railways have started to do now. It is a course that some of the central and eastern European countries are considering.
I hope that part of the Tacis programme will be to advise countries which have not yet started the process to think very carefully before they do start. I do not know whether in a market economy a subsidised railway, unchanged since the days of a planned economy, will ever compete with deregulated lorries, but the advice has to be given. We must say to them, "Do not follow what we have done regardless of local conditions".
A Member of your Lordships' House, a very eminent former Minister in the previous government, is, I believe, participating in offering advice around the world on how to privatise the railways—as we did such a great job in this country! I would question whether that would be good advice to give to NIS countries, regardless of who the owner should be. The best advice would be, "Let us have level playing fields. If you are building roads, make people pay for using them"—as we may do here—and, "If you are building railways, make people do that as well". Let us have some proper advice based on our best practice in this country.
The Commission is at present trying to introduce changes to the working time directive. It has advised—I fear, although I hope I am wrong, that the Government will go along with this—that the railways should be included but owner/drivers of lorries should be excluded because it is too difficult. If that is the case, we shall find that in two years' time every lorry driver will be an owner/driver and he will then be able to load his lorry for six hours and drive for eight hours. He will still be within the limit, but he will have been working for 14 hours; and he might be tired and not quite so good. That is what the Commission is proposing—I do not know why; we can debate it—but let us not pass that advice on to the NIS countries.
We should possibly look at some of the advice. Do we separate infrastructure on the railways? The Commission is advising and requiring everyone to do so. If it is to be subsidised, I say, "Let us keep the road and rail subsidies the same". Should NIS countries introduce competition? We have competition in Britain but not in the rest of the European Union. So what is the advice from the European Union to NIS members? Is the advice to close lines and to sell off land? As I have said, we regret it here. Mothball it perhaps, but let us have some modernisation. Let us modernise those railways, Just as we are going to modernise our railways. Let us advise them to do both, with the same investment and choosing technology that is appropriate to their stage of development. There is no point in closing all the signal boxes in Russia and saying that the system should be run from Moscow because that would

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save so many jobs. That is not the objective. Whether it is the objective in this country is debatable; it certainly is not sensible in NIS countries.
Let us allow the rail operating companies to perform the drastic human surgery required to reduce staff numbers and become competitive. That has not yet happened in continental Europe. It will be long and it will be painful. We have not yet finished in this country; nor has the European Union. In a market economy, those countries cannot continue to have the railways as part of the social security arm of the state. It does not work. French train drivers retire at 50 on full pay—that is great—but lorry drivers do not. There are many other situations like that. How many productive hours are worked in a day? The advice has to be appropriate.
I believe that the programme has an enormous potential to lead and advise NIS countries of the direction that they might follow, but I have serious concern about who is giving the advice, the basis of the advice and whether the advisers are saying, "We have done it at home this way, that way or the other way". We in the EU are not in a very good position to give advice on transport matters. Commissioner Kinnock told the EU railways a year ago, "Change quickly and you will have a great future. Stay as you are, and you will not survive long". If that advice is applicable to parts of the EU, how much more appropriate it is to NIS members. But we cannot say that we are doing it right.
The report will be of enormous assistance to those who want to help NIS countries from within and without. I love the partnership approach and I hope that the report will be read with great interest and be adhered to by those in the Commission and the member state governments who are charged with developing and implementing the programme.
8.24 p.m.
Lord Cromwell: My Lords, I should like to start by welcoming this very interesting and wide-ranging report. I have worked on and off with Tacis for the past six years and I certainly recognise many of the committee's findings in my own experience. I am also currently involved as a small contractor on several Tacis projects and I therefore declare a substantial practical interest.
I should like to make four points. My first concerns local—by which I mean NIS—non-government organisations. The DfID submission to the committee was correct in saying that local organisations are generally weak and have poor project preparation skills. I would add that they are also mainly run on a voluntary basis, seldom have any funds to speak of and are only very dimly aware of opportunities for donor funding. This is mainly a reflection of the short time-scale over which they have developed and is not evidence of any lack of ideas or lack of enthusiasm.
For such organisations, accessing donor funding is a daunting exercise. They are unfamiliar with the funding process, which, with its cycles, jargon and diversity of formats, has a culture of its own. A lack of proposal writing and lobbying skills is, since donors still in practice tend to work in western languages,
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compounded by a lack of language skills. If the local NGO sector is to benefit from donor involvement—and this point goes well beyond Tacis—then donors need to support the development of local NGOs' capacity to formulate and present well structured and practical project proposals. In order to achieve this, Tacis mechanisms and working practices need to change.
Effective involvement of NGOs requires specific programmes designed and managed in ways which improve the ability of NGOs to connect successfully with donors while at the same time building the donor's ability to work with NGOs. NGOs must not be excluded from engaging with Tacis by the cost, complication and slowness of application procedures. But, equally, they must not be swamped with money and over-ambitious programmes by over-eager donors—a recipe which has destroyed many initially successful NGOs the world over.
My second point concerns the role of external NGOs and smaller companies. I note the committee's interest in greater involvement of western NGOs and smaller organisations in Tacis programmes. There are Tacis facilities for NGO funding, but I should like to draw your Lordships' attention to the practical demands of pursuing such funding. Grant funding or co-funding can take a year or more to obtain and involve on-going lobbying efforts as well as requiring the applicant to keep prices, staff and so forth on hold for long periods. It also requires project partners' enthusiasm and faith in the funding process to be sustained, often for month after month.
Bidding for the larger projects which are put out to competitive tender requires a considerable effort even for large organisations and is estimated to cost between £5,000 and £10,000 a time. Even the winning organisation cannot recover these costs, and unsuccessful bidders, especially if they are relatively small organisations, tend to feel that the cost and effort involved is not worth the risk, and they give up.
In a commercial tendering environment that might be acceptable. A relatively small circle of the wealthiest companies, which might at least claim to be the best resourced to carry out the tasks involved, will be left in the ring. However, awarding finance on the basis of "To those that have shall be given" will not lead to the development of an active and diverse NGO landscape. As with local organisations, so working with external NGOs requires a different approach from dealing with commercial consulting companies.
Evidence given to the committee suggested that western NGOs could join consortia led by larger consulting companies in bidding for projects. That does happen; but I would ask your Lordships' to consider that tagging along behind a large consulting company, whose raison d'être may be very different from the NGOs', is a poor substitute for developing and implementing projects with an NGO focus and an NGO ethos.
I should not, however, wish to suggest unremitting criticism or doom and gloom; and that brings me to my third point. Tacis includes some excellent programmes. Stories of bureaucracy and delay in Tacis are not hard to find, but it is naïve to compare Tacis too

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unfavourably with, for example, bilateral programmes. Tacis certainly has no monopoly on delay and bureaucracy.
The Tacis "Bistro" programme is a very positive example of a relatively simple, swift and accessible funding line available within the CIS countries. Its success derives from being largely in the remit of the in-country EC delegations, where local staff and resident external staff can assist and advise in project development. I note from the report, however, that it remains consistently underspent. Perhaps some of the reasons for that are in my two previous points about lack of NGO access. The programme's only other practical shortcoming lies in the application of inflexible financing rules from Brussels, a subject to which, with your Lordships' indulgence, I shall return shortly.
My final point concerns the use and development of CIS nationals. The committee's report emphasises the wealth of talent within the CIS. The report also warns, however, against assuming that highly intellectual and cultured societies—such as are widely found in CIS countries—are "at one" with western attitudes and aspirations. I am sure that the report is correct on both those points.
Development of local expertise should be a central aspect and justification of any western involvement. Developing that expertise requires not merely training but also opportunities to put training into practice. As regards the NGO sector, that means real avenues of financing for NGO activities. In the case of working with and bringing on individual CIS specialists, a realistic approach is needed to meeting the costs of engaging them. Perhaps I may provide a brief illustration of that point.
A common problem with Tacis programmes is that Brussels insists on unrealistic and substantial differentials between living allowances granted to local and external specialists. That outdated approach leads to situations in which project team members are unable to take meals together or even to stay in the same hotel, due to the financial gulf between them. That does very little to develop good working relationships or respect, or to support the transfer of know-how between team members. I sincerely apologise for taking up the House's time with such a prosaic illustrative detail. However, it is exactly that kind of anomaly which hinders the proper participation of local specialists in projects intended to develop their countries. Tacis needs to address such anomalies if it is serious about increasing the roles, availability and impact of local specialists.
In conclusion, I feel that Tacis does much successful work and, while it is not yet as effective as it should be in the areas that I have attempted to describe, we should learn from Tacis' successes as well as its shortcomings. Where problems are overcome, it is often due to the local knowledge, initiative and goodwill of in-country EC delegation staff—a model which could be used far more widely.
It is easy to engage in "Brussels bashing" and I am glad that the report sought a balance between identifying
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areas of frustration and reflecting on the difficult path which Tacis has to tread between financial accountability and flexible responsiveness to emerging needs. I congratulate the committee on a very interesting and illuminating report, which I look forward to discussing with my friends both in Tacis and in the CIS.
8.33 p.m.
Baroness Wilcox: My Lords, we have heard a superb speech by the noble Baroness, Lady Hilton of Eggardon, the chairman of the committee on which I was privileged to serve. This was, as she described, an opportunity to influence a far-reaching report being formulated by the European Commission on the future of Tacis. We have read in our committee's report vividly and beautifully written descriptions by our Clerk, Tom Radice, of the quality of the environment of the former Soviet Union and its immense significance to the rest of the world.
Concern for the environment is not only central to the development of democracy and civil society and to protection of the consumer; it is also vital to successful economic transformation. The transition from command to market economies in the NIS is a painful process. There are immediate needs to be met: jobs; money; food. Hazardous fumes from the local factory do not yet lead local residents to demand its closure as they want the factory to stay there because they need to work in it. So there is a long-term challenge. But a new generation cometh, with new expectations. On our fact-finding visit we met many young people, mainly women, who were already taking up opportunities and creating an environment of which their parents, just a few years ago, could hardly have dreamed.
Our evidence gathering and our visit to Kiev in the Ukraine, Moscow and St. Petersburg showed us that the European Union's Tacis programme, with all the faults that have been outlined by the noble Lord, Lord Cromwell, has plainly been beneficial—in particular in helping to build trust and mutual respect between western Europe and the newly independent states.
However, even eight years after the command economy came to an end, it is still not a simple task for people to break free from their institutional and social straitjacket. The technically qualified managerial class has yet to come to terms with taking responsibility as opposed to following orders. Tacis must have as its priority the management of change in that area—but with pre-visit briefings on the culture and the language for outside experts to arrive with, in order to avoid, as we heard described to us, putting everyone's back up on day one with European and, worse, American "business school management-speak".
Tacis has done a great deal to stimulate environmental awareness and the capacity of people to be involved in a host of social and environmental issues at grass roots level. Although our committee warmly welcomes the general tone of the Government's response to the report, there is one area where I would ask the Government to be clearer in their support of the "people-to-people"

