Lords Sitting of 2 February 1999

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

Melksham Hospital
Lord Clement-Jones Lord Clement-Jones asked Her Majesty's Government:
Whether they intend to take any action following the employment tribunal case relating to Melksham Hospital in Wiltshire, won by Christine Clunie and Alison Hale.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hayman): My Lords, the Government are taking a range of measures to ensure that the NHS offers its staff more family-friendly working arrangements. This case related specifically to the particular circumstances of the NHS trust involved. Individual employers have a responsibility to ensure their decisions are in accordance with employment law.
Lord Clement-Jones: My Lords, does the Minister accept that after yesterday's very disappointing award for senior nursing grades, the retention of experienced nurses remains a key issue for the National Health Service and that the encouragement of family-friendly employment practices will continue to be essential? Does she also accept that it is vital that the pay award is covered in full by the department, failing which other cases such as that of Melksham Hospital will occur, where hospital trusts will attempt to cut their costs and reduce the flexible working arrangements now in place?
Baroness Hayman: My Lords, first, the case of Melksham Hospital was a specific one about the introduction of internal rostering to nursing shifts and the effect that that had on women with family responsibilities.
I am rather surprised to hear the noble Lord describe yesterday's settlement as "disappointing". It is the biggest real terms pay increase for 10 years for all nurses and members of professions allied to medicine; and for the first time in five years the award is to be paid nationally, in full, with no staging. Besides the very generous increases for people at the beginning of their nursing careers we are also ensuring that those within the profession are given financial incentives to stay in terms of additional discretionary points. We are also committed to modernising the pay and grading system so that experienced nurses are fairly rewarded for skills and responsibilities.
On the funding, £100 million from the modernisation fund has already been earmarked centrally for staff. Sufficient money is included in the £21 billion
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settlement for the next three years to meet staffing requirements and to make the additional investment that we want to see.
Lord Winston: My Lords, does the Minister agree that, with regard to nursing recruitment, a great deal of evidence shows that it is not merely salary that counts in terms of the attractiveness of the nursing profession?
Baroness Hayman: Yes, my Lords, I agree with that. That is why in my initial response I said that we were taking a range of measures to ensure that we invest in staff development, that we give people who have left the service the opportunity to retrain and return, and that we provide flexible conditions—conditions that recognise family responsibilities—so that many more of those thousands of nurses currently not employed by the NHS will be attracted to return to medicine.

British-Russian Relations
2.41 p.m.
Lord Hylton Lord Hylton asked Her Majesty's Government:
Whether there have been improvements in British-Russian relations since May 1997, and what plans they have for such relations in the medium term, including joint initiatives with other European countries.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, we co-operate on a wide range of issues bilaterally. Our G8 presidency in 1988 saw the first full inclusion of Russia in a G8 summit. Our EU presidency last year improved Russia's relations with the union. We have encouraged the development of NATO's relationship with Russia, including through the Permanent Joint Council. The Prime Minister and Foreign Secretary have close working relations with their counterparts. In the medium term, we hope to agree a common strategy on Russia setting out EU policy, comprehensively, at the Cologne European Council in June.
Lord Hylton: My Lords, I thank the noble Baroness for that reply. Can she confirm that the following will be firmly on the diplomatic agenda for the next few years: Russian membership of NATO, nuclear safety in the Arctic Ocean, faster decommissioning of weapons of mass destruction and the reduction of Russia's external debts?
Baroness Symons of Vernham Dean: My Lords, the noble Lord, Lord Hylton, has covered the agenda pretty comprehensively. I assure him that all the issues that he has raised come up from time to time.
Perhaps I can say something briefly about debt. Any re-scheduling must, of course, depend on Russia reaching an agreed programme with the IMF. The key is Russia implementing rapid fiscal and economic

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reform. Her Majesty's Government are doing what they can through technical assistance, both bilaterally through the know-how fund and through TACIS.
On nuclear safety, concern about the disposal of nuclear weapons is very much on our agenda. There has been an exchange of experts from the UK to Russia and from Russia to the UK. There is also the question of nuclear waste in the polar peninsula and in north-west Russia. I give the noble Lord the assurance that my right honourable friend the Foreign Secretary has taken steps to ensure that that does appear on the summit agenda for the EU/Russia summit this month. The Government's position overall on the decommissioning of nuclear weapons is a matter that I hope I do not have to remind your Lordships is very much on our agenda and was clearly stated in our election manifesto.
Lord Hunt of Wirral: My Lords, will the Minister include on the agenda the strongest possible representations to the authorities about the recent anti-Semitic remarks, in particular on 1st November, when a Member of the Russian Parliament, Albert Makashov, called for the extermination of the country's Jews and for the introduction of quotas on the immigration of members of the Jewish population? As that followed an attack on a Jewish cemetery, a bomb attack on a synagogue, and the failure of the Russian Parliament to condemn one of its Members for those remarks inciting racial hatred, will the Minister ensure that the view of many of us that those remarks are completely unacceptable is made clear to the authorities?
Baroness Symons of Vernham Dean: Yes, my Lords, I can give the noble Lord that assurance. We are very concerned about the anti-Semitism in Russia, and particularly about the comments made in the Duma not only by Mr. Makashov, but also by Mr. Ilyukhin. We are monitoring the situation closely. We welcome President Yeltsin's clear statement which condemned racial intolerance, and the consideration of charges against Makashov by the Interior Minister, Mr. Stepashin. Moreover, the British Ambassador in Moscow has also made representations to the chief of the presidential administration and to the leader of the Communist Party about the comments made by the Duma Members in question.
The Earl of Carlisle: My Lords, does not the Minister agree that one joint practical means of co-operation between the European nations and the Russian Federation would be to build a third bridge over the River Narva, thereby linking the Baltic states and Russia? That would also show to the world that Western Europe and, indeed, the Russian Federation are committed to peace and security within the Baltic states. Does the Minister realise that the Baltic states are currently unable to fund that valuable project alone?
Baroness Symons of Vernham Dean: My Lords, your Lordships have discussed the relationship between the Baltic states and the Russian Federation on a number
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of occasions. We expect Estonia and Latvia to implement the recommendation made by the OSCE High Commissioner, Max Van Der Stoel, on the rights of, for example, the Russian minorities. I am not entirely sure that pressing for a third bridge at the moment is necessarily one of the priorities that we would pinpoint, given that there are other matters with which we hope the Russian Federation will deal; notably, on the economic front and with regard to fiscal reorganisation. We believe that they are the real priorities at the moment.
Lord Beloff: My Lords, in view of the Minister's reference to better relations with the Russian Federation, are Her Majesty's Government satisfied that no further help is going from Russia to Iran in relation to Iran's nuclear ambitions?
Baroness Symons of Vernham Dean: My Lords, we have raised the question of the help that has allegedly been given by Russia to Iran. We are monitoring the position closely. We are very concerned about the movements of conventional weapons. Again, that is a matter that Ministers raise with their Russian counterparts from time to time.
Lord Mackie of Benshie: My Lords, is the Minister aware that there have been extremely disturbing reports of nuclear safety workers not being paid in Russia for up to six months? As we are trying to help financially, can the Minister say whether we are doing anything about that specific and extreme danger?
Baroness Symons of Vernham Dean: My Lords, there are disturbing reports about many different public servants in Russia not being paid. I refer not only to those working in the nuclear industry, but also to some members of the armed forces and to school teachers. Steps are being taken to try to safeguard the position with regard to nuclear weapons. We have been discussing with our counterparts in Europe the steps that we can take to help the Russians to make their nuclear installations safer. The payment of public servants in Russia is a very much more widespread problem. The Russian Federation must address it by having a far better organisation in the future in terms of economic stability and fiscal programmes.
Lord Moynihan: My Lords, can the Minister say whether in the light of the improvements that she has described, Russia would now support military action by NATO against Serbia in the event of a failure by President Milosevic to comply with the demands of the contact group, given Russia's previous opposition to such use of force?
Baroness Symons of Vernham Dean: My Lords, I am unable to answer that question at the moment. As the noble Lord knows, we are concentrating now on trying to get all the parties to the discussions that are scheduled for this weekend. The Russians have been very supportive, as members of the contact group, in pressing for all sides to participate in the discussions.

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However, I cannot tell the noble Lord that the position has changed with regard to possible military intervention.
Lord Milverton: My Lords, will the Minister be able to encourage the Russians to agree that the Latvian Government have gone quite a long way, and are still doing so, in order to make the Russian minority in Latvia—a large minority—feel more at home? I have a slight interest in the matter because I am chairman of the all-party British Latvia Group. It ought to be acknowledged that the Latvian Government are continuing to go a long way towards improving the situation.
Baroness Symons of Vernham Dean: My Lords, the Russians have acknowledged that there has been progress in Latvia, which last year fulfilled the last two recommendations on citizenship of the OSCE High Commissioner on National Minorities. However, Russia still claims that there is discrimination in other areas, including on the proposed new language law. We recognise that work remains to be done in ensuring that the Latvian language and labour laws conform to international law. We support Mr. Van der Stoel's efforts to help bring that about.
Lord Avebury: My Lords, is the Minister satisfied with the controls exercised by the Russians over exports of conventional weapons to the third world? Moreover, can she say whether there have been any discussions between the European Union and the Russian Federation about the harmonisation of codes of conduct between the two entities?
Baroness Symons of Vernham Dean: My Lords, we have been doing our best to discuss questions of nuclear weapons with our friends in Russia. However, at present we are particularly anxious to ensure that the Duma goes ahead with the agreement on Start II. That was meant to be ratified by the end of last year, but we hope that it will be done this spring. Our next priority is to secure agreement this year on the fissile material treaty, which we regard as the absolute priority in international terms on nuclear disarmament.
Lord Hylton: My Lords, if ways and means could be found of achieving full membership in NATO for Russia, does the Minister agree that many problems would be solved and that the alliance might become one which embraces the whole of the northern hemisphere?
Baroness Symons of Vernham Dean: My Lords, the fact is that Russia has not applied for NATO membership. However, it would be foolish to say that Russia never will apply and that, in the right circumstances, such an application would not be considered seriously. Indeed, I believe that it would be. At present we are working hard to ensure that the Founding Act works properly, that the Permanent Joint Council works properly and that the military links we have forged with Russia can be made to work well.
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We shall see the establishment of a NATO commission in Moscow over the course of the next few months. This incremental, step-by-step approach is a sensible one. It is one which is building confidence between Russia and NATO. The longer-term programme is one to which we shall look forward.

State Pensions
2.53 p.m.
Lord Islwyn Lord Islwyn asked Her Majesty's Government:
Whether they will now raise the level of state pension for a single pensioner to £75 per week.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, we have honoured our manifesto commitment to retain the basic pension and to increase it at least in line with prices. We also said that we would give priority to the poorest pensioners. That is exactly what we are doing with our minimum income guarantee.
Lord Islwyn: My Lords, I thank my noble friend the Minister for that Answer. However, has she stopped to compare this meagre claim of pensioners with what is happening in Ystradgynlais in South Wales where 750 jobs are to go at Lucas Varity, the very lifeline of that Welsh community? In the meantime, Mr. Victor Rice, the chief executive of Lucas SEI and the man who authorised the sackings, is due to pick up £17 million. Is that not an indication of the re-emergence of the unacceptable face of capitalism? Can my noble friend tell the House what the Government's attitude is over these issues?
Baroness Hollis of Heigham: My Lords, much though I might enjoy this in a different forum, it is not for me to comment on the award to an individual former chief executive or director. I believe that most people would find it excessive, to say the least. However, in terms of my noble friend's original Question, it is important to remember that, whatever excrescences there may be as regards extraordinary large awards at a time when other people are losing their jobs, the major problem facing pensioners in this country is the fact that so many of them still have incomes at or below income support level. That is why we are taking action by way of the minimum income guarantee; and that is why we are trying to ensure that this problem is not repeated for future pensioners by making sure that they have access to decent jobs through the New Deal and that, while working, they enjoy a good second pension. That is our policy.
Baroness Ludford: My Lords, far from being better off under Labour, is it not true that independent figures show that after two years of Labour government pensioners are worse off when the net effect of all the tax changes is taken into account? Therefore, would it not be a start to tackling pensioner poverty to raise the measly 25 pence a week—barely enough to buy a

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stamp—which 80 year-old pensioners receive to at least £5 a week? Surely that would be an excellent start to tackling pensioner poverty.
Baroness Hollis of Heigham: My Lords, I assume that the noble Baroness is quoting figures which appeared in the Daily Mail, and which, in turn, may have been mentioned by her honourable friend in another place, regarding what has been happening to pensioner incomes since the Labour Party came to power some 18 to 20 months ago. It is true—and the figures were given by my right honourable friend the Prime Minister and by my right honourable friend the Secretary of State in another place—that poorer pensioner households have, on average, increased their income by £140 a year by virtue of the reduction of VAT on fuel and winter fuel payments. In addition, the poorest pensioners (the 20 per cent. or so eligible for income support) will see their incomes rise by £160 a year from this April, which means a total increase of £300 a year. I should have thought that the noble Baroness would have welcomed this increase in income—indeed, rejoiced over it—for the poorest pensioners in the country.
Lord Astor of Hever: My Lords, as we on this side of the House have given a firm assurance that we will not means test the basic state pension in the next Parliament, why have this Government not done the same?
Baroness Hollis of Heigham: My Lords, I suspect that the noble Lord can make whatever statement he likes about what his party would do in the next Parliament without necessarily being held to account by the British electorate. However, having said that, I should point out that the Prime Minister and the Government have made it absolutely clear that the basic state pension is a keystone of our pension policy. It will not be means tested. It will rise at least in line with prices. But—and this is a basic point—if we are to ensure that all our pensioners enjoy the prosperity that they should, they need a decent second pension. That is why we are developing a state second pension which will give to those earning between £3,500 and £9,000 a year a pension as though they were earning £9,000 a year. That would do more to lift those on lower earnings and intermittent earnings than anything we have seen since my noble friend Lady Castle introduced SERPS 20 years ago.
Lord Marsh: My Lords, I apologise for interrupting this unholy alliance, but it is very difficult to acknowledge the genuine concern that everyone has for the fact that a large number of pensioners on state pensions are receiving an inadequate amount and, at the same time justify, as both Front Benches do, the £7 billion a year going to top rate taxpayers. Does the Minister agree that that is an absurdity?
Baroness Hollis of Heigham: My Lords, I am not sure that I understood the noble Lord, though that may be because of my stupidity. Is he querying the tax relief that goes to top rate pensioners from the £7 billion?
Lord Marsh: No, my Lords; I am suggesting that it is absurd in this situation that state pensions are not means tested in terms of top rate taxpayers. We acknowledge that there are people who are under-provided for in the state pension scheme, while at the same time we give pension benefits to people who clearly do not need them and who are paying very high rates of tax.
Baroness Hollis of Heigham: My Lords, pensioners, including the highest rate pensioners, will pay tax on their basic state pension at something like 40 per cent. The commitment we have made is that the basic state pension is a universal pension available to all, which will rise in line with prices. However, as I said a moment ago, I believe we all accept that for pensioners to enjoy a comfortable standard of living to which they are entitled they need a good second pension on top of that. So far too much of our pension provision has been shaped by images of the person who has a job for 40 years, who never changes that job and who works full time with one employer.
We need to develop new, flexible pension arrangements. We need to include the self-employed. We need to look after carers and those with intermittent earnings. That is the way we are going. However, the assumption that those who pay the highest taxes do not pay tax on their state pension is simply wrong.
Lord Stoddart of Swindon: My Lords, will my noble friend confirm that over the past 18 years the basic state pension as a proportion of national earnings has consistently dropped and that if nothing is done to increase pensions beyond the retail prices index the state pension will gradually be phased out? Can my noble friend assure me that something will be done in future years to maintain the value of the state pension in relation to average earnings?
Baroness Hollis of Heigham: My Lords, our policy is clear. The basic state pension will rise in line with prices but that alone will not be sufficient, as my noble friend said. By the year 2050 that alone would produce a pension of only 7 per cent. of average earnings. That is why we seek a state second pension and the measures taken together will be worth about £30 or £40 a week more than the sum that a person who earns £6,000 a year would receive at present.
Baroness Gardner of Parkes,: My Lords, I accept what the Minister said; namely, that the basic state pension will not be means tested. However, she then said that people will nevertheless receive a guaranteed income. I do not know what that is if it is not another form of pension. I cannot understand how the Minister intends to give that to people without means testing it. Will she clarify that?
Baroness Hollis of Heigham: Yes, my Lords. The basic state pension at the moment is £65 a week, which is below the level of what a pensioner would get if he had no capital and was therefore entitled to an income support top-up. The guaranteed minimum pension

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represents £75 a week as opposed to £65; that is, the basic state pension plus a premium on top which will be paid automatically to those pensioners who have no capital and no alternative earnings. That way we shall ensure that they are at, and above, income support levels.

European Union: Tax Harmonisation
3.2 p.m.
Lord Blaker Lord Blaker asked Her Majesty's Government:
What recent consultations they have had with other European Union governments about the harmonisation of taxes.
Lord McIntosh of Haringey: My Lords, let me answer by drawing from the joint statement made by the German Chancellor and the Prime Minister in December which states,
"We strongly support action to combat unfair tax competition … But we will not support measures leading to a higher tax burden and jeopardising competitiveness and jobs in the EU … At no stage have we considered measures to harmonise personal income tax … We fully support the need for enhanced co-operation in the fight against tax abuse and evasion…But where tax policy is used to support wider health and environmental objectives, there may he advantages in co-ordinating action across the EU".
Lord Blaker: My Lords, the Minister and the Government set great store by the veto. If an application by the Government to join the single currency is met by the response that we may do so if we agree to a general harmonisation of taxes—which is what Herr Lafontaine wants—or that we should agree to a move towards qualified majority voting on tax matters, what would be the Government's response? Will the Minister give a unqualified assurance that no such deal would be accepted?
Lord McIntosh of Haringey: My Lords, that question makes two presumptions, neither of which I can accept. The first one is that there is a move towards general tax harmonisation in the European Union. I have already quoted the boss of Herr Lafontaine to make it clear that that is not the case. The second assumption is that some such condition will be made on an application to join the single currency. I do not accept that proposition either.
Lord Bruce of Donington: My Lords, in view of the constitutional and economic importance of these tax harmonisation considerations, I ask the Government in the most non-controversial fashion whether they will make available to Members of this House a pack consisting of the important documents that have been issued by the Commission and by the Government and which have either been sifted or are due for scrutiny by the various Select Committees? I am quite sure the Government will agree that that would be most helpful to the detailed discussions which sooner or later will have to occur in this House.
Lord McIntosh of Haringey: My Lords, the explanatory memoranda which accompany all draft directives are available to all Members of this House.
Lord Taverne: My Lords—
Lord Higgins: My Lords, part of the so-called harmful tax practices—
Lord Carter: My Lords, I suggest that the noble Lord, Lord Taverne, speaks and then the noble Lord, Lord Higgins.
Lord Taverne: My Lords, following the constructive suggestion of the noble Lord, Lord Bruce of Donington, will the Government continue a pragmatic approach to the question of tax harmonisation, recognising that certain kinds of harmonisation are obviously desirable—one can hardly argue against state subsidies and not oppose certain special kinds of tax incentives which have the same effect—but, on the other hand, also recognising that certain kinds of harmonisation, which would lead to the loss of business across the Atlantic or elsewhere, would be undesirable? Will the Government continue to be pragmatic in their approach?
Lord McIntosh of Haringey: My Lords, my first Answer, which made it clear that we shall continue to be pragmatic, demonstrated that that is the policy not only of the British Government but also of the German Government.
Lord Higgins: My Lords, why is the "hit list" of so-called harmful tax practices which is being considered by the European Union Code of Conduct Group not being published when our national interests are at stake and many of our industries may wish to make representations on the subject? More specifically, last Thursday the Minister said that roll-over relief for British ships is on the list. Can he give the House an assurance that other much heavier subsidies and tax reliefs for shipping in other European countries are also on the list?
Lord McIntosh of Haringey: My Lords, when the noble Lord uses the phrase "so-called harmful practices", he has decided that certain practices are harmful. We do not accept that the five examples that we have given to the European Union are harmful. There are 80 more such examples practised by other member states. Those are retained in confidence by ECOFIN until the Code of Conduct Group has completed its consideration.
Lord Boardman: My Lords, is the noble Lord content that taxes should be imposed on British subjects by a consortium over which we have no control?
Lord McIntosh of Haringey: My Lords, that is simply not the case. My first Answer, and every answer I have given on this point over recent weeks and months, have made it clear that we are in control of our own fiscal policies.
Lord Ewing of Kirkford: My Lords, in view of the interest in this matter can my noble friend tell your Lordships' House whether, should tax harmonisation be introduced, it would mean that those who receive tax free allowances would need to start paying taxes?
Lord McIntosh of Haringey: My Lords, I think my noble friend is using a wide definition of tax harmonisation. It has never been suggested that there should be any harmonisation of personal income tax.

