Lords Sitting of 10 March 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 Oxford.

Royal Assent
The Lord Chancellor (Lord Irvine of Lairg): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
Road Traffic (NHS Charges) Act.

Public Utilities: Millennium Compliance
Viscount Brentford Viscount Brentford asked Her Majesty's Government:
Whether they have discussed with the public utilities continuity of services in the first days of the new millennium.
Lord McIntosh of Haringey: My Lords, the public utilities, their sponsoring government departments and the regulators belong to the National Infrastructure Forum. Forum members share information about millennium preparedness with the aim of meeting the Government's objective that there should be no material disruption to essential public services over the millennium. The regulators are commissioning independent assessments of the utilities' preparedness for the millennium date change. They include plans to ensure that utilities can maintain services to the public if critical elements of their business are damaged.
Viscount Brentford: My Lords, I am grateful to the noble Lord for that Answer. Is he aware of the large measure of anxiety and concern in the country about discontinuity of resources at that time? How should I reply to a small business which has sent me a copy of a letter from its electricity company saying that it gives no guarantee or warranty about continuity of electricity supply over that period, although that small business and its machines are very dependent on electricity? I am also concerned about pensioners if electricity is cut off for a week or so over that period. How should I reply to such concerns?
Lord McIntosh of Haringey: My Lords, the Government are aware of the public anxiety and are concerned that the public should be reassured where that is appropriate, which is in almost all cases. The question of a warranty is a legal issue and I understand why the utilities are unwilling to give a warranty. However, the noble Viscount may be reassured to know that 46 per cent. of electricity companies have already established that there is no substantial risk of material disruption and 52 per cent. are on course to meet the
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deadline—in other words, they will sort out problems well before that date. In addition, the 2 per cent. which still have problems outstanding are mostly older generators which may not necessarily be in use at the time of the millennium.
Earl Attlee: My Lords, how many telecom operators licensed by Oftel have yet to declare themselves millennium-compliant?
Lord McIntosh of Haringey: My Lords, all telecom operators either have declared themselves to be millennium-compliant in the sense that there are no substantial risks of material disruption, or have in hand programmes for meeting the deadline in good time.
Lord Razzall: My Lords, having listened to the Minister's replies, I have a slight concern, so will the noble Lord confirm—and perhaps make this answer slightly stronger than was his Answer to the noble Viscount—that the Government take responsibility for ensuring that there will be no problems?
Lord McIntosh of Haringey: Yes, my Lords, of course. The Government take responsibility for ensuring that the public services, the utilities and, as far as we can influence them, the private sector companies are millennium-compliant. As I said in my Answer, we are also taking serious steps to ensure that services to the public are maintained if critical elements of the utilities' business are damaged at the time of the millennium. We have in hand contingency plans which will be co-ordinated between the utilities through the National Infrastructure Forum to ensure that any damage is kept to the absolute minimum.
Lord Mackie of Benshie: My Lords, does the Minister advise the public to lay in essential stocks; for example, for Hogmanay in Scotland?
Lord McIntosh of Haringey: My Lords, I think that the noble Lord should stick to his usual habits. I am sure that he lays in stocks for Hogmanay. He will, of course, recognise that the holiday period will be rather longer over the millennium. I am not advising that he should lay in stocks of, for example, tinned food.

Imported Works of Art: VAT Increase
2.41 p. m.
Lord Pearson of Rannoch Lord Pearson of Rannoch asked Her Majesty 's Government:
Whether the United Kingdom will be obliged to increase the rate of VAT on certain imported works of art from 2.5 per cent. to 5 per cent. in June 1999 and, if so, what effect this will have on the international competitiveness of the British art market when combined with the effects of a possible droit de suite directive.
Lord McIntosh of Haringey: My Lords, under EC law governing VAT on the importation of certain

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works of art, agreed in 1994 by the previous government, the United Kingdom should raise its VAT rate from 2.5 per cent. to at least 5 per cent. The Government are keen to change that, but the legal position can be altered only with the agreement of the European Commission and all other member states. It would be very difficult to estimate the combined effects of import VAT and droit de suite on the British art market.
Lord Pearson of Rannoch: My Lords, I am grateful to the Minister for that reply. However, I fear it means that he misled the House on 28th January when he said:
"What we shall not do is level up to 5 per cent. ". —[Official Report, 28/1/99; col. 1209.]
Since the Minister's Answer also proves that the Government's much-vaunted charm offensive in Brussels has failed, will they now invoke the Luxembourg compromise and use the veto to save this highly important national interest? It is worth double our pop industry to the United Kingdom economy.
Secondly, as our Eurobond market, our mergers and acquisitions industry and many other British interests are now on death row in Brussels, do the Government at last agree that the time has come for an objective cost-benefit analysis of our adherence to the Treaty of Rome?
Lord McIntosh of Haringey: My Lords, the noble Lord quotes me correctly on 28th January. Unfortunately, that part of my speech got completely garbled. Immediately before that I said that we would be seeking to level down to other countries, which is clearly nonsense. I apologise for saying that what we shall not do is level up when I meant that we shall do our very best not to level up, as the noble Lord knows.
The noble Lord then asks whether we have abandoned our attempts. On the contrary; at the Internal Market Council on 25th February my noble friend Lord Simon of Highbury managed to achieve further consideration of the draft directive by the Committee of Permanent Representatives. That means that we are talking again. Under those circumstances it would be premature to talk about using the Luxembourg compromise which—I remind the noble Lord—can be used only in conditions of vital national interest. Meanwhile, we are carrying out an independent UK study of the directive. I will not go so far as to agree to the wider inquiry which the noble Lord wishes the Government to undertake.
Lord Shore of Stepney: My Lords, we all accept that it was very unfortunate that on 28th January a categorical assurance was given to the House that there was no question of tax changes being imposed upon us against our will. The Minister said, and I accept, that that was said in good faith. But it illustrates the lack of seriousness in the Government in assessing the pressures, dangers and risks of the drive for tax harmonisation which exists in the European Community today. Does he not agree that the increase in VAT of
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2.5 per cent. on imported art works to 5 per cent. —we cannot resist it; we have no veto—will do great damage to the London art market?
Further, does my noble friend agree that the additional droit de suite 2.5 per cent. levy will only add to the difficulties? Again, we have no veto on it; we can only stop it by establishing a minority in a qualified majority vote.
Finally, I want to put this to my noble friend.
Noble Lords: Order, order!
Lord Shore of Stepney: My Lords, it is terribly important to get this right. I raised the matter specifically at the time and was given an absolute assurance. Can we not now begin to understand that so much depends on obtaining agreement with our colleagues that the unanimity rule is not enough?—otherwise we would never have agreed to impose the VAT, as the previous government did in 1994 without any opposition—indeed total acceptance—by the official Labour Opposition at the time. I hope my noble friend will give some assurances that he will treat further threats of the withholding tax and other matters with greater seriousness than has been shown so far.
Lord McIntosh of Haringey: My Lords, I understand and sympathise with the passion which my noble friend shows for these issues. However, he must not infer from that that anybody else is treating it with anything less than the serious attention it deserves. He is right in saying that the 7th VAT directive, under which these changes come, was agreed by the previous government without objection from the Labour Opposition. But that is the end of any party political point that can be made of it. These changes are not in themselves evidence of any fresh moves towards tax harmonisation in the general terms expressed by my noble friend. We will continue to encourage the development of measures against harmful tax competition while continuing our objection, which we can sustain, against tax harmonisation.
Lord Inglewood: My Lords, is this not an instance of the Community shooting itself collectively in the foot? While London for the time being is the principal art market centre within the Community, there is no reason why that should continue. These levels of VAT will condemn the Community as a whole to ring-fencing itself from being in a position to sell works of art from outside the Community.
Secondly, is it not the case that the principal beneficiaries of droit de suite are in fact the heirs of a number of extremely well-known painters and not struggling artists? Is it not also the case that it applies only to works of art sold at auction rather than by private treaty, which by any standards seems to be illogical?
Lord McIntosh of Haringey: My Lords, the noble Lord asks questions about both VAT and droit de suite. Some countries in the European Community at present have VAT rates of 5 per cent. or even more and therefore, presumably, would not suffer if there were a