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policy. They seem to be proposing to support a greater emphasis on larger programmes in their response to the ECC report. I question, as did the noble Baroness, Lady Hilton, and my noble friend Lady Park, whether an increased number of large-scale, high profile initiatives accompanied by a limited number of small-scale initiatives is the right way forward. The visits and the evidence in our report lead me to press in favour of smaller projects and their growing importance and the vital role of the non-governmental organisations and the consumer groups with which I am involved.
Initiatives such as "city twinning" have already been referred to. I refer also to the locally named "Bistro" projects. It was only when I was in Russia that I learnt that "bistro" was a Russian word. The Russian émigrés who had rushed over to Paris and had to find something to do opened up quick food restaurants. That is where the word comes from. It is marvellous that they own that word; it is their own. Naturally the projects are hugely successful. They are local initiatives; they come together quickly; they can be run by local people and transferred easily, town to town, street to street, village to village. It is ownership of the best kind. The local European Union delegation has much more discretion in relation to these small projects than it does in relation to larger projects to hand out the money and approve them.
In one area, people came together to run a local market. The project was described to us: how to manage a local market; how to get the traders together with their stalls; wholesaling; distribution; the routes to market; the transportation; then the shared profit; the retained profit; the reinvestment; and even more, the planning for the future.
I cannot stress strongly enough the enthusiasm of people at a local level to learn how to take ownership of their lives. I suspect that local consumer groups, already now learning how to manage and campaign through the media and the press and how to lobby their parliament for the health of their families, will promote democracy faster through their groundswell than ever will the vast programmes we have heard about, where limited groups of contractors can go in and take the contracts. We heard awful stories: as soon as they have got the contract they send in their least experienced people because their most experienced people do not want to work out of their host country for these long periods of time. That leads to local corruption.
It does not seem to me that that is the place to start. The future of this vast area of our globe, 15 per cent of the land mass, is in its people's courage and confidence to embrace a new and unknown future. The closer the Tacis programmes can get to those people, the more chance there is of successful democratisation of a new kind which will take responsibility for its own environmental programmes by Russia, by those newly independent states. It will look, therefore, to our safeguard, to our future and to the safety of all of us. I commend the report to the House.
8.40 p.m.
Lord Walpole: My Lords, as a member of the committee speaking so late, I believe that most points have been made. Once again I thank our chairman of the inquiry for the wonderful way in which she so gently and firmly guided us all. I especially thank Tom Radice for organising us and Andrew Convey, our specialist adviser. We made a wonderful team and, together with the noble Baroness, Lady Wilcox, and myself, we were the group who went to Russia.
There are two aspects of my experience of going to Russia and meeting people that I wish to share with your Lordships tonight. They are the concept of person-to-person contact, on which many have touched, and, arising from that, the problems of Russian NGOs and their status. I particularly welcomed the speech of my noble friend Lord Cromwell, because it was unsolicited. It was wonderful. If he had been on the committee he could have made it and got away with it, it was such a good speech. From someone not even on the committee, it was delightful, confirming everything that I am afraid we discovered.
We chose the title of the report carefully. It suggests that help to the former Soviet Union is a partnership and that both sides have a great deal to contribute. Talking person to person is one of the best ways of resolving problems. It might not be inappropriate to suggest at this moment that our Prime Minister's dash to America last night for a little person-to-person chat with President Clinton and Viktor Chernomyrdin's visit to President Milosevic today may do a lot more than any other forms of communication between leaders in the present Kosovo crisis. It is an example of person-to-person contact which we hope will resolve matters.
Under the Tacis range of agreements, it is very important to have various forms of discussion. Twinning of NGOs and local authorities and exchanges between universities could lead to a greater understanding between the EU and the former Soviet Union. It is also vitally important to understand the Russian character and Russian aspirations, not the least of which is to appreciate that they have much to offer us. That is one of the reasons we decided that the main points of our report would also be produced in Russian. I have a copy in front of me, I cannot read it and I cannot prove that it is correct. However, publishing one of our reports in Russian is another first for this House. It is an innovation of which the committee is proud.
I am, therefore, slightly concerned about the Government's response. The proposed regulation does not appear to be reinforcing the person-to-person policy. By placing greater emphasis on the larger projects, there are bound to be many people and organisations talking to each other rather than persons. I do not quite understand what the Government mean by,
"There are fewer opportunities for the UK public sector than other members of the EU".
In paragraph 64 of our report we mention but four extremely close exchanges with co-operation between, for example, Moldova and the Hampshire County Council. It is interesting that someone in Hampshire, attempting to try to work out the traffic problems of

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Basingstoke, was approached by Moldova which is frightened that more cars may cause problems. What a lovely clean sheet to start with! Hampshire people must have been very envious.
In the Government's response to our Recommendation 6—again, on the small versus the large-scale initiatives—we are very much in favour of the small-scale projects which involve local NGOs and give rise, at very little cost, to such actions as environment awareness days and setting up the libraries with environmental information in book, video and CD-ROM form. Those projects are essentially aimed at children and are the kind of thing I have been attempting to do in England in the past 10 years. We hope that in Russia in the long run it will produce a new generation of environmentally aware adults.
However, there are other forms of aid to the former Soviet Union. We have already heard that such organisations there are not well co-ordinated. You just happen to hear that someone is giving something to someone. There are many instances of money coming in from the Baltic states. It is important that the whole of the Baltic states' environment is kept roughly under control, Russia being the problem. There is money coming in from the US—we have heard that it comes in in a conquering way—and from Germany, which I am sure is genuinely keen to help. It also comes from our own Know-How Fund. I ask the Minister this tonight: if the EU is to take on bigger projects, could our Government look to the small projects, as they have in the past with our Know-How Fund? That is one of the ways in which we can make progress.
The point I wish to make about the Russian NGOs is one which we can do nothing about, I am afraid. It is just that they operate under a totally different system from NGOs as we know them. They are at least beginning to be recognised by the authorities in Russia; they are not just looked on as being rather subversive and difficult organisations. We may make remarks about Friends of the Earth on occasions, but we accept that our NGOs in Europe are helpful. I want the Russians to get it right.
However, the problem is that they cannot operate under the type of charity laws that we have in this country. In particular, they have to pay tax on any money they raise. That makes their financial viability less easy. I hope that over a period of time this will improve and that Russia and the other members of the former Soviet Union will introduce charity laws under which NGOs can work and tax systems which will be helpful to them.
Finally, the report is one of the most interesting and stimulating that the sub-committee has produced. If the Soviet Union is to recover from the appalling environmental state it has got into, co-operation, partnership and trust are the name of the game.
8.50 p.m.
Lord Ponsonby of Shulbrede: My Lords, I, too, would like to congratulate my noble friend on her chairmanship of the sub-committee. I should also
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particularly like to congratulate her on the colour map, which was a great addition to the report. My views can be summed up by a particular quote. I very much appreciated the inclusion of various quotes throughout the text because it brought the report alive. It was so much easier to concentrate, if that is the right word, although it was an easy report to read anyway. Perhaps I may read just a little of the quote which summed up my view. It is from Mr. Guy de Selliers, who is chairman of Flemings Eastern Europe. He said,
"Our basic recommendation is to reorientate the objectives of the Tacis Programme from the broad objectives of the past—support for democracy and market economy—to a more pragmatic objective of promoting concrete activities which can lead to mutually beneficial co-operation between NIS institutions and their counterparts in the EU".
That really sums up my view about the reorientation of the Tacis project.
The noble Lord, Lord Cromwell, gave an extremely good speech. I congratulate him on his tenacity in managing a number of projects with Tacis funding. In my previous job I applied for both World Bank funding and Tacis funding. I gave up on both counts. I found that it was diverting too much attention from what I was trying to do in running the company with which I was involved. I congratulate the noble Lord on his tenacity.
I wish to concentrate on two areas arising from that quotation; namely, the administration of the Tacis programme and its integration with other international bodies. The word "monitoring" translates as "control" in Russian. Russians know about control only too well. They are extremely suspicious of it. I believe that accounts for the reluctance of many of the Russians who are part of the Tacis programme about whom I have read and to whom I have spoken directly. They are somewhat resentful of the monitoring or control of their programmes. The whole essence of this report is the balance between proper accountability for EU funds and allowing some freedom of action for people to use their initiative and to develop their skills in managing money in creative ways.
The word "consultant" has become something of a dirty word, in this report as well as in Russia. I have been a consultant in my time. I have certainly employed many consultants. When we applied for the funding which I mentioned at the beginning of my speech we aspired to being consultants at that stage. In my experience it is very difficult when employing people on vastly different wage levels. I was earning 50 times more than the Russian engineers with whom I was working. We were not quite as insensitive as to make my Russian colleagues and I use different flights and eat in different messes. We were all treated completely the same as regards working conditions. There was a massive differential in the amount we received for doing pretty much the same job.
It is somewhat simplistic and naive to say that the differential needs to be reduced, which it does. The reality is that the purpose of the Tacis programme is to change working and management practices in Russia. Having worked for nearly four years in a joint oil venture in Siberia, it is impossible to exaggerate the debilitating effects of a huge Russian bureaucracy and