Business
Lord Carter: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lady Hayman will, with the leave of the House, repeat a Statement that is being made in another place on NHS Direct.

Trustee Delegation Bill [H.L.]
3.8 p.m.
The Minister of State, Cabinet Office (Lord Falconer of Thoroton): 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 Falconer of Thoroton.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clauses 1 to 5 agreed to.
Lord Brightman Lord Brightman moved Amendment No. 1:
After Clause 5, insert the following new clause—

EFFECT OF THIS ACT ON SECTION 25 OF TRUSTEE ACT 1925
(" . The text of section 25 of the Trustee Act 1925 as amended by the Powers of Attorney Act 1971 and this Act is set out in Schedule (Text of section 25 of the Trustee Act 1925 as amended).").
The noble and learned Lord said: In moving Amendment No. 1, I wish to speak also to Amendment No. 2, although I shall not detain the Committee for many minutes. Amendment No. 2 is a Keeling schedule which I tabled in order to make it easier for the reader to understand the impact of Clause 5 of the Bill on Section 25 of the Trustee Act 1925. My amendments are supported by the Law Society.
The Minister telephoned me this morning to say that he would achieve the same result by tabling an amendment for Third Reading which would put the final form of Clause 25 of the Trustee Act into Clause 5 of the Bill. This would achieve, by an alternative route, exactly the result I sought and is wholly satisfactory.
I have only one tiny niggle. When the noble and learned Lord spoke to me on the telephone this morning, he told me that he would table the amendment for Third Reading. In a letter which reached me half an hour ago there is a slight gloss on that. The letter used the words,
"at Third Reading or as soon as practicable thereafter".
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Can the noble and learned Lord omit the words "as soon as practicable thereafter"? All that needs to be done is to transport the wording of Amendment No. 2 into Clause 5 of the Bill. The wording is absolutely accurate; it has been in the hands of the parliamentary draftsman for a fortnight and it has never been suggested that a single word needs changing. Would it not be better to send a polished Bill down to the other place rather than one which is still in need of amendment? I beg to move.
Lord Goodhart: I support the noble and learned Lord, Lord Brightman. This will be of considerable practical help to those who study the Bill—or Act, as it will become—in the course of their professional duties. I am glad that the Minister has agreed to accept it in principle. I am not sure whether this would meet with the approval of the noble and learned Lord, Lord Simon of Glaisdale, who has taken up a considerable part of the debates on the Access to Justice Bill in trying to remove surplus words from the Bill. In this case it seems to me to be appropriate, and I welcome the noble and learned Lord's amendment.
Lord Falconer of Thoroton: The amendment tabled by the noble and learned Lord, Lord Brightman, would result in the inclusion of what is called a Keeling schedule in the Bill. Introduced in 1937, these schedules—named after a Member of another place whose inquiries of the then Prime Minister gave rise to their use—are now little used. They tend to give rise to handling difficulties during the passage of Bills and set the amended provision in aspic. Future amendments to the provision would not show up on a Keeling schedule and it might become a trap for the unwary at a later date. However, the noble and learned Lord has put a persuasive argument that the provision in this Bill, which amends Section 25 of the Trustee Act, should be treated exceptionally.
He has accurately recorded the conversation we had. I undertake to introduce a government amendment—well, I say that I undertake to introduce a government amendment, but I am not going to give him satisfaction on his last point. I undertake that an amendment will be introduced at some stage, in effect, to set out the whole of the new Section 25 in the body of the Bill, which meets his point.
I did say to him on the telephone that it would be done by Third Reading. I am now told that I am not in a position to give such a watertight undertaking and that it might have to be introduced during the Commons stage of the Bill. I appreciate the humiliation to this House of not sending a Bill to the other place in tiptop form, but I am afraid that is the best I can do, and for that I apologise.
Lord Brightman: Subject to my slight niggle, I thank the noble and learned Lord for the helpful attitude he has adopted towards my amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Remaining clauses agreed to.
[Amendment No. 2 not moved.]
Schedule agreed to.
House resumed: Bill reported without amendment.
Report received.

Contracts (Rights of Third Parties) Bill [H.L.]
3.15 p.m.
The Lord Chancellor (Lord Irvine of Lairg): 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.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 [Right of third party to enforce contractual term]:
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 1:
Page 1, line 8, leave out from ("may") to end of line 10.
The noble Lord said: I begin by apologising to my noble and learned friend the Lord Chancellor for tabling my four amendments rather late last evening. This did not give him the opportunity to study these amendments closely, and perhaps put his own name to them, as I am sure he would have been quite willing to do.
The amendments arise from a long-standing connection that I have had with the construction industry, as older Members of the House will know. I have a lifelong and continuing interest in the industry, and I declare it now. These amendments have been inspired by the Construction Industry Council. I shall begin by making a few general remarks and, in due course, deal with each amendment as briefly as I possibly can.
First, let me say that I have a feeling of having been here before. Perhaps Glen Hoddle can help me. I recall that in the 1980s, under a previous Lord Chancellor—the last but three or so, I think—we debated a Latent Damage Bill. Like this Bill, that was a law reform Bill, and is now an Act. It was a law reform Bill which impinged very heavily on the construction industry. But it did not deal with the 90 per cent. of latent damage cases connected with the construction industry as carefully as it did with the 10 per cent. of cases which were not. I feel there is something similar about this Bill.
It seems to me that the Bill ignores the nature of contracts in the construction industry. The Law Commission's proposals incorporated in the Bill take account mainly of arrangements involving one promisee and one promisor with roughly equal strength—contracts between equals, in other words—and a reasonably well-defined pattern of third parties.
The construction industry is not like that. Let us consider for a moment the building of a power station or, even more dramatic, the construction of the Channel
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Tunnel. Projects of that nature involve a great network of contracts. The project is never given as a whole. It is given as a series of parts. It may well be that the main contractor on one part of the work has a subcontractor and on another part of the work that subcontractor is a main contractor and the first main contractor is himself a subcontractor. Then there is the whole body of specialist subcontractors on which the construction industry depends. All of those people can be main contractors, subcontractors or indeed third parties. The position is far more complex than the Bill, if I have understood it properly, makes out.
The contractors are not equal and that goes against the grain of the Bill. A multitude of contracts is involved. Very often a main contractor is able to impose on a subcontractor fairly onerous terms, especially if he is a specialist subcontractor. Each contract will have an amalgam of third parties, which might include the general public. By its nature a piece of construction is imprecise. We all know that the Jubilee Line may or may not be finished in time for the millennium. It will probably not be finished. That is commonplace in construction contracts because unforeseen circumstances arise. There are factors such as inclement weather, the fact that foundation conditions might be different or floods might occur. There might be union strikes, as was the case in the old days. There are all kinds of factors which impinge on a contract and make the contract liable to change during its period. That change impinges on the third parties.
Let us put the position at its most simple and assume that a construction contract is expected to last for nine months. The general public will have to put up with nuisance, bother, noise and all kinds of inconveniences for nine months. However, due to unforeseen circumstances, the contract lasts for 12 months. So the public's inconvenience is extended. People are hurt far beyond their expectations. That is a totally different situation from the generalised one-to-one contracts which the Bill envisages.
All I have to say—it is a fairly draconian so I shall say it as quietly as I can—is that these complications mean that Clause 1(1)(b) is unworkable in the construction industry. My amendment seeks to remove it. I should say for the ease of mind of my noble and learned friend that I do not intend to press any of my amendments to a Division. They are probing amendments. I beg to move.
Lord Meston: I am sure the Committee is grateful to the noble Lord, Lord Howie of Troon, for bringing forward these amendments which, as he said, are prompted by the Construction Industry Council, whose very interesting observations some of us, including, I suspect, the noble Lord, saw only yesterday. All of us would have preferred to have seen them at an earlier stage, perhaps before Second Reading. However, the noble Lord raises the important question of the impact of this Bill on construction contracts.
It should be said that the Bill before the Committee, as was made clear at Second Reading, is hardly rushed legislation. It has been some 50 years in the offing and comes to Parliament via the Law Commission, to which, as I understand it, the construction industry, among

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many others, made representations. As I read and reread the Law Commission's report in the light of the observations of the Construction Industry Council, it clearly acknowledged the impact of the proposed law reform on the complex network of contracts which typically arise in the construction situations to which the noble Lord referred.
For the most part, I think the answer will be that the construction industry, among others in the future, will have to depend on well drafted and sometimes better drafted contracts. Having said that, although I do not accept that there is particular force in the proposal to amend Clause 1 beyond the suggestion I have already made that better drafted contracts may well be required, there is some force in the proposal in Amendment No. 2 to amend Clause 2. However, as far as concerns Clause 1, I do not believe that the solution will be found in leaving out subsection (1)(b), which has to be read with Clause 1(2), which I notice the noble Lord's amendment does not seek to delete.
The Lord Chancellor: The noble Lord, Lord Howie of Troon, has not really moved Amendment No. 1 in the sense that, if accepted, it would be of wholly general effect. He has claimed that the Government have not sufficiently attended to the special nature of contracts in the construction industry. I do not accept that. The noble Lord's Amendments Nos. 1 and 2 are of wholly general effect and go much further than to protect the supposed interests of the construction industry.
Amendment No. 1 seeks to leave out Clause 1(1)(b). The Bill certainly could have been more restrictive if it had provided for third party rights only when the contracting parties had provided in express terms that they should be entitled to enforce the terms in question. However, the Bill desires third party enforceability to cover cases where, properly construed, the contract intended a term to confer a benefit on the third party. Thus Clause 1(1)(b) provides:
"subject to subsection (2), the term purports to confer a benefit on him".
The Bill did not, however, stop there because Clause 1(2) was added which, as the noble Lord, Lord Meston, pointed out, the noble Lord's amendment fails to elide. Clause 1(2) provides that,
"Sub-section (1)(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party".
So essentially the combined effect of sub-paragraph (b) and subsection (2) is a rebuttable presumption in favour of there being an enforceable third party right where a contractual term purports to confer a benefit on a third party, but the presumption is rebutted where on a proper construction of the contract the parties did not intend to confer a right of enforcement on the third party.
Perhaps I may give a simple illustration of how the Bill, if amended in the way the noble Lord proposes, would work an injustice. An uncle transfers his business to his nephew who promises in return that, after the uncle's death, he will pay an annuity to an expressly named aunt. In such a situation, the uncle and nephew may not have included an express provision that the
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aunt's rights would be enforceable. But I agree with the Law Commission's view that the nephew would be unable to satisfy a burden of persuading that those were not intended to be enforceable. It would be unfortunate if the third party right should be unenforceable in cases of this description—and there could be many—just because the parties had not thought to refer expressly to enforceability. On that basis I invite the noble Lord to withdraw his amendment.
Lord Howie of Troon: I thank my noble and learned friend for his comments, and I especially thank the noble Lord, Lord Meston, for his.
I did not suggest removing subsection (2) as it seemed to me fairly obvious that if subsection (1)(b) were removed, subsection (2) would also be removed. I did not want to hammer the provisions too hard into the ground.
I was interested in the comments about uncles, aunts and nephews. They illustrate my point. They are a long way from the complications of the construction industry and relate merely to the complications within a family.
However, I understand the weaknesses of the amendment. I tabled it in order to place this debate at the beginning of our deliberations. I am happy to withdraw it, although we may soon need to return to a provision that is not too dissimilar. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2 [Variation and cancellation of contract]:
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 2:
Page 2, line 32, at end insert (", or
>(c) that his consent is being unreasonably withheld.").>
The noble Lord said: This amendment relates to the kind of situation in the construction industry where a contract has to be varied due to unforseen circumstances such as I described earlier. A third party might intervene in such a way as to prevent the work being carried on and cause it to be held up for an undue length of time. All I suggest is that we should add the words,
"that his consent is being unreasonably withheld".
I beg to move.
The Lord Chancellor: We cannot accept this amendment. The essence of the Bill is that it should give effect to the parties' intentions to confer on third parties such enforceable rights as they choose. They may choose to confer none at all. If they do choose to confer enforceable rights, they may specify by their contract the point at which the third party rights cannot be varied without the third party's consent. The Bill, however, sets out in Clauses 2(1)(a), (b) and (c) the crystallisation points which will apply if they are not specified in the contract. It also provides assistance where there is no practicable way in which they can obtain the consent of the third party to a variation to their contract which they desire to make, either because they cannot find the third party (Clause 2(4)(a)), or because he is mentally incapable of giving his consent (Clause 2(4)(b)).

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What the proposed amendment would achieve would be to give the court in all circumstances a power to hold that, despite crystallisation, the third party was unreasonably withholding his consent to a variation. It is not the policy of the Bill, absent an express provision in the contract, to dictate that the intended beneficiary will not be entitled to withhold his consent if that were held to be unreasonable by a court. Such a provision would in effect be conferred if the discretionary power now proposed were conferred on the court. It is Clause 2(3) which provides protection for the primary contracting parties, under which express terms of the contract can specify either the circumstances in which the contract can be cancelled or varied without the consent of the third party, or that the contract can vary the crystallisation circumstances which would otherwise apply under Clause 2(1)(a) to (c).
A provision of the kind the noble Lord proposes could lead to endless litigation as the reasonableness of a third party's refusal to agree to literally any variation of the contract affecting his entitlement. I therefore invite the noble Lord to withdraw his amendment.
Lord Williams of Elvel: For those of us who are not lawyers, will my noble and learned friend give the Committee a definition of the word "crystallisation" that he has used on a number of occasions?
The Lord Chancellor: I used the expression "crystallisation circumstances" in an attempt to assist the Committee. Plainly, I have not done so. If the noble Lord examines Clause 2(1) of the Bill he will see that,
"Subject to the provisions of this section, where a third party has a right under section 1 to enforce a term of the contract, the parties to the contract may not without his consent cancel the contract, or vary it in such a way as to extinguish, or alter his entitlement under, that right, if",
the circumstances set out in either sub-paragraph (a), (b) or (c) exist. Any of those three sets of circumstances are the crystallisation circumstances to which I refer.
Lord Howie of Troon: I thank my noble and learned friend for that lengthy, detailed and crystal clear explanation of the position.
I was greatly attracted by one of his remarks when he explained that my amendment, inoffensive as it appears to me, might lead to endless litigation. This is the first time that I have ever heard a lawyer complaining about the possibilities of endless litigation. It gives me a certain amount of delight.
I shall study my noble and learned friend's reply carefully tomorrow, and possibly for two or three days thereafter. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 [Defences etc. available to promisor]:
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 3:
Page 3, line 21, at end insert—
("( ) When a third party is conferred rights by more than one promisor, each promisor's liability shall he proportionate to, and limited by, that promisor's undertaking.").
The noble Lord said: This amendment relates to the complex nature of the construction industry and the fact that there is a network of contracts between people, who might often be the same people though in different guises. It seeks merely to ensure that, when a third party is the third party to two or three different first and second parties, any damages that he might accrue should be shared out equally and in proportion to the other parties. I feel that this will not be to my noble and learned friend's taste, however, I hope he will consider it. I beg to move.
The Lord Chancellor: I assure my noble friend that although, as he observed, his amendments were tabled rather late in the day, I certainly have considered them carefully.
The purpose of the Bill is to enable the contracting parties to confer enforceable rights on third parties to the extent that they themselves choose to do so and no more. They will therefore be free to place limitations on their liability as they choose under the contract to the third party. As the noble Lord, Lord Meston, said on an earlier occasion, it may be that the construction industry needs to look with great care at the many contracts that apply to interlocking transactions. It may do no harm to that industry if it looks with greater care at the precise obligations that it creates.
Where there is more than one promissor the parties may specify what their individual liabilities are to be, including the proportions in which they are to share any liability. The amendment, however, may convey the impression that where there is more than one promissor in order for the contract to be effective it must specify the quantum of the obligation assumed by each promissor. That is not the intention. In the ordinary way the court will construe any contractual provision to be either joint or several or joint and several according to whatever interpretation it concludes is the correct one. It is however entirely plain that if the contract quantifies the obligation of each promissor separately, that will limit the obligation of each to the third party beneficiary. The moral therefore is that there should be clear contracts. On that basis I invite the noble Lord to withdraw his amendment.
Lord Howie of Troon: I thought for one moment that my noble and learned friend had accepted my amendment but once again I turned out to be mistaken. I shall read carefully what my noble and learned friend said and attempt to understand it within the next few days. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.45 p.m.
Clause 3 agreed to.
Clauses 4 and 5 agreed to.
Clause 6 [Exceptions]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 4:
Page 3, line 39, leave out ("contained in") and insert ("on").
The noble and learned Lord said: Amendment No. 4 is a drafting amendment to make clearer exactly which contracts will be excluded from the operation of the Bill by Clause 6(1). A single document may contain provisions that set up more than one contract. It may contain a contract on a negotiable instrument in addition to what is effectively another contract that has no negotiable element. By this amendment we modify the wording slightly to make it plain that it is only the former—a contract on a negotiable instrument—that is outside the provisions of the Bill.
I understand from the Financial Law Panel that the distinction has particular significance for practices in the euro securities markets. Thus, for example, a company may issue a global note which is negotiable and deposit it with a depository institution, perhaps a bank. The parties to the negotiable instrument will be the issuer and the bank and the investor's right will be against the bank. But it may be intended that in certain events, for example, the insolvency of the depository institution, the investor should have rights against the issuer. We believe that at present this is achieved by the rather cumbersome method of the issuer executing a deed poll that confers on the investor rights against the issuer. I understand that the wish is to use this Bill to obviate the need for deed polls to confer rights on the investor against the issuer. The Government are content to respond to the Financial Law Panel on the basis that this amendment will allow the Bill to provide a useful additional facility for the London market. I beg to move.
Lord Donaldson of Lymington: I begin by declaring an interest as chairman of the Financial Law Panel. I thank the noble and learned Lord the Lord Chancellor for moving this amendment and for the explanation he gave. The panel very much welcomes the Bill as giving rise to new rights to enforce third party obligations. Its particular concentration is the operation of the bond market. The amendment makes even clearer the fact that provided the obligation to a third party is not a contract on the bill of exchange, or whatever it may be, there is no problem.
At one point in the panel's deliberations some members took the view—no doubt they still do—that the use of deed polls to confer rights on third parties was a cumbersome procedure, as the noble and learned Lord said. There are many practising solicitors in this field who have become so used to it that they do not regard it as cumbersome in the least, although London is different from any other financial market. As far as I am aware no one has been able to point to a defect in the system apart from the fact that it is unusual. In that situation I believe that the use of deed polls remains an alternative. However, I very much welcome the fact that the Bill will provide those who have inhibitions about deed polls with the ability to proceed by a different route. That will also be available in any specialised transactions where plainly a deed poll is inappropriate,
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however unusual those transactions may be. I welcome the amendment and thank the noble and learned Lord the Lord Chancellor for the way in which he moved it.
The Lord Chancellor: Before departing from the amendment, I should make plain that by my choice of language in moving the amendment I did not seek to cast any doubt whatever on the legal effectiveness of the use of deed polls.
On Question, amendment agreed to.
Lord Howie of Troon Lord Howie of Troon moved Amendment No. 5:
Page 3, line 43, at end insert ("or under any contract falling within section 104 of the Housing Grants, Construction and Regeneration Act 1996.").
The noble Lord said: I am very pleased that my noble and learned friend has just made another exemption from the Bill. This amendment proposes an exemption from the Bill for the construction industry as a whole. Were the amendment to be accepted, as I believe should happen, my earlier amendments would be otiose and need not have been considered. I believe that I have already laid the ground for this argument and I shall not go over it again. To my mind—it is not a legal mind—the Bill assumes that there are two contractors of equal weight, a promissor and a promisee, who reach an agreement and all goes well. This is not so in the complicated arrangements of the construction industry. The special nature of the construction industry can be seen from the fact that in 1986 we had a lengthy debate on the Housing Grants, Construction and Regeneration Bill, now an Act. Part II of the Act was devoted entirely to construction contracts because of their special nature.
The special nature of construction contracts, as already recognised in the Housing Grants, Construction and Regeneration Act, should be recognised. I suggest to my noble and learned friend—I hope that he will pay some heed to the suggestion—that the best way to do that is to exempt the construction industry from this Bill and amend the Housing Grants, Construction and Regeneration Act in order to include the protection for third parties which he thinks necessary as a generality of the law so that they then become protections as regards the complex nature of the construction industry. I beg to move.
Lord Meston: The noble Lord suggests that the amendment is justified because construction contracts are special. They are certainly complex: we all agree that. He also said in effect that the Bill suggests, inaccurately, an assumption of an equal bargaining position in construction contract situations. Surely the noble Lord's amendment substitutes a sweeping assumption the other way: that there is presumed to be inequality in construction contracts. I suggest that that is equally invalid and too generalised an assumption for the purposes of the law.
The Lord Chancellor: The noble Lord, Lord Meston, is right. The construction industry is not the only area of commercial activity in which there are