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levelling up, though as I said before, we shall continue to resist that. In relation to droit de suite, the evidence is rather confusing. It appears that in France, where droit de suite has been going since 1920, around 80 per cent. of the receipts go to 20 per cent. of artists or their families. I have been unable to find out what proportion goes to living artists. However, as far as we are concerned, the amount of money which might go to artists is very small; indeed, it could hardly be more than £10 million, of which £2 million might go to British artists. It could also have the effect of depressing prices even for first sales.
Lord Jenkins of Putney: My Lords, is my noble friend the Minister aware that a distinction must be drawn between tax harmonisation and droit de suite? Is it not the case that tax harmonisation is for the benefit, or otherwise, of governments, whereas droit de suite is for the benefit of the artists? Therefore, to draw the two together and put them into a single sack is quite wrong.
Lord McIntosh of Haringey: My Lords, my noble friend is quite right. That is why I resisted the extension of the Question to include tax harmonisation in general. Of course, there are arguments on both sides. The best regulatory assessment that we have on droit de suite is that £360 million of sales would be affected, with a maximum earnings loss to the British art market of £68 million. Against that we have to balance £10 million which might go to artists. It is on the basis of that balance that Her Majesty's Government have opposed the extension of droit de suite.
Lord Skidelsky: My Lords, I should like to be clear about the exact position in the art market. If the Government's efforts in Brussels fail, is it the case that we will have no alternative but to accept the 5 per cent. VAT on the sale of imported works of art and, indeed, that we will have no alternative but to accept a harmonised rate of royalty to be paid to artists and their successors for 70 years, whenever one of their works of art is sold in this country? Can the Minister say whether that is an accurate statement of the present position?
Lord McIntosh of Haringey: My Lords, the noble Lord has actually asked two questions. The answer to the first one is, yes. If the present reconsideration of the draft directive which has been achieved goes ahead, it is likely that we would have to raise our VAT rate from 2.5 per cent. to 5 per cent. As far as concerns droit de suite, I can tell the House that there is a proposal on the table as regards the draft directive of 2 per cent. on the most expensive works of art; 3 per cent. to 4 per cent. on less expensive ones; and no droit de suite on even less expensive works of art. Indeed, there is a whole variety of options of droit de suite which might be adopted. It is far too early to say what could be achieved. However, the fundamental point behind what the noble Lord has said is that the legal position can be altered only with the agreement of the European Commission and all other member states.
Lord Haskel: My Lords, does my noble friend the Minister agree that the suggestion that an increase in
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costs of 2.5 per cent. would cause financial ruin to companies is something of an exaggeration? We should bear in mind the fact that, over the past few years while this matter has been discussed, most companies have increased their competitiveness and productivity by 10, 15, 20 or even 30 per cent.
Lord McIntosh of Haringey: My Lords, that is exactly why I said in response to an earlier question that the maximum loss to the British art market in earnings would be £68 million. That is based on the assumption that all of our relevant sales went across to New York. But that is highly unlikely; in other words, my noble friend is right.
The Earl of Lytton: My Lords—
Noble Lords: Cross Benches!
The Earl of Radnor: My Lords, if the art market went to New York and the auction houses took their business there and operated in that city and all this droit de suite and the extra VAT came in, can the Minister tell us what kind of effect that would have on the export licensing of any remarkable pieces of art? For example, would people be able to take them to New York and receive an export licence in order to do so? It seems to me that it might cause considerable disruption if such a thing should happen; and it might.
Lord McIntosh of Haringey: My Lords, questions regarding export licences are entirely different from droit de suite. Indeed, there is no necessary connection between the two. It is not necessarily the case that we would need, or wish, to reconsider the issue of export licences.

IMF Restructuring Programmes: Education and Health
2.54 p. m.
Baroness Williams of Crosby Baroness Williams of Crosby asked Her Majesty's Government:
Whether they will urge on the International Monetary Fund the importance of protecting primary education and public health services from expenditure cuts when proposing restructuring schemes for countries facing financial and economic crises.
Lord McIntosh of Haringey: My Lords, the Chancellor of the Exchequer has consistently emphasised the need for the IMF and World Bank to work together to ensure that spending on health and education is protected at times of crisis. Following proposals put forward by the Chancellor at the 1998 annual meetings, the World Bank is developing general principles of good practice in social policy in consultation with the IMF and other relevant organisations. These principles should be drawn upon

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by the IMF and World Bank in the design of their programmes. The principles will be discussed at the development committee meeting next month.
Baroness Williams of Crosby: My Lords, I thank the Minister for that most hopeful reply. I also note that, during his visit to Russia, this very week the Foreign Secretary praised Mr. Primakov for ensuring the payment of arrears in wages to public servants and also for trying to reach social stability in his country. Can the Minister say whether the lessons from the IMF rescue package for Russia in August of last year and the more recent lessons from the Brazil package have been fully learnt, and confirm that in particular primary education and public health services will be broadly protected in future restructuring programmes?
Lord McIntosh of Haringey: Yes, my Lords. It is precisely the problems which arose from the Russian rescue package and from rescue packages in east Asia which led the Chancellor to take the initiative in October of last year to ensure that we have this general statement of principles of good practice in social policy. He will have to push this forward very fast indeed, compared to normal movement in international organisations, if he is to get drafts discussed in April of this year and, as we hope, finally agreed not later than October of this year. Crises happen immediately and their effects are felt immediately. We simply cannot afford to let matters drag.
Lord Judd: My Lords, my noble friend the Minister referred to the role of the World Bank. Does he agree that it has been most encouraging to see the lead being given by the current president of the World Bank on the need for change of policy in this sphere? However, will he accept that, for those working in the front line, there is all too often an absence of evidence of what is agreed at the intellectual strategic level being followed through? Therefore, can the Government pursue that issue and ensure that good intent is turned into good practice?
Lord McIntosh of Haringey: My Lords, my noble friend is quite right to say that Jim Woolfensohn, the president of the World Bank, is very much seized of these issues. I was very attracted by what he said; namely, that social and economic issues were inseparable, like breathing in and breathing out. Indeed, I thought that that was a very proper way to put it. My noble friend knows far more than I do about the way in which these policies are implemented on the ground. I fear that he may be right. I shall, therefore, draw his remarks to the attention of Ministers.
Lord Skidelsky: My Lords, can the Minister say what steps the Government currently take to ensure that official assistance from this country to developing countries is spent on primary goods, which the noble Baroness, Lady Williams, rightly identified as being the
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key to economic and social development, and not simply wasted on economically valueless projects of which we have had many examples in the past?
Lord McIntosh of Haringey: My Lords, I am afraid that the noble Lord is right about past experience. I am sure that there have been far too many examples of wasted aid. If I may say so, that was particularly the case under the policy of trade-and-aid introduced by the previous government, which certainly led to a very considerable distortion of our aid programme. With the abolition of that particular distortion, we are certainly being very active in seeing to it that the social effects of our aid policy are carried out. We have representatives in all parts of the world to ensure that that is the case.

Sparkling Cider: Duty
2.58 p. m.
Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer asked Her Majesty's Government:
What proposals they have to avoid damage to the sparkling cider industry following the increase in tax from its 1996 level of 23p per litre.
Lord McIntosh of Haringey: My Lords—
Noble Lords: Hear, hear!
Lord McIntosh of Haringey: Little things please little minds; like mine. In 1996, faced with the threat of infraction proceedings by the European Commission, the then government began the process of aligning the duty rates on sparkling cider and lower strength sparkling wine. This culminated in yesterday's Budget with the increase in sparkling cider duty which affects less that 0.5 per cent. of cider production. The process has had the support of the National Association of Cider Makers and has been phased in over a number of years.
Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for that reply. He has made the very point I wish to make; namely, that this is a small problem. Perhaps that is why neither party when in government has chosen to address it seriously. Sparkling cider is an historic drink. It is a 17th century drink—
Noble Lords: Question!
Baroness Miller of Chilthorne Domer: My Lords, I am coming to it. Obviously none of your Lordships drinks 17th century cider. As the Economist said, at one stroke this measure will wipe out a small, rural craft industry of the type the DTI and MAFF seek to protect with grants. Does the Minister feel that his action is in conflict with that of the DTI and MAFF? What can he do to remedy the situation?
Lord McIntosh of Haringey: My Lords, I have to make two points in response. In the Question the noble Baroness asks me about avoiding damage to the

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sparkling cider industry. This is not a question of protection; it is action against protectionism. I wonder, for example, how noble Lords would feel if we did not pursue the Greek Government, who have a policy of lower rates of duty on ouzo as opposed to Scotch whisky. That is protectionism of exactly the kind we have been accused of as regards competition between sparkling cider and lower strength sparkling wines. The noble Baroness is right to say how small the industry is but she did not say quite how small. There are fewer than 30 producers of bottle fermented sparkling cider. Of those, 15 are exempt from the measure because their output per annum is too small; bottle fermented sparkling cider represents a small proportion of the total output of the remainder. I am sorry for the individuals concerned but this is hardly an industry of the kind that merits the massive attention which the DTI gives to industry throughout the country.
Lord Mackay of Ardbrecknish: My Lords, does the Minister realise how much we appreciate the fact that he has answered all four Questions on the Order Paper? He thus joins what I gather is an extraordinarily exclusive club of which I never managed to become a member. I am sure that it will be particularly welcome to the Yeomen of the Guard that their Captain has joined the club of those who have answered four Questions out of four. It is the first time, I believe, that has occurred. We congratulate the noble Lord on giving his ministerial colleagues a day's holiday in that regard.
On the subject of the Question—and in connection with the first Question on the Order Paper—would it not help us all to celebrate the millennium if the duty on Scotch for the period of this New Year were reduced to 23p per litre?
Lord McIntosh of Haringey: My Lords, when I said that little things please little minds, I am glad to note that there are two little minds in the House, the noble Lord's and mine. As is well known, the Chancellor announced that he is imposing no new increases on any form of alcohol, with the exception of the matter raised in the Question, before the millennium. I think the noble Lord asks rather a lot in seeking a reduction in the duty on Scotch whisky.
Lord Pearson of Rannoch: My Lords, when the noble Lord justifies his position by saying that the Greeks are being forced to come into line on the duty rates between ouzo and whisky, can he give the House an assurance that the Greeks and other Mediterranean countries always obey EU directives?
Lord McIntosh of Haringey: My Lords, we seek to take action against the Greek Government as Italian manufacturers have sought to take action against us with regard to sparkling cider. The issue has not yet been resolved. When it is resolved, we shall expect the Greek Government to obey European Community directives, as we do.