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very entrenched Russian management practices. Even though I was employed as an engineer, my job was to try to change the way they ran their businesses. That is the purpose of the Tacis programme. Western consultants have something to offer. In fact, I go further and say that quite a few Western consultants nowadays have a great deal of experience of Russia and the former Soviet Union.
When we were managing the joint venture our experience was that the best way forward was to engage young Russians who were extremely capable. We gave them a lot of responsibility early in their working life. While the conditions were fairly harsh in that it was minus 40 degrees centigrade, they could earn a great deal of money over a few years and then go on to even more responsible jobs. In that manner we found our way around the problem of working effectively with Russians. Our answer was to use young people.
The phrase "people to people" has been used a number of times. It is absolutely right. The key to success concerns the personalities involved, commitment and your colleagues believing that you are there for the long haul, come hell or high water. In my view there is nothing else which really motivates people.
The second subject I wish to mention is the integration of the Tacis programme with other programmes and international and financial institutions. I am thinking of the EBRD, the World Bank, IFC and the multitude of bilateral aid programmes. I include the European Investment Bank, which does not invest in Russia. Perhaps it should think about that in the future.
There needs to be some idea of where the funding is coming from once the reports have been produced by Tacis. It causes tremendous resentment among the Russians that these bright ideas are dreamt up and the consultants then swan off back to their countries in the West, but the money is not there for implementing the ideas.
The reality of the Russian economy is, as I understand it, that about 60 per cent is a grey economy. I have heard the figure of 30 billion US dollars held in cash in Russia. It is quite wrong to equate that with massive corruption. It represents the total breakdown of the Russians' faith in their own banking system and institutions. There is a vibrant economy there, but it is totally undirected. There needs to he an institutional look at how to gain access to these funds and to channel them more constructively for the restructuring of Russia.
In conclusion, I wish to state the obvious; namely, that this involves a long haul. The Tacis programme has already invested in Russia over one billion ecus, which is about 1 billion dollars. It is a large-scale investment on a scale similar to that of the Marshall Plan, to which it was quite rightly compared. But I do not believe that it is constructive to engage in Brussels bashing, as the noble Lord, Lord Cromwell, said. We have to talk up success and change the Tacis programme. I was very privileged to take part in the preparation of this report. I am sure that it will go some way towards reorienting the long-term success of the Tacis programme.
8.58 p.m.
Baroness Williams of Crosby: My Lords, it has been a very great pleasure to read this report. It is one of the best presented, most sensible and wisest reports that I have seen from any of the sub-committees of the Select Committee on the European Communities on which I had the privilege to serve for a period of time. I congratulate all those members of the sub-committee and not least the noble Baroness, Lady Hilton of Eggardon, on what I believe is a remarkable achievement.
Having said that, I have to declare a rather bizarre interest. I am the president of an organisation called Project Liberty, now renamed Project Parity, which, since 1990, has worked very closely in central and Eastern Europe and more recently in Russia and the Ukraine encouraging, among other things, women to enter public life and to encouraging civil servants to understand the need to be responsible and responsive to their citizens. I am also a member of the board of one of the very few management institutes which is Ukranian-led, based in Kiev. It is the International Management Institute of Kiev. In case there are any Eurosceptics here I should say quickly that I am not paid in any capacity apart from a modest stipend when I spend a week at a seminar. This has always appeared to be rather surprising to Tacis, as are the extremely modest sums that we pay to those who lecture in these seminars which are deliberately kept to a minimum. I add that none of them is a consultant. I apologise to the noble Lord, Lord Ponsonby of Shulbrede, who is as nice a consultant as anyone can hope to meet.
I turn briefly to the report. I begin by echoing the words of the noble Baroness, Lady Hilton, about the scale of the environmental disaster that still confronts Russia but also Ukraine and now to a lesser extent—thank God—central and eastern Europe. She mentioned her own experiences. I should like to give two other examples. First, whenever I go to Ukraine I am still warned that I must not go anywhere near the Pripet Marshes. Many noble Lords are aware that there are literally thousands of hectares of arable land still hopelessly poisoned and will not be able either to yield food or feed animals for many decades to come. It is a huge hole in the middle of the Belarus Ukraine and is a very rich area of arable land that has simply been written off for many generations to come by the Chernobyl accident. Many noble Lords will be aware that the second, third and fourth Chernobyl stations still show signs of being very dangerous and from time to time lead to alarms. They still have not been adequately modified to enable us to feel completely safe about their continuing use. That is not the only nuclear power station of which that is true.
The second example is the recent visit that I paid to Kharhiv in the Donbass in the east of Ukraine where all too often it is impossible to see out of the window because of the sheer volume of carbon dioxide in the air. That is a coal mining area where the abilities of the regional council are non-existent. It has no money, no resources and virtually no ability to deal with a disastrous environmental problem that is already

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profoundly affecting their children. It results in the very worst forms of lung disease, asthma and many other related complaints.
I very much commend the comments of the noble Baroness, Lady Hilton, about management styles. She is absolutely right that we can learn a great deal from Russia and the NIS countries, but the management style certainly stands in the way. One reason for it was the overwhelming priority given to economic growth in virtually all circumstances under the communist regimes in those countries where effectively growth was not qualified by any sense of the input or quality of product but the sheer need to show that one was meeting production norms. That meant that an institutionalised attitude grew up to the misuse and abuse of resources.
I believe that the United Kingdom and the EU can play an immense part in bringing to bear our expertise in the field of energy conservation and the control and use of electronic devices to minimise energy use. Even today the NIS countries and Russia are literally flinging away their finite resources in huge proportions because of their lack of adequate energy conservation measures.
I agree with the comments of the noble Lord, Lord Berkeley. In a very inappropriate way I almost began to applaud what he said. When he referred to some of the purposes for which western consultants had been used I could not have agreed with him more. I provide only one example to complement what he said so interestingly about public transport and the railways. I have noticed that they run rather well in Russia; they are very effective and usually run on time.
I should like to add to his comments the totally ludicrous financing of consultants in the field of health privatisation. Those consultants went out to speak to countries which until recently had been characterised by a rather astonishing level of public health provision despite their relatively low per capita incomes. They certainly did not need to be told by us how to ensure that 50 per cent of their population would never have access to health again. We have been rather successful in getting that message across in central and eastern Europe. I pray that we totally fail to get it across in Russia and Ukraine especially given the conversion that Conservative colleagues have undergone in fully supporting the idea of a national health service.
I turn next to the issues raised in the report. I go through them quickly to save the time of the House. I could not agree more with what the report had to say about partnership. In our own Project Parity organisation we have always worked directly and closely with NGOs from local areas. We will not put on seminars unless we have the full support and involvement at every single planning stage of local NGOs, including the provision of lecturers and chair persons. In that way people feel that they own these seminars and we do not come with any sense of superiority or pride.
Partnership is indeed the name of the game. I completely agree with the noble Baroness, Lady Wilcox, about the Bistro programme and the twinning of towns and local authorities with their counterparts in NIS
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countries and Russia. As the noble Lord, Lord Walpole, pointed out, this is one of the most effective ways in which we can help these countries. It brings about the people-to-people relationships that are so utterly crucial and the humility and learning that takes place on both sides of it.
I am a little frightened by the regulation. I very much agree with the criticism made by the noble Lord, Lord Cromwell, and others, about the emphasis placed on a very small number of subjects as a result of the reforms that are being made. I fear that it is perhaps the wrong—and bureaucratic—way to go.
I also add my great approval of the comments about respect for the skills and talents of the NIS communities, particularly in fields like engineering and the arts. These countries have a huge amount to contribute to us. At a time when they are going through a crisis of confidence it is vital that we recognise the huge achievements of Russia, Ukraine and other NIS civilisations not least in respect of the quality of their education. I am not even sure that we cannot in this country learn something about the quality of the science and technology education that has long been achieved in Russia and, for that matter, in much of central Europe. If one compares the results of their mathematics competitions with the rather pathetic results of British and, for that matter, American competitions in the same field one feels a proper sense of humility.
I wish also to underline what was said in the report about the need for the financial institutions, too, to learn these lessons. On a number of occasions they have done a rather bad job. I think in particular of the International Monetary Fund's handling of the last Russian crisis. It is important that they learn the lessons in the report and elsewhere.
We are beginning to see some light dawning. For the first time, on Monday, the European Bank for Reconstruction and Development, which now has responsibility for investment in Russia, held a seminar at which environmental NGOs were not only present but also on the panel. That is the first seminar the EBRD has conducted, and the first at which an environmental NGO has been invited to come to give its opinion. Mr James Barnes of Friends of the Earth International was present and able to comment on some of the work of the IFI.
I echo what the noble Lords, Lord Cromwell and Lord Ponsonby, said about the complexity of procedures. Those of us involved know that in many cases the best thing one can do if one wants to obtain a Tacis grant of some size is to employ a Brussels law office whose members have never been anyway near Russia or Ukraine. That cannot be right. Procedures which are so complex that one has to employ a lawyer in order to have the documents drawn up must be badly wrong. I know that the same is true of American foundations, but surely we could simplify the requirements laid down for contracts to be extended. We should also beef up the evaluation systems for projects once completed.
This is such a good report that I should like the committee to ask how best it might be disseminated. As the noble Lord, Lord Walpole, said, it is marvellous that