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contracts in sets or sequence. Complex sets of related contracts often call for consideration together—for example, in shipping or the export trade. I accept that the noble Lord, Lord Howie, has much experience of the construction industry and his views are always worthy of careful consideration. On this occasion, however, I have no doubt that the Committee should not accede to what he proposes. My experience of the construction industry is that it is rarely united in its views and I do not believe that there is unanimity on this occasion either. My understanding is that the Bill is a welcome reform for many clients.
The theme of the Bill is to enable the parties to give effect to their contractual intentions. It is up to them to decide whether or not a third party should be able to enforce a contractual term in his favour. To my mind, it would be far better to do what the Bill does—to give parties to construction contracts the opportunity to make such an agreement, but not to require them to do so—than to exclude a construction contract altogether and thus make it impossible for them to confer enforceable rights on third parties. That would be the effect of the noble Lord's amendment.
I should also draw the Committee's attention to the fact that in this Bill we are bringing our law into line with that of other Commonwealth countries which have made the same changes in recent years. None of them has made particular provision excluding construction contracts and I see no reason why the United Kingdom should do so. On that basis I invite the noble Lord to withdraw the amendment.
Lord Howie of Troon: I am not having a very successful afternoon, am I? However, I am grateful for the courtesy with which my noble and learned friend dealt with my humble proposition. I do not agree with him, and I dare to say that in public; I hope that no one is listening! The noble Lord, Lord Meston, is right. I made the assumptions about which he hinted. I did so because I know the business well. That is why I suggest the amendment.
I did more than merely move the amendment. I suggested that reference to the construction industry should be taken out of the Bill and dealt with in another way. I do not believe that the Bill deals with the construction industry with any greater certainty than does the Latent Damage Act to which I referred earlier. In the name of certainty for a small part of the legal world, the Latent Damage Act left a considerable body of uncertainty in the construction industry.
In the same way I fear—for the reputation of my noble and learned friend I hope that I am mistaken—that the Bill will leave similar uncertainties in the construction industry. We shall have to return at some stage to a revision of the Housing Grants, Construction and Regeneration Act to which I referred. In the meantime, I beg leave to withdraw the amendment and will take further advice for future occasions.
Amendment, by leave, withdrawn.
Clause 6, as amended, agreed to.
Clause 7 [Supplementary provisions relating to third party]:
Lord Borrie Lord Borrie moved Amendment No. 6:
Page 5, line 8, leave out subsection (2).
The noble Lord said: I do not have an interest to declare, but some 25 years ago I was a member of the Council of the Consumers' Association, and I am indebted to that body for a certain amount of advice on the problems that would be left by Clause 7 unamended.
In the Second Reading debate, I ventured to comment on the considerable value of the Bill in a number of typical transactions. I cited an example from the 1996 report of the Law Commission where one contracts with a builder to do work on the house of one's daughter. The work is done defectively. At present, even though the daughter may be expressly identified in the contract, she cannot sue for breach of contract because she is not a party to it. That situation would be changed for the better by this Bill. When the Bill is enacted, she could sue for damages.
However, let us suppose that the contract contains, usually in small print, some exemptions clause excluding liability for personal injury or for other damage or financial loss. As regards personal injury, the clause is void by reason of Section 2(1) the Unfair Contract Terms Act 1977. The daughter could claim compensation for an injury arising from the defect. But somewhat inconsistently, as the Law Commission admitted, and now by reason of Clause 7(2) of this Bill, the exclusion clause would be effective against any claim for compensation by the daughter in respect of any other kind of damage arising from the defect. That is the case even though a court may consider that the clause fails to satisfy the test of reasonableness that would apply under the Unfair Contract Terms Act if the claimant was the contracting party.
At Second Reading my noble and learned friend the Lord Chancellor very fairly admitted that this was "A very difficult question". He felt that the balance lay in favour of preserving the rights of the parties who have chosen to bind themselves by the terms of their contract rather than enlarging the rights which they have chosen to confer on third parties. In that sentence I believe that my noble and learned friend seems to be equating the deliberate identification of the daughter in the Law Commission's example with the small print exclusion clause which is very unlikely to have been chosen by both parties or to have arisen from any clear consensus of the contracting parties.
The basic purpose of the Unfair Contract Terms Act 1977 was to qualify the sanctity of the terms of the contract because in the real world so many contracts are made not between parties of equal strength but between a stronger and a weaker party, with the stronger one having drafted the terms and presented them to the other party on a take-it-or-leave-it basis. It is for that reason that contractual exclusions of liability for personal injury are now void and that exclusions for other kinds of damage are subject to a reasonableness test. I believe that the policy of the law should be against allowing reliance on unreasonable contract clauses whether against the contractual party or the third party such as that defined in this Bill.
I apologise for going a little further, but since Second Reading I have looked at a consultation paper entitled The Key To Easier Home Buying and Selling. It is in the name of the Department of the Environment, Transport and the Regions, the Department of Trade and Industry, the Welsh Office and the Lord Chancellor's Department. The consultation paper was published last December. It is designed to bring proposals to assist the easier sale and purchase of houses. It includes a proposal, which many noble Lords may have seen in the press; namely, a proposal where the vendor of a house commissions a surveyor's report, which will be made available to potential buyers. The idea, as stated in paragraph 66 of the consultation paper, is that this report should,
"be something the buyer (as well as the seller) can enforce".
Mr. Geoffrey Hoon, the Minister of State in my noble and learned friend's department, in launching this consultation paper referred to the last point as something that can be achieved by the Bill which is before the Committee today. The statements and effect of what is in the surveyors' report commissioned by the seller may not be enforceable by the buyer if Clause 7 remains as it stands. That is because Clause 7(2) of the Bill as it stands disapplies Section 2(2) of the Unfair Contract Terms Act. Clause 7(4)—I am speaking now to the next amendment in my name—disapplies the Unfair Terms in Contract Regulations 1994. So the buyer, relying on the surveyor's report supplied to him by the seller, would not be able to contest the validity of a contract term which, for example, excluded liability for claims arising from a surveyor's report that failed to mention defective foundations or something of that kind.
The proposals of the four departments responsible for the consultation paper on making it easier for the buying and selling of houses, and the efficacy of their particular recommendations, including the value of the surveyor's report commissioned by the vendor, would be seriously undermined—as would the buyer's confidence in such reports if the Bill is not amended in the way that I have suggested. I beg to move.
4 p.m.
The Lord Chancellor: I shall speak to both Amendments Nos. 6 and 7 in the name of the noble Lord, Lord Borrie. He has argued, as he did at Second Reading, that the parties to a contract should not be able to exclude liability for certain types of damage to the third party and that the provisions of the Unfair Contract Terms Act should be extended to restrict the parties' powers. I accept again that this is a very narrow and difficult issue. It is one that can be argued strongly in the sense so well expressed by my noble friend Lord Borrie. It is an issue that I have thought about carefully, as did the Law Commission.
However, my conclusion remains as it was at Second Reading. The Bill is not taking away any existing consumer rights. Third parties are not being deprived of any existing statutory protection. They are being given rights to enforce contractual terms, if the parties so choose, which third parties did not have before. So it is
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a matter for the parties to decide whether or not to confer rights on third parties. It is a matter for them to decide whether such rights should be limited; for example, by providing that liability for negligence causing a third party loss is to be excluded.
It is important to remember that although there may be linkages between this Bill and the Unfair Contract Terms Act, the two do not really occupy the same ground. The Unfair Contract Terms Act is not primarily about third party rights. Even if it were desirable to reform the Unfair Contract Terms Act to protect third party consumers, I do not believe that it would be possible simply to accept these amendments as achieving that aim. Perhaps I may give one example. The Unfair Contract Terms Act contains a reasonableness test. We would have to decide whether that test was to be applied as between the promisor and the promisee or as between the promisor and the third party.
That having been said, I accept and recognise that there are cogent arguments on the side of the noble Lord. I hope that he will find it helpful when I say that I am certainly not seeking to rule out further consideration of the effect of the Bill on consumer protection, if the Bill becomes law. But I believe that it would be preferable for what is a relatively straightforward Bill to be enacted and to operate for some time before considering whether to tackle rather more complex issues as regards the ambit of consumer protection. On that basis I invite the noble Lord to withdraw his amendment.
Lord Borrie: I am most grateful to the noble and learned Lord the Lord Chancellor. His sentiments are extremely helpful and encouraging. My only anxiety is that he speaks of making some further proposals in the future. But one might have to wait another 10 or 12 years before there is another opportunity and a suitable Bill in order to make the changes that I have suggested. I shall read carefully and take further advice on what my noble friend said. In the meantime I am happy to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 7 not moved.]
Clause 7 agreed to.
Clause 8 [Short title, commencement and extent]:
Lord Kingsland Lord Kingsland moved Amendment No. 8:
Page 5, line 25, at end insert (", including conditional contracts which may or will be performed after the end of that period").
The noble Lord said: Clause 8(2) provides that the Bill does not apply in relation to contracts entered into before the end of six months from the day it is passed. Difficulties may arise where an option has been granted before the Act takes effect and is later exercised when the Act applies. In particular, is an option to buy something a contract to sell it conditional on the exercise of the option, or an irrevocable offer which does not become a contract until accepted by a notice which exercises the option?
That difficulty has been resolved by the courts, at least at first instance, with respect to options for the sale of land and by statute with respect to covenants between

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landlord and tenant. However, there are other situations in which difficulties may arise; for example, in a contract for the supply of up to a specified quantity of some bulk commodity under which the buyer is entitled to call for delivery during the contract period.
In those circumstances, and in the interests of certainty, and because the terms of the option would have been negotiated between the parties without regard to the Bill, I beg to move.
The Lord Chancellor: The noble Lord indicated that what he specifically has in mind, although not exclusively, by the expression "conditional contracts" is the grant of an irrevocable option, say, to buy land. That option might be granted before the end of the statutory six-month period referred to in Clause 8(2) and only exercised thereafter. If that option were to be characterised as a contract for the sale of land conditional on the purchaser's unilateral exercise of the option, it would qualify as a contract made before the end of the statutory period: whereas, if it were categorised as an irrevocable offer by the vendor requiring an act of acceptance by the purchaser after the statutory six-month period, the Act would apply to the contract constituted by that acceptance because the contract would have come into being after that six-month period.
The noble Lord indicated that the categorisation of such an arrangement had been addressed at first instance in the courts. It was addressed by Mr. Justice Hoffmann, now the noble and learned Lord, Lord Hoffmann, in Spiro v. Glencow Properties Limited in 1991 Chancery Division Reports, page 537. He held that the former was the correct categorisation and that the arrangement constituted a contract for sale conditional on the exercise of the option. I believe, but express no view myself, that this is generally regarded as the correct categorisation. But it might be open to a higher court to hold otherwise and that the option was no more than an irrevocable offer which fructified into a contract only upon acceptance.
We have no intention in the Bill of seeking to resolve unsettled and disputed questions of contract law by a side wind. If a court holds that a contract was made prior to the expiry of the statutory six months, the Act does not apply to that contract. If the court holds that the contract was made after the period, the Act does apply. Beguiling as the invitation is, we decline to take the opportunity of the Bill to seek to resolve any other issues of controversy in contract law. On that basis, I invite the noble Lord to withdraw his amendment.
Lord Kingsland: The steeliness of the noble and learned Lord's reply deters me from pressing the point any further. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 agreed to.
House resumed: Bill reported with an amendment.

Business
Baroness Ramsay of Cartvale: My Lords, before we move to the Statement on NHS Direct, I would like to take this opportunity to remind the House that the Companion indicates that discussions on a Statement should be confined to brief comments and questions for clarification. Peers who speak at length do so at the expense of other noble Lords.

NHS Direct
4.16 p.m.
Baroness Hayman: My Lords, with the leave of the House I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Health. The Statement is as follows:
"Madam Speaker, I wish to make a Statement on the development of NHS Direct; the nurse-led 24-hour helpline.
"In March last year we launched three NHS Direct pilot schemes in Milton Keynes, Preston and Newcastle upon Tyne. Between them these pilot schemes covered over 1.5 million people. They have proved a great success. Up to the end of December they had taken over 60,000 calls. Independent research has revealed that 97 per cent. of users are satisfied with the service provided, which they find prompt, friendly and professional. It has been particularly popular with young mothers and around 40 per cent. of calls have been about children.
"Callers get through at first to a call handler who takes the callers' details and deals with any requests for basic information. Those callers who have a specific health problem are then put through to a nurse.
"The nurse listens to the caller, assesses the case, using what is called an expert computer based decision support system, and then recommends what action the caller should take. This can range from immediately summoning an emergency ambulance to advising them to visit their GP or their accident and emergency department, or advice on how to treat someone at home, or just offering simple reassurance.
"A detailed survey of the three pilots showed that for the latest quarter: 80 per cent. of callers were advised to do something different from what they had intended before they rang NHS Direct; only 9 per cent. of callers had intended to look after themselves at home, but after calling NHS Direct 38 per cent. were enabled to look after themselves at home; 20 per cent. of callers were directed to more urgent care and 40 per cent. to less urgent care; and 530 people were transferred to the 999 service.
"It rapidly became clear that the pilot schemes were a success. So last summer I authorised the extension of the scheme with 13 call centres to cover 40 per cent. of the country—20 million people—by April this year. The first of these opened last month

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covering 1.1 million people in the Black Country. Yesterday, a further scheme covering 1.6 million people opened in Essex. A further service covering Nottinghamshire opens next week and the first service in London opens in parts of West London early in March.
"The other areas to be covered by April are in the West Country, Manchester, West Yorkshire, Hull and East Yorkshire, Hampshire, North West Lancashire, Birmingham (as well as the Black Country), Lambeth, Southwark and Lewisham, Buckinghamshire, Northamptonshire and Oxford, Newcastle and the North East. Most of those services will be provided by the local ambulance trust but they usually involve the local GP co-operatives, other NHS trusts and voluntary bodies. In some cases local social services are involved as well.
"The success of NHS Direct springs partly from the use of modern technology, properly managed and staffed by top quality professionals with a sympathetic ear. It also depends on commanding the support of the NHS in each locality and in particular the professions involved in providing primary care. At my personal insistence there will be a major role for GP co-operatives in the delivery of this service in many parts of the country. I am pleased to be able to report that the west London call centre to be located in Southall will be run by a local GP co-operative.
"Our original intention was to extend NHS Direct to cover 60 per cent. of the country by April next year. However in view of its growing success and my concern to help the NHS cope with the special problems it is likely to encounter over the millennium period at the turn of the year, I have decided that this programme should be brought forward to aim to cover at least 60 per cent. of the country by the beginning of December this year. In some cases this will be achieved through extensions to the existing centres where the service is well established and in others through opening new centres.
"It is intended to cover South Yorkshire, Leicestershire, Derbyshire, Liverpool and parts of London, in all of which NHS Direct could be particularly valuable next winter. To do this we will be investing from the NHS Modernisation Fund an additional £10 million on top of the £44 million from the fund already committed to the NHS Direct in the coming financial year.
"NHS Direct is proving to be a modern, additional, convenient and dependable service for the people who turn to it. It is also proving to be a very popular and professionally satisfying service with the nurses who staff it. One centre recently received over 300 applications for 50 jobs. Nurses applying for jobs with NHS Direct have been coming from other parts of the NHS, from the private sector, and others are returning to nursing. With the support of the Royal College of Nursing and Unison I am very keen to encourage applications from experienced nurses who have left nursing because of, say, a back injury which left them unable to carry out routine nursing tasks. Working in NHS Direct could give them the
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opportunity to continue to put their hard-won professional skills and experience to good use for the benefit of patients.
"The new schemes should provide the basic NHS Direct advice and information service which has proved so successful in the three pilot areas—Newcastle, Preston and Milton Keynes. However, I should report that from July the Newcastle centre will be working with local doctors, A&E departments and other services to provide one gateway for out-of-hours services, providing a single number for patients to call. This idea shows the huge potential for using NHS Direct to develop new and better services for patients in a way that is also popular with the professionals involved. Building on the experience of this pilot I will be prepared to consider further pilots of this kind where NHS Direct has shown it can deliver the basic service and where there is joint commitment by both NHS Direct and the local doctors and other professionals involved to deliver services in this way.
"Arrangements are now being made to set performance standards for NHS Direct call centres drawing on careful evaluation of experience so far and on best practice in other sectors. We are also determined to use the capacity of a national network we are creating to provide the most dependable service. NHS Direct is a good example of the opportunities which new technology offers to help make the best possible use of the professional skill and knowledge of NHS staff—21st century technology in place for the beginning of the new century.
"I am pleased with the success of NHS Direct; delighted that it can be funded from the extra £21 billion we have found to invest in the health service, and glad to have been able to announce today that 60 per cent. of the country should have access to NHS Direct by December this year".
My Lords, that concludes the Statement.
4.24 p.m.
Earl Howe: My Lords, I shall be brief. First, I thank the Minister for repeating the Statement. From these Benches we believe that much of what it contains is positive and we give it a general welcome. I particularly welcome the fact that so many people availed themselves of the service plus the news that, against a background of fragile morale in the nursing profession, NHS Direct is attracting nurses out of retirement and that those who staff the service find it a professionally satisfying job. Long may that continue.
The debate of my noble friend Lord Rowallan in your Lordships' House last November on health service helplines enabled the Minister to apprise us of the background to the Government's thinking on NHS Direct and I do not intend therefore to go over the same ground again. However, the Statement gives rise to a few important questions.
One of my main concerns centres around the evaluation of the service. The Government took the decision last summer to proceed with the second wave