Business
Lord Carter: My Lords, after the first debate today my noble friend Lord Simon of Highbury will, with the leave of the House, repeat a Statement that is being made in another place on enterprise and competition.

Business of the House: Debates this Day
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Baroness Miller of Chilthorne Domer set down for today shall be limited to three-and-a-half hours and that in the name of the Baroness Thomas of Walliswood to two-and-a-half hours. —(Baroness Jay of Paddington.)
On Question, Motion agreed to.

Countryside Policy
3.4 p. m.
Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer rose to call attention to the case for policies which will ensure a living, working countryside and in particular to the need for clarity in the new relationships between the regional development agencies, the Countryside Agency, government offices, the European Commission and local authorities; and to move for Papers.
The noble Baroness said: My Lords, as I introduce this debate this afternoon I especially welcome the fact that so many noble Lords have chosen to take part. The future of rural Britain needs a new vision, and sharing our thoughts and concerns today will certainly help to build that vision. I especially welcome the fact that the noble Lord, Lord Williamson of Horton, is making his maiden speech this afternoon. He has long expertise in this field which I am sure will be welcomed.
For decades we have lived with the myth of a countryside which has now ceased to exist. We have lived with the myth of rural England as the cosy, rose covered cottages near the village green. But the reality has changed. People who were born in the cities now move to the village when they have enough money or when they retire. People who were born in the village have to move to the cities as they grow up because that is where the cheaper housing is and where the jobs are. People from urban and suburban Britain want to visit the countryside for a day to walk, to go to the country pub for lunch or to watch the heron rise from the river. People working in the countryside want access to training to help them keep as skilled as their city counterparts. But the sad fact is—it is this fact that we must address today—that the political vision, the policy and the resources have been denied to rural Britain by successive governments. The Government have trailed dismally behind the pace of change and that is why we are now faced with a crisis in the countryside.
Liberal Democrats have long advocated many practical policies for putting our vision of a thriving countryside into action. Indeed, our Liberal Democrat councils have, in spite of the lack of central government action over the past decade, worked with their rural towns on regeneration and with their village communities on practical measures. This Government have adopted some of them, for example rate relief for rural post offices and shops. One of the major points which we have consistently made is that rural issues need addressing in a comprehensive way.
This Government are proud of the phrase "joined up thinking". Where, then, is the rural policy unit or the rural ministry that could achieve this? Early on this Government were minded to think about that, but it seems to have fallen off the agenda. We need an overall vision. We must implement the kind of changes that will create a rural Britain that is not a museum where there is no real work; that is not a wilderness of wheat with no wildlife; that is not a preserve of the wealthy second home owners; but is a place where wildlife thrives; where wholesome food is produced; where children can grow up in communities that offer them varied opportunities; and where elderly people do not need to dread isolation and diminishing essential services as they grow older.
The Government are now preparing a White Paper on rural England and a discussion document has been published in the past fortnight. But what will be the reaction to this document? Rural communities and their representatives have been consulted literally dozens of times over the past few years. They have been consulted on their local plans, on how many houses should be built and where they should be built. They have been consulted by their community councils on how their communities are progressing and what kind of things need to happen to build them up. They have been consulted on their response to the crime and disorder proposals. They have been consulted by their local housing authorities on housing needs, and they ask themselves what has changed. What they do know is that their post offices and village shops continue to struggle and sadly in many cases continue to close. I am sure that most noble Lords are aware of the huge number of rural villages that have no shop or post office. People in rural communities also know that there are fewer hares in the fields and fewer larks in the sky and—as has been highlighted in your Lordships' House over the past few months—fewer sparrows and fewer lapwings. They have heard about good intentions from successive governments, so one cannot blame the people of rural Britain for being cynical.
I wish to turn for a moment to the people who are trying to deliver the rural services. I have to say, off the record, that they are cynical too. They are cynical because the forthcoming White Paper on the future of rural Britain will come after the Government have done so much to define that rural future. It will come after the creation of the RDAs and the guidance to them on what their strategy should contain. I remember the struggle in your Lordships' House to include a reference to representation of rural interests. The White Paper will
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come after the decision to merge the Rural Development Commission and the Countryside Commission into the Countryside Agency. It will come after the prospectus for that agency has been decided.
In their Select Committee on the Countryside Agency, Members of another place wondered whether this decision to, in their words, "cobble together" was more a matter of administrative convenience than a vital part of a new strategy for rural areas. Furthermore, the White Paper will come after the Government have decided their negotiating position on CAP reform. Hardly anything will have more impact on rural Britain than that. The White Paper on rural England should have led this process, not followed it.
After hearing that catalogue, your Lordships might be forgiven for asking what there is left to discuss. I am an optimist and I hope that there is quite a lot left to be discussed. The positive step in this direction is that the discussion paper on rural England is a joint publication between MAFF and the DETR. So there is a partial acceptance that rural issues are cross-departmental. But other departments whose policies are crucial are not included; for example, the DTI. Small businesses outside the agricultural sector are very important. Tourism, too, is of great importance in many of our rural regions but is so often left out of the equation.
It is possible to foresee an environment in which small rural businesses thrive and where farmers, especially those on the smaller family farms, get their due for implementing agri-environment schemes and receive a decent return for producing high quality food. A recent Exeter University study estimated that producers receive only 15p in every pound for their produce. If the Government supported a processing and marketing scheme for farmers, imagine what that would do to change some of the returns producers would receive. I think it is the small producers, despite the exchange I had at Question Time, who need special consideration. They are the ones who are building the whole picture of the agricultural sector in rural Britain. Although we may dismiss only 15 producers as a very small part of what happens, we know that it is local produce and the distinctiveness of that produce that are very important to people.
There are European funds for such schemes, but as yet the Government have chosen not to take part in them. I hope that we will benefit from the reform of CAP funding that can introduce agri-environment and rural development measures. But who will decide how to use these funds? Who will decide the priorities in each region? Crucially, who will measure the success of such schemes? In short, we have a jigsaw of agencies, boards and authorities. How do they fit together? The question that should have been addressed right at the start of this process is: which agency or authority is responsible for what?
Regional development agencies' guidance is that their fundamental purpose is to improve their regions' economic performance and enhance their regions' competitiveness. The guidance makes almost no mention of either the quality of life of the people living in the region or of maintaining and enhancing the

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quality of the environment, sustainable development and protecting biodiversity. RDAs have to deliver their first regional economic strategies by June of this year. They urgently need advice on those environmental issues. From where will they get it? Will they get it from the new Countryside Agency? Its chairman has only just been appointed and its board has not yet met. Where do English Nature and the Farming and Rural Conservation Agency fit in? Who informs whom? They will all be dealing with remarkably similar issues. Will we end up with more barn owls as a result? Will wildlife sites get the recognition they need? Will the rate at which we are losing SSSIs be halted? What if the RDAs choose not to heed advice? The consultation paper does not really define that relationship.
This would be less of a thorny issue if the Government had defined that relationship between RDAs and the regional chamber. Noble Lords will remember that it was not defined on the face of the Regional Development Agencies Bill. The RSPB, among others, has picked up this point. It says that,
"The relationship between the RDA and the Regional Chamber is crucial to the success of the regional partnership".
Without a clear relationship that link with those who deliver so many rural services is lost. In fact, I am surprised by the way local authorities are so marginalised in the rural discussion document. Councils are key players in delivering rural services and in the regeneration work in their towns and villages. This is all the more surprising given that the Government have said that the point of their Modernising Local Government drive was that those elected, accountable bodies could play a vital role in shaping the future of their communities. Is this not to be the case in rural areas?
We should bear in mind the crucial role of local authorities in, say, housing. Again I return to the discussion document on the rural White Paper which gives housing just a cursory mention. It says:
"Access to decent, affordable housing plays an important part in sustaining rural communities and demand for housing in many areas continues to grow".
I think that that understates the situation wildly. For anyone who needs to live in rural Britain, who wants to live near their families and needs to work there, who is young, single or in insecure employment, finding a home would be as hard as finding a haystack in modern rural Britain.
I recently had a meeting with the chairman of the Young Farmers in Somerset. I asked her what was at the top of her members' agenda. I expected her to say BSE or the difficulty of entry into farming. But at the top of her list, too, was lack of affordable housing. So who is the housing authority? Who must draw up and implement the integrated transport plans? It is the local authority.
Into this melting pot I would just like to throw the Government Offices for the Regions. Among other tasks, they must encourage a constructive dialogue between, for example, the regional planning conference and the RDA. That is particularly crucial at the moment when we are all still struggling to predict and provide the number of homes that will be required and which
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threaten so much of our greenfield England. That is continuing to cause enormous conflict between what we should protect and how we should protect it.
We now have many new bodies and a good deal of re-organisation. Will these structures be easy to understand and work with? Will they make it easier for a community to rebuild its village hall? Will the funding mechanisms for such projects be easier to deal with? It is very, very difficult for a local community to get together four, five or six partners; frequently we need a professional red-tape interpreter. I hope the reorganisations will make this simpler.
Recognition of the problems and solutions offers us opportunities. The European CAP reform proposals offer a chance to draw on funding for rural development which will strengthen the whole of the rural economy. It offers an opportunity because a regional structure with regional assemblies could draw the strands together. It offers an opportunity for the Government to create a Ministry which will draw the strands together nationally, or will at least do what so many in the countryside are after and "rural proof, a phrase which people like the CPRE are now using. It is a time of opportunity because there is a recognition that everyone has a stake in a rural future. The city dweller, those in the market town, the farmer, those living in villages and those who live in our isolated uplands all have a stake in that future and we need to get it right. We must not miss these opportunities because they fell through cracks in the structures. Let us be clear in our vision. Let us make the links and fill in the cracks. I beg to move for Papers.
3.30 p. m.
Lord Williamson of Horton: My Lords, this is an important debate for me for three reasons: first, because it is widely acknowledged that debates in this House and the reports of committees of this House have made a valuable contribution to public policy and discussion on agriculture and the countryside; secondly, because so far in this debate there has been a monopoly of speakers who are Somerset folk, and Somerset folk think that they know a thing or two about agriculture and the countryside; and thirdly, because it is the first time that I speak in this Chamber and I ask your Lordships' indulgence. There is a very good principle to which I subscribe. It is that newcomers should be seen and heard —but not for too long!
I support very much the approach proposed by the noble Baroness, Lady Miller of Chilthorne Domer, in seeking a living, working countryside. If farmers cannot make a living, or if they do not think that it is worth continuing to work, we shall not have a living, working countryside. So agriculture is central to this debate. However, the countryside is much more than farming, and there are many things we can do to improve co-ordination between the various agencies to which the noble Baroness referred.
In the countryside we are in any event going to depend in the future very much, perhaps even more so than now, on small businesses. The action taken in yesterday's Budget is very welcome. It should be pan:

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of countryside policy as well as national policy to encourage small businesses in small towns and villages. There are many ways in which we can help small businesses; for example, by systematically questioning, when new obligations are imposed on businesses, whether the smallest businesses can be exempted on de minimis grounds. That should be an important general rule.
The type of small business in the countryside is bound to change, with fewer manufacturing and more service businesses, and more distance-working. I do not know how far the public services have gone in encouraging distance-working. I doubt whether a part of the department of the noble Lord, Lord Whitty, will be established in Chilthorne Domer in the near future, but at least we should seek to remove any barriers to distance-working by which people or groups work at home with a connection to the main centres by computerised means.
In addition, the increased attention being given by the public to the protection of the environment and to leisure activities in the countryside is to be welcomed, provided that we do not overrun the capacity of the countryside to handle the changes. That is particularly important following the recent Statement on the right to roam. We should not under-estimate the attractiveness of the rural landscape, not only to walkers but to the public generally. A recent study in the south west indicated that an estimated 10 million holiday trips in the area are motivated by the rural landscape. Conservation organisations such as the National Trust and the wildlife trusts provide a large number of jobs and a great deal of economic activity, going well beyond their own employees. The estimated figure for the National Trust—I declare an interest as a member of the regional committee for Wessex—is that for every one job in the National Trust, 3.3 jobs are created elsewhere in the south west. Altogether, about 5, 000 full-time equivalent jobs depend on the activities of the National Trust. It is a significant figure.
All the agencies need to understand the changes that will, or have, come about in the common agricultural policy. There is a certain time lag in comprehending the changes. I am sympathetic to that, as they are fairly complicated. However, I believe that changes in the common agricultural policy will have a significant impact on the countryside. After all, we are making changes in terms of reducing prices, reducing the importance of intervention and in setting up more direct and agri-environmental grants, and grants for rural development. These are important changes. They will mean lower prices. Regrettably, there may be a higher budget cost. And there will probably be very low stocks in intervention in the near future. All those factors will affect the way in which farming develops. The safety net will be somewhat lower and farmers will be more reliant on market prices and direct grants.
Finally, we need to look beyond changes that have already taken place towards possible future changes. As we debate this matter, Ministers of the member states are meeting yet again in Brussels to discuss further changes in the common agricultural policy. As one who
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has attended—I should say suffered—108 meetings of the Council of Agriculture Ministers, including eight marathons, I know the horrors, and also that the results are not always strictly rational. However, I think we can assume that the movement will be towards a greater impact of the market on agriculture. The Commission has proposed a 20 per cent. cut in the price of cereals. That is an important move. Even if Ministers do not accept it, there will probably be some significant reduction in cereal prices. I sometimes reflect that, were we in ancient Egypt or Rome, people would be cheering in the streets if they heard that the price of wheat was to decline by 20 per cent. But in Britain, where good news is occasionally overlooked, it seems not to have received a mention. Indeed, for 2, 000 years it has been a principle of political success that we should give the people "bread and circuses. "We already have the Millennium Dome, and now it looks as though there will be a slight cut in the price of bread. So the noble Lord, Lord Whitty, will be able to sleep peacefully at night.
Overall, I believe that the forthcoming changes are important, as is co-ordination between the agencies. Change will be difficult, but it is absolutely necessary if we are to have a living, working countryside of which we can be proud.
3.27 p. m.
Baroness Young of Old Scone: My Lords, on behalf of the whole House, I congratulate the noble Lord, Lord Williamson of Horton, on his excellent maiden speech. He brings to this House a wealth of experience, not only of the Department of Agriculture in this country, but also of the machinations of Europe which he so well described. Many of the issues with which we shall be wrestling in the forthcoming months and years to safeguard the vibrancy of our countryside for the future are ones in which the noble Lord is thoroughly steeped. We look forward to the benefit of his knowledge and wisdom. If I may be bold enough to say so, attending 108 European Council meetings eminently equips him for this House!
I also thank the noble Baroness, Lady Miller of Chilthorne Domer, for the opportunity to debate this important issue of a living, working countryside. I declare an interest as chairman of English Nature, one of the plethora of bodies that she described as presently working for the countryside.
The rural agenda that we have heard sketched out is an extremely wide one. It includes all the economic, social and environmental issues described by the noble Baroness, Lady Miller. Indeed, we are all looking forward to the rural White Paper. I was with the Deputy Prime Minister when he launched the rural White Paper. I found myself experiencing one of life's delicious moments when he turned to me, pointed his finger and started lecturing me on the importance of tackling the decline in skylarks. It is not a topic on which I have often heard the Deputy Prime Minister wax lyrical. I am glad that the rural White Paper has brought him to a recognition that the decline in biodiversity in our countryside is an important issue.

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I had another wicked thought while he was lecturing me on the value of skylarks. We have had several other rural White Papers, none of which has solved the problems of the countryside. I do not believe they have been short on ideas, they have been short on implementation. It might be easier if we erased the word "Conservative" from the last rural White Paper and wrote "Labour" at the top of it and proceeded to implementation immediately, rather than going through the process of asking everyone their views all over again.
What we need is integration of the three countryside issues to produce a sustainable countryside. We need to bring together the economic considerations and the economic crisis in the countryside, the real social deprivation and lack of amenities and the need to protect the environment.
I am pleased that we shall look at the rural White Paper also in the context of the urban White Paper because, as the noble Baroness pointed out, the town and the country are not hermetically sealed from each other. These days they are mutually dependent, they share issues like deprivation, poor transport and lack of employment.
I wish to tackle three issues. First, I shall look at what is different in the countryside. It is distinctive because it is green, it has biodiversity, it is our landscape. It has a value that is intrinsic in that its wildlife and biodiversity are important for the future of all of us and the sign of a healthy environment. But those distinctive features of the countryside are also economically important. Our wildlife and landscape create jobs—conservation management is now one of the fastest growing employment sectors in the countryside. For every direct conservation management job there are five other jobs created in support services and areas like green tourism.
I hope we will see more of extensive agriculture under the common agricultural policy reforms. It employs more people than traditional—as it has now become—intensive agriculture. A high quality countryside is economically good because it promotes inward investment. Many firms go to parts of the country that have high quality rural surroundings because they want to operate there and know that they can recruit staff to live there.
Last but not least, our landscape and biodiversity are important for social reasons. People enjoy visiting them and we will look with interest at the development of the access provisions recently announced.
In tackling the social and economic interests in the countryside, we need to ensure that we are building them firmly on the basis of the natural assets that are so valuable in the countryside. Economic development must enhance the environment and reflect regional character rather than destroying it.
The noble Baroness also pointed out the plethora of regional processes that we are now seeing impacting on the countryside. I wish to focus particularly on the regional development agencies. They have the potential to become a positive force for change and renewal in the countryside and not just engines for economic
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change. They need to tackle their development task in a sustainable way that takes account of social and environmental issues as well. They are rather thin in membership terms of people who have real rural background and knowledge. But that is not necessarily a total fault. There are other ways in which knowledge of rural processes, the environment and the countryside can be brought into the rural development agency process. As they begin to recruit new staff, we want to see specialist teams who have rural interests as part of their background and a range of skills being brought in through advice from other agencies.
Most of all, we need the rural development agencies to operate within the framework of the planning system which has been developed over the past 30 or 40 years, to do the job of bringing together competing needs in the countryside and resolving those competing needs.
My time has overrun. The third point I wished to raise has already been well covered by the noble Lord, Lord Williamson: the common agricultural policy reform. I end by saying that the countryside is distinctive because of its natural assets. In tackling social and economic issues it is vital that the solutions are built on enhancing those natural assets.
3.33 p. m.
The Earl of Selborne: My Lords, I also wish to start by congratulating the noble Lord, Lord Williamson, on his maiden speech. He clearly has great expertise in the area, but he particularly commands our admiration as a veteran of 108 Agricultural Council meetings. His speech was admirable; his attendance record at those meetings even more deserving of praise.
I also thank the noble Baroness, Lady Miller, for initiating the debate. She reminded us of a number of far-reaching changes here in the United Kingdom, in the regions, and in Europe. It is extremely important that we work out how we can achieve what our own rural White Paper seeks to achieve: an integrated and effective approach for rural areas.
National policy must ultimately be the key. It is clearly helpful to have a European input. It is sad in a way that the great aspirations at the time of the Cork conference two years ago have clearly not been fulfilled. There is much watering down of the rural development element; nevertheless it is still there. I hope that that can be harnessed to our own aspirations—national, regional and local—for the rural areas.
One factor is absolutely clear. We cannot conceivably determine the rural initiatives that are needed in order to recharge the rural economy at a European level. It is self-evident that we have completely different aspirations and problems in our rural areas from region to region, let alone compared with other parts of the continent of Europe. Objective 2, which is an innovation within the Agenda 2000 package, is something we will no doubt welcome provided it can be seen to be subservient to the measures that it is incumbent on us to identify.
The regional development agencies will have a central role because so much can and should be determined at the regional level. I share the concern of