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it has been translated into Russian. That is a great achievement by the committee. I should like a copy of this report sent to every member of the environmental committee of the European Parliament, every member of the cabinet of the commission for the environment in the European Commission, and every member of the environmental committees of both Houses of this Parliament. One of the great tragedies about the marvellous work done by the Select Committee and its sub-committees in this House is that on the whole the reports are so little known once they have been completed. This report is one of several which deserve to he far more widely read and digested than is likely otherwise to occur.
As regards the Council's conclusion about the regulation, the Council of Ministers of the European Union, which represents member governments, pronounced itself wishing to set up a committee of member states to oversee the work of Tacis. Perhaps the Council of Ministers could have been just a little more visionary by suggesting that there should be a joint committee of donors and recipients along the lines of the overwhelmingly successful Marshall Plan. I fear that the provision of yet another committee to oversee with no input from the recipients is all too clear an example of what this committee has indicated: the superior attitude of Western powers towards those at the receiving end of the projects under Tacis. I strongly recommend that there should be at least occasional meetings of donors and recipients. Together they can make this a better programme, and one from which many more can benefit.
9.12 p.m.
Baroness Rawlings: My Lords, I shall be brief at this late stage as I believe we should all like to hear the response of the noble Baroness, Lady Amos. I, too, add my congratulations to the noble Baroness, Lady Hilton of Eggardon, and her committee on a superb and comprehensive report which I have read with great interest and enjoyment. I agree with everything that the noble Baroness, Lady Williams of Crosby, said about it. I was especially interested as the former USSR was an area that I studied for many years.
This has been a most informative debate to which I listened carefully. The political events following the fall of the Berlin Wall brought enormous changes to the map of Europe. Within the area covered by this report, the former Soviet Union changed from one centralised state into a much larger number of autonomous states, based on the former states of the Soviet Union.
The new independent states faced and still face immense environmental problems. While partly derived from geography, those are largely the legacy of the Soviet period, as pointed out so clearly by the noble Baroness, Lady Williams of Crosby. Priorities must be the reduction of health risks, especially the provision of safe drinking water and tackling the worst problems of industrial pollution and hazardous waste. I remember speaking on the PHARE report when I mentioned the
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environmental horrors in Bulgaria which I had witnessed and which were much the same as we have heard today.
The Tacis programme was first conceived as far back as December 1990. The Council then decided that the European Union should support the then Soviet Union in two ways: by providing the know how; and by supplying humanitarian aid, with a budget of £280 million. Since its creation in 1991, it has evolved pretty rapidly over what is a relatively short period. In November 1996, a regulation marked a raising, of the profile of the environment in the Tacis range of programmes. That is of immense importance, as we have heard from several noble Lords this evening.
It has always been said when talking about the European Union that "the environment knows no frontiers". I think this is right. As with the PHARE programme, the inquiry revealed a considerable number of complexities.
We on these Benches support the Tacis initiative, especially in the context of the environment. Many of the countries in the region are sadly unable to give adequate importance to their environmental problems as they fundamentally lack the resources.
The role of the non-governmental organisations and the LIEN programme, to which the noble Lords, Lord Cromwell and Lord Walpole, referred, is crucial. These are by their nature less cumbersome and probably less doctrinaire. They have a crucial place in the establishment of the institutions. Here, Tacis can play a key role, first in reassuring the governments of the countries that they have nothing to fear from the NGOs. They are often regarded with a great deal of suspicion, not unnaturally. The NGO was virtually an unknown phenomenon during the communist era. It is important that the NGOs are assisted by Tacis officials to help them to find their way about governments. I would support more use of local talent when possible—a thread that has run through all the speeches this evening.
I return to the central point, the environment. The challenge is huge. Perhaps it is the most visible of the dismal legacies of the communist era. The Tacis democracy programme which was launched by the European Commission in 1992 to help promote to democratic Russia is of vital importance I echo the sentiments of my noble friend Lady Wilcox on the size of the programmes. It must be right to keep them closer to the people. "People-to-people projects" sounds a very good name to me.
The noble Lord, Lord Ponsonby, from his personal experiences, explained all too clearly the need for greater transparency and easier accessibility especially to applicants. This comes up with practically any project that comes from Brussels. It was mentioned by several noble Lords and needs attention. I have touched on just a fraction of this very comprehensive report.
Finally, we support this first-class report. The whole world wants to see Russia as well as the former Soviet republics stable, democratic and prosperous. It is not only essential for their people, but for the world too. We want this not from altruism; not even because we want to be able to trade goods and services with them in

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ever-increasing amounts; we want it because if there is no democracy and prosperity over this huge area of the world, the resulting lack of stability could pose great and continuing dangers for us all, as we are currently seeing only too vividly and tragically in former communist lands much closer to us.
The current Tacis regulation expires at the end of this year, as mentioned by the noble Baroness, Lady Hilton of Eggardon, and a draft regulation for the period 2000–06 is now under consideration. According to the Secretary of State, the draft is broadly acceptable, but contains a number of new initiatives on which we are seeking clarification.
As I said, we on these Benches fully support the Tacis programme, despite some shortcomings which were clearly brought out in this excellent and comprehensive report.
But, Russia has her responsibilities too, towards both her neighbours and towards the industrial world that is working so hard and giving so generously to help her drag herself out of her miserable past. One of her responsibilities is her co-operation with the NATO allies during this very difficult and tense time in the present war with the former Republic of Yugoslavia and President Milosevic. News of the Russian Government aiding and abetting President Milosevic, putting serious pressure on former satellites, like Bulgaria, and trying to force them not to co-operate with NATO, is hardly the best way to encourage the European Union to extend the Tacis programme. Russia needs Tacis. It is an important programme, but not at any price.
9.20 p.m.
Baroness Amos: My Lords, I join other noble Lords in thanking my noble friend Lady Hilton of Eggardon, the chairman of the committee, for introducing tonight's important debate. I also thank other noble Lords who have contributed.
The Government have welcomed the very comprehensive report by the Select Committee on the European Communities on the Tacis programme, and in particular its fundamental conclusion that it will be essential to maintain and strengthen the position of environment as a priority area for Tacis.
The report is primarily about Tacis's response to the environmental challenge facing the region. But it also goes further and looks at the means employed by Tacis in implementing its programmes: its use of consultants; its procedures; its management structure; and internal resources. Those points were taken up by many noble Lords tonight. A good deal of attention is given to the bureaucratic systems which affect all Tacis activities. The report also considers ways of improving quality and transparency throughout the programmes, a point made by my noble friend Lady Hilton. Many of the report's conclusions match our own views about the ways Tacis might tackle its perceived shortcomings, as well as contributing towards a more coherent approach to environmental programmes.
There is no doubt that the states of the former Soviet Union face an immense environmental challenge. We have heard examples of the problems facing the region
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during the debate this evening. The legacy of unsustainable development under Soviet planning has left a huge burden of environmental degradation. This is reflected in the widening gap between health standards and life expectancy in western and former Soviet countries. It is also seen in the huge wastage of energy—a point raised by the noble Baroness, Lady Williams—water and other natural resources because of distorted pricing and poor environmental management.
Although economic decline in recent years has brought about a reduction in air and water pollution, there are still large volumes of municipal and industrial waste. Reforms and investments are now needed to ensure that economic recovery will take place in an environmentally sustainable way and that the great natural resources of the region are not destroyed.
My noble friend Lady Hilton referred to the importance of economic growth, but not, as she said, to the detriment of the environment. The DfID considers that economic reform, good government, the growth of civil society and the improvement of the environment are inseparably linked. It is no coincidence that the transition countries which have made most progress on the environment are those which have been in the forefront of economic and political reform. The slower pace of reform generally in the former USSR has been a significant brake on environmental improvement. In judging the performance of Tacis, we should keep in mind that many of the basic conditions for environmental progress are lacking in the countries in which it operates.
The scale of the problem is enormous and there is plenty of scope for all donors to play a part. The United Kingdom Government, in the 1997 White Paper, identified protection and better management of the environment as one of the aims of sustainable development, along with creating livelihoods for poor people and promoting human development. In Russia, for example, our allocated funding to the environment has increased by over 300 per cent since the White Paper, having risen from £600,000 a year to the current level of £2 million a year. This has allowed us to support a variety of new projects, including strengthening the management efficiency of the water utility in St. Petersburg; identifying and tackling the barriers to commercialising water services; and establishing a challenge fund to ensure that Russian environmental NGOs are fully involved in the transition process.
My noble friend Lord Ponsonby of Shulbrede made reference to the need for integration with other international institutions.
We take the view that Tacis should continue to retain its position as the principal technical assistance instrument within the region, but as a complementary part of a global system, which includes the international financing institutions; for example, the World Bank and the European Bank for Reconstruction and Development.
We fully support the recommendations in the report for closer co-operation with other financing institutions and we shall press for environmental issues to be given higher priority in the new regulation for Tacis now

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being negotiated for the period 2000–06, and for the programme to be co-ordinated as much as possible with those of other donors.
Discussions on the new regulation have indicated that other member states share our concerns that due attention should be given to the environmental and social effects of transition. We are reasonably confident that we shall succeed in focusing the new regulation to that effect.
I turn now to some of the management issues which many noble Lords raised. The Tacis programme has attracted a good deal of criticism, some of it repeated this evening. There is criticism in the report, in the press, from the European Court of Auditors and by general repute. There is no denying that Tacis has been slow to implement programmes. Its unwieldy procedures have led to delays in engaging contractors and in launching projects. In many cases, project quality has been of questionable value and consultants have been frustrated by the inability of Tacis to adapt to changing circumstances and by delays in receiving payments.
Therefore, the Government welcome in particular the practical recommendations in the report. I am pleased to tell my noble friend Lady Hilton of Eggardon that we consider the proposed database to be an excellent suggestion, although it should be noted that there is no shortage of publicly available information about Tacis programmes. Such information is available through the Tacis website and through Tacis publications, but overlap and duplication may be avoided by better co-ordination among donors. We have already been in contact with Tacis on that point.
The noble Lord, Lord Cromwell, mentioned the need to develop local capacity. The report also recommends that Tacis should become more transparent and accessible for would-be applicants and tenderers. It is obvious that emerging NGOs and other groups which we hope will shape and eventually transform civil society in the region in the future are put off by the complexity of the procedures.
The Department for International Development has a particular interest in the development of civil society organisations in transitional countries. In doing that, we also hope to build capacity. In our own bilateral programmes, we have been working with a range of new and more established organisations such as chambers of commerce, community groups, human rights organisations and lobbying groups, including those promoting environmental issues. We certainly support any moves to make Tacis more responsive to the needs of civil society stakeholders.
A number of noble Lords mentioned the need to use skills in the region, and the noble Baroness, Lady Wilcox, highlighted in particular the need for cultural sensitivity. The question of culture is fundamental and the report rightly highlights the need for awareness of local sensitivities.
We agree completely with the recommendation that donors should recognise the skills and experiences existing already in the region. We should work hard to
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build up trust and make greater use of NIS experts, a proposal recognised already in the draft of the new Tacis regulation.
A number of noble Lords, including the noble Lord, Lord Walpole, and the noble Baroness, Lady Rawlings, spoke about the importance of small projects, the need for support to local NGOs and people-to-people links. The Government agree that such links are crucial to building partnership and trust between NIS countries and Europe.
Tacis does not have comparative advantage in running small projects from Brussels, as many of your Lordships have rightly pointed out. The procedures are still too complex and slow. However, schemes run directly from EU delegations have been effective and much more flexible, as incidentally have many Know-How Fund schemes. That is why the Government support more devolution of responsibility for Tacis projects to EU delegations, especially working through local people.
I also want to join the noble Baroness, Lady Williams of Crosby, in commending the important work which Project Parity does with women. There are a number of ways in which Tacis could streamline its operations. The suggestions made of delegating more responsibility to in-country Tacis teams and involving field staff in project design and planning would have the effect of both speeding up project delivery and improving project quality, as would longer tours of duty to ensure better continuity of advice and project supervision.
We have always recognised that to a certain extent Tacis was constrained by the administration procedures imposed on it by the 1977 financial regulation, which governs all EC programmes, which are notoriously inflexible and bureaucratic. The Commission is planning a substantial review of the financial regulation this year. The UK is seeking to influence that process to ensure that the revised regulation allows for more effective and efficient systems, while still maintaining an appropriate degree of financial control and oversight to prevent fraud and mismanagement.
The noble Baroness, Lady Park of Monmouth, mentioned mismanagement. It is our view that the Commission could also institute substantial internal managerial reforms to improve the speed of delivery and quality of Tacis and other aid programmes within the constraints of existing procedures and staff resources.
Last month the Prime Minister set out in the other place a number of ideas on Commission management reform. The Government will work closely with Mr. Prodi and his new team to ensure that modernising Commission working practices is high on the reform agenda.
Now, more than ever, a complete overhaul of systems for approval, financial management and auditing of aid projects is needed, together with a new culture of accountability in the Commission, so that individuals are held responsible for the budgets that they manage. We also accept the need for reviews of staff resources and competences to allow more staff resources to be allocated to improving project design and monitoring.