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of pilots and now we learn that the third stage of the programme is to be brought forward so as to commence later this year. That seems to be a rapid roll out. The Statement referred to a survey of the first stage pilot areas during the latest quarter. I was hoping to glean from that survey something in the nature of an evidence base on which a balanced judgment could be made in relation to the scheme's success. That is not what we have been given. It is one thing to discover that 80 per cent. of callers were advised to do something different from what they had intended to do before ringing up, but a more pertinent question might be: was the advice that they were given the right advice? Of the 530 people transferred to the 999 service, how many turned out to be genuine emergencies? Only with that sort of information and evaluation can a proper assessment be made of the cost-effectiveness of NHS Direct. It was therefore a little surprising to hear that Ministers have already felt able to judge the pilot schemes a success.
My other main concern relates to nurses. The key to success for NHS Direct is thorough and appropriate nurse training. Manning a helpline is a specialist skill. Can the Minister say anything about the training that nurses receive for NHS Direct? How rigidly is a nurse dependent on the computer-based protocol? Are the Government happy that the computer-based system can be relied on with confidence by nurses and patients? Also, can the Minister say what proportion of nurses appointed to NHS Direct come from other parts of the NHS? At a time of national nurse shortages there must be a worry if NHS Direct is sucking in trained nurses from areas that are already under considerable pressure.
I strongly agree with the need for NHS Direct to command support from the wider NHS in each locality and indeed from the professionals who deliver primary care—a point that I stressed in the debate last November. Perhaps I can ask about the procedural links between NHS Direct and GP practices. If an individual receives advice from the service, is the fact of that call, and the content of that advice given to the individual, automatically notified to the patient's GP?
I understand that in the pilot schemes a number of models have been running. I am aware of anxiety that, while local schemes with nurses based in GP surgeries allow more co-ordination with other primary care services, they are also thought to be less efficient and may be subject to regional variations in standards. On the other hand, national centres, which are viewed as more efficient and lead to more uniform standards, reduce co-ordination with local GPs. Have the Government come to any conclusion as to which scheme they prefer?
NHS Direct, as I said in our debate on the subject of helplines, is a service with considerable potential and we shall follow its development during the course of this year with close interest. We wish it well.
Lord Clement-Jones: My Lords, from these Benches I join the noble Earl in thanking the noble Baroness for repeating the Statement from the other place. We welcome regular updates about NHS Direct, the Government's commitment to bring forward the roll-out of the scheme and the commitment to provide additional
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resources to do so. However, it is clear that there are a number of concerns which should be expressed in relation to the development of NHS Direct. I have already expressed those concerns to the noble Baroness.
Above all, there is the question of the relationship of NHS Direct to the specialist voluntary sector helplines. Will NHS Direct work alongside those existing helplines? Will it make sure, in addition to its triage role, that optimum cross-referral to specialist services by NHS Direct takes place whether for mental health problems, cancer or asthma?
Furthermore, is the department addressing the question of the quality of service both for NHS Direct and for the voluntary sector? They must operate within the same quality framework. With the advent of NHS Direct, will the department consider some kind of kite-marking or accreditation, perhaps along the lines of the guidelines for good practice in telephone work, drawn up by The Telephone Helpline Association? Will they ensure that those helplines that are of sufficient quality will be able to enter into service-level agreements with NHS Direct to provide specialist information, support and advice on referral?
Do we yet know enough about NHS Direct's effect on primary care services? Will the service build on the primary care experience of general practitioners? Will it build on the extremely successful Wiltshire trial and the University of Southampton research which resulted in a 40 per cent. drop in patients' visits to surgeries, halved GP's out of hours workloads and cut hospital admissions and casualty visits?
Is NHS Direct currently developing draft national guidelines or protocols? Will second-phase pilots be working next year with draft national guidelines?
In a recent Statement, the former health Minister, Alan Milburn, indicated that a national telephone line might be the way of the future. However, the Statement seems to indicate that a single local line for GP surgeries and accidents and emergencies—NHS Direct itself—might be the way forward. Which way is preferred by the department?
When will software systems be rationalised? The first three pilots have used three different software systems.
Reflecting some of the comments by the noble Earl, what are the recruitment implications for NHS Direct? Some estimate that another 15,000 nurses will be needed to provide a full national service. In the face of a major recruitment crisis, with about 12,000 nursing vacancies, will there be enough experienced nurses available to start the service?
Finally, is the December 2000 deadline for the full coverage of the whole country still the department's target, or will it be earlier as a result of bringing forward implementation for 60 per cent. of the country? We welcome the implementation of NHS Direct, but it must not be an over-hasty implementation and it must take into account some of the considerations that we have put forward.
4.32 p.m.
Baroness Hayman: My Lords, I am grateful to the noble Earl and the noble Lord who, overall, have welcomed the announcement today of speedier implementation of national coverage by NHS Direct.
The noble Earl, Lord Howe, commented on the move towards national implementation before the results of the evaluation have been fully understood. There has always been a commitment to a national roll-out. The information that we have received so far has been so positive that we feel confident in speeding up the implementation of the next phase. Sheffield University is conducting a detailed evaluation which will give us some answers to the questions about protocols, national standards and forms of implementation. The first phase of that evaluation will be published soon.
In the developmental process it is important that we go ahead and make changes and carry out improvements to make sure that we have standardisation where appropriate as we move forward. We have clear indications that that is the right thing to do and that it is sensible to cover as much of the country as soon as possible.
I do not want to be drawn by the noble Lord, Lord Clement-Jones, on whether we will be able to bring forward the full coverage implementation date, but we are making considerable progress on the date that we have put in for the 60 per cent. coverage.
I was specifically asked about the training that those involved in providing the service receive. They receive specific and extensive training of six to eight weeks both in using the computer software available and the decision support systems. They also receive training in helpline skills, which is a separate issue. There is increasing evidence on how those skills are developed. We shall consolidate that for the national service.
The question about the quality of the service and the advice given has been raised. We have highly qualified nurses, operating expert clinical decision support systems which have been validated by local clinicians. As we move towards the national service, we shall develop national clinical standards for NHS Direct and national validation processes for the decision support systems. The nurses who give the advice also have on-line access to medical advice should they need something above and beyond their own skills or what is in the decision support mechanisms.
On the balance between national standardisation and local implementation, as with so much else in the NHS, we have to assure ourselves of the quality of the service provided throughout the country. However, we must not do that in so rigid a way that we take away any local sensitivity and the real benefit that knowledge of, for example, local voluntary organisations and local services can bring. That is not an impossible task, but we are moving towards a model with a number of centres rather than a single national centre. The phrase used by the Secretary of State is "horses for courses". There will be variety in the size and coverage of different schemes.
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On the nurses who will perform the important role of giving advice, as I said in the Statement, some come from other parts of the NHS, but some are returning to nursing and others come from the private sector. We believe that there will not in any way be an issue of competition with other parts of the NHS. We see valuable opportunities for retaining staff who want a different form of work from that which they have had in the past; a form that provides flexible working opportunities for those who are thinking of returning to nursing, with specific training for this particular role.
As I said earlier, there are opportunities for those who have had to leave conventional nursing because of injury. That is not an insignificant pool of people. I believe that providing a wide range of opportunities for nursing is more likely to increase retention and return-to-work rates than diminish the pool of nurses available across the NHS.
I was specifically asked about the issue of GP notification when patients call NHS Direct. Yes, GPs will be notified, but only after the patient has given his or her permission. We have to recognise the confidentiality issues that may cause some people to prefer to call a telephone helpline in some circumstances.
The noble Lord, Lord Clement-Jones, asked about the inter-relationship with the specialist helplines that already exist in many areas of healthcare. In your Lordships' House we have discussed the specialist helplines in mental health and I know that the noble Lord is particularly interested in the services that BACUP (the British Association of Cancer United Patients) provides for patients with cancer. Perhaps I may repeat that it is certainly not intended that NHS Direct should take over the role of specialist helplines. We want to work with them and to work closely with voluntary sector agencies and their helplines to ensure co-operation and synergy between the two sets of services.
Rather than the two being in competition, I believe that the availability of a well-known central point for telephone inquiries will help to increase the use of specialist helplines, rather than diminish it. I believe that that will be true as long as we ensure that the protocols for referral to the specialist services are correct and that, wherever possible, the technology ensures that a patient does not have to put down the telephone and to call another number. Instead, we should "hotline" patients through to the appropriate specialist service. The Department of Health is conducting consultations with those from that sector, with the NHS Steering Group and with other telephone advice lines. This is to ensure that we work together to provide the most appropriate form of treatment, advice and help for those who call NHS Direct.
We are looking to have a single national telephone number to give people access to NHS Direct. As I said in the Statement, there are opportunities in particular localities to provide an out-of-hours service on a specific local number. As we roll out the service we shall have to work out the specific details.
4.41 p.m.
Baroness Gardner of Parkes: My Lords, I welcome the new NHS Direct. However, perhaps I may put a number of practical questions to the Minister. First, legal liability is now becoming a major issue in the health service. Who will be legally liable if a patient is given the wrong advice? How will we be able to differentiate between whether the patient was genuinely given the wrong advice or is fraudulently claiming to have been give the wrong advice?
Will the patients be identified? If you telephone an insurance company, you are given a warning that your call is being recorded. If you telephone a bank, you have to identify yourself in some way. What will patients have to do? How can we reconcile a patient having to identify himself with the position of a patient who wants to call anonymously, perhaps with regard to HIV? Has the Minister thought about that? If not, will the Government give some thought to it? I believe that one day such a case will go wrong, just as we hear about with regard to ambulance trusts, and it will be claimed that the patient died because the wrong advice was given. Will the general practice carry that responsibility or will the responsibility be carried centrally? Exactly where will that responsibility lie?
The Minister said that it is hoped to operate national clinical standards and that nurses will be able to call for expert advice if needed. How will a nurse know when she needs expert advice? Surely that will be extremely difficult to decide when talking to a patient over the telephone as opposed to actually seeing the patient. Perhaps that is an issue for training.
I note from the Minister's answers that NHS Direct is to be a 24-hour service. The Minister mentioned the possibility of a national number. Will it be an 0800 number or an 0345 number, which means the patients will be charged at local rates? Presumably, the number will be widely publicised, but will the Minister confirm that?
As I said, I am pleased to hear about NHS Direct. My final question is: how many human beings will be available to answer telephone lines at any one time? If the Minister, like me, has tried to telephone a phone-in line, she will know that trying to get through for a long time can be very frustrating. One has very little hope of getting through, but when one does one is often greeted by an answering machine saying that there is a queuing system. Will there be a queuing system for NHS Direct?
Baroness Hayman: My Lords, in the interests of publicising the number widely, perhaps I may tell your Lordships that it is 0845 4647. We hope that that number will become well known and well recognised.
The noble Baroness made a number of important points. She is right that the issue of legal liability affects the whole of the NHS. NHS Direct will be staffed by employees of NHS bodies with exactly the same legal liabilities as any other NHS staff. Situations analogous to that outlined by the noble Baroness can happen with ambulance trusts or general practitioners. Such cases have to be decided on the facts. Calls will be recorded, as will decisions under the decision support systems. In
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fact, there is a lot more back-up in terms of hard evidence of what has been done and advised than was the case in many of the paper records that were kept—or perhaps not kept—in the past.
The noble Baroness asked about how a nurse at the end of a telephone can tell whether she needs further professional advice. That is difficult. Giving advice over the telephone, rather than face to face, is a skill. Many of the expert and specialist helplines have had to come to terms with that. Against the disadvantage of not seeing a patient face to face must be set the fact that the decision support systems and the software are very impressive in terms of prompting people to ask the right questions and to give validated advice following the answers to those questions.
I cannot give the noble Baroness any information now about the number of people answering the telephones. Perhaps I may write to her on that point. However, I do not think that there have been problems with queuing systems so far. Matching supply and demand is difficult. We shall have to consider that matter carefully over the Christmas and New Year period this year because last year calls to the pilot centres were up by nearly 100 per cent. That in itself is evidence of how valuable they have been. A large proportion of callers had 'flu symptoms and a large proportion of them were advised to stay at home and self-treat. One can see that that presents opportunities. The pilot schemes had the capacity to deal with those calls without becoming overwhelmed, but we shall have to consider that issue carefully.
Baroness Pitkeathley: My Lords, does my noble friend agree that we should not overlook the part of the Statement referring to simple reassurance? I know from my own experience of running helplines for carers and people with disabilities that very often that is precisely what they need. Calls are not about emergencies or practicalities, but about the need for reassurance. We should constantly emphasise that fact.
Baroness Hayman: My Lords, my noble friend is absolutely right and speaks from detailed experience in this area. This is not merely, as it has sometimes simplistically been presented, a way of persuading people not to go to hospital. Indeed, if hospital is where they should be, many have found that the process has been speeded up. Frankly, nobody is better off for taking a sick child out and waiting for several hours (because they are not high priority) in an accident and emergency department when they could instead be receiving advice and reassurance in their own home, through the telephone, and thus better and more effective care for that child.
Lord Skelmersdale: My Lords, I find this a very exciting innovation and an extra avenue into primary care. NHS Direct consists of what I call in my own mind "telephonic triage nurses". I believe that that is basically a fair analogy. I note that in the trial areas NHS Direct has resulted in a 40 per cent. drop in visits to GP surgeries. However, I have one slight niggle. I hope that the noble Baroness will be able to give a commitment

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now that when patients telephone their own surgeries, they are not asked whether they have first telephoned NHS Direct, with the result that if they have not, they will be turned down for the surgery. It is very important that the Minister and her department should express this as an extra service within the NHS rather than a replacement service.
Baroness Hayman: My Lords, as regards any patients in the pilot areas ringing up their general practitioners asking for consultation, it is certainly not my understanding that they would be told that there was an additional and separate loop for them to go through; namely, ringing NHS Direct. That is not my understanding of what would or should happen. However, if I am wrong in that respect I shall write to the noble Lord when I have checked the position. As the noble Lord said, it is an additional service. It may well be a substitute in that people find it a more appropriate service, but that should be a matter of their choice because they have chosen to go there.
I very much welcome what the noble Lord said about the service. The only thing on which I would semantically niggle with him is the fact that, although it is triage in one sense, it is not the classic triage because the appropriate advice will be given. There are also opportunities for the future in that other things may be accessed through NHS Direct; as, indeed, ambulances are now being accessed for those who ring up with, perhaps, chest pains thinking that they can see it through until the morning. In such a situation the NHS Direct nurse would think "no", and send an ambulance immediately.

Road Traffic (NHS Charges) Bill
4.51 p.m.
Lord Hunt of Kings Heath: My Lords, I beg to move that this Bill be now read a second time. When a person receives treatment at a hospital as a result of injuries sustained in a road traffic accident and subsequently makes a successful claim for compensation for personal injury against the holder of a compulsory motor vehicle insurance policy, the hospital can require the compensator to meet some of the costs of the accident victim's treatment.
The principle was first introduced in 1930, 69 years ago. At that time hospitals could recover costs of up to £25 per person. When the figures were last uprated in 1995, this had risen to £295 per person needing out-patient treatment and £2,949 per person needing in-patient treatment.
In 1934 Parliament further decided that motorists should pay a fee towards any immediately necessary treatment—in other words emergency treatment—needed by any person injured as a direct consequence of the driver's use of a motor vehicle on a road. In this case, the hospital's right to the fee did not rest on a requirement that the victim should claim compensation. When the emergency treatment fee was first introduced,
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it stood at twelve shillings and sixpence per person—that is about 63 pence in today's money. Today the fee is £21.30.
The continued existence of these charges was most recently confirmed during the passage of the Road Traffic Act 1988. But it was not until the early 1990s that figures were first collected to show what income was actually being generated for hospitals under the provisions. The figures showed that in England hospitals were receiving around £13 million each year. Of course, £13 million is a substantial sum of money; but it is far, far short of the amount which should be recovered. Why should this be?
Although hospitals have been empowered to collect charges and fees, they have been left on their own to do so. It must be difficult enough if you have just been involved in an accident, coping with the shock and the pain. The last thing needed is an insensitive inquiry as to whether you are going to be pursuing a claim against anyone or, worse still, within days of the accident a bill for emergency treatment dropping through your letter-box. On the hospital's part it cannot be a pleasant job to have to question patients or demand payment from drivers. Our staff in accident and emergency departments have enough to do without tasks such as those.
However, the problems do not end there. The hospital still has to track down the person or institution which may pay compensation; it still has to calculate the costs of treatment; and it still has to track the progress of the claim. I understand that the average length of time it takes to process a personal injury compensation claim is around two years, with a significant number taking very much longer. It still has to bill the insurer; and it still has to ensure that the debt is settled.
It is no wonder, when you consider that list, together with the fact that not all patients will have decided whether or not to claim compensation in the immediate aftermath of an accident, that many hospitals have not been able to recoup the amounts to which they have, by law, been entitled. We have therefore decided to act to help hospitals; to simplify the system, thereby helping insurers; and to bring charges into line with actual costs.
The Bill before the House today replaces, for NHS trusts and military hospitals, the provisions concerning hospital charges in the Road Traffic Act 1988. Clause 1 is based on the provisions of the 1988 Act and sets out the circumstances in which NHS charges are due. Those arise where someone has been injured in a road traffic accident, has received treatment in an NHS hospital, and has received compensation for his injuries from a person or institution holding compulsory motor insurance. For the first time, however, the NHS will be able to recoup charges in cases where the driver causing the accident is uninsured or untraceable and the victim receives compensation from the Motor Insurers' Bureau. We intend to make clear in regulations that payments will only be sought from the bureau in respect of accidents which happen after this Act comes into force.
I turn now to Clause 2 of the Bill. On coming to office we realised that the current system of leaving hospitals to pursue charges themselves was not working and we

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were faced with identifying an alternative system. Fortunately, the way forward had already been pointed out. In 1996 the Law Commission had produced, as part of a series of papers on the subject of damages, a consultation paper which suggested, among other things, that NHS charges could be collected more efficiently by following the example of a unit set up in 1990 within the Benefits Agency, the compensation recovery unit.
The unit, which is based on Tyneside, exists to recover state benefits where both benefit and a compensation payment have been paid in respect of the same accident, injury, or disease. Compensators are already required to notify the unit of claims for compensation. Therefore, we have decided that it makes sense for the work of collecting NHS charges to fall to the compensation recovery unit. The advantages are many. The unit has a track record of delivering results; it has good relations with the insurance industry, including an accepted administrative procedure for charge recovery; the insurance industry will have one point of contact for NHS charges instead of several hundred; the work can be undertaken at minimal cost; patient information necessary to assess charges remains within government; and hospitals are relieved of the burdens of collection and can concentrate on patient care.
Clause 2 provides the basis for the transfer of the administrative work of collecting NHS charges from hospitals to the compensation recovery unit. In order to extract the highest possible efficiency from this arrangement the clause introduces the concept of a certificate of NHS charges, modelled on the certificates issued for benefit recovery, so that in cases where there is both NHS and benefit recovery the two recoveries can be dealt with together.
One of the aims of the changes we are introducing is to simplify wherever possible. Rather than having hospitals calculating charges in every case, Clause 3 of the Bill enables a tariff of charges to be introduced. This will mean that for each accident the hospital, the insurer and the compensation recovery unit, which will make the final calculation, will all know from a few simple facts how much the charge will be in any particular case.
The charges will be set out in regulations. The initial calculation for the tariff has been based on average treatment profiles of road traffic accident victims. We have simplified this information to give us two costs. The first is a flat rate fee for those who are less severely injured and do not need to stay in hospital. That will include all patients from those who simply attend accident and emergency through to those who need to return on many future occasions for further treatment or checks. The flat rate fee will be initially set at £354 per patient.
Secondly, there will be a daily rate charge for those patients who need to stay in hospital as a result of their injuries. This will be initially set at £435 per day and includes the cost of any subsequent out-patient treatment which may be necessary after discharge from hospital.
We also intend to move to charges which more closely reflect the actual costs of treatment to the NHS. My right honourable friend the Chancellor of the
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Exchequer announced the move to full costs on 2nd July 1997 and my right honourable friend the Secretary of State for Health has agreed with insurers that these new costs will apply to accidents happening on or after that date.
The new scheme will not present insurers with unlimited liability. The tariff set includes a ceiling on the costs in any one case but still ensures that, overall, the amounts raised nationally will be close to the actual cost of treatment. At the outset of the scheme this cap will be set at £3,000 for accidents happening before 2nd July 1997, reflecting the current scale of charges, and £10,000 for accidents happening after that date, reflecting the revised charges representing the actual costs of treatment.
The Bill will also allow charges to be recovered in respect of treatment received at more than one hospital, subject, of course, to the overall cap in any one case. For example, severely injured patients are often transferred between hospitals, or perhaps where the accident has happened far away from their homes patients may be transferred to a more local hospital. In these cases all hospitals will be identified and an appropriate part of the charges returned to the hospitals actually providing care.
Clauses 4 and 5 of the Bill cover the arrangements for payment of the NHS charges due from the compensator to the compensation recovery unit. We have not, as an act of faith with the insurance industry, included any specific penalties for non-compliance with the scheme. The industry's record of compliance with the scheme for benefit recovery is commendable and we fully expect similar co-operation with the NHS scheme.
One benefit of starting afresh is that we are, for the first time, able to build into the system a method of review and appeal. Clause 6 of the Bill provides for a certificate of charges to be reviewed by the compensation recovery unit either as a result of its becoming aware of something being wrong with the certificate or on request by the compensator.
Given that we are opting for a simple scheme and tariff we anticipate that any problems which arise will be sorted out on review. Where, however, problems remain after review, Clause 7 offers a further avenue, that of a formal appeal. Compensators will have the right of appeal, after having paid the charges, if it seems to them that the amount asked for is wrong, the amount is in respect of treatment which was not given as a result of the road traffic accident, or the compensation payment in question is not one to which the scheme applies.
Having allied our scheme with the benefit recovery scheme we also intend, as provided for in Clause 8, that appeals against NHS charges will be heard by the same tribunals which hear appeals in cases of benefit recovery. Appeals in Scotland will, after devolution, fall to be heard by separate tribunals. After the appeal tribunal we do, however, part company with the benefit recovery scheme. Clause 9 provides that any further appeal will lie direct to the courts and not through the social security commissioners.
Clause 10 deals with procedures for payments which may be necessary following appeal.