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the noble Baroness, Lady Young, that there may not be the expertise on rural areas within the regional development agencies. It is important that we ensure that the expertise is available.
We have a raft of initiatives from the past five to 10 years on which to draw. We know that the population in the rural areas of this country—unlike so much of the Continent, particularly France—is increasing. We know that this, in turn, causes great pressure on housing. There is a shortage of low-cost social housing. We must put in place the appropriate housing in order to meet the aspirations of younger wage-earning adults of whom there is a shortage in the rural areas. The rural areas have a greater preponderance of the elderly, often suffering from lack of transport.
A point touched on by all speakers is that agricultural employment is in long-term decline. There is nothing new in that; it has been happening ever since the war. That is not to say that the agricultural industry is inevitably in terminal decline. Nor is it automatically true—and this is where I part company with the noble Baroness, Lady Young—that extensive agriculture employs more people.
If we require agriculture to be competitive in world terms—and we do require it—we must ensure that we develop agricultural systems which have the least impact on the environment and provide the most opportunities for the rural economy. There is no reason why extensive farming or intensive farming should be better or worse. If we consider some of the best managed farms and estates which have won national awards for environmental measures, some can only be described as intensive, highly competitive agriculture. If that agriculture does not survive, we will not have a rural economy. Agriculture may be declining in terms of rural employment, but it is still a large part of the rural economy.
We become muddled when we use emotive words about intensive agriculture and the impact on the environment. I make the point time and time again that while organic farming may be an important niche, which we are failing to fill, we must ultimately determine how we have agricultural systems which fit most happily into the environment and particularly into the landscapes which we all cherish. The phrase, "a living, working countryside", to which the terms of the Motion refer, implies that there must ultimately be commercially competitive agriculture.
There is one specific proposal to which I should refer on the agricultural side. I was saddened that the previous administration removed the UK processing and marketing scheme. If we recognise that we must have a competitive agriculture, we quickly determine that we must meet the regional aspirations to which the noble Baroness, who initiated the debate, referred. We must also try to add value as close as possible to the farm. That means creating jobs in the countryside and trying to bring marketing and processing as near the farm as possible. We missed an opportunity to do that by removing the scheme which was funded by the CAP.
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My time is up. I shall set a precedent by being the first person not to exceed the six-minute time limit. I hope that noble Lords will not ignore the great contribution that can be made by competitive agriculture.
3.40 p. m.
The Lord Bishop of Hereford: My Lords, I am grateful to the noble Baroness, Lady Miller of Chilthorne Domer, for introducing this important debate. I also add my congratulations to the noble Lord, Lord Williamson, on his excellent maiden speech. This debate gives us the opportunity to consider again the vital needs of a living, working countryside at a moment of change when we see the evolution and emergence of several new agencies with, we hope, complementary but possibly conflicting responsibilities. The picture is very complicated. It is a kind of three-dimensional jigsaw puzzle with many uncertainties, some risks but also a number of important possibilities for revitalising rural life.
I believe that the key lies with the new Countryside Agency which is a national body with the specific remit of promoting a living, working countryside. It has been created out of the old RDC and the Countryside Commission, but continues to be housed in the former base of the Countryside Commission. Many of its staff were formerly with the Countryside Commission. This has led to some fears being expressed that the Countryside Agency may be too much concerned with environmental issues and too little interested in rural development, infrastructure, transport and all those other vital factors that make for a vigorous and sustainable rural community.
In reality it would be difficult to be too much concerned with environmental issues, which are clearly crucial. I long to see more larks and lapwings. A fortnight ago I was in Normandy under leaden skies and saw huge flocks of lapwings. I wondered what the French knew about lapwing habitats that we appeared to have forgotten. But the new Countryside Agency needs to act quickly to win the confidence and support of all in rural communities: farmers, small business people, landowners, voluntary organisations and environmentalists. The research and advisory function of the Countryside Agency is of critical importance. It will need to give clear and convincing advice to the RDAs, which are dominated mainly by urban and business interests, and also to the Government Offices and local authorities. It will need to maintain a close and fruitful relationship with Brussels.
The RDAs are emerging as very powerful players with easy access to government which is to be welcomed, but they need to take over the old rural regeneration functions of the RDCs and to be put in charge of European Union structural funds as well as the single regeneration budget. I hope that the Minister will be able to give noble Lords some indication that that will happen. There is real concern about the urban domination of RDAs. Their members need to remember that 23 per cent. of the population live in the country and 30 per cent. of national GDP is accounted for in rural areas.

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The Government Offices may appear to be losing out in terms of power and influence to the RDAs. I understand that in many places Government Offices staff have been offered the chance to transfer to the new RDAs. But further devolution to the regions is very much on the cards. That process may well bring other functions to the Government Offices, such as Home Office or culture, media and sport responsibilities. One very important change that it would be good to see and that would be especially beneficial to rural areas is the incorporation into the Government Offices of the regional offices of MAFF. Indeed, MAFF needs to be much more concerned in future with rural development in the broadest sense, especially by helping farmers to add value to their produce locally. Moreover, MAFF needs to advise the RDAs about businesses that can appropriately be located in rural areas to help the process of regeneration. I ask the Minister to give your Lordships' House an indication of whether the Government intend to encourage the convergence of MAFF and the Government Offices.
The regional chambers are as yet fairly shadowy bodies. It is not clear how influential they may become. They are important because they give a voice to local authorities and voluntary agencies. In due course they may develop into regional elected assemblies. That would transform them into very powerful bodies. In the West Midlands there is a strong head of steam in favour of that development. But for the moment I see the chambers as ensuring a close and harmonious partnership between the RDA and the local authorities. It is the local authorities who still handle the vast bulk of public funding, even though they may believe, as one local politician put it to me rather cynically the other day, that RDAs are a necessary evil so that they can continue to have access to Richard Caborn's wallet.
Rural people and voluntary organisations including CPRE and the Churches are not well represented on most chambers. We are concerned about being taken seriously. We are also concerned about the end of European 5b funding which was specifically targeted for rural regeneration. Common agricultural policy reform has run into predictable difficulties and access to European funds for rural development appears to be increasingly difficult and problematical. The Minister's assurances that this problem is recognised and will be tackled vigorously would be very welcome.
Finally, I touch upon another change that we may have to envisage. We may have to look again at local government. We have just been through a great upheaval in the form of the introduction of unitary authorities in many places. In the diocese of Hereford, which is almost equally divided between Herefordshire and South Shropshire, I can compare a new unitary authority—Herefordshire—with a weakened two-tier Shropshire. Having lost The Wrekin with a large population and significant resources, Shropshire, although an extremely well run county, is struggling. The argument for simplifying local government, for example by creating new unitary authorities in North and South Shropshire, begins to look quite convincing.
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If regional government does come it is clear that unitary authorities will have to come too in place of the more elaborate two-tier county structure. The prospect of more upheaval is not attractive, but I believe this debate has made us think more radically and long term. However the present relationships develop and whatever comes in the future, a living, working countryside will remain of vital importance. Tourism will become more important, but to take rural England as a whole it can never make more than a marginal contribution to the kind of well balanced, sustainable rural communities that we urgently need to maintain.
3.46 p. m.
Lord Monro of Langholm: My Lords, I add my congratulations to the noble Lord, Lord Williamson. I know that we have a strong agricultural voice on his Bench. I also thank the noble Baroness, Lady Miller, for initiating the debate. The Government make frequent Statements on the countryside and produce White Papers and consultative documents, but positive action is much less substantial. This week it has been totally negative, in that we have had a big increase in the tax on fuel, which is our life-blood in the countryside. On most farms it is essential to have fairly high-powered vehicles to pull trailers and to get round the countryside. The same goes for transport. We have also had a Statement on access to the countryside, to which I shall turn later, and the continuing muddle of the CAP in Europe. All together, this is bad news for the countryside.
I speak with some credentials as one who steered the Wildlife and Countryside Bill through another place and, as the noble Baroness, Lady Young, is aware, served on the Nature Conservancy Council for nine years before she became chairman of English Nature. By and large, I have strongly supported what we have done in the countryside, with two exceptions: wind farms and telecommunication towers. Both the previous government and the present one have made it far too easy to erect these most unattractive, almost obscene, towers all over the rural countryside. Nothing can be done to enhance the environment, improve habitats, support wildlife, achieve a high standard of husbandry and retain employment unless fanning and forestry are profitable. We must have a fair return on capital and labour if we are to make any improvements in the rural economy. At the moment that is manifestly not so.
We had a period of increasing income up to 1996–97. Since then almost everything has gone wrong. There has been a severe drop in farmgate prices. In Scotland, the income from agriculture was £600 million in 1995 and £100 million in 1998. Every sector is affected, especially the hills. No wonder there is gloom. I think that it was made worse by the wholly one-sided government Statement earlier this week. I do not think that the Government have appreciated the substantial progress in the past few years towards voluntary agreements and arrangements. The CLA, the Scottish Landowners' Federation and the NFUs of each country have worked hard towards that. Under the excellent chairmanship of Magnus Magnusson—sadly he is retiring this year—Scottish Natural Heritage introduced