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The strengthening proposed should be carried out by developing the Commission's internal expertise to enable it to make better judgments on project quality and to find other ways of making better use of existing staffing budgets rather than simply by increasing staff numbers.
It is not premature for me to tell the House that there is a good chance that some of the recommendations included in the report will be addressed by the new regulation governing the programme which is currently under discussion in Brussels. It is a testament to the work of the committee that that is happening.
The noble Baroness, Lady Park of Monmouth, mentioned the need for a more practical and pragmatic approach. My noble friend Lord Berkeley expressed concern about the lack of empathy with local conditions. I am pleased to be able to tell the House that the proposal for the new regulation includes the increased use of local experts and more attachments, or twinnings, between western organisations and NIS partners. It also makes provision for a dialogue-driven approach to programming, a point made powerfully by the noble Lord, Lord Walpole, when he talked about the need for people-to-people policy.
The proposed new regulation also proposes that there should be a move away from the old "shopping list" approach towards one which we hope will give member states a greater role in deciding priorities as well as engaging local partners more effectively. There are also proposals to improve programme quality and content by adopting a phased approach, which would help to prevent continued funding for clearly unsuccessful projects. There are also ideas for an incentive scheme. Those proposals have yet to be worked out in detail, but they indicate a genuine desire on the part of the Commission to effect real improvements.
On the wider issues of reform of the Community's aid programmes, the Government have published an institutional strategy paper since they gave evidence to the committee last year. That document sets out 18 specific objectives which the UK is pursuing with the Commission, other EU institutions and member states to improve the effectiveness and focus of EC aid. It is available in the Library and I commend it to the House.
In the time available, I am unable to deal with the specific transport issues raised by my noble friend Lord Berkeley, but I am happy to follow them up in writing and to answer the specific points he raised.
I conclude by turning to environmental issues. The report and the debate this evening recognise that the environmental problems are huge, and that Tacis resources alone will never be enough to solve them. Good projects have been implemented in the face of great difficulties and many more are now in the pipeline. The Tacis programme is now entering a new era and we must ensure that this leads to a better and more effective programme in the future.
9.36 p.m.
Baroness Hilton of Eggardon: My Lords, I am grateful to the Minister for what was in many ways an
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encouraging response, particularly in relation to the negotiations that are taking place with the Commission. They sound very much in tune with our recommendations. I am also grateful to all Members of the House who took part in the debate. We were talking to ourselves to some extent, but I am particularly grateful to the noble Baronesses, Lady Williams and Lady Park, who both suggested that there should be much wider dissemination of our report to diplomats and politicians both here and in Europe. That might fulfil some of our objectives and I am delighted that the noble Lord, Lord Tordoff, was present to hear that recommendation and hope perhaps that it will be carried forward.
It has been a great pleasure to take part in this debate and, as well as being involved as my last task as the chairman of the environment committee, to take part in such an exciting project. I apologise to my noble friend Lord Ponsonby for some of our comments on consultants. There are of course exceptions to every rule. On the other hand, every stereotype contains a grain of truth and I hope he will accept that perhaps not all consultants are as splendid as he is.
Once again, I thank all those who took part in the debate tonight. I commend the report to the House.
On Question, Motion agreed to.

Indonesia
9.38 p.m.
Lord Avebury Lord Avebury rose to ask Her Majesty's Government what steps they are taking to promote democracy and human rights in Indonesia.
The noble Lord said: My Lords, I am extremely grateful to those noble Lords who have remained until a fairly late hour on a Thursday evening to take part in this important debate on the question of human rights and democracy in Indonesia.
I believe that the Government had the best of the argument on their policy of constructive engagement when this became a matter of dispute in the Select Committee in another place. In the long run we have been more effective by remaining involved than if we had tried to isolate Indonesia. The principle of constructive engagement should be applied on a case by case basis, as the Government agreed with the Select Committee. There are only a handful of psychopathic regimes where it would not be possible to do anything at all to promote human rights. Indonesia, even under Suharto was not included in that category.
During the Suharto era we did quite a lot. Mr. Fatchett met Xanana Gusmao in prison twice and called for his release. In the presidency of the European Union we led a troika mission to East Timor; we organised a human rights workshop later in the year in Jakarta in October and since the resignation of Suharto we have continued to work actively to support reform.
One matter which received emphasis in the report of the Select Committee and also in the reply from the Foreign Office was the training of the police force. It is important, bearing in mind the poor human rights record

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of the police in the past, that they should learn good policing methods, including respect for human rights. Now that the police are separated from the military, we are saying that we can see an even clearer role for British training.
Intuitively, human rights education ought to improve the standards of any police force, but I want to ask the Minister whether there is any evidence to show that it does. If the police are part of a system with an agenda of oppression, the training might be nothing more than a cloak to hide their real intentions. As the Minister knows, the police are still responsible to the Ministry of Defence and thus under the control of ABRI, whose political goals are not entirely clear. Under the previous administration, a study was initiated of the effects of police training in human rights to ascertain whether or not it was effective. It would be useful to know whether that project is continuing.
The Government also have a better record on arms sales than their critics have allowed. According to the Strategic Export Controls report, they issued 40 licences in 1997, but most of those were not for lethal equipment. We exported 23 armoured combat vehicles in that period, which were presumably licensed under the previous administration. Can the Minister say whether there are further commitments to deliveries of lethal equipment and tell us whether, in view of the violence already erupting, she thinks we ought to ask the United Nations to impose an embargo on all military supplies to Indonesia until after the presidential elections?
We do know that there are 16 Hawks still remaining to be delivered. I ask the Minister to agree that, even if we cannot persuade the Security Council to impose a mandatory embargo on all weapons sales to Indonesia, it would be inappropriate to deliver these aircraft while the armed forces are still involved in atrocities all over the country, not just in East Timor.
Since the fall of Suharto, both the risks and opportunities have increased. The electoral system has been reformed and the dual function of the military has been reduced, though not eliminated. As I have already said, the police are to be separated from the army, freedom of speech and freedom of assembly have been expanded and the parliamentary elections are scheduled for 7th June, with presidential elections following in November. Above all, the people of East Timor are supposed to be given a choice between autonomy and independence.
On the other side of the coin, the economy has nose-dived and unrest has broken out in many parts of the country, with ethnic and religious tensions fuelling violence. The armed forces and the police have continued to kill and torture civilians and, in East Timor, pro-integration militias have been formed with ABRI encouragement and given free rein to attack and intimidate those who favour independence.
Although the unrest and violence is very serious, I do not think it has reached the level at which the elections in 45 days' time are imperilled, except in East Timor where a vote is also scheduled in July on the government's autonomy package. The modalities of that exercise are being sorted out today in New York
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between the foreign ministers of Indonesia and Portugal under the auspices of the UN Secretary-General. But there is some evidence to suggest that Indonesia's offer of self-determination was not made in good faith. There are people within the regime who, while pretending to be interested in a democratic solution to the question of East Timor, are intent upon creating a situation of civil war in which those who want independence will be kept away from the polling booths by murder and intimidation.
On 6th April the militia, aided by the army, attacked refugees in the church and the home of the local priest in Liquica, killing some 50 people, When Bishop Belo went there to say mass the following Sunday, his convoy was attacked by the same thugs. Last weekend the militias went on the rampage in Dili, beating up and shooting people and setting houses on fire.
At the home of Manuel Carrascalao, brother of the former governor Mario and a leading critic of Indonesian rule, 12 people were murdered, including his son. The army made no attempt to stop the violence, and two of the victims who were wounded say that not only were soldiers in uniform standing by, but they believe that others who were dressed in black and who participated in the murders were serving soldiers. Neither the Governor, Mr Soares, nor the local military commander, Colonel Tono Suratman, did a thing to maintain order, as the Irish Minister of Foreign Affairs, Mr. David Andrews, confirmed. Mr. Andrews was in Dili at the time and he heard from aid workers that the soldiers cheered truckloads of militia on their way to the massacre as they passed army posts, and that a speech by Governor Soares at a military rally had encouraged the assassins to proceed with the murders.
President Habibie's foreign policy aide, Dewi Fortuna. Anwar, has accepted that the Government were responsible for the violence, and the UN Secretary General has said that he,
"regrets this apparent inability of the Indonesian authorities to control the violence by militias and to protect the civilian population".
It is encouraging to note that a peace agreement was signed yesterday between the militia and the Timorese resistance, but Jose Ramos Horta has said that General Wiranto himself masterminded the violence, and of course Wiranto did not sign the deal. He merely witnessed it, promising to end the attacks without acknowledging that his own troops were responsible. If Wiranto is genuinely committed to peace, he should relieve the commander of the forces in East Timor, General Adam Damiri, of his duties, as well as the colonel who is directly in control in Timor itself; he should order the disbanding of the militias, reduce the military presence in East Timor, and invite KomnasHAM or some other suitable impartial authority, to conduct an inquiry into the violence of the past month. General Wiranto's attitude has been ambivalent so far, and it is essential that he makes a public declaration of support for the consultation process.
The disbandment and disarmament of the militias under international supervision is absolutely essential to the success of the democratic process. As long as these elements have a free rein, pro-independence activists are