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Clause 11 deals with the provision of information. While the Bill places an obligation on a list of people or bodies which could be involved it is envisaged that in the vast majority of cases the insurer will be able to give the compensation recovery unit sufficient information for the claim to be processed. In the ordinary run of events the only information about the patient's contact with the NHS which will be relevant is whether or not NHS treatment was given and, if the patient needed to stay in hospital, for how many days.
Again, because the new system is simple, no details of the accident victim's condition or treatment need routinely be supplied by the hospital. If, however, an appeal against charges is made on the grounds that part of the treatment received was not as a result of an accident it may be necessary for further information to be sought. Regulations will ensure that such information can only be sought and used in limited circumstances.
I mentioned earlier that we had specifically modelled our scheme on the existing scheme for benefit recovery so that the two schemes could be run together with maximum efficiency both for government and compensators. Clause 12 allows exchange of information further to aid this efficiency. Compensators will benefit by being able to notify the compensation recovery unit of potential cases under both schemes on a single form and the unit will then be able to use that information for the purposes of both schemes.
Clause 13 concerns the transfer of charges received by the compensation recovery unit to the relevant hospitals. We intend—and this will be set out in regulations—that hospitals will receive payment directly into their accounts on a monthly basis. Compensation payments are not always simple affairs. There can be a number of paymants over time, or a payment into court, or perhaps more than one compensator. Clause 14 provides regulation-making powers to provide specifically for these more complex cases.
Clause 15 of the Bill enables regulations to be made to allow those military hospitals which also provide services for their local civilian population to benefit from the new administrative arrangements. Provision for regulations and orders and the interpretation of terms within the Bill are covered in Clauses 16 and 17.
Clause 18 amends the Road Traffic Act 1988. One important issue which results is the removal from NHS trusts of the right to collect the emergency treatment fee. As I said, we consider it unacceptable that hard pressed hospital staff should spend time collecting the fee. At its current rate of £21.30 it must also be open to question as to whether it costs more to collect than it generates in income. We have, however, chosen to leave the fee on the statute book where it has been for more than 60 years as any doctor, be he GP, off-duty surgeon, or perhaps retired, attending the scene of an accident has the right to seek payment. It is not our intention to remove existing rights from individuals.
Clause 19 provides for any necessary financial expenditure as a result of the Bill. By coincidence the new scheme and its appeal provisions will come into force as the social security appeals system undergoes
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change. The provisions for appeal in Clauses 7 and 8 assume that these changes have taken place. Clause 20 providas for transitional arrangements so that any appeals falling from the NHS recovery scheme can be heard under the current appeals system, if necessary.
Clause 21 brings us to the Short Title and the end of the Bill. This is a measure which will bring a long-standing system up to date by simplifying what had become a muddle. It represents no new principles. The idea that compensators should meet hospital costs has been accepted since 1930. What we are doing is making sure that our hospitals actually receive income to which they have had a long-established right.
The Bill will simplify the system of recoveries for hospitals and insurers. It will provide for easier collection of substantial sums, well over £100 million. This money will be returned to hospitals for use in patient care. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Hunt of Kings Heath.)
5.8 p.m.
Earl Howe: My Lords, the House will be grateful to the Minister for introducing the Bill in his customary clear and concise way. As he said, this is a measure whose underlying principle has been enshrined in law for nearly 70 years, the principle being that hospitals of all kinds should be able to recover from private insurance companies the cost of treating road accident victims. It is a principle that has been endorsed over the years by successive governments, most notably the previous Conservative administration when they introduced what became the Road Traffic Act 1988. With this aspect of the Bill therefore I have absolutely no quarrel. However, listening to the Minister's speech one might be forgiven for thinking that that was all there was to it. It has been presented as a fairly straightforward administrative re-arrangement designed to streamline and improve the existing scheme to recover hospital costs. In my opinion that is a false impression. To my mind, for reasons I shall explain, this is a strange and rather revealing little Bill. It is also a Bill which raises some interesting questions which I shall discuss in a moment.
The Minister indicated that one reason for introducing the Bill is that the present arrangements for collecting hospital charges do not work properly. I certainly agree that, across the country as a whole, the sums of money recovered for the NHS are relatively small. Last year they amounted to approximately £16 million. Why this should be so is difficult to determine. There is a perception in some quarters that the current system is bureaucratic and complex.
However, it rather depends on who you talk to. While a good many hospital trusts recover nothing at all from insurance companies, others succeed in recovering significant sums. For example, in 1996–97 the Leicester Royal Infirmary raised £365,000; this compares to a figure of nil at Derby City Hospital. On the face of it, it is perfectly possible—if you have a mind to do so—to follow the procedures laid down under the present system and generate a useful contribution to hospital

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costs. Indeed, a Department of Health circular has advised NHS trusts to look more carefully at how they might pursue claims under the Road Traffic Act 1988 with more vigour. It will be interesting to know from the Minister the results so far of that initiative.
However, under the Bill the system is to be changed. It is proposed to use the good offices of the compensation recovery unit of the Benefits Agency to recover charges on behalf of hospitals, and to place a duty on insurance companies to initiate that process whenever a claim for compensation is made under a motor insurance policy. I have no information which leads me to doubt that the CRU is capable of undertaking this responsibility. But can the Minister say whether the Government considered any alternative mechanisms and, if so, what they were? Is this the most cost-effective way of remedying what the Government perceive as the defects in the current system? If so, on what information do the Government base that opinion?
I have described the Bill as strange but revealing. I admit that I was casting about for some mild adjectives; I could have used slightly stronger ones. The Bill is extraordinary for what it tells us about the Government's sense of priorities. With all the legislation competing for parliamentary time, it is a Bill to rejig the system of recovering hospital charges which rises to the surface. Why? An obvious reason is that the Government look upon private insurance companies as a cow whose milk has not up to now been sufficiently squeezed out of the udders. The Government have identified what appears to them a politically painless way of generating a lot more money for the health service. How could one possibly object to that?
But in order to judge this Bill in the round, one needs to understand who will suffer from it—the motorist. Since being elected to office, this Government have hardly disguised their antipathy to the private motorist. Fuel duty has been raised by 20 per cent; vehicle excise duty has also gone up. Powers are now in place to impose a registration tax on new vehicles. It is forecast that by the end of the current Parliament motorists will have paid more than £9 billion in additional taxation to the Exchequer. Here in this Bill is yet another cost they will have to bear—additional insurance premiums to finance the new and higher charges levied by NHS hospitals.
The position of the Government is that these are not new charges and that the cost of hospital treatment—or most of it—is already factored into existing insurance premiums. That would be a perfectly respectable position if it did not conflict with some inconvenient facts. The first inconvenient fact is that if the NHS is to recover 10 times as much in charges from insurance companies as before, then it is not just a question of creating a more effective collection system. The charges will have to go up by a very great deal. That is exactly what the Government are now proposing. For in-patient treatment, the ceiling on an individual charge is, we understand, to go up from £2,949 to £10,000. That sort of money does not come from thin air; someone has to fund it. The Association of British Insurers estimates that the provisions of the Bill will cost the average motorist between £6 and £9 more per annum on his
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insurance premium. That of course applies to the average motorist. Some will no doubt pay very little or even nothing extra; others, particularly those in higher risk categories, will pay perhaps £20 or so more.
What then are we looking at here? I find it difficult, when you strip away the wrapping paper, to see the proposals as anything other than a straightforward hike in indirect taxation—a hike aimed, quite deliberately, at one particular group in society, namely vehicle owners. Not only does this tell us a lot about the Government's attitude to vehicle owners; it is also extremely revealing about their attitude to the NHS. After years and years of arguing against levying charges on users of the health service, a newly elected Labour Government have used scarce legislative space to do what? Not to scrap a charge that was yielding very little money, but to buttress and boost it so as to make it yield substantial sums. It is perfectly clear that, contrary to all their rhetoric on the subject, Labour has conveniently put aside its supposedly principled objections to charging patients. Simultaneously, it has overtly endorsed the principle of using insurance as a means of spreading the burden of the costs of healthcare. Those two things speak volumes for new Labour. I should be most interested to hear what the Minister has to say about them. In particular, I would welcome the Minister's assurance that the charges to be prescribed in regulations will not—either now or in the future—be unfairly loaded and will be kept, in real terms, within the limits that the Government have announced.
There is a danger, if substantial sums are raised from the scheme as revised, that income from charges will slowly and imperceptibly become a substitute for Treasury funding. That would not only he undesirable in itself but would accentuate the reliance being placed on the private motorist for funding the health service. It could also disadvantage certain hospitals which, through no fault of their own, deal very little or not at all with road accident victims. I should be grateful if the Minister would comment on that point in his reply.
Another feature of the Bill of which your Lordships need to be aware is the way that it proposes to deal with hospital charges arising from accidents where the driver is uninsured. At the moment, any claim for compensation against an uninsured driver is met by the Motor Insurers' Bureau, the MIB, which is essentially a statutory pooled fund maintained on behalf of the motor insurance industry. That arrangement represents a necessary safety net to ensure that nobody injured by an uninsured driver is unable to secure compensation for his injury. However, the MIB cannot at present be used to reclaim the costs of NHS hospital treatment.
Under the Bill, that situation will change. For the first time, the NHS will be able to collect charges from the MIB where the claim for compensation is against a driver who is uninsured or untraceable. That means that law-abiding motorists with insurance will be paying for NHS hospital treatment in three ways: first, as ordinary taxpayers; secondly, through their insurance premiums for potential claims against themselves; and now, in a third way, again through their insurance, for any accident at all where there is a claim against an uninsured driver.

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The Government owe us an explanation of why they are proposing to take this step. It seems to me a step too far. The test of a new provision such as this should be one of natural justice. I do not believe that it passes that test. Indeed, it has all the appearance of a rather sneaky piece of opportunism—a nice, easy way of raising yet more money for the health service from motorists.
The more one puts up insurance premiums, the more one is bound to increase the number of drivers who do not insure. It is estimated that there are already approximately 1.5 million drivers who are uninsured and who simultaneously dodge paying the annual road fund licence at a cost to the Treasury of £170 million. The Government should be looking for ways to reduce the numbers of uninsured drivers and tax dodgers, not doing things to encourage them. I give the Minister notice that I shall be raising this issue in Committee, but it would be very helpful if he could say something in his reply which might shed a more respectable light on the rationale of this part of the Bill.
There are a number of other issues which we shall be pursuing in Committee: the retrospective elements of the Bill, which I believe are quite unnecessary and patently unfair to the insurance industry; the order-making powers; the Scottish dimension; and the practical arrangements for the Bill's implementation. There is, however, one matter I should like to cover today. As I said, the very existence of this Bill sheds a revealing light on the Government's sense of priorities. The fact that we are now considering a measure to beef up a system which involves funding the NHS from the pockets of those who are insured begs the question of where this is leading and whether there is more of the same still to come.
The motorist in this context is a sitting duck. The reason he is a sitting duck is that the insurance that he carries is compulsory. I must ask: do the Government have any intention of extending the principle underpinning the Bill to other groups of people who are obliged by law to insure themselves? Local authorities, for example, are compulsorily insured for public liability. There is no difference in principle between the hospital treatment of someone who breaks a leg tripping over an uneven pavement and who then claims compensation and the treatment of someone who makes a claim after being in a road accident. One could think of numerous other examples. So I ask: to what extent do the Government regard private insurance as a legitimate means of defraying the cost of running the NHS? As they say in a certain magazine, I think we should be told. If the principle of the Bill is to be extended, resulting in a shift in where the costs of the NHS are to lie, then it really does merit a proper public debate with the full involvement of those affected.
This Bill contains features that are roundly to be deplored as well as much that is unobjectionable. Its particular interest lies in the fact that it comes from a new Labour Government whose ideas and intentions, when they emerge, have a habit of belying their previous utterances. By the end of the passage of the Bill, I trust that the House will have shed some useful light on some of those intentions to the benefit of us all.
5.21 p.m.
Lord Clement-Jones: My Lords, I join in thanking the Minister for his clear exposition of the contents of the Bill. For a short Bill, it has generated a great deal of heat and not a great deal of light in the other place. On their own, we could welcome on these Benches certain aspects of the Bill such as the reduction in the bureaucracy involved for hospitals, the fact that there will be no further function for debt collectors, the more centralised system of collection through the compensation recovery unit, the new rights of appeal and also more money for the National Health Service, provided it comes into the National Health Service.
However, my party voted against the Bill at Second Reading and Third Reading in the other place on the grounds that we could not basically tell whether this was the thin end of a thin wedge or the thin end of a thick wedge. Indeed, throughout the debates in the other place, the Government refused to state whether there was an over-arching principle behind the Bill, whether indeed any wedge was involved at all, and also whether it could be extended in future. They refused even to engage in debate on these issues which could potentially have very far reaching consequences for the insured, insurance companies and the whole principle of the NHS.
The basis of the debate and the speed with which the Bill was passed through seemed to reflect rather some kind of budgetary urgency. Ministers allege that this is simply updating a system that derives from the 1930s. But there is a new dimension. It is estimated that the new charging system will collect £160 million rather than £16 million, a tenfold increase. I am by no means against increasing the finance for the health service as long as it is absolutely clear that this is additional funding and would not be clawed back by the Treasury. But if this is right for motor insurance, why is it not right for other forms of compulsory insurance, such as employers' liability insurance, product liability insurance and occupiers' liability insurance.
Let us take, for instance, the employee who suffers damage at work and who is cared for by the NHS; or the consumer who suffers damage when using a product, such as a faulty electrical piece of equipment. All these issues were looked at by the Law Commission which reported in December 1996. It looked at the whole issue of recovery of hospital charges. Will the Government be extending this scheme if it is treated as a pilot under the Bill? What kind of animal are we dealing with here? Is this a limited measure or something potentially much wider in its consequences?
In this debate we can of course distinguish the case of compulsory insurances, such as those I have mentioned, from those situations involving travel insurance where a person injured in a skiing accident claims under his own travel insurance policy. But the Government's approach to the Bill throughout adds up to a lack of a coherent framework for the Bill going forward. No wonder the debate in the other place was not very constructive. On these Benches we hope for better in this House.

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Perhaps I may tackle a number of other issues in the Bill. The first is the question of retrospection. Why has 2nd July 1997 been chosen? We were told that this was the Labour Budget date and that this was the key date for when the new charges would apply because the Chancellor announced then that the new system would come into effect. But insurance companies did not know until the Bill was introduced the level of charges that were contemplated. The Bill will no doubt pass in some shape in March or April. Would that not be the correct date to choose? Otherwise, motorists and insurance companies will in effect be paying a retrospective charge.
The second issue is the question of limitation on the amount of charges. There should be proper scrutiny of those charges. A large increase was mentioned during the debate. Perhaps one way of ensuring that the charges are kept in proportion would be to specify in the Bill that the tariff should reflect the average cost within the National Health Service of a particular treatment. That would encourage hospitals with higher costs to work towards the average. It would also reward the more efficient ones.
On these Benches we do not have a great brief for the motorist in this context. We have always believed that they should bear the true cost of their activities. But the impact of the Bill on premiums will bear down disproportionately on young people. In addition, as the noble Earl mentioned, the Motor Insurers' Bureau will be charged for the first time and the cost of this will also be borne by the premium payer and the insurance industry.
A number of aspects of the Bill relate to devolution. We note that under the Bill there is in Scotland the absolute right of appeal. In England, however, there is only the possibility that the right of appeal to the courts will be provided by regulation. The Bill also goes counter to all the devolution legislation passed in the previous Session. Throughout the Bill the Secretary of State is assumed to be the English Secretary of State for Health. Whatever happened to devolution? If the health service could be devolved to four separate national health services, why not the collection of revenue? The compensation recovery unit is appropriate for England and perhaps Wales, but we urge the Government to consider other options for Scotland.
The amendments we put down in Committee will reflect the comments I have made at Second Reading and some other aspects but we hope that during the Committee and Report stages the Government will engage in a much more constructive debate on the contents of the Bill than they have hitherto.
5.28 p.m.
Lord Brooke of Alverthorpe: My Lords, I rise to support the Bill and in doing so I take the opportunity publicly to express my appreciation of and heartfelt gratitude to the National Health Service and its staff for the way in which they cared for me over the past few months while I was ill. I have now returned in fitness to the House.
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I support the Bill because I believe it is a long overdue update and amendment of existing provisions. The current rules have not been properly or uniformly applied. Therefore, in practice they have increasingly proved to be unfair—and unfair to the motorist. There have been variations in the way they have been applied in different parts of the country and there have been variations within specific areas—even between one health trust and another hospital trust close by. So it is high time that the Government turned their attention to the matter and followed through on the promises made by the previous administration.
It is understandable that many of the trusts have not put too many resources into this area. The administration burdens on hard-pressed hospitals are significant under the existing rules. Yet there has been relatively little financial return for those trusts that have expended effort in attempting to comply with the present rules. That has been the case especially in relation to the £21.30 emergency treatment fee. It has been particularly unpopular with the public, because it has had to be paid by the vehicle driver involved in an accident, whether or not that individual has caused the accident. I welcome its departure. I am pleased that, in updating these provisions, the Government have used this opportunity to abolish this much disliked hospital emergency treatment fee.
I also welcome the transfer out of hospitals of most of the recovery administration. We look forward to the Benefits Agency compensation recovery unit effecting speedy and efficient delivery of the revised charges to hospitals. The funds are badly needed, notwithstanding the extra £21 billion that the Chancellor has committed to the NHS.
noted in the Explanatory Notes to the Bill, in the Summary of the Regulatory Impact Assessment, that four options were considered in relation to future collection. I thought them somewhat limited for a modernising Government, and I tend to he marginally critical in this regard. We could perhaps have sought, as a fifth option, a public/private initiative, possibly on similar lines to the American approach, where it is possible to factor the debts. That would have given the trusts an immediate cash flow advantage. Instead, under the present arrangements we shall continue with a system under which recovery of costs will be delayed by the amount of time it takes for successful personal injury claim settlements. I know that those who have examined the American arrangements have understandable concerns about some of the hard-nosed business approaches adopted in the recovery of insurance money. However, our approach is different. We could have written contract specifications without compromising the trusts' integrity or our patient support culture, which we are anxious to maintain in order to ensure that patients are not subjected to hard business pressure. Had we been prepared to explore such a partnership, it could have presented a great opportunity for extending public service employee involvement and motivation opportunities. When we come to review the working arrangements further down the line, I hope the Government may return to a consideration of possible alternatives if the proposed arrangements are not

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working as effectively as we would wish. I emphasise, however, that I support the new arrangements. They are certainly a great improvement on matters as they stand.
I recognise that in an effort to simplify and reduce administrative costs under this scheme the Bill must of necessity introduce a tariff of charges on a daily and a flat rate basis. The Association of British Insurers advises that its members support this approach, "provided that these are calculated fairly and in a transparent way". I support that view and can understand why the association has lent its backing. The reality is that its members will still not be paying the full rate of treatment costs incurred through road traffic accidents. That must be the case if a cap is being introduced—admittedly, a revised cap. A cap of £10,000 on a single charge will mean that in many instances the full amount will not be taken into account in devising the tariff. It is still difficult within the NHS to ascertain the true cost of all patient treatment, not only in this area but in many others. Those in private sector medical care are wizard at working out these charges, and have been wizard at putting in their compensation returns. Within the NHS we do not perform in the same way. As the Minister knows, I believe that there should be more openness and transparency in relation to NHS costs. Such an approach is needed in order to raise public awareness and provide for a better understanding and appreciation of the value of the care that is being delivered by the NHS. A knowledge of costs helps to strengthen the links between rights and responsibilities. That applies equally to motorists. Their right is to free NHS services at the point of access, but responsibilities fall to them in a way that they do not fall to the non-motoring public. That must be responded to appropriately with money. Raised awareness of the link between rights and responsibilities is increasingly necessary for patients. It is also necessary in order to enable management and staff to increase efficiency and continue to drive out waste.
Major IT investment plans have recently been announced. I hope that one of the outputs from that programme will be the availability of more information on costs. Will the Minister say when we can expect to see more progress on that front, particularly as the Bill, at least temporarily, moves in the opposite direction?
Overall, I very much welcome this long-overdue measure. It offers the prospect of additional, badly needed resources for the NHS. It provides a possible model for increasing the flow of National Health Service funds from other compulsory insurance. I believe that the Government probably do not intend to embrace that approach, but the topic is rightly on the agenda and should be debated. The Bill also provides a possible model to be applied over wider fronts, even beyond the field of compulsory insurance. Those views are entirely personal; however, I believe that we shall need increasingly to examine these issues. I believe that the bulk of National Health Service funds will continue to come from taxation. But as we become wealthier, and as expectations and health demands continue to grow, and as the population ages, there will be an increasing need to explore with an open minded, commonsense,
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pragmatic approach all NHS income streams that are open to us. I hope that we may look increasingly to a more consensual approach in these areas. I believe that among the great British public there is an increasing recognition that we get the health service that we pay for. More and more people are coming to the view that we are not paying sufficient for the kind of services that we justly seek. We must therefore look not only to taxation, but to all the opportunities that may open up to us to ensure the stream of income for an even better health service in the future.
5.38 p.m.
Lord Hunt of Kings Heath: My Lords, this has proved an extremely interesting debate. It has not been over-endowed with speakers; however, that does not indicate any lack of importance attaching to the Bill's contents. I have no doubt that in Committee we shall return to many of the issues raised. I shall take this opportunity to touch on a number of key points.
First, I wish to emphasise that the Bill is designed to give support to a principle that has existed and been accepted for more than 60 years. In response to the charges made by both the noble Earl, Lord Howe, and the noble Lord, Lord Clement-Jones, let me emphasise the point that these are not new charges. The Bill does not introduce a charge for the use of the NHS. Road traffic accident victims receive hospital treatment free of charge. There is no question that they will ever be presented with a bill. This is a method of raising income for hospitals that should have been theirs for many years but which has been lost for want of administrative support. The principle is as it always has been: road users are required to insure against third-party risks which includes the compensator reimbursing hospitals for the cost of third-party treatment.
The noble Earl, Lord Howe, inquired about problems to do with the existing scheme and asked why the NHS had not been more successful in collecting money as a result of the charges. I have already explained some of the problems: hard-pressed staff of A&E departments who have to question patients or demand payment from drivers; the difficulty of tracking down the person or the institution who must pay the compensation; and ensuring that the debt is settled. As the noble Earl points out, we are aware that some hospitals have been more successful than others. This depends very much on local circumstances and the attitude of staff and management. Anyone who has been involved in the NHS for many years, as I have, will be aware that there is always a difference in priorities from hospital to hospital. Despite enunciations in circulars by the Department of Health year after year, these matters will be dealt with differently. Further, even when hospitals make a considerable effort to collect the charges they often fail to pick up all of the potential cases. For example, there is reluctance on the part of the public to inform hospitals when a claim is made. The whole history of this issue is that exhortations to the NHS to do better do not work in the long term. I believe that the proposals will both simplify the procedures and, very importantly, bring more money into the health service.