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the Access Forum in Scotland which brought immediate agreement on all sides as to voluntary access to the hills of Scotland. He underlined the important point that,
"Access must be exercised responsibly and must be subject to land use requirements".
I hope that the Government will include that requirement in the Bill when it arrives in this House.
However, harmony was ruined by the confrontational approach by the Government this week. I think that they will rue the day. It is sad to see the argument polarised. We must have a long debate on the subject when we can raise the tone of discussion and seek consensus.
The Government seem enthusiastic to reform the CAP. I recommend caution, and did so in public on many occasions as a Minister. Any major reform which reduces income, coupled with the current low prices, will be the death knell of farming. That industry is the mainstay of the rural economy. At present the world is full of cliches from Ministers to academics on advice to farmers. It is so easy to give and difficult to achieve. Buzz words are everywhere—training; conversion of buildings; tourist development; farm shops; country cottages; co-operatives; rural transport; bed and breakfast, and so on. They tell you everything except where the money is to come from. Even if there were a 50 per cent. grant from the development agencies, from the enterprise companies in Scotland or from Europe, the matching 50 per cent. on many grants is just not there.
How can farmers make substantial investment without a good cash flow? There are also the lengthy arguments they have to undertake with planning committees, which, my goodness, can be difficult, and the grant-giving authorities. The Government's first duty must be to get farming off its knees; then the rural problems will begin to disappear. But if there is no increase in income, no capital, no employment and no development, the countryside will deteriorate. Last autumn I was in northern New York state on a military visit. The countryside there had been largely abandoned, with derelict fields, fences and buildings. It demonstrates what can happen if farming is allowed to go to rack and ruin; and that includes all the environmental aspects too.
The CAP presents many aspects which are unattractive to us, in particular the modulation scheme. I hope that the Government will be careful how they proceed. They must realise that if we are to improve the environment they must make farming profitable.
3.53 p. m.
Lord Mackie of Benshie: My Lords, noble Lords will be glad to hear that there is no need for me to make my speech. Everything has been said, and said well, in particular by the noble Earl, Lord Selborne, who placed the correct emphasis on the importance of agriculture. That was emphasised by the noble Lord, Lord Monro, in a somewhat more gloomy manner.
An enormous proportion of the countryside is still peopled by farmers. In Great Britain in 1977, 748,000 people, including spouses—it is important to
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include them—were directly employed in agriculture. In 1996—it is the last comparable figure I have—the figure was 603, 000. Those are large numbers. In Scotland the total figure is 80, 000, with 20, 000 farmers and 60, 000 workers in the countryside. The number is multiplied by a large figure which I have been able to ascertain precisely: that is, those who are directly employed in servicing agriculture.
I visited a farm machinery firm representing one of the best known manufacturers. In the past year-and-a-half of bad figures relating to farming, while it has not sacked anyone—it is a good firm and wishes to keep its good people—it has not replaced five people out of 20 in the workshop. That is a significant figure which demonstrates the dependence on prosperity in agriculture.
A somewhat lesser illustration comes from a pest control officer—we used to call them rabbit trappers. He said to me, "The farmers are daft. In bad times they don't employ me to kill the rabbits. They leave the rabbits to multiply and eat the grain they need so badly". So he, too, was suffering. It is an illustration of the importance throughout the countryside of reasonably prosperous agriculture. It is true that we need to develop and facilitate other forms of employment in the countryside. On the east coast of Scotland one of the great snags, for example, to developing old farm buildings for other purposes is the difficulty of obtaining planning permission. For example, a young man may have a good idea in engineering. It is ludicrous that the planners, for some extraordinary reason, refuse permission or take so long to give it that the project falls through. We need to pursue all these practical matters.
In introducing the debate, my noble friend Lady Miller had an English background in mind because she is rightly concerned with the cohesion of the various bodies. I wish to point out, with others, the absolute necessity of a prosperous agricultural industry if we want a good, viable countryside. It is vital to spend money—we have many enterprise groups in Scotland—on encouraging co-operation and marketing. The ludicrous figure of the farmer receiving 15 per cent. of the end price needs to be improved. I have said enough and will sit down well within my allocated time.
3.57 p. m.
Lord Gray of Contin: My Lords, I associate myself with others who have thanked the noble Baroness, Lady Miller of Chilthorne Domer, for allowing us to discuss the subject today. Perhaps I may be forgiven if I do not mention agriculture. Four of the first seven speeches were by experts in agriculture. It is sufficient for me to endorse heartily all that they said.
One of my reasons for taking part in the debate is that I see a distinct danger of this House becoming divorced from Scottish matters after the creation of the new Scottish Parliament. The functions of that Parliament are far-reaching; and we shall have no locus in the legislation it may pass which could affect seriously the Scottish countryside. My hope is that your Lordships will not feel inhibited in any way from comment or advice on such issues, and that the new parliament will

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have the confidence and the maturity, even in its infancy, to welcome constructive criticism and comment from wherever it comes.
It seems likely that either Labour or the Scottish National Party will emerge as the largest single party after the May elections, and since both are committed to some sort of land reform, a Bill to enact their proposals will be among the first to be presented to the new parliament.
I trust that very careful thought will be given to the preliminary researches already carried out by the Scottish Office. In September 1998 a land reform group, chaired by the Scottish Office Minister, the noble Lord, Lord Sewel and including a number of distinguished Members, produced an interesting document entitled Land Reform-Identifying the Solutions.
I have no criticism of the way in which the case is presented or with the detailed analysis given to each of their "Visions for the Future"—the somewhat romantic title which they gave to their ideas. But I do hope that they, or the Scottish Office officials who will service the new Ministers, will take very careful note of the many disadvantages as well as the advantages, outlined in their own document. In the future nobody can suggest that the new parliamentarians have not been warned. The disadvantages of every aspect of land reform is there in black and white for all to read.
I would not deny that over the years we have had some bad landlords in Scotland, but they have been far outnumbered by the far-sighted, dedicated and thoroughly good landlords who have struggled to make their estates viable.
I trust that some research will be done into the present viability of estates particularly in the Highlands of Scotland. If it is, it will be discovered that few would be viable without the injection of capital from business or financial interests from other sources and sometimes even from other countries.
Should those estates be broken up, their limited viability would be further eroded. I do not want to see the baby thrown out with the bath water. I want to see a way of life preserved and rural areas continue to act as the lungs of the countryside, free of pollution and available for both leisure and sport, with each having regard to, and respect for, the aspirations of the other. For example, there is no merit in encouraging hordes of ramblers to climb hills where eagles or falcons are known to nest. Their very presence will scare off the birds they wish to observe. Yet there are opportunities for hill walking which are readily available throughout Scotland, as can be witnessed by the number of enthusiasts who conquer munros in Scotland every weekend.
Fishing, shooting, and stalking all provide sport for a sector of the tourist industry which we neglect at our peril, for within that grouping are customers who are prepared to pay substantial rents which help to finance the land over which they shoot or the rivers which they fish. I doubt that land reform will play a significant part in improving the situation. The problems of the countryside in Scotland differ from those in England and
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Wales only in scale. Those and other problems will not be resolved overnight, but the terms of this debate can help to provide the way forward.
4.3 p. m.
The Countess of Mar: My Lords, the timing of this debate is most appropriate. I, too, am grateful to the noble Baroness, Lady Miller of Chilthorne Domer, for tabling her Motion. I also add my congratulations to my noble friend Lord Williamson for his very enlightening speech.
I must declare an interest. My husband and I have just over 100 acres in Worcestershire. We have a small flock of pedigree black Welsh Mountain sheep; a small herd of pedigree Blonde Aquitaine beef cattle and about 20 milking goats, from whose milk I make cheese. Our local family butcher, who has a low throughput abattoir attached to his shop, kills our surplus lambs and kids and prepares them for private sales. He, his brother and other members of his family have awards for their specialist meats and sausages. There is, as the Minister is no doubt aware, a niche market for these meats. Neither our lambs nor our kids are acceptable to the supermarket buyers who dominate local auction markets and co-operatives. No large-scale abattoir would look at the small numbers we would want killed. Even if it would, we would have to travel many miles to our nearest one. Our local hunt kennels takes our fallen stock. The local knackerman went out of business during the BSE crisis.
It seems to be the policy of this Government that farmers should lose their local abattoirs and hunt kennels; the first in the name of rationalisation and the second in the name of morality. I wonder whether they, their supporters and advisers are aware that by doing so they are in grave danger of killing off the few remaining local markets and, with them, upland and specialist meat producers. Do they not realise that there is a ready market for meat with flavour that has been reared, slaughtered and prepared to the highest welfare and hygiene standards? Is it not the intensively reared, industrially slaughtered, pale and tasteless relation that masquerades as meat that is in surplus in the EU?
The Minister's honourable friend, the Minister of State for Agriculture, appeared only last weekend on BBC2 South-West in a debate on the plight of small abattoirs. He said in effect that, while he had sympathy for the small abattoir owners, the "big boys in the meat industry" would not allow him to order charging on a headage rather than an hourly basis. It is all too clear why these "big boys", with a throughput of a beast every 45 seconds, will not hear of a headage charge.
We are also told that there is over-capacity in the slaughter industry. Dare I suggest that it is not a question of over-capacity? It is one of profitability. I understand that the Meat and Livestock Commission calculations are based on the throughput capacity in the slaughter hall. Will the Minister persuade his colleagues in MAFF to go back to the MLC and ask it to produce true capacity figures, including chiller capacity, together with those for profitability? Could it be that the "big boys", to whom the agriculture Minister says he must