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unable to campaign, as Jonathan Head of the BBC said yesterday. The Sydney Morning Herald claims that 150 pro-integration assassins are heading for Jakarta to kill East Timorese leaders and activists. Mario Carrascalao has said that he believes he is at the top of the death list and he is in hiding.
Has Britain, as a permanent member of the Security Council, taken a view on the desirability of an international presence in East Timor to ensure that both the MPR election and the referendum on autonomy are conducted properly and without violence or intimidation on either side? I note that James Rubin of the US State Department said that an international presence could advance the immediate disarmament of all groups on the island although clearly action needs to be taken to prevent murders elsewhere, including Jakarta.
It is reported that President Habibie has invited Australia and other countries to co-ordinate preparations for the July consultation. Can the Minister confirm that the other countries invited are Germany, Brazil, the US and the Philippines and has their role been further defined, or is this a matter to be left to the Security Council, in consultation with those concerned, assuming that the deal is signed between the foreign ministers today or tomorrow?
While the limelight has been on East Timor, the army has also been responsible for atrocities in Aceh and Irian Jaya, in both of which there are strong independence movements. In Aceh, preliminary findings by commissions of inquiry have discovered that the army was responsible but no one has been tried for the killings, torture and disappearances. The hostility between the military and the people is intense and is fuelled by the unnecessary arrests and gratuitous violence against people supporting the Free Aceh movement. For instance, on Tuesday two people were killed, five suffered gunshot wounds and 300 were arrested at Lhokseumawe when they were demonstrating against the arrest of perfectly peaceful demonstrators the previous day. In Irian Jaya, the police have banned all discussions of recent talks between President Habibie and a delegation of locals who were demanding a review of the 1965 Anschluss sanctioned by the UN in breach of its own rules.
In a situation where the people cannot get news of the negotiations and activities of government, the World Service has a particularly vital part to play in enabling people to get the information that their governments do not want them to have. It has a good record of responding to immediate crises with additional broadcasting time, as it has done in the case of the events in the Balkans. The Foreign Secretary wrote to me on 13th February and said that the World Service,
"is constantly shifting resources from higher to lower priorities to take account of political, technological and commercial developments".
He agreed with me about the special value of the World Service in weak democracies. Yet the BBC broadcasts only two and a quarter hours a day in Bahasa Indonesia. Could there be some extension of broadcasting hours, at
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least over the election period, and also an increase in the audio on the Internet, which is at present only half an hour a day?
If people cannot talk freely about questions of governance in the context of elections, the transition will not be towards democracy but to civil war. Britain has already done much to help with the reforms that are so desperately needed throughout Indonesia. I hope that we may continue to rely on the Government to look for means of helping the people to make their important decisions in June and July, after full debate and without further intimidation or violence.
9.52 p.m.
Lord Dholakia: My Lords, when I was appointed to your Lordships' House I had the pleasure of occupying the desk of the noble Lord, Lord Avebury. I was amazed at the mountainous number of files on his desk, all of them about matters of human rights. There are many people in various parts of the world who are alive today because of the efforts of the noble Lord, Lord Avebury. Your Lordships' House should note seriously what he has to say. Only last weekend I was observing elections in Turkey. No one cared about me; all that people wanted to ask me was how was Lord Avebury.
I welcome the debate. Only this week, in a debate on India and Pakistan, I said that it is right that we should stress our commitment to human rights wherever, whenever and by whomsoever they were abused. Here we have the opportunity to express our concern about East Timor.
We are all aware of the troubled history of Indonesia. For more than three decades of President Suharto's rule the regions were governed by civil servants from Jakarta, supplemented by battalions of soldiers to quell separatist revolts. I have looked at a number of reports analysing the history and they all confirm that the major share of Indonesia's revenue depended on the regions. No wonder this situation was exploited without due regard to the grievances of the local population. It is expedient to ignore human rights when the primary aim of Indonesia was to explore the wealth of its regions. The government there are now considering greater autonomy, including the proposal that regions control most of the revenue from their own resources.
The Government of Indonesia had no alternatives. East Timor has been a special case as the United Nations decided that its annexation was illegal. There are pronouncements now that East Timor may be granted full independence after the June elections. I shall believe that when I see it.
The BBC has quoted the Information Minister, Yunus Yosfiah, as saying that Indonesia's parliament may consider granting regional autonomy plus to East Timor. I do not know what he means by "plus". He goes on to say,
"If that is not accepted by the masses in East Timor, we will suggest to the new membership of the People's Consultative Assembly to release East Timor from Indonesia".
The Nobel Peace Prize winner, José Ramos Horta, has said that the government is a sham aimed at the diplomatic community. He is from East Timor, and he

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should know. There is concern about what is going on even now in East Timor. The noble Lord, Lord Avebury, cited cases under the murderous regime in Indonesia. Again, according to José Ramos Horta, people are being slaughtered, women are still being raped and torture is rampant.
About a year ago I had been invited as a witness to an exhibition of photographs which highlighted the tortures and murders in East Timor perpetrated by soldiers sent to quell revolts by local people. No one can fail to he moved by the suffering of the East Timorese. The degradation of and violence against defenceless people was unimaginable. We must never allow that to happen again.
East Timor has a troubled history. In 1975, immediately after Portugal's withdrawal, Indonesia sent troops in. In the process of annexation and the famine that followed it is estimated that over 200,000 people died. The rights of ordinary people were violated. In 1991, armed forces fired on demonstrators, killing scores and imprisoning Xanana Gusmao, who is today under house arrest. Despite the offer of special status by the new president, President Habibie, there is concern about the future of the island. The main concern is what will happen economically to an island which has few natural resources and few other means of supporting itself. Of course I accept the point about natural resources such as oil still being available.
We need to ensure that a number of things happen. The political process of autonomy and independence must be achieved by peaceful means and ample support must be provided during the transition period until Timor gets on its feet.
Decades of protest and political repression have left the country with a poorly educated workforce. Unemployment is high. There is also a history of violent political divisions. As a history of the island demonstrates, in the past rival political factions have formed militia to fight others for control. I echo the words of the Nobel Peace Prize winner and Bishop of Dill, Carlos Belo, that the dangers of destabilisation are there. A transition period is needed during which talks could be held between opposing groups. We need to ensure that the bloody history of the island is not repeated in the new process, otherwise, violence and bloodshed will taint the road to freedom.
9.58 p.m.
The Earl of Sandwich: My Lords, I should like to associate myself with the remarks of the noble Lord, Lord Dholakia, and to congratulate the noble Lord, Lord Avebury, not only on this debate, but on introducing so many debates on human rights and encouraging younger Members when they first enter this House. I also thank the noble Lord for his invitation to speak in the gap. I speak as a board member of Christian Aid and on behalf of the Catholic Fund for Overseas Development. I hope that, in a reformed House, we may have a Roman Catholic spokesperson. A subject such as East Timor requires a major contribution from a Catholic church leader.
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For the people of East Timor, the situation is broadly comparable to that in South Africa just before the elections in 1994, or even to the Good Friday agreement in Northern Ireland. After many years of struggle, the parties are on the verge of agreement. They are almost ready to lay down their weapons. It is only a matter of time. The outside world must encourage both sides in the long-awaited peace process which may lead to independence, although it may fall short of that.
However, it is not as simple as that, because the people do not yet have the confidence that the government—and I mean here the Indonesian Army rather than President Habibie himself—will deliver on the agreement they are putting forward. The Foreign Ministers may be meeting in New York today, but the Churches in Timor are cautious. General Wiranto, the armed forces Minister, attended the so-called peace accord, between pro-integration and pro-independence groups in Dili yesterday, but he did not actually put his name to it; nor did Bishop Carlos Belo (Bishop of Dili and Nobel Laureate) or Bishop Basilio do Nascimento. Those two eminent Church leaders, and the Catholic agencies, remain extremely wary as it is widely believed that the whole agreement was stage-managed by the army and designed once again to prove that the Timorese are divided among themselves.
Meanwhile, there are nightly attacks in and around Dili and numerous reports of deaths at the hands of pro-integration militias. I know there are two sides to every process, but as one who has witnessed pre-election intimidation in South Africa, I can recognise the fear which contract killers paid by government can instil in the local population. It is the same in Southern Sudan.
I heard today from a Roman Catholic agency in Dili that many young Timorese are either hiding in the mountains or queuing to leave the country by air or ferry, or whatever means—so little trust is there in the peace process. The Churches are vulnerable to attack and a number of aid workers assisting the displaced people or running the health programmes, have received death threats.
We have heard that international pressure is developing in favour of a United Nations peace-keeping force. Amnesty International is calling for human rights monitors. Australia, Japan (which is the main trading partner) and Portugal are all urging restraint at this time.
The Minister will know that the heads of four British charities have written to the Foreign Office Minister to express concern that,
"elements of the Indonesian military are acting in direct contradiction to stated Indonesian government policy, in a concerted attempt to undermine recent moves towards resolving the impasse over East Timor's political status".
The agencies also echo Bishop Belo's call for a United Nations peace-keeping force, and they offer this warning about the plebiscite:
"Consultation of the East Timorese along the lines of UN proposals currently under discussion will in the present circumstances be fraught with intimidation, coercion and violence. Given the coercive nature of previous consultations of East Timorese, a vote now must be seen to be absolutely free and fair".