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In response to the noble Earl, Lord Howe, I assure him that this will be real additional money on top of the normal NHS allocation. Although, as the noble Earl says, the amount of money received by each hospital will necessarily be different, the fact is that this money will go into the NHS as a whole. Therefore, the NHS as a whole will benefit. The noble Earl also asked questions about the future revision of charges. Clearly, this will need to occur from time to time but no particular interval has been set. That is consistent with the practice that applies to other charges within the NHS.
The noble Lord, Lord Clement-Jones, perhaps repeating arguments in another place, objected to the whole principle of the Bill. I have always believed that the NHS draws considerable strength from the provision of services to the whole of the public which is mostly free at the point of delivery, but I reiterate that no new principle is involved in the Bill now before the House. The Bill simply ensures that the NHS receives what is rightfully owed to it and in a way that simplifies the current administrative burdens. In addition, this must be seen in the context of the comprehensive spending review that underpins the Government's commitment to the service and its underlying principles.
Both the noble Earl, Lord Howe, and the noble Lord, Lord Clement-Jones, asked whether the scheme might be extended to other potential insurance areas. One example was sportsmen and women. The primary purpose of the few compulsory insurance schemes in this country, such as motor vehicle insurance, is to protect innocent third parties. We have no plans to make individuals self-insure. It can be argued that that is counter-productive as it may dampen efforts to improve health and safety consciousness. The noble Lord, Lord Clement-Jones, asked whether the NHS might recoup its costs in cases where personal injury compensation was paid. The Bill we are debating today is about the provision of a better functioning system to support existing rights. The Bill does not provide a mechanism to extend those rights by stealth.
The noble Earl, Lord Howe, asked about the Motor Insurers' Bureau. Clearly, the recoupment of NHS charges predates the setting up of the Motor Insurers' Bureau, but as the MIB makes compensation payments in respect of road traffic accidents as a matter of general principle we believe that it should also meet NHS costs as do other insurers. That is the reason why we intend to bring it into the scheme in line with the recovery of benefits legislation.
A number of points were raised relating to the compensation recovery unit by both the noble Earl, Lord Howe, and by my noble friend Lord Brooke of Alverthorpe. It is a particular pleasure to see my noble friend in his place today looking so well. The CRU has established a very good track record in dealing with similar work on a national scale. It has good relations with the insurance industry, including an accepted method of recovery. Insurers have welcomed the decision to use the CRU. We believe that it can accommodate NHS work in addition to its role in benefit recovery work at minimum additional cost. It also keeps patient information within the government family and
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enables us to move with speed. We shall keep the matter under review, but we believe that the CRU is the best option at present.
The noble Lord, Lord Clement-Jones, made reference to devolution and Scotland in particular. The scheme is not reserved in the Scotland Act and therefore post-devolution Scotland will do as it may wish. The powers of the Secretary of State will be transferred to Scottish Ministers on devolution. The noble Lord also asked about the tariff. To establish full cost our economists looked at detailed work undertaken by the Transport and Road Research Laboratory in which treatment profiles following road traffic accidents were produced. Those profiles were costed and, using information from the police and compensation recovery unit as to the number of accidents and the success rate of compensation claims, we arrived at the total sum that the NHS should recover. It is from that total sum that we have been able to develop the tariff.
My noble friend Lord Brooke of Alverthorpe referred correctly to the issue of rights and responsibilities generally in relation to NHS patients. He asked specifically about the availability of information in relation to the cost of treatment. I echo his concern that the information available is as accurate as possible. The more information we have the more we can compare it and the more effective the NHS can be. There is no doubt that as a whole the NHS is becoming more sophisticated in the information that is becoming available to it. The impact of all of the Government's changes which we shall debate in your Lordships' House very shortly—the development of health improvement programmes, the new role of health authorities, the development of primary care groups and trusts and the initiatives that we are taking to improve the capability and use of IT—will provide better information on which to make the judgments in the health service about priorities and whether or not treatments are cost-effective.
Much has been said about the impact of the Bill on the motorist. I believe that this has been somewhat exaggerated. The Bill means that the NHS will recover charges in all cases where compensation is paid. We are changing the amounts raised so that the NHS receives something closer to the actual costs of treatment, but the effect on the motorist will be minimal. We have estimated that if the amount that the NHS receives from this measure is averaged out across all motorists who hold compulsory insurance the effect will be to raise the average premium by between 2 and 3 per cent. or, as the noble Earl pointed out, between £6 and £9. I emphasise that the Government are not anti-motorist or anti-car. We recognise that for many people and for some journeys the car is the most sensible way to get about. We are not against people owning cars. The United Kingdom has a lower percentage of people with cars than many other European countries, although cars tend to be used less in those countries. Our integrated transport White Paper offers many comforts for motorists. We need to reflect on that before suggesting that the Bill is a gross attack on the motorist.

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The noble Lord, Lord Clement-Jones, raised the issue of retrospection. We have clearly come under some criticism for seeking to increase the charges to something like the full cost for treatment following any accident which happened on or after 2nd July 1997. That is the date of the Chancellor's Budget speech. I fully understand the position of insurers. No one would expect them to be happy to have to meet those costs. But despite what the insurers have said in the public arena, in face to face meetings with my right honourable friend the Secretary of State for Health they have acknowledged that raising charges from 2nd July 1997 is reasonable. We believe that our decision is fair. The NHS has undeniably lost out for many years because of poor compliance with the existing statutory provisions. We should remember that NHS charges fall due when, and only when, compensation is paid. The average time taken to settle claims is around two years. Insurers knew from 2nd July 1997 that costs would increase but that it would be only from April 1999—nearly two years down the track—that full costs would start to be recouped.
My noble friend Lord Brooke of Alverthorpe asked about the general review of the system. I can confirm that we are committed to reviewing the system after about six months in operation and that the results of the review will be made public.
The Bill will simplify arrangements for all parties. Best of all, patients will benefit as the money raised will be sent back to the hospitals which need it and which can use it in whichever way they think best. NHS care is, and will remain, free to all those who need it. No one will be denied care or prevented from seeking it as a result of the Bill. The Bill puts right something that has been wrong for nearly 60 years. I commend it to your Lordships.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Airports: Planning Procedure
5.52 p.m.
Lord Gladwyn Lord Gladwyn rose to ask Her Majesty's Government whether they are satisfied that current planning procedures respecting proposals for new commercial airports take adequate account of environmental considerations and national policy requirements.
The noble Lord said: My Lords, the White Paper of last July, A New Deal for Transport, announces the preparation of a new UK airports policy for the next 30 years. But, apart from six regional studies exclusive of the south-east, this national policy must await the outcome of the Heathrow Terminal 5 inquiry. The timescale of the inspector's report and the subsequent Minister's decision is such that the new policy can hardly be determined within two years, and might even be postponed until after the next general election. Meanwhile civil aviation is roaring ahead, boosted by the commendable policy of open access.
Unsurprisingly, this forceful increase has provoked growing concern about aircraft noise. Despite the progressive introduction of quieter engines, aircraft noise escalates faster than with the mere number of movements, due to the introduction of larger aircraft and to airport congestion involving holding patterns in controlled airspace. Whatever the outcome of the Terminal 5 inquiry, it is clear that considerations about noise, pollution and traffic will have to be given greater weight in the delicate balance between economic expansion and environmental restraint.
As one who worked for many years in air transport, I applaud its recent success, though I feel that, for the future, an unquestioning attitude towards demand-led projections is inconsistent with the concept of sustainable development, as has been seen in the case of roads—a point recognised by the noble Lord, Lord Berkeley, in his debate on transport in your Lordships' House last week. I also appreciate that the Government are taking action on the question of noise, for instance, by the Noise Monitoring Advisory Committee, and that the White Paper envisages enhanced responsibilities for the CAA in noise control. But my concern today is with the actual and potential licensing of new commercial airports. In practice this relates to a number of former Ministry of Defence air bases.
Those sites, rendered redundant by the end of the Cold War, are scattered around the country in locations set by military strategy. I shall briefly summarise the position of five of them, all except one being in the south-east. I pass over the future of Northolt, except to note that in a debate about it in another place last June the Minister affirmed that, although no decision is likely in the near future, no option has been discarded. It is, of course, extensively used for civil flying.
At Manston in Kent, where the RAF has allowed civilian flights for over 10 years, the MoD is about to conclude a sale of the site to Wiggins plc. Wiggins intends to set up an airport with the most advanced systems, and is in negotiation with the CAA for a licence. But there is to be no planning application for this new airport, which will involve 24-hour operations, because the MoD has persuaded the Thanet District Council that none is needed, on the grounds that there has been no material change of use. At Farnborough, where the MoD has leased the site to TAG, business executive flights have been operating since 1990. The Rushmoor District Council expects TAG to submit a planning application which will involve a threefold increase in movements and with larger aircraft, though with a night curfew.
At Finningley near Doncaster the MoD first negotiated with non-aviation interests, including the Home Office which wanted a prison. That was fiercely opposed by the metropolitan borough council and then dropped by the present Government on coming to power. Proposals were then put forward for a commercial airport, and last year the MoD agreed to sell the site to Peel Holdings, subject to contract. Peel Holdings has yet to submit a planning application, but has made it clear that its plan will be for 24-hour operations for freight and passenger aircraft.
At Alconbury in Cambridgeshire the former USAF base is still owned by the MoD, which has formed a joint venture with a consortium called Alconbury Developments, led by BAA. This consortium originally submitted an application for a large freight distribution centre, co-ordinating road, rail and air. In March of last year the aviation element of this was dropped in the face of political pressure. Although it would accordingly necessitate a fresh application, apprehension about the aviation potential remains as strong as ever, for three reasons. First, the present application includes the phrase "retention of existing flying use". Secondly, the runway will remain unobstructed. And thirdly, the BAA is still heavily involved.
I come now to Bentwaters in Suffolk—a county in which I live, though well away from Bentwaters. This was the subject of a short debate in your Lordships House in June 1996, initiated by the noble Lord, Lord Bridges. He criticised the MoD for going for the highest possible sale price without sufficient regard for environmental issues. These are especially sensitive at Bentwaters because the whole of the airport operating area lies within an area of outstanding natural beauty. The company which at that time was negotiating for purchase had no plans for aviation; indeed, it intended to dig up the runway. But in the event it withdrew, and the site was then sold to Bentwaters Investments Ltd, which, in May of last year submitted a planning application, in the name of Anglia International Airpark, for a maintenance and testing facility for all types of aircraft, together with scheduled services, charter flights, private flying and helicopters. This application, at present on hold pending a public inquiry into the Suffolk Coastal District local plan, has served to rally public opinion in defence of the inviolability of the AONB, amid enormous publicity.
In all these instances aviation protest groups have been formed. At Alconbury they scored a victory; at Bentwaters they have already obliged the local council to lower its sights and are fighting the whole principle of an airport at the local plan inquiry. At Manston they have been completely frustrated and at Finningley they represent only a small minority.
The strict democratic planning procedures may have been duly observed, but the whole system is open to criticism. First, there has been throughout a lack of transparency by the MoD in its selection of purchasers. The public have not been informed about what alternative bids might have been involved. Secondly, the question of whether previous military use establishes a precedent for future aviation use is unclear. Thirdly, although operational limits may be imposed, they can usually be breached by subsequent demand: one has only to look at Stansted. Fourthly, noise enforcement is very uneven, ranging from the strict control of the London-designated airports to no control at others. That is why several of the MoD sites are so attractive for the operation of noisy freighters or for jet engine testing, such sites not being available in neighbouring Europe. Fifthly, the planning procedures may have been made within the framework of county and local plans—though even that is very questionable at Bentwaters—but they have been made piecemeal because there is no national
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or south-east regional policy. Hence the provision of what are potentially major new airports in an entirely haphazard way.
A sixth criticism is that these airfields were only built on these sites in the first place as a measure of extreme national emergency without any planning considerations whatsoever. It is understandable that their relatively compact domestic and maintenance areas should be developed for civilian housing and other enterprise: it would be deplorable to have ghost towns. But their operating areas—vast expanses of as much as 1,000 acres, more grass than concrete—are, on the face of it, more suitable for environmentally friendly enterprise. To use them for a new town, as was first proposed at Upper Heyford, or for a civil airport, is quite another matter.
The stated intention of the White Paper is to maximise the use of regional airports to relieve the pressure on the congested airports of the south-east. But an integrated transport system also demands that some of that relief should come from a shift from air to rail for ultra short-haul or interlining journeys. We must therefore avoid unnecessary proliferation of regional airports whose environmental damage is less justifiable than that of the major hub airports on which the prosperity of our civil aviation, and hence of our national economy, primarily depends.
My Question, as originally tabled, asked the Government to defer the authorisation of such new airports, but I recognise that that is impracticable. So I merely ask: are they satisfied with what is happening?
6.2 p.m.
Lord Marlesford: My Lords, I believe that we owe a debt of gratitude to the noble Lord, Lord Gladwyn, for enabling us to debate this important subject. I intend to confine myself to Bentwaters, to which the noble Lord has referred, and the proposal to establish there a new regional airport. In doing so I declare an interest both as a resident of East Suffolk and, more importantly, as president of the Suffolk Preservation Society.
The saga of the disposal of Bentwaters reflects little credit on either the MoD or on the previous government. The problems have arisen because no government has so far accepted that, in disposing of state-owned land, the maximisation of cash received should not be the overriding consideration. That Treasury policy leads to environmental anarchy.
It is hard to imagine a less suitable place for a new regional airport than this remote site on the Suffolk coast. It is a place of outstanding beauty and solitude where by day and by night the wide Suffolk skies are at their finest and the cry of the curlew breaks the stillness.
As the Countryside Commission put in evidence last week to the public enquiry into the Suffolk Coastal Local Plan,
"It is our view … that [the District Council plan] in supporting the re-use of RAF Bentwaters for civilian aviation purposes is attempting to support a major form of development within the AONB which is not compatible with the guidance contained in PPG7 nor with the purpose for which the Suffolk Coasts and Heaths AONB was designed".

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The brownland released when a military airport becomes redundant—and I do not include the greenland around the actual runways—should indeed be re-used for development especially for housing. This can make a contribution to reducing the housing pressure on greenfield sites. Businesses, too, should be encouraged; although mainly the smaller, high-tech businesses.
The new owner of Bentwaters, Mr. Mouawad, paid his £9 million for the 1,100-acre Bentwater site to provide 5,000 houses and an industrial estate. That could all have been welcomed. But then Mr. Yann Borgstedt of Anglia International Airport, suggested that a regional airport at Bentwaters could be icing on Mr. Mouawad's cake.
It is said that another regional airport is needed in the south-east. That is in addition to Stansted, Luton, City Airport, and Marshall's at Cambridge and Norwich. Taken together, those five provide a multitude of aviation services within 100 miles of Bentwaters. I doubt whether a further airport in the south-east can be justified. If it can, a more obvious location would be Alconbury near Huntingdon, which at least adjoins a major junction of Britain's trunk road and motorway network.
It is said that Bentwaters would provide jobs for local people. As at December 1998, the three local constituencies (Suffolk Coastal, Central Suffolk and South Suffolk) all have a full employment rate on the Beveridge criteria of 3 per cent. or less. Indeed an airport, because of its environmental impact, would destroy far more local jobs in the tourist industry than it could create.
There are few parts of England less well provided with transport links. Bentwaters is linked to the London-Yarmouth A.12 trunk road by winding country lanes. The Department of Transport is actually in the process of de-trunking the A.12 north of Ipswich, much of which is still single carriageway with a particularly bad fatal accident record. The rail line to Lowestoft, north of Ipswich, has long been a single-track branch line with a fragile tram-style passenger service passing about two miles from Bentwaters. There is thus none of the public infrastructure which a new regional airport would need. I doubt that the Government have the funds to provide it.
When Bentwaters was a military airfield the noise of aircraft was tolerated for the defence of the realm. It was known that one day it would end. The noise pollution, referred to by the noble Lord, Lord Gladwyn, from a new civil airport would intrude dramatically over at least an eight-mile radius covering Aldeburgh, Saxmundham, Woodbridge and Framlingham. This would probably bring to an end the world famous musical centre at Snape, home of the Aldeburgh festival which, along with Edinburgh, is perhaps the most important in Britain. Last week 13 leading figures in the arts world publicly condemned the airport proposal. I may say that in the days of the American airbase there were special arrangements not to fly during concerts.
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There has been widespread cross-party local condemnation of the proposal. The Suffolk Coastal District Council, which no one party controls, is deeply divided and not on party lines. It is rumoured that independent anti-airport candidates may well stand for some of its constituencies in the May elections this year.
I understand that the developers have suggested that they were in some way misled by the officers of the local council who, in private discussions before the final sale of the property, may have indicated that they favoured a commercial airport on the Bentwaters site on the grounds that it would help to "put Suffolk Coastal on the map". To clarify that, the council should agree to the disclosure of the records of all such meetings. To the developer I would merely say "Caveat emptor".
If any unqualified encouragement was given to the developers it was inappropriate for three reasons. First, in a matter of such importance it would be wrong to pre-empt the views of councillors, and officers must not become parti pris. Secondly, such an intrusive development as a civil airport in an AONB would seem, prima facie, to be quite out of place and to be contrary to public policy. Thirdly, the council officials ought to have anticipated the considerable opposition there was bound to be to such a proposal. I understand that of 2,000 letters that the council has received on Bentwaters fewer than 50 were in favour of the airport.
I am concerned that there may be a feeling among planning officers, not just in Suffolk, that the general public's views on such matters as this should count for little. It is an attitude that was certainly echoed in some remarks made to me recently by a senior Suffolk County Council officer. I was reminded of the famous statement made in 1947:
"the gentleman in Whitehall really does know better what is good for the people than the people know themselves".
The author was Douglas Jay. While that famous name still lives in your Lordships' House, I trust I can say with confidence that that attitude has no place in the mind of New Labour!
I turn to another serious concern, which arose on a number of occasions in various counties while I was Chairman of CPRE. It is that councillors may be warned not to vote against any advice they may receive from their council officers in case in a subsequent public inquiry costs are awarded against the council.
I have consulted a number of authorities and I can say that it would only be if such a view of councillors were to be unreasonable that there would be any risk of such costs being awarded. That would not apply in this case as the proposed airport would be in an AONB, against laid down public policy.
The developers have now indicated that they would be prepared to reduce the number of flights that they would apply for. I trust councillors will see through, and reject, this toe-in-the-door tactic.
History shows that airports grow where airports are. There is a very strong presumption in favour of allocating additional capacity to existing sites rather than establishing new facilities; a principle I for one would support. If the district council does not reject a regional civil airport at Bentwaters, I believe that it