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bow, have over-extended themselves in that their premises are too large and their profit margins are too narrow? It would be much more sensible to plan the closure of one or two of the factory abattoirs rather than force the closure of 150 or so small throughput abattoirs and cutting plants.
As an aside, there is a 300 per cent, over-capacity in car production plant in Europe. Why not close Longbridge? As the noble Lord, Lord Willoughby de Broke, will very aptly illustrate, the social and employment effects of the closure would be similar in both situations. Instead, it seems that Longbridge might well get £200 million of taxpayers' money. The charges to be levied on the slaughterhouses and cutting plants are for meat hygiene inspections. Is this not a public health matter? Should not these costs also be paid out of general taxation as they are in some of the other European states such as France?
We are told that, because of a lack of suitably qualified veterinary staff, only the small throughput abattoirs with low hygiene scores will face the higher inspection charges in the initial stages. I wonder whether noble Lords are aware that although there are legally established requirements for hygiene, for staff, premises and equipment in slaughterhouses and cutting plants, the scores applied to each plant are based upon the subjective judgment of the inspector, as I gather some owners have found to their cost. I am also reliably informed that members of the State Veterinary Service have recently been going round deliberately downgrading hygiene assessment scores. There is no appeal mechanism. A senior vet stated at a recent tribunal that it was no part of his duty to act fairly. What is the world coming to?
Perhaps it would be much simpler if we are told that there is no longer a place for small producers, livestock in the hills and speciality British farm foods. The rural community would then know where it stands in the great plan. Its members could then be issued with mowers and contracts to keep open the paths for the roaming urban population.
4.10 p. m.
Lord Kimball: My Lords, the noble Lord, Lord Williamson of Horton, in an excellent maiden speech, rightly drew attention to the jobs created by leisure activity in the countryside. The Motion calls for clarity. It is timely with the new organisations, the Countryside Agency and the regional development agencies, coming into effect on 1st April. The Motion also addresses the role of Government Offices, and I shall endeavour to show briefly how two ministries are failing to recognise the major growth area of their responsibilities in the countryside.
In previous rural debates, we have lamented the restructuring of the Rural Development Commission. It has achieved so much since its foundation in 1909. Whole villages in my old constituency in the heartlands of Lincolnshire have been resuscitated by it. It goes into the Countryside Agency in company with the Countryside Commission but disembowelled of its
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grant-making powers which pass to a regional development agency competing with the demands of the urban regeneration agency. The functions passing from the Rural Development Commission to the regional development agencies are the redundant building grants and rural development programmes.
Powers passing to the Countryside Agency under Section 35 of the Regional Development Agencies 1998 include ones that can be applied across a wide-ranging experimental sphere covering social, economic and recreational areas. I want to put down an early marker here concerning the urgent need for licences to be issued for extensive experiments in avian predation management by quota and translocation. It is needed as a result of the Langholm study and the correct procedures for dealing with a major rural problem of the employment and harvesting of the most valuable crop of the heather moorland; the red grouse. The department has the power to issue such licences in relation to the hen harrier and peregrine falcon. Research by the Game Conservancy as a follow-on from the Langholm project shows that this may be an opportunity to save these birds as part of the rural working landscape.
Like the right reverend Prelate, I am concerned that the Minister of Agriculture was missing from all press briefings about the Countryside Agency and the regional development agencies. The Deputy Prime Minister was to the fore, supported by Ministers from the departments responsible for the environment, trade and industry and education and employment.
If you take a graph of agricultural employment and production and compare it with a graph of employment of production from the British Horse Industry Confederation, you will see that in rural Britain the horse will overtake agriculture in a very short time. No Minister is responsible for this major development. The interest of the Home Office in racing is purely as a regulator of betting. It has no responsibility for breeding or export.
It is the moment to pay tribute to the bold action of the noble Lord, Lord Donoughue, who, from the Ministry of Agriculture, has played such a key role in encouraging and facilitating the creation of the Horse Industry Confederation. It is most welcome. The confederation has an estimated annual value of £2.5 billion and more than 160, 000 jobs. The confederation wants to discuss with the Government more encouragement of British equine exports, trade missions and taxation, especially the favourable conditions granted to Irish and European breeders, and at least six other major issues, including rights of way and a proper data base. I do not want to see the horse classed as an agricultural animal—it is a very complex issue—but I do want the Minister of Agriculture to become the responsible Minister for one of the major areas of development in the countryside. It is certainly an area that needs clarification.
Finally, can we say loudly and clearly that rural England needs the motor car? The Government's hostility to the motorist does not support their pre-election promises on traffic. The Motion deals with working in the countryside. In the rural south-west of

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England, in Somerset and other places, 3.5 per cent, of the population work in the combined manufacturing and servicing industries for the motor car. In Lincolnshire and Humberside, the figure is the same (3.5 per cent.) and in rural Wales it is 3.8 per cent. We must champion personal mobility and the freedom to travel when and how one likes. We must not pander to the anti-car lobby. We should confront it and encourage technology to make improvements on the impact of the many more cars which will undoubtedly be with us. The planning authorities will have to tackle the problem of car parking in villages in relation to any new housing. The Department of the Environment, Transport and the Regions must not neglect its rural role. The Budget will hasten the continuing decline in small, unbranded petrol stations. Last year saw a 31 per cent. decline in the number of petrol stations in rural areas. There are now only 601 in such areas of the United Kingdom.
So much of what has been said in today's debate emphasises the importance of the rural White Paper. We must all make representations and ensure that it has some positive and helpful conclusions.
4.15 p. m.
Lord Hooson: My Lords, my noble friend Lady Miller has crafted her Motion with great care. She speaks of policies which will ensure a living, working countryside. In 1962, I fought a by-election on the very problem of rural depopulation from Montgomeryshire. I therefore know that there is enormous ignorance among the public and those in high places about the problem of having a living, working countryside.
In today's debate and outside this House, speakers have spoken with pride, saying that if the common agricultural policy disappears and is not replaced, and if agriculture is unable to compete in a free trade world, the countryside will look after itself. It will not. A great deal of the English countryside is man-made and we would quickly see the kind of countryside that is to be found in New York State, New Jersey and such like, with its abandoned fences and so forth.
Life in the living, working countryside involves a rural economy which sustains civilised life. When I became a Member of Parliament in 1962, 1, 000 young people left my area of the country each year. The unemployment figures were low because people did not stay in the area. They moved elsewhere to find employment because they had been brought up to be industrious. Unless adequate steps are taken now, we are in danger of allowing the whole of our countryside to slump into a rural depression.
I do not believe that the problem will be solved by bureaucracy. We are in great danger of creating too many bodies charged with the function of helping the countryside. The countryside needs more carefully thought-out, directed help. Perhaps I may give two examples. I remember the help which was given by the local councils and others to Bernard and Laura Ashley when they started a business in my constituency a few months after I became an MP. They employed two people when I first knew them and their business grew to become a large concern. It still provides more jobs
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than almost any other company in mid-Wales. It probably did more than any other corporation. In addition, a small scientific firm called Control Techniques set up in my area. Three people started working together and were attracted by the idea of working in the countryside. The business developed into a large company, which has now been taken over by a large American company, but it is still in the area and provides work.
When one thinks of a living, working countryside, its backbone is agriculture. I do not care what anybody's theories are. I should fight to the death to preserve a healthy agriculture in this country because without it, the countryside will not be preserved. I have: not been one of those who has hammered away at the common agricultural policy as though if we got rid of it tomorrow, everything would be all right; far from it. One would perhaps need a better-directed policy, but we should need a policy nevertheless.
We need a healthy agriculture and the ancillary industries and services which depend on it are then important. There are other matters. When I think of a typical farmer living in my area, I think of a husband and wife on the farm. Sometimes the wife goes out to do clerical work and the daughters are working in one or two of the factories nearby. That means that the average income of the household is enough to sustain life in a very beautiful part of the countryside where people want to live. In the area where I live, I am amazed by the number of people who go away to work, but who return when they retire. They tell me that they wished that they had never had to leave the area at all.
We are living in a time of great change and there will be enormous developments. There will be some problems and I advise people in England to take care because we have faced those problems in Wales. There is a danger of transferring the ethos of an over-centralised UK into an over-centralised region. Birmingham, Leeds, Manchester and Cardiff have their own metropolis complex and one must take care that the countryside is safeguarded when there is regional development because the interest of the region is not necessarily the same as the interest of the countryside within the region.
4.23 p. m.
The Earl of Radnor: My Lords, I too am very grateful to the noble Baroness for bringing forward this very wide subject of the living countryside and how it should survive and work well. I believe that it does still live and I declare an interest because I have worked in it all my life. Many people still do.
In particular, I echo what the noble Earl, Lord Selborne, said. It is absolutely vital that farming should be efficient as it goes into the future. There should be no idea of holding it back into a kind of Stanley Anderson A. G. Street period. If we are to work our way in the world, which I hope we shall eventually do, and put up with the sort of wheat and barley and pig prices that we have had, then we must be efficient.
I start by dealing with our relationship with Brussels. Brussels is not my favourite place. Of course, there is a love-hate relationship between farmers and Brussels