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Can the Minister confirm that this Government have a moral obligation to support at least a small peace-keeping force, as well as observers, to ensure that a fair election takes place and that the security of the people is guaranteed, while humanitarian aid is allowed to continue?
There is communal violence and unrest all over Indonesia, as the noble Lord said, and most recently in Jakarta itself. Can the British Government do anything directly to assist the people through their own embassy? I doubt it. But what they can do is to continue to express concern at the highest level, including at the World Bank and in International Monetary Fund meetings. The Asian crisis, as well as the present political unrest, continues to bite into the economy. I know that since the Public Accounts Committee reported and the end of the aid/trade provision, DfId has been looking for more poverty-focused programmes. Perhaps the Minister can confirm that the Government are placing new emphasis on support for the non-governmental organisations and civil society.
10.3 p.m.
Baroness Williams of Crosby: My Lords, I too wish to thank my noble friend Lord Avebury for raising the issue of human rights in Indonesia. I always remember being moved by a famous quotation from Lord Burke which runs:
"It is enough for evil to triumph that good men do nothing".
If there had ever been an example of someone to whom that saying would not apply, I believe it to be my noble friend Lord Avebury. There is never an act of injustice that does not attract his attention, his hard work, perseverance and determination to make every possible effort he can to try to rectify it. I am sure that there are times when the Minister sighs at yet another detailed letter from the noble Lord, Lord Avebury, arrives on her desk. At the end of the day I am sure that she, too, appreciates, as the rest of us do, that he is one of the builders of civilised societies and for that we all owe him a very great deal.
Perhaps I may underline a point raised in particular by my noble friend, Lord Dholakia, and by the noble Earl, Lord Sandwich. That is the devastating effect that the economic crisis has had on Indonesia in the past two years. Certainly none of us would wish to pay too much tribute to President Suharto's long regime, although he managed to attract quite a lot of co-operation from this country at a business level. In the past two years Indonesia has gone through something close to agony with a 14 per cent drop in its national income in 1998 and a further probable drop of 5 per cent to 6 per cent in the current year. We are dealing with a country which has seen about a quarter of its national product disappear in the course of a very short period of time. Even though there are some signs of recovery in east Asia, particularly in Thailand and in Malaysia to some extent, that does not seem to have embraced Indonesia so far, where literally millions of people have lost their jobs, millions more are unable to feed their children and where there are extremely serious economic conditions in many of the islands.
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My son-in-law visits Indonesia regularly. He is an architect and goes there in connection with his profession. He has often reported to me that he now finds starvation in the Indonesian villages, and people are unable to pay for even such basic products as rice. There is an increasing desperation on their part, much of which is visited in the form of ethnic violence. Attacks on the ethnic Chinese in May 1998 led to about 70,000 Chinese uprooting themselves and leaving with their capital. That had a devastating effect on Indonesia because the ethnic Chinese were among the major sources of business and trade in that potentially very rich country. Once again the poverty which affected ordinary Indonesians was carried further into ethnic violence, which has led to a further worsening of an economic crisis of a very serious kind.
I underline what my noble friend Lord Avebury said about Aceh and West Irian. I say with all the seriousness that I can that there is now some danger of Indonesia beginning to disintegrate. It is worth putting that on the record, not that there is any pleasure in the matter, but because it is another of those places like Kosovo which occupies much of our attention and where early warnings may help to avert a yet more dreadful crisis in future years.
What could we do? I do not want to repeat what has already been said by other speakers in this debate about the situation that arises with regard to human rights in East Timor. With the coming of President Habibie there is some hope, even though he does not now command a great deal of public support. He has signed human rights conventions, including the UN convention against torture. He has allowed a number of political prisoners out of prison. He has indicated that he is willing to accept the presence of opposition parties. He now has a very formidable party in the form of the PDI led by Megawarte Sukarnoputra, the daughter of the former president but one of Indonesia. That is something of an achievement and we should record that fact. But it is not clear whether he has command of his own forces or police in the way that my noble friends underlined.
The point made by the noble Earl, Lord Sandwich, is all too likely to be true. We may be looking at a very elaborate form of stage management with the impression being given that the people of East Timor are profoundly divided in their attitude towards the long-standing effort for independence. Not only is there no reason to doubt that the attacks by paramilitaries have occurred consistently over the past few weeks, but those attacks appear to have been financed and supported by the Indonesian army and police. The evidence for that appears to be almost overwhelming.
Further, as the noble Earl, Lord Sandwich, pointed out, the decision of the bishops, who for a long time have observed the attitudes of their parishioners in East Timor, not to sign the so-called peace agreement, alongside the decision by General Wiranto not to sign it, may signify their belief that this is perhaps a deception (to put it in modest terms). There appears to be no clear reason to believe that this is a serious, concrete step towards peace. A former governor, Mario Carrascalao, to whom my noble friend referred, very courageously indicated that he had grave doubts about

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the so-called peace agreement and the proposals for a referendum. He is now running in fear of his life and the safety of his family.
I draw my contribution to a close by mentioning some of the ways in which the Government may help. I do so recognising all the limitations—heaven knows—on the action of any government with regard to another sovereign, independent government. At present there is under discussion at the World Bank a $600 million loan for Indonesia. That loan has been held up because of concerns about whether it may fall into the hands of corrupt administrators and may not go to help the poorest of the poor for whom it is intended. Can the Minister say anything about the possibility of involving NGOs and others in the delivery of that loan so that the money goes to people who are now near starvation in some of the islands of Indonesia?
Is there any possibility of education and health being ring-fenced? The only matter on which I disagree with my noble friend Lord Dholakia is that Indonesia has a remarkable record of primary education with no less than 95 per cent of its children attending school. That is a high figure for east Asia. Alas, we now know from figures provided by UNCTAD that in the past year 20 per cent of children have withdrawn from school. It is likely that that figure will approach 30 per cent in the present year. That is devastating for the future of Indonesia and its ability to compete against other countries for global exports. It is not surprising that the World Bank's vice-president for east Asia said:
"The toll of human suffering in Indonesia is too great for us to turn away in her hour of need".
I believe that to be a very perceptive remark. But perhaps the Minister can say more about the conditions to be attached to the loan, if it is agreed in the coming months.
I turn finally to proposals for the political and human rights situation. Does the Minister agree that we should make representations to the Government of Indonesia, as I understand the US Congress has done already, about ceasing support for the paramilitaries? Can we ensure that we ourselves provide no such support? The US Congress discovered that training of some Indonesian police who were being used as paramilitaries was continuing and brought that programme to an end. First, can the Minister assure us that we are giving no support in the shape of arms, weapons or training to those currently engaged as paramilitaries in the suppression of opinion in East Timor and elsewhere?
Secondly, will the noble Baroness carefully consider supporting the proposals—now surprisingly accepted by President Habibie, at least in principle—for monitors to supervise the referendum in East Timor? I recognise that that may mean some delay from the 15th July date which has been made public, but the idea of having international monitors for that referendum is utterly crucial. Without them there is little chance that either the people of East Timor or world opinion will accept the outcome of the referendum. I think that those who take such a sceptical view would be right.
Thirdly, does the Minister agree that it is important to encourage action on racial and religious discrimination in Indonesia? Perhaps here DfID and the
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Know-How Fund could be helpful in providing some information about the experience of Europe which, after all, knows deeply about religious and racial discrimination and the ways in which our laws are beginning to help attitudes on that front.
Lastly, can the noble Baroness tell us anything about the outcome of the recommendations of the inquiry into the rape of Chinese women at the time of the riots in May 1998? I understand that the Indonesian inquiry team courageously made a number of recommendations which we understand have not so far been acted upon. Can the attention of the Indonesian Government be drawn to that inquiry result, and to our approval of the courage of those who took part in it, and can we suggest that its recommendations should now be acted upon?
10.15 p.m.
Baroness Rawlings: My Lords, I should like, first, to take the opportunity to congratulate the noble Lord, Lord Avebury, on securing this important debate. As other noble Lords have mentioned, it has taken place at a relevant time, for today in New York the Indonesian Foreign Minister is due to unveil its autonomy package in the UN-mediated talks with Portugal, the very day after the pro-integrationists and anti-integrationists in East Timor signed a peace agreement.
From these Benches, I should like also to take the opportunity to welcome the announcement today that the Minister of State will visit Indonesia and East Timor next week, reinforcing the UK's support for, and commitment to, the process of democratic and political reform upon which Indonesia is currently embarked. We look forward to hearing the results of his visit in due course.
Nevertheless, despite those rays of hope in what has surely been one of the most tumultuous and traumatic years in Indonesia's modern history, progress on democracy and human rights has often seemed like a case of two steps forward and one step back, while religious violence, ethnic unrest, federalist, secessionist and integrationist conflicts, the corruption of "money politics", and economic hardships have continued to exact their heavy toll.
Yet it would be a grave mistake to underestimate the distance which Indonesians have travelled since last May when the tinderbox of public anger was set alight by the shooting of four students by the police and Indonesia teetered on the very edge of anarchy as years of simmering grievances boiled over. During that period, organised gangs looted the properties of the wealthier ethnic Chinese minority and systematically raped the Chinese women, as we heard, in one of Jakarta's darkest hours. Few Indonesians will forget the mass student march and occupation of the Parliament which sounded the death-knell for the three decade regime of President Suharto.
Since that time, Indonesia has seen a change in leadership, the enactment of new political laws, the scheduling of elections and the adoption of a fresh approach to East Timor. At this late hour, I shall not go into the details of East Timor. We have heard eloquently from noble Lords today on the issue.

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I have a few questions for the Minister. The international community has often been criticised for its inaction over East Timor, other than to issue statements of condemnation and concern. Even the historic visit of the EU/Troika ambassadors to East Timor last June was criticised for contributing little to the process of seeking a fair, comprehensive and internationally acceptable solution to the situation. In the light of that, what assessment have the Government made of the statement of the Nobel Peace prize winner, José Ramos Horta, that it is "bizarre" that while NATO's conflict with Yugoslavia is acceptable to the international community, sending peace-keepers to East Timor is not? Does the Minister agree with Mr. Horta's recent statement that there should be a boycott of Indonesian exports, a freezing of loans and of the assets of former President Suharto?
What assessments have the Government made of fears that too abrupt a transition could result in violence comparable to that which followed Portugal's withdrawal in 1975, with reprisals from pro-integration groups which want to remain in Indonesia?
What discussions have been held with the Australian Government concerning the future of East Timor? Can the Minister say whether this Government would offer troops as part of a multi-national force to oversee the transition from full Indonesian rule?
Finally, what support have the Government offered for Mr. Habibie's proposals to invite international monitors, as mentioned by the noble Baroness, Lady Williams, to help to prepare East Timor for a vote, and does the Minister consider that it would be acceptable for the planned ballot in July to be delayed while international monitors are invited?
In conclusion, Indonesia has a peaceful, stable and democratic future within its grasp. Its position as the driving force behind ASEAN, the founder of the ASEAN regional forum and a major player in APEC, combined with its large population, its strategic location, the wealth of its resources, its multi-cultural, multi-ethnic, multi-religious society and its status as a vibrant centre of Islamic thought, make it a regional leader and a world player.
Indonesia, just like any other emerging democracy, will face many challenges to achieve the positive economic conditions and political trust necessary for a successful transition to democracy. From these Benches, we join the Government in offering Indonesians our full support in their quest for true democracy and for the rejection of violence, so that from Aceh in Northern Sumatra to Irian Jaya in Eastern Indonesia, where issues of political secession and independence are still to be resolved, a future of justice and freedom, prosperity and peace can prevail, enabling Indonesia to enjoy close and co-operative relationships with its international partners in the 21st century.
10.23 p.m.
Baroness Symons of Vernham Dean: My Lords, I, too, thank the noble Lord, Lord Avebury, for initiating the debate this evening. I agree wholeheartedly with
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what the noble Baroness, Lady Williams of Crosby, said about his propensity for raising matters of real importance. He has demonstrated again his commitment to human rights in all parts of the world. The noble Lady said that on occasions I may sigh when I see another detailed letter from the noble Lord. I do not sigh when I see those letters. I read them with very great interest because I have learned over the past two years or so since I have held ministerial office that there is a great deal of wisdom in what the noble Lord says. I very much welcome the opportunity that he has given us this evening to explain what the Government are doing to support Indonesia as it becomes the world's third largest democracy and what we have been doing to try to ensure that there is an improved climate for human rights in that country.
On 7th June Indonesia goes to the polls in full multi-party elections. Forty-eight political parties have qualified to take part. It is a mammoth task. Over 320,000 polling stations and 110 million eligible voters will have to be catered for. The United Nations Development Programme (UNDP) is co-ordinating international electoral assistance, focused on support for the independent electoral commission, voter education and domestic monitoring.
The noble Earl, Lord Sandwich, asked what we were doing to do in a practical way in support and the noble Baroness, Lady Rawlings, made a very similar point. I can tell your Lordships that we are contributing over £1.8 million in bilateral assistance, mainly through the UNDP, supporting projects, including BBC training workshops for local radio journalists, workshops for Indonesian political parties which will be run by the Westminster Foundation for Democracy, and technical assistance for domestic monitoring organisations. The EU contribution is some 7 million euros and there will be, I can assure your Lordships, an EU observer mission for the election.
We are not sanguine about the human rights situation, particularly in East Timor, which I shall address shortly, but there have been significant improvements since President Habibie took office a year ago. That point was made by the noble Baroness, Lady Rawlings. We have seen most political prisoners released. Official figures show that 212 out of 240 have been released. There has been trade union reform and much greater freedom of expression.
However, the outbreaks of inter-ethnic violence in outlying areas in recent months have been truly shocking. We have called for a new approach in dealing with these incidents. We consider it essential that the delicate ethnic and religious balance of Indonesia is preserved. Acts of violence jeopardising this should be dealt with by security personnel in accordance with international human rights standards and with the aim of reducing tensions. We and the EU have called for all parties to show the utmost restraint in pursuit of their political goals in order to avoid a further increase in tension.
The noble Earl, Lord Sandwich, asked what we were doing in a practical way to support human rights. In terms of practical support, we continue to give material