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would be an irreversible step to a long-term and permanent change, and indeed destruction, of the character and beauty of one of the jewels of rural England.
6.11 p.m.
Lord Bridges: My Lords, I am most grateful to my noble friend Lord Gladwyn for tabling the Question and for his helpful introduction of it. Like him and the noble Lord, Lord Marlesford, I live close to the airport at Bentwaters and have raised the subject in the House on previous occasions. For the present, I propose to refer strictly to the Question tabled by the noble Lord, Lord Gladwyn, and to refer only to the matters relating to it.
First, perhaps I may say a few words about airport policy in general. The grant of permission for a new commercial airport is a significant decision in any country, but particularly so in our case, given the relatively small size of our densely populated island and the priority we now rightly accord environmental policy. Also, we are at a critical hinge in international air travel. We still enjoy, at present, the advantage of being the Clapham Junction of international civil aviation.
That is not unlike the role we had in the last century in international shipping when the best route for most cargoes crossing the wide oceans of the world to continental ports was via transhipment in the Port of London. We lost that role in the post-war years for reasons which, in Sir Thomas Browne's words, are "too sad to insist on." If we are to retain our current position in international civil aviation, we need to have an airports policy which meets the case. We also have to protect our market position from erosion by those, whether in the United States, Brussels or elsewhere, who wish to capture our existing markets. We shall have a chance to discuss those aspects when we come to debate a recent report of the EC Select Committee, printed as House of Lords Paper No. 56.
Meanwhile, I, too, welcome the promise in the Government White Paper, A New Deal for Transport, that a review of airports policy is in hand. Perhaps the Minister can tell us how the review is progressing and when it may be concluded. This is an extremely important area of policy. Most of the decisions taken in the past 40 years—some of them of great difficulty when one thinks of the controversy over Stansted and Maplin—have served us rather well and it is now time to think ahead. The point I seek to emphasise is the need for national policies on civil aviation, determined by government and communicated to Parliament, to be properly reflected in the decisions taken by individual planning authorities. As I shall now try to explain, that does not seem to be happening at present.
Let us take, for example, the fundamental question of airspace. Our local would-be airport at Bentwaters, north east of Ipswich, is close to a number of military bases, particularly RAF Woodbridge and Wattisham. We believe that Woodbridge is to be retained by the Ministry of Defence for use as a base for combined inter-service exercises and both bases are to be used to train pilots on military versions of the Apache helicopter. Therefore, it is important to know whether
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these activities would be compatible with plans for a resumption of flying at Bentwaters, only three miles or so from Woodbridge.
I sought information from the CAA, the DETR and the noble Lord, Lord Gilbert, Minister of State at the Ministry of Defence. All were extremely polite, but they have been unable to provide me with information. The planning authority is revising the local plan, apparently with a view to accommodating the developer's proposals, but, so far as I know, the authority lacks reliable information about the availability of airspace. I was informed by Glenda Jackson, Under-Secretary of State at the Department of the Environment, Transport and the Regions, in a letter of 4th September, that:
"airspace and licensing are matters for the CAA and are not material planning considerations".
Thus, the local authority, in considering whether to permit a commercial airport in its territory, will be able to consider road and rail access; employment; economic benefits and disbenefits; noise; and the various forms of pollution. However, it is not allowed to know whether there is available airspace for aircraft to use. That comes into the frame, apparently, only after the planning authority has made its decision.
A similar situation arises over protection of the AONB. The airport site is in an AONB and thus enjoys the protection of PPG7, which specifically prohibits major commercial development within its boundary except in the case of national need and the absence of an alternative site. No evidence has been submitted by the developer on either count. The local planning authority has correctly informed the local office of the DETR, GOER in distant Bedford, that it has received a planning application which, if approved, would be a departure from the county structure plan. I suggested to the DETR that it might inform the local planning authority of its attitude while the matter was still under discussion so that the Government's views could be taken into account. But the Minister of State, Mr. Caborn, informed me in a letter of 27th January that that cannot be done as it would be contrary to the "plan-led" system. The DETR will not act until the local planning authority informs it that it is "minded to approve" a planning application contrary to policy in the AONB.
Meanwhile, the director of planning, tourism and leisure of the district council has presented his statement of case to the local planning inquiry. On the AONB, this document states the following:
"In accordance with statutory requirements, the GOER has been consulted at each of the stages throughout the preparation of the alteration to the local plan and has, at no stage, objected to the policies for Bentwaters, including the policy for the airport. It must therefore be assumed that GOER do not consider that, in taking all matters into account, the aviation polices are an unacceptable exception to the normal AONB policy".
I quote that passage verbatim as it shows, quite conclusively, I think, that the department's silence has been interpreted by the planning authority as implying approval. That has been adduced in a formal document in support of authorisation of a civil airport in the AONB in the local planning inquiry. Was that the department's intention? What, I wonder, did it say to the

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director of planning? No doubt the department intended to behave with its usual scrupulous impartiality. But, given the misunderstanding which has clearly occurred, I suggest that the DETR Minister should write to the chairman or chief executive of the council telling him the truth and setting the record straight. I should be glad to give the Minister a copy of the documents in question.
I find the situation deeply unsatisfactory. It surely must make better sense for the Government to form the view of the implications of a large new commercial airport in such a sensitive place, to tell the planning authority of their opinion and to give some guidance about essential matters directly relevant to the decision. Otherwise, we may well end up in the ludicrous situation of an airport having the capacity for apparently unrestricted future growth which has been approved by the planning authority contrary to the spirit of the letter in PPG7, thus permanently damaging the AONB, contravening the RAMSAR, to which we are parties—
Baroness Farrington of Ribbleton: My Lords, the problem is that speakers are consistently running over time with additional questions for the Minister. My concern is that my noble friend may not have time to answer the questions unless other speakers cut short their speeches.
Lord Bridges: My Lords, I understand that my noble friend Lord Colville is not going to speak, so there will be time for the Minister to reply. I shall repeat my last sentence. Otherwise, we may end up with a ludicrous situation with an airport which has apparently unrestricted future growth, approved by the local planning authority, contrary to the spirit and letter of PPG 7 thus permanently damaging the AONB; contravening the RAMSAR convention; infringing the EC habitats directive; and all that when it may ultimately appear that there is no airspace available for the aircraft.
That does not fit well with the Government's stated intentions on environmental policy. It appears to be the case that some government agencies—the CAA and even English Nature—do not submit evidence to local authorities or public inquiries on planning matters as they lack the resources and, indeed, the inclination to do so. However, we could avoid that particular sector of Cloud-cuckoo-land if the Government were to change their practice, which is simply a change in administrative procedure. I invite them to do so as a matter of some urgency. A planning system may be a fine concept but it cannot be expected to operate correctly unless supplied with accurate information. That really matters in relation to airports.
6.21 p.m.
Baroness Ludford: My Lords, governments have come round to the idea that for roads, the old predict and provide approach is no longer feasible on environmental grounds. Demand for road space must be managed. But even in the bad old days of merely responding to demand, there was at least a national road plan, even if it was simply to build more.
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For air travel and airports, the situation is even worse than it used to be for roads. Not only is there no overall national strategic plan for airports, with each application to build or expand treated individually, as other noble Lords have pointed out, but the Government's response seems still to be to meet the demand rather than to manage it.
As a London person, I wish to move swiftly from the general to the particular in order to discuss Heathrow Terminal 5. The need for a strategic approach is amply demonstrated by its absence prior to a decision on Terminal 5. How can such a hugely significant decision be made before we all understand how it fits into a national or regional plan and the achievement of a sustainable economy and environment?
Once Terminal 5 is approved, the pressure in future to use it to full capacity by building a third runway may follow as night follows day. I should like the Minister to give a pledge that a decision on Terminal 5 must be delayed until such plans are in place and until proper studies have been undertaken to determine the real effect of Terminal 5 on health through asthma stress, sleep disturbance and pollution, including noise pollution.
It is putting the cart before the horse for the Government only to promise an airport strategy once the T5 recommendation is known. The fact is that Heathrow has already reached its environmental limit with 50 million passengers and four terminals. The capacity at Terminal 5 would be an additional 30 million passengers per year—a 60 per cent. increase. And yet that airport is in the suburbs of London, within the M.25 area. In contrast, Charles de Gaulle in Paris is limited to 55 million passengers and Schiphol outside Amsterdam is limited to 40 million passengers. The noise, air pollution and traffic congestion generated by Heathrow have long exceeded the levels which the 1 million people affected by it are prepared to tolerate. Air pollution already breaches government targets.
Local people acknowledge that Heathrow as it is today makes an economic contribution to their area, as it does to the whole London economy, providing jobs and attracting business investment. But the key is to have a sense of proportion and to know when enough is enough. Once it starts to turn from a positive force into an intolerable blot on the quality of life of 1 million people, it is time to pause.
Why should the wishes of two large companies—BAA and BA—just because they have enormous financial and lobbying clout, and even friends in high places, override the democratically expressed wish of the local community? After all, 13 local authorities of all political colours are opposed to the expansion. That degree of cohesion would not exist unless all those authorities genuinely represented the clearly expressed wish of the community. Is democracy to be beaten by corporate power?
Let us not forget the financial facts of this David and Goliath battle. BAA has been allowed by its regulator—the Civil Aviation Authority which reports to the Secretary of State for the Environment, Transport and the Regions—to recover its £60 million costs of the Terminal 5 inquiry by charging airlines higher landing

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fees which are passed on to individual airline passengers. Meanwhile, the cash-strapped local authorities have to use council tax money raised from individual residents to present their case, even though it is with the democratically expressed support of those residents. Is money to be allowed to outgun democracy?
I cannot rehearse here in detail all the strong environmental and health arguments against Terminal 5. They include traffic fumes and congestion and of course focus particularly on aircraft noise, including night flights. There is a 24-hour noise climate around Heathrow. That needs to be restricted by the banning of night flights.
But a factor which goes beyond the local environmental impact is the question of safety. The skies over south-east England are the busiest in Europe and the air traffic control system is known to be at breaking point. Near misses are reported regularly. There was a record 15 in the first six months of 1998 alone. If even more flights were allowed into Heathrow, that could be extremely dangerous indeed with increased risk of mid-air collisions over a densely populated area.
I spoke earlier about the need for democracy to influence decisions such as those relating to Terminal 5. Clearly London's airports would need to continue to be included in a national transport policy and airports strategy. But the Greater London Authority also needs to have strong consultative links into the process, a part of its forthcoming strategic planning and transport responsibilities. The GLA will need to have a regional transport plan for which it is answerable to London voters. One of the factors at which it would look would be the need for balanced east-west development in London. Another would be the public transport links for passengers. I suggest that a Greater London Authority would seek to do better than the Heathrow Express which, good as it is, is "price controlled"—that is, quite expensive—to prevent overcrowding. The only alternative is the slow and very overcrowded Piccadilly Line.
A third factor which the GLA would wish to take into account would be the opportunity for rail travel to, for example, Paris and Brussels with a rail terminal at Heathrow.
The fact is that residents and local authorities around Heathrow feel betrayed and angry. Twenty years ago, the inspector, Mr. Justice Glidewell, in recommending the go-ahead for Terminal 4 said that it should be the last major expansion at the airport. The then government imposed a flight limit of 275,000 flights per year. Last year, that number was 440,000, an increase of two-thirds over 20 years. The local community is subjected now to pressure for massive expansion bigger than all the existing four terminals put together.
If trust is to be restored, a better way must be found to plan airports. Elements of that better way include a partnership between national and regional government with balanced planning to prevent over-congestion in London and the south-east; the promotion of rail travel alternatives particularly to cities on the Continent; and consideration should be given to the deregulation of
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landing charges to allow regional airports to compete. Until at least all that happens, Terminal 5 must not get the go-ahead.
6.28 p.m.
Lord Northbourne: My Lords, I offer a crumb of comfort to the noble Baroness because I shall not take up all my time. I rise to speak about Manston Airport, which is about eight or nine miles from my home, and the problems there which are causing enormous concern to the people of Thanet.
Manston is designated at present as a government aerodrome with a military air traffic control unit. At present, it is not a licensed aerodrome. However, a sale is under way by the Ministry of Defence to Wiggins which is due to be completed in March or April of this year.
The plan is that the airport will be operated by Thomson, which I believe is an extremely reputable airport operator. A management plan is in the process of being produced—indeed, it should already have been produced but has not been—and an aerodrome licence will be required from the CAA. The licence will be concerned with safety factors—safety standards are set by national legislation—but it will not cover noise or pollution. Who, then, will be able to control environmental factors, specifically noise and pollution? That is of enormous concern to local people.
The east-west flight path of the aerodrome goes straight over the ancient borough of Ramsgate. The difficulty is that the Thanet District Council, rightly or wrongly (some say wrongly) issued an "existing use" certificate for the operation of Manston as a civil airport without attaching any conditions. The council now says that it has no further powers to control the operation of the airport. Indeed, Wiggins claims that the council has no further powers to control noise or pollution or to control flight times or flight patterns, and that there is an established use for 55,000 movements in and out of the airport each year.
Historically, the vast majority of those 55,000 movements were movements of Tiger Moths or today's equivalent—single-engine training aircraft—because there is a flying school there, movements of gliders and, more recently, a few substantial aircraft which came in on charter flights and with freight but in limited numbers. Wiggins is now claiming that, because a glider came in last year, it has a right to bring in a jumbo jet; indeed, 55,000 jumbo jets.
Wiggins publicly advertised that the airport is to be open 24 hours a day. It is therefore not surprising that local residents are extremely concerned, particularly in relation to noise and pollution. The local people are perfectly reasonable. They agree that a properly controlled airport at Manston would be a godsend for Thanet, particularly if it dealt largely with freight. That might bring in industry, and there is a serious unemployment problem in the area. But, as with all airports, environmental factors must be controlled. However, there seems to be nobody to control them except, possibly, the Secretary of State—to which I shall turn in a moment.

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Control can be effected by governing the numbers of landings and take-offs, the times of day when they take place—most major airports have a bar on landing or taking-off, except in emergencies, between midnight and 6 a.m.—and the type of aircraft. Older aircraft make more noise unless they are fitted with a "hush kit". Those will have to be supplied by the airport; the operators will not install them because they are more expensive. Apparently, one old Russian aircraft which currently lands in Manchester is known throughout Kent because it makes such an enormous amount of noise.
The Government have an obligation to establish that methods of control will be implemented. I conclude by suggesting, first, that the Ministry of Defence behaved irresponsibly in considering only the maximisation of the value of the land it is selling and not paying the slightest attention to either environmental factors or any kind of good neighbour policy. Secondly, perhaps the Minister can say whether the Thanet District Council now has or could have powers to impose any kind of restrictions? In particular, can it link restrictions of the kind I described to the granting of permissions; for example, for a new control tower which is needed or new hangars?
Finally, can the Minister indicate whether, if no other controls are available, the Secretary of State will step in and make an order under Section 5 of the Civil Aviation Act 1982?
6.34 p.m.
Baroness Blatch: My Lords, I too am grateful to the noble Lord, Lord Gladwyn, not only for his powerful speech, but also for the thoughtful way in which he ranged across the United Kingdom and not simply in his own county of Suffolk.
We hear a great deal from government about integrated transport policies, national airport strategies, environmental issues—for example, noise and air pollution, congestion on the roads and in the air, environmental planning policies, economic development and environmental impact issues. Yet many policies remain to be published and government policies across Whitehall are creating rather than lessening tensions.
The specific point I want to address is co-ordination between government departments, in particular the Ministry of Defence and the Department of the Environment, Transport and the Regions. Increasingly, throughout the United Kingdom, capital assets are being realised by the Ministry of Defence. That is even more critical since the Strategic Defence Review. The noble Lord, Lord Gladwyn, ranged across the country and perhaps I too may be allowed to be parochial. I live in East Anglia and in my area the Royal Air Force Alconbury, which has already been mentioned in the debate, is actively under consideration for development. The Royal Air Force Wyton was recently declared a possible area for development. And, disturbingly, only yesterday I received from the Ministry of Defence in reply to a Written Question as to whether there were plans to relocate RAF logistics headquarters from its
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present site at RAF Brampton the answer that the MoD is currently looking at possible locations for its headquarters.
Those are three major Royal Air Force establishments within two or three miles of each other; two have runway facilities and the other is a logistics base. These issues are causing enormous problems locally. Again, as has been said in this debate, they are tearing apart local communities. There are tensions between the DETR—for example, about its airport strategic policy, which we have yet to see; environmental quality, about which we are continually reminded; housing needs (there is a great demand for more housing); and economic development. The MoD land agents are deeply involved with the detail of many of these projects but are not forthcoming in telling local people what is going on. It was only when I asked the question about Royal Air Force Brampton that I elicited the information that it is actively being considered for relocation.
There is tension also between the Civil Aviation Authority, whose licensing procedures act independently, the planning system, which is underpinned by guidelines which we know are being reconsidered, and the MoD, which wants the best possible return for its capital assets. The way in which it realises those assets is often in conflict with what is being said, often to the point of pontification, by the Department of the Environment, Transport and the Regions. Then we have the Treasury, which has always pocketed the proceeds. That means that there is often no direct benefit to local communities and the infrastructure needed to support many of the projects is not forthcoming.
In East Anglia, if all government land and buildings were released and developed, the character of the eastern region and certainly the quality of life would change dramatically. If the Ministry of Defence proceeds are returned to the Treasury, as is the usual case, and the infrastructure is not provided to support large-scale development, the results may be extremely damaging.
There is a mismatch between many of the policies coming out of government or, worse, an absence of policy altogether in areas such as national guidelines, local planning policies, infrastructure needs, airports policy, capital receipts and their use. And the Ministry of Defence's policies versus those of the DETR is an issue that needs to be addressed. It would be helpful to know from the Minister how those two departments are talking to each other about the impact of one department's realising assets on the other, which is charged with concern for the quality for the environment.
In answer to the question posed in the Motion, I do not believe that current planning procedures respecting proposals for new commercial airports, or any other large scale developments, are adequate to take account of environmental issues. Today I have spoken to three planning officers and they say that they are in considerable difficulties about advising their local people what to do. My noble friend Lord Marlesford made the point that many local councils throughout the land feel threatened when they are told that if they do

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not vote in a particular way they may find themselves financially disadvantaged at a later date when funds could be sequestered should they be deemed to have voted against the project.
In less formal language, the plea that I wish to make and the point that I wish to address is for joined-up government in this area.
6.40 p.m.
Lord Mountevans: My Lords, I, too, thank the noble Lord, Lord Gladwyn, for giving us the opportunity to discuss new commercial airports, their environmental implications, planning, and local issues.
Too often we hear of industries merging, of plants closing and of the laying-off of staff. However, I cannot recall an incidence of that happening in terms of airports. Quite the reverse. Affluence and deregulation have done well by our airlines and their customers. In consequence, they and the airports have done well. Perhaps I may bracket both as the "aviation industry", as I did last July, and suggest that it is an outstandingly successful industry.
In airport terms, that success is across the board, be it the privately-owned heavyweights in BAA, other private operations such as the National Bus-owned Hurn airport at Bournemouth, or our municipal airports. In the context of the latter, I welcome the Government's relaxation of public sector borrowing controls in respect of soundly financed local authority projects. The success of Birmingham, Manchester and Newcastle must benefit the community, the shipper and the traveller.
Where should we aim to go from here? What steps can we take to build on success? I believe that we should look at the airlines, be they scheduled or the new generation low cost or chartered airlines. With practically no subsidy for their operations, they identify demand and provide service on a commercial basis. I believe that a national airports policy would anticipate their requirements and thus customer wishes.
But there is an environmental price to pay. No one has mentioned Kyoto yet. It deserves an airing. We cannot overlook it. I sleep within 15 yards of the Bakerloo line and under a Heathrow approach, neither of which bother me much, but I appreciate that others have a much rougher time. Nonetheless, I believe that we must choose between more airports, which I am against, and greater utilisation of existing facilities, which I believe will find much sympathy among speakers in your Lordships' House.
I come down on the side of the latter. A number of airfields are potential airports. Those of the MoD have been mentioned and I believe that British Aerospace has at least half a dozen that could be developed from test airfields into commercial airports, but not yet. I would leave them unconverted; I would leave them in their present situation pro tem. I hope that a national policy will embrace them only at the far end of the 30-year view that is taken in the White Paper. Maybe that is a little too long.
Having argued for the best use of what we have, I accept that increased demand leads to what we do not have. I hope that we will encourage existing success by
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overhauling the planning regime—I believe that that is essential—not only to address the problems that other noble Lords have spoken about, but also to address the problems of exploiting what we already have. I hope that existing success will be encouraged.
I shall not rehearse all that was said on 21st January during the Question tabled by the noble Earl, Lord Kinnoull, about Terminal 5, but I welcomed the trend in the Government's answers that day. Having taken the Kings Cross and other railway Bills on the Floor of this House, I believe that it is essential that the Government overhaul the planning regime, especially in respect of additional facilities rather than in respect of new airports.
I would also suggest that new infrastructure should not be looked at in purely airport terms. Access is an issue that must be addressed at all times—access for users and workers. We must not forget that much of the traffic at Heathrow is not as a result of the customers but the people who keep the airlines and the airport going.
The Heathrow Express, Manchester Airport's new station, the forthcoming Luton Airport station and the Tyne and Wear Metro's airport extension are all welcome developments. Would that the Heathrow Express served Hayes and Harlington, thus opening up access from Wales and the West of England and taking local traffic off the roads. Would that Stansted had an approach from the east, from East Anglia which might help to alleviate the needs of the Bentwaters development or anything similar. Would that Heathrow had a southern access from, say, Feltham. That was first mooted in the early 1960s and was then costed at £6 million, which is peanuts.
We cannot afford to follow the Scandinavian example of building new airports on greenfield sites, as has happened in Sweden and Norway, or on reclaimed land as in Copenhagen. Nor am I convinced, as some noble Lords have suggested, that we can follow the German plan of eliminating domestic flights in favour of surface transport. However, we can make the best use of what we have by simplifying the planning regime and by enhancing local and national access to airports by means of public transport. Those are two themes set out in the White Paper and they are objectives for the commission for integrated transport to pursue?
6.46 p.m.
Baroness Hamwee: My Lords, I join with others in thanking the noble Lord, Lord Gladwyn, who I think may know the answer to his Question. There is a tinge of "Have you stopped beating your wife?" in the Question. "Is the Government satisfied that procedures take account of policy?". What policy?
One need only recall—to take one airport—what the inspector said at the time of the T4 inquiry, to which my noble friend, Baroness Ludford referred. At that time the Government accepted in 1979 that the proposed fifth terminal at Heathrow should not go ahead. Recalling those statements one understands well the public's scepticism about the procedure and the value of undertakings given as part of them.