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support to the Indonesian National Human Rights Commission (Komnas Ham) and other Indonesian NGOs. The noble Earl asked specifically about the NGOs. In October last year, we organised a human rights workshop in Jakarta. This was a UK initiative jointly funded by the UK and the European Commission. The workshop, which was divided into four separate working groups covering police and judiciary, women's and children's rights, human rights education awareness and institution building and labour rights, was co-chaired by Mr. Marzuki Darusman, now the Chair of Komnas Ham, and Professor David Harris, a leading human rights expert and head of the human rights law centre at Nottingham University. Participants came from all EU countries and involved a wide range of Indonesians, including government Ministers, NGOs and human rights activists. The fact that the workshop took place at all symbolised a new era of change in Indonesia. I hope that your Lordships agree with that as a general proposition.
A large number of concrete suggestions for follow-up action emerged from the working groups which we and our partners are taking forward. Included was a recommendation that relevant training should be offered to the Indonesian National Police. As part of our human rights strategy for Indonesia we see a clear role for police training, and even more so now that the Indonesian police are being separated from the military, as the noble Lord, Lord Avebury, pointed out.
Perhaps I may tell him a little more about what is happening. Recent initiatives we have taken on police training include a lecture tour of Indonesia by a senior British police team on modern policing methods, and a training programme in the UK for Indonesian police officers of high potential on the concept of policing by consent as practised in the UK. The training will include modules on human rights, police accountability and the rule of law.
I turn to the issue of East Timor. Like the noble Lord, Lord Dholakia, Her Majesty's Government are truly appalled at the recent violence in the territory, culminating in attacks by paramilitaries in the capital, Dili, last weekend resulting in some 30 deaths. We have called on the Indonesian government to rein in the militias. The violence included a report of up to 50 deaths in an attack on a church in Liquica, to which the noble Lord, Lord Avebury, referred, on 7th April by paramilitaries while, as we understand from the reports, the army looked on. The Red Cross is investigating and the Indonesian government have promised an inquiry on this appalling incident. My right honourable friend Mr. Fatchett issued a statement on 9th April expressing concern and calling for restraint, and asking for the disarming of the militias and saying that the UN process was the best hope. I hope that your Lordships will also be pleased to learn that the EU issued a declaration along similar lines on 12th April.
At the weekend, the militias went on the rampage again in Dili, as the noble Lord told us, and some 30 deaths were reported. Some prominent independent activists sought refuge at the residence of the Nobel
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peace prize winner, Bishop Belo, as did the visiting Irish Foreign Minister. I believe that the noble Lord had some communication in relation to that.
The Prime Minister has written to President Habibie voicing our concern about the situation in East Timor, so we now await a response to the Prime Minister's intervention in that regard.
As a number of noble Lords pointed out, it is imperative that the UN process stays on course and the consultation with the East Timorese people on the autonomy process to be organised by the UN takes place later this year. As a number of noble Lords noted—in particular, the noble Baroness, Lady Raw lings—Portuguese and Indonesian foreign ministers are meeting Kofi Annan today to reach agreement on the consultation and transition process.
The Government believe that flexibility is needed. The EU and ourselves have called for a UN presence to be established in the territory as soon as possible to ensure stability. I hope that that answers the point that a number of noble Lords raised on that issue, in particular the noble Lord, Lord Avebury, and the noble Earl, Lord Sandwich.
We are not committed to any particular solution in that UN process. It is important that it should be fair and comprehensive and that an internationally acceptable solution should be found to the problem of East Timor. But that solution must also respect the interests and legitimate aspirations of those people. That has been the EU Common Position as agreed in 1996. We shall continue to keep in very close contact with the UN Secretary General and his personal representative. Mr Jamsheed Marker, as well as with the Portuguese, the Indonesians and the East Timorese, on that important issue.
The noble Earl raised the question of what was happening to the Christian community. We deplore the recent inter-communal violence. However, there is no suggestion that that is part of any systematic persecution of particular groups. It is the case that, generally, Indonesia has a good record of religious tolerance. We must continue to encourage the Indonesian Government to do all they can to prevent any recurrence of those deplorable events.
The noble Lord, Lord Avebury, drew our attention also to his worries about defence sales to Indonesia and I shall try to answer some of the points which he raised. We shall not issue licences for export of equipment where we judge that there is a clearly identifiable risk that equipment may be used for internal repression or international aggression. We have made clear to the Indonesian authorities that we do not expect any British-supplied equipment to be used against civilians; to prevent the exercise of their rights of free expression, assembly and association; or in violation of other international human rights standards.
I was interested in what some noble Lords said and the tenor of other speeches also indicated that there is evidence that equipment may have been used for such repression. The Government do not have evidence that any equipment licensed for export by this Government has been used for repression in Indonesia or in East

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Timor. If any noble Lord has such evidence, my colleagues responsible for those areas in the FCO would be pleased to see it. If that is so, I urge noble Lords to let the Government have it as soon as possible.
The noble Lord, Lord Avebury, asked, implicitly at least, why we sell arms to Indonesia at all. We see no justification for a general arms embargo on Indonesia. It has legitimate defence requirements. All licensing applications for defence equipment to Indonesia are considered on a case by case basis following the criteria which I have just articulated. No new licences are issued for export of any equipment where we judge that it will not be used in accordance with those criteria.
I can also tell the noble Baroness, Lady Williams of Crosby, that there is no support from Her Majesty's Government for the paramilitaries.
The noble Lord, Lord Avebury, drew our attention to the useful role that can be played by the BBC World Service. I am grateful to him for his kind words about the World Service. The World Service is involved in the training of Indonesian journalists, to which I referred a moment ago, and how they report elections. There is a good deal of interest in that in this country as there will be in Indonesia. We hope that it will be possible to extend the broadcasting hours further, as the noble Lord indicated. I shall obtain further details from my colleagues in the BBC World Service and write to the noble Lord with details of what we may be able to take forward on that point.
The noble Baroness, Lady Williams, also referred to the appalling and shocking attacks on women in the Chinese community last year. I shall write to the noble Baroness about how the inquiry into that rape incident has evolved and how we might encourage its resolution.
The noble Baroness, Lady Rawlings, asked a broader question about our economic links. We are keen to maintain a substantive relationship with Indonesia. I want to make it clear that we believe that that is important. We believe that the relationship should reflect the breadth of our bilateral, regional and global interests and address the issues of mutual concern. We should also, of course, address the issues of human rights.
The noble Baroness also referred to the ASEAN relationship. Indonesia plays a leading role in the multi-national arena. It has an important role in regional and international organisations, such as ASEAN, and it is a role that we wish to see encouraged because we believe that that is the way in which Indonesia's institutions, which we have been discussing in democratic terms and in terms of the rule of law, can be encouraged.
The noble Baroness, Lady Williams, asked about the World Bank. We believe that the work of the international financial institutions (IFIs) should focus on the economic development of Indonesia. That is how
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they can best contribute to the alleviation of poverty which, as the noble Baroness knows, is a particular focus of the Government. The NGOs also have an important role to play, sometimes in conjunction with the IFIs. We support that role.
The noble Baroness made a specific suggestion about ring-fencing parts of public expenditure. That is a very interesting suggestion and I should like to look into it further. I shall write to the noble Baroness on that point, too. I now owe the noble Baroness three letters on the very interesting points that she has made this evening.
Although still fraught with difficulties, the transformation of Indonesia into a fully democratic country is one that must fill us all with a degree of hope and, I would go so far as to say, a degree of real joy. I believe that it can be accomplished.
I hope that I have been able to indicate that Her Majesty's Government are fully engaged in supporting that process. My right honourable friend Derek Fatchett visited Indonesia three times last year. The noble Baroness, Lady Rawlings, is extremely observant and has noticed the press release from the FCO today which announces that he will visit both Jakarta and East Timor next week, security concerns permitting. We believe that my right honourable friend will have the opportunity to demonstrate our commitment there to the democratic transition, the support of human rights in Indonesia, and to a future for East Timor which accords with the wishes of its people.
Earl Attlee: My Lords, before the noble Baroness sits down, perhaps I may say that she has been extremely helpful on the subject of new licences, but what is Her Majesty's Government's policy on the export of dual-use equipment; that is, equipment that can be used for defence or civil purposes? What is the Government's policy regarding spares for in-service defence equipment, especially when those spares could be used for civilian uses or for defence purposes?
Baroness Symons of Vernham Dean: My Lords, spares are looked at on a case by case basis by Ministers. All Ministers in the Foreign Office and indeed elsewhere have, on occasions, had to look at these cases. The criteria are the same as the criteria that we apply on dual use and indeed the criteria which I had occasion to articulate to your Lordships a moment or two ago.
All the licences are looked at on the basis of whether the equipment which we are being asked to consider will be used for internal repression or external aggression. That is the policy. I cannot articulate it any more clearly than that, but I assure the noble Lord that licences are carefully scrutinised. In relation to Indonesia, great care is taken by those who are responsible for the scrutiny process.
House adjourned at twenty minutes before eleven o'clock.