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As always, I have to declare an interest in Heathrow as a west London resident. I am well aware that arguing a particular local case does not aid the debate.
As noble Lords have said, the transport White Paper promises an airports' policy looking 30 years ahead. When will the 30 years start? Not only will we have to wait for the inspector's report on T5, but also for the Secretary of State's decision—in other words perhaps at least three years. I hope that the Minister can explain whether emerging proposals for airports, both relating to Heathrow and otherwise, can or should be put on hold. I include in the list Northolt Airport, to which the noble Lord, Lord Gladwyn, referred, for which one option is as a feeder for Heathrow.
I fully support the Motion that airports and air transport policy should be integrated with other areas of transport policy and wider policies. That is a commonsense view and it is a view held by the public. I believe that the public's expectations and demands are increasing, particularly with regard to sustainability and environmental protection. One of the most serious aspects of the matter is the public's view of the difficulty of individuals making a difference, not just when dealing with a particular matter, a particular application, but also the process of creating the plan, the framework, in the first place. The concern to which noble Lords, including the noble Baroness, Lady Blatch, referred attaches to the application made by an organisation in the public sector, lack of transparency in those processes and the obligation on them to realise the best price. I support what the noble Baroness said on that. On this occasion she must be glad not to be in government in order to be able to say that.
It is a good idea in theory to have a plan-led system, but that requires a plan to be in place. One of the difficulties of the application for Alconbury, to which reference has been made, seems to be that the issue was not, as I understand it, considered within the Huntingdon local plan, so there was no proper analysis at the plan-making stage. In other words, it is not plan-led; it is developer-led, so it is difficult to set it in the context of, for instance, transport links, and particularly the now very full A.14. and still less to respond to it being a site which must be an obvious candidate for mixed development, including perhaps fulfilling some need for household growth.
Reference has been made to flying rights at Alconbury. Can the Minister confirm whether flying there will require a further application, as the noble Lord, Lord Gladwyn, suggested? An application such as Alconbury may be the biggest decision in any district councillor's career and unless there is a strategy in place we may be expecting decisions from people whom we have not adequately equipped to deal with them.
Integration with other policy areas is a need writ large over Heathrow. The inquiry there is taking years and I cannot possibly cover the issues in the seven minutes allowed to speakers tonight. However, perhaps I may touch on just a few. I refer first to the place of private funding. The Heathrow Express, so funded, disgorges passengers into the difficulties of Paddington without
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CrossRail and is to control its demand by pricing. There is also the role of the airport as a shopping centre—a big attribute of T5.
I turn next to noise and night flights. The White Paper recognises that the aviation industry imposes severe environmental costs which it should meet, but the Government do not seem to have struck the same balance in the current consultation paper on night flights. Dangerously, they do not seem to be taking the public with them in the exercise of consultation. There is a big credibility gap between research and the disturbance actually suffered. People know when their sleep is disturbed. They know that the effect of the number of movements as well as the amount of noise is relevant. The "them and us" reading is compounded by such things as redefining what is meant by "night" in order to make it shorter. Other airports have banned night flights without alarmist claims about huge amounts of business being lost or, like Schiphol, they give a weighting to night flights so that in their annual noise budget they count for more.
I appreciate that the Minister cannot comment on current applications or consultation, but I hope that he can help the House on one general matter. I refer to the role of the Secretary of State, a matter on which I have written to him. The word on the street is that the current Secretary of State considers that decisions should, as often as possible, be left to local planning authorities and that he is resisting using Article 14 directions and calling in applications. I have a lot of sympathy with that although there are situations when intervention is appropriate. Has there been any change of policy or approach? If so, that should be known.
As has been said, the Government boast of their joined-up approach. I hope that they will soon join up the strands of their airports policy. A different department, MAFF, used to be reputed to defend agriculture with a disregard for public health, but now we are to have the food standards agency. I hope that the DETR will show that it is not an uncritical defender of the aviation industry, but also a defender of people's quality of life. I hope that we shall soon have passed the point when we hear, "Let us have an airports policy, but not yet".
6.53 p.m.
Lord Dixon-Smith: My Lords, I have vivid boyhood memories—I think it was in 1942—of the arrival, first, of clearing equipment and then of construction equipment on five separate sites, all within close proximity to my home. Wartime airfields were constructed on a five-mile triangulation across the whole of the eastern counties wherever the terrain was in any way suitable. We should all be grateful to those who served over the years in the interests of the defence of this nation, first as a matter of survival and latterly as a matter of serious defence. I should welcome an assurance from the Minister that there are no possible residual defence considerations left which could justify continuing the maintenance of those airfields.
Almost all of those wartime airfields are long gone; most are almost completely removed. Those that have remained in use latterly have had very little impact on,

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or need for, the infrastructure. They were largely manned by Americans and everything was moved in and out by air. But a change of use could bring a dramatic change.
In his Unstarred Question, the noble Lord, Lord Gladwyn, asks really about the validity of the planning process. Long experience of that process leads me to say—I hope that the noble Lord will forgive me for saying this—that one's satisfaction with the process is directly proportional to one's degree of agreement with its conclusions. There is simply no getting away from that. Planning is an extremely subjective matter. However, it is reasonable to suggest that in this situation, if it were not for the existence of the former wartime airfields, any planning application on any of those sites, either for airfield use or for residential use, would almost certainly be instantly rejected. I suggest that that is not perhaps an unreasonable starting point for consideration of this matter. Of course, such robust action would immediately lead to appeal—or possibly would have lead to a call-in by the Secretary of State because there would have been national policy implications. The Secretary of State wishes at present, quite properly, to get a high degree of local decision-making. But where is the national policy to guide those who are responsible for taking such decisions?
The Minister's predecessor said on 6th July 1998, at col. 956 of the Official Report:
"I hope that we can set a framework in the White Paper which will be published later this month on integrated transport policy".
The White Paper, published only a few days later, states:
"We will prepare a U.K. Airports policy looking some 30 years ahead… We will consult widely and will take account of the inspector's Report on the Heathrow Terminal 5 inquiry".
We have heard from many noble Lords tonight that that inquiry is continuing. I understand that the inspector will probably need two years to summarise the inquiry. Subsequently, the Minster will probably take another year to make up his mind on it. I do not want to go into the merits of that inquiry.
On the same day, the noble Baroness, Lady Hayman, also said, at col. 957:
"our plans for regional planning guidance will ensure that in future a regional transport plan is included in regional planning guidance".
Can the Minister tell us where that regional planning guidance development has got to? It appears that the local authorities concerned with the applications have still not heard of it.
The planning process does not stop. It is already running. In both Suffolk and Cambridgeshire, structure and district plans are moving forward, driven by an assumption that the former military airfields are Brownfield sites, to be developed with the encouragement of the Secretary of State at the DETR. Is that a correct assumption? If it is not a correct assumption, where do we go? Moreover, if it is a correct assumption, has it been made to the exclusion of all other policy interests?
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These matters will be decided long before there is a national policy from the Government. Hence the policy, when it comes, will have to be made to fit the past rather than guide the future unless the Government take some action now. I am most grateful to the noble Lord, Lord Gladwyn, for tabling this Question. It has revealed what appears to be a vacuum in the Government's thought on this matter as well as a lack of willingness to take action. That seems to be becoming a common feature as this Parliament develops.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, I, too, am grateful to the noble Lord, Lord Gladwyn, for initiating this debate and to all noble Lords who have taken part. Indeed, they have shown a great deal of expertise in the field. I regret that part of my reply may appear unsatisfactory to some noble Lords, and I might as well make that confession at the beginning. That is partly because, in many of these areas, the quasi-judicial role of the Secretary of State means that the only line that I can possibly take is to say that, "I cannot possibly comment". However, I shall try as far as possible to pick up the points that have been made, but I am afraid that in relation to Terminal 5, and the individual planning situations, there is a role at the end of the process for the Secretary of State which I have to protect as I am his representative in this House.
The White Paper sets out some key general principles on airports policy, relating to integration with environmental policies, with regional development and with surface transport. It announced that we wished to develop an airports policy which would look 30 years ahead.
We are currently considering the precise scope and timing of that policy statement and will announce our conclusions in due course. But until the new national airports policy is in place, existing airports policies remain which we inherited largely from the previous government. They will remain valid and continue to do so until such time as they are changed or discontinued. In the meantime, development proposals involving civil airports will be considered in the first instance by local planning authorities, or, where appropriate, by planning inspectors and the Secretary of State. That will be in the light of existing airports and planning policies, including regional planning guidance to which reference has been made.
Preparing the new airports policy and following the principles set out in the transport White Paper will take time. It would not be possible to do this without taking account of the inspector's report on the Heathrow Terminal 5 inquiry. Noble Lords have quite correctly pointed out that there is an indication that the report may take two years to complete. In the meantime, we are still progressing with the existing airports policy.
I accept that there are problems with the situation, but for any development of airports policy it must be clear that an assessment of the traffic movements of the

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south-east is central and that the future or otherwise of Terminal 5 is central to the future allocation of such movements. I give way to the noble Lord.
Lord Dixon-Smith: My Lords, I am sorry to interrupt the Minister, but I did say that I did not wish to discuss the question of Terminal 5. However, I had always understood that, if there was justification for it, it would have nothing to do with the number of air transport movements; indeed, it would have everything to do with the increase in the size of aircraft.
Lord Whitty: My Lords, that is partly true. Obviously, changes in the size of aircraft would alter the situation that the inspector is considering. However, the results of that assessment must have profound implications for the siting and development of other airports within the south-east area. Indeed, the south-east area accounts for a large proportion of total air movements and, therefore, total airports development in the country as a whole.
Noble Lords will recognise that the inspector's report will therefore form an essential input to the development of a new airports policy. I believe that a number of speakers recognised that the process is unsatisfactory. We are considering modernising the planning procedures, especially for major national infrastructure. However, we are stuck with a position in relation to Terminal 5 where the airport has to follow current planning arrangements. We have to wait the outcome of that inquiry.
I move on to the actual and potential use of former MoD airfields. The Government consider that the local planning process, together with the extant planning and airports policy, provide an adequate framework for the consideration of planning applications for new commercial airports, whether or not they are on old MoD sites. From the planning point of view, a material change of use from a former military airport to that of civil airfield would normally require a planning application to the local planning authority under Section 54A of the Town and Country Planning Act 1990. Such planning applications must be determined in accordance with the development plan, unless material considerations indicate otherwise. Account can also be taken of emerging development plans which are going through the statutory process.
PPG 13 advises that airport development is promoted by developers through the normal planning process. It recognises that airport development can bring economic benefits, but may also give rise to environmental and other concerns. The PPG advises that regional airports offer the opportunity to fly without the need for long surface journeys. It also advises that existing sites, including redundant military airfields and airfields, with established uses, will often present the best opportunities for providing acceptable facilities.
That is the existing position. In addition, we have a situation where the MoD is attempting to dispose of substantial parts of its land, as the noble Lord, Lord Gladwyn pointed out. The Defence Estate exists solely to provide operational bases for our Armed Forces. It is Ministry of Defence and Government policy that the
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Defence Estate should not be any larger than that which is absolutely necessary to meet the operational needs of the Armed Forces. For that reason, early disposal of surplus property was identified as a priority within the recent Strategic Defence Review and within the CSR. A target of £700 million was set for receipts on Ministry of Defence land over the next four years.
It is MoD's usual policy to dispose of the freehold of surplus land on the open market by competition, with the benefit of planning permission. This is in accordance with guidelines issued by the Treasury, which have been extant for some time. However, a range of other methods may be used if professional advice indicates that such alternatives would produce a better value.
At the same time, negotiations with local planning authorities are normally undertaken by the MoD before a property is offered for sale and in the course of that sale. Indeed, it is crucial to establishing the development potential of all sites before they are offered for sale that an understanding with the local authority is established. In the current plan-led development environment, wherever possible MoD land is allocated in local and structure plans so as to optimise the planning potential and hence, from the MoD's point of view, the receipts from disposals.
Perhaps I may comment as far as I can on the individual sites which have been mentioned during the course of the debate. I shall begin with RAF Bentwaters, which is an area that I used to know well. When the American Air Force was in that area, and in various places around there, it was not just the "call of the curlew", as indicated by the noble Lord, Lord Marlesford, which broke the silence. It is clear that Bentwaters in particular is located in an area of outstanding natural beauty. On the other hand, it is also within a rural development area and the closure of that base did have a significant impact on the local economy. The local planning authority is keen to find a sustainable solution.
I should add that it would normally be inconsistent with the aims of designation as AONBs to permit the siting of major industrial or commercial development in such areas. Although it is appropriate for planning authorities to have regard to the economic and social well-being of those areas, only proven national interests and lack of alternative sites can normally justify an exception. Local planning authorities must take that into account in preparing their development plans.
I cannot comment in detail on the assertions of the noble Lord, Lord Marlesford, relating to contacts between council officers and potential developers. However, I understand that the planning application currently before Suffolk Coastal District Council for the change of use of Bentwaters essentially covers the former operational part of the airfield, and that the developers propose to convert existing buildings and to modify existing infrastructure rather than undertake any large scale new build. The application has been accompanied by an environmental statement. The council has informed the Government Office for the Eastern Region that the application could be referred to the Government Office under the terms of the Town and

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Country Planning Directions Act 1992. I understand that Suffolk Coastal District Council has requested that predictions of noise levels likely to occur above Aldeburgh Maltings will be taken into account. The applicants suggest that they will be prepared to enter an agreement with the council and with Snape Maltings to avoid certain kinds of operational activity when recording and other musical events are taking place.
As regards the suggestion by the noble Lord, Lord Bridges, that the silence of the Government Office has been taken by the district council as indicating approval of the Bentwaters planning brief, that is not the case. As a matter of practice we do not comment on the content of statements placed before the local planning inspector. It is for the inspector to consider all the information before making his recommendations in a report to the district council. Therefore, if that has been asserted I wish to make it clear that that is not the case. That is where we stand in relation to Bentwaters.
As regards RAF Alconbury, that is a slightly different situation. The current proposals are different from those proposed for Bentwaters because the original application which included proposals for air freight has been withdrawn. If those proposals were to be reinstated—I believe the noble Baroness, Lady Hamwee, asked about this—a further application would be required. It is true that previously the draft regional strategy for East Anglia identified Alconbury as a possible site for the development of a regional base. The position on Alconbury at the moment, however, is that Huntingdon District Council is considering only a freight and surface transport base and not an airfield.
Baroness Blatch: My Lords, I hope the Minister can be more helpful on that point. My understanding is that the MoD is using the local planning system almost out of a sense of courtesy, and that there is not a requirement to do that because at Alconbury there is an existing use. I believe that the MoD should be required to submit at some later date an application for air freight activities. Is what has happened just a courtesy or a promise on the part of the developer; or is it genuinely a requirement under the law?
Baroness Hamwee: My Lords, I hope I may add a further point. I may be asking the same question slightly differently. Are military air movements transferable into the commercial sector?
Lord Whitty: My Lords, they are not covered by the same planning permissions. There is not an existing planning authority permission for military movements. Therefore, one cannot transfer one to the other in that sense. In any case there are no military movements from Alconbury at the moment. I hope I have answered the point made by the noble Baroness, Lady Hamwee. In answer to the noble Baroness, Lady Blatch, as I understand it the original proposition included provision for air freight. That was withdrawn. The current application does not include air freight. If it were given the go-ahead, it would require a new application if air freight were to be reinstated. We are not at that point. As far as I understand the position, Huntingdon District
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Council has not received any application relating to air freight. It would require a new application, were that to be the case.
With regard to RAF Manston, the position there is different again in that civil air transport has existed at Manston since 1965 and both the Isle of Thanet and Kent planning authorities are in favour of that development. We are not dealing with a single situation. The position is different in all those three sites, and I suspect that it is different in regard to the other sites too.
A number of noble Lords have referred to intervention by the Secretary of State and indeed have called for intervention by the Secretary of State. I say in answer to the noble Baroness, Lady Hamwee, that the policy has not changed in terms of intervention but we use the call-in power sparingly and exceptionally, as indeed did Secretaries of State under the previous government. The level of call-in is roughly the same as in the equivalent period before the election. But in this as in other areas we shall consider the role of the Secretary of State at the end of this process. The noble Lord, Lord Northbourne, also asked whether the Secretary of State would intervene in relation to noise levels. That is a complex area and I should be grateful if the noble Lord will allow me to write to him on that point.
I have gone over my allotted time, even allowing for the time spent on interventions. We believe that the planning process is essentially sound in that it allows local authorities—the democracy that the noble Baroness, Lady Ludford, asked for—to operate in the first instance. However, we believe that some substantial streamlining should be considered, particularly in relation to projects such as Terminal 5 which are of national infrastructure importance. As noble Lords will know, my honourable friend Dick Caborn is engaged in substantial consultation on the future of planning procedures in that and other areas.
As regards the specific Question that has been asked, we believe that the local planning process is a sensible one. We believe it could be improved. We have to wait for the outcome of the Terminal 5 inquiry before we can finalise any overall national airports policy. I trust noble Lords will understand that position. I trust noble Lords will also understand that as regards the specific questions that were raised, my right honourable friend the Deputy Prime Minister will need to reserve his position in case he is called upon in a quasi-judicial role at the end of that process.
Lord Marlesford: My Lords, before the noble Lord sits down, are the Government prepared to contemplate the possibility that before state-owned land, particularly military land, is disposed of, the environmental implications of what it might be used for will be considered in a disposal so that there is not the risk that developers think they will get permission for something, which they subsequently do not obtain and that that thought adds to the pressure for inappropriate environmental development?
Lord Whitty: My Lords, I have tried to indicate that as regards the MoD's approach to disposals—I trust this would apply to other state-owned land—while considering maximising its return on the land it should also engage with the local authority to indicate what the
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planning requirements ought to be in relation to development on that land. That would obviously include environmental issues, noise issues and also economic development issues.
House adjourned at seventeen minutes past seven o'clock.