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because all the money comes from Brussels. And yet it is nonsensical in a way because it always seems to be applied to supporting people rather than to making them more efficient so that one day, they can compete in the world market, or at least come near to it. I do not say that that will happen tomorrow, but it should happen at some time. Therefore, I am not at all happy about Brussels. I believe that there is a large democracy gap and I am not sure that the people there really understand about farming. They are much keener on playing politics. I am not at all happy about the situation between them and the Parliament at Strasbourg which had the opportunity to sack all the Commissioners and passed it by, which I felt was rather a pity.
The next matter on which I wish to touch is local and central government. It is really local government on which I wish to concentrate although central government must be included. I wish to refer to planning. Planners have been an absolute dead hand. The process has always been too slow. The ideas behind planning are always fairly unimaginative and because of the large number of people who must be consulted about everything, somebody is bound to disagree and the whole performance is extremely expensive. That is bad for small workshops in the villages and so on. The noble Lord, Lord Hooson, mentioned Laura Ashley. As my neighbour I have Von Evzdorv who has one of the best silk-printing businesses in the world. It was established originally in a derelict stable and is now in a derelict cow barn. But it has been hard work the whole time.
It is too early to tell what the new agencies will be like or what they will do. I liked the Rural Development Commission because it covered the whole of England. It was much better placed on a national scale to pick out priorities instead of dividing up the country into smaller areas where the very badly-off areas may be left out. The noble Lord, Lord Vinson, ran it very well as did my noble kinsman, Lord Shuttleworth, after him.
That takes me on to the right to roam and so on. I was deeply sorry that no agreement was reached on a basis any more friendly than that legislation is promised for the future. Of course I understand why people want to go onto the land, but we must acknowledge that people and wildlife do not mix. Large numbers of people and wildlife do not mix and it would be a sorrow to the ramblers that if they get their way and go all over the place in large numbers, they will kill the very thing that they love and want.
I do not know about the French being better, as the right reverend Prelate said. France is a much more rural country with a great deal more countryside. In Italy I believe that a starling makes a very good sandwich. At least we do not do that here.
Perhaps I may revert back to central government and the subject of forestry which nobody has talked about. The Forestry Commission has set forestry in aspic. If you cut down an oak tree, you plant an oak tree; if you cut down a beech tree, you plant a beech tree. Lots of oak trees are growing in the wrong soil as are beech trees. It may be better to plant a Douglas fir, make a bit of money and plant the oak trees elsewhere. That does
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not seem to have occurred to the powers that be. The sooner they become a little more flexible, the happier the countryside will be.
4.19 p. m.
Lord Peston: My Lords, having moved back to the countryside 18 months ago, I hope that I possess the necessary credentials to take part in today's debate. I have a few remarks to make. Some are positive and supportive of the countryside and country people, but one or two are negative and critical.
I start with the positive. I had forgotten the pure pleasure of living in the countryside and the many benefits stemming therefrom. I do not take a sentimental view of all that. Even today country life can be very harsh, and while rural poverty does not stare one in the face as its urban counterpart does, it undoubtedly exists. The abandonment of full employment as a policy objective is no more acceptable in one part of our economy than in another. Nonetheless, I see in the rural area in which I live a sense of community and neighbourliness which is lacking in the big city. Let me add that that is characteristic of the local towns as well as of the villages and hamlets. I also see it in the excellent local newspapers (in my case the Sudbury edition of the Suffolk Free Press). The treatment of local issues, whether it be the conflicting uses of the River Stour, the future of the local hospital, the reports of the Women's Institute, the parish councils and gardening clubs, is an endless source of fascination to me. The letters pages of such papers have a simplicity and an honesty which contrast attractively with the self-importance of their counterparts in the national dailies.
I have no doubt, therefore, of the importance of preserving what we have, not ruining it, and, more to the point, enhancing it. It is eminently reasonable to scrutinise policy at the level of central government and the European Union in terms of how it impinges on rural life and the rural economy. I should add, like other noble Lords, that the rural economy amounts to a good deal more than farming. There is, indeed, very little that other noble Lords have said that I could possibly disagree with.
My doubts arise in the area of what I can best describe as the present tendency of some country people to feel sorry for themselves and to look for blame in others; notably the people who live in the big city. Not least of those who are blamed are members of the government, of whatever political persuasion.
I have no doubt that there are always valid grounds for complaint. Obviously, country people will ask how any item of legislation—not least yesterday's Budget—will affect them, but in that they are the same as all of us. What I find unreasonable is the current tendency, evinced most strongly by the so-called Countryside March, to try to make the case that the inhabitants of our rural communities are somehow specially selected for adverse treatment and that they are victims. How farmers, who because of the common agriculture policy are a clear example of the dependency culture, can say that is quite beyond me. There are plenty of industries

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adversely affected by world competition, let alone recent monetary policy, which would like access to some of that support.
However, my point is more extensive than that. Let me give two examples with which I am directly familiar. I live in a small hamlet on a country road lying between two main roads. My road is only just wide enough for two average sized cars to pass safely. However, it is used as a so-called rat run between the main roads, and the speed limit is widely ignored. It is not people from big cities who are behaving in this way and destroying the peace and quiet for the sake of saving a couple of minutes; it is country folk. It is not my noble friend's department which is failing to deal with this problem; it is Suffolk County Council and other local councils. It is not the Metropolitan Police who do nothing to enforce the speed limit, but the local constabulary. My reading of the local press tells me that my experience is not unique. I shall not dwell on the related issue of the destructive use of all-terrain vehicles on small roads and lanes. My point is that countrymen and countrywomen have the power to act, both personally and through their own institutions, to improve the quality of life. Too often they are themselves the source of the problem.
My second example concerns local shops. I have recently been involved in research on the future of neighbourhood shopping. While this is relevant to urban areas, it is especially important to rural areas, and in particular to those lacking motor vehicles. In our part of Suffolk there are still local shops, including some small stores run by the larger chains. There are also some excellent supermarkets. Clearly the latter take a substantial part of rural trade and, while providing a service themselves, also threaten their smaller rivals. When the Office of Fair Trading completes its work on supermarkets, it will be interesting to see whether it will report that the rural chains are engaging in unfair competitive practices.
Our research shows that consumers would be worried if the neighbourhood shop disappeared but they feel no obligation to change their own behaviour to help it survive. Most households do not favour strong government aid to local traders. In this connection it seems that our legislation and tax system are less helpful to the small shopkeeper than those of our European neighbours. So much for Napoleon! That is not all. Both the big banks and the Post Office appear to be in the process of closing down many small local branches.
In my judgment, the least we can do is to ensure that rules and regulations are not biased against the neighbourhood shop, which, of course, is generally a small enterprise—which I hope will benefit from the Government's announcements yesterday and today. I should also like to say to my friends in rural areas, do not shop in the supermarket and then blame someone else when the village store closes.
I do not wish to end on a negative note, because both the countryside and the big city are part of our nation's history and heritage. I am convinced that their interests are complementary and that the way forward requires each to show some sympathy for and to place some trust in the other.
4.35 p.m.
Lord Vinson: My Lords, it is a pleasure to follow the noble Lord, Lord Peston. I, too, thank the noble Baroness, Lady Miller, for this timely and, I hope, possibly influential debate. I declare a personal interest. I live and farm in a deeply rural area. Fortunately, [do not have to make my living there. It is an area where there are more sheep than people. It is the most rural county of England. Also, for 10 years I was chairman of the Rural Development Commission. I am very grateful to the noble Lord, Lord Kimball, for his kind remarks.
The policy of the Rural Development Commission was to help develop indigenous enterprise by building on local skills and, having found and developed that enterprise, help to house it in redundant farm buildings and workshops. That policy over the years helped to create tens of thousands of jobs in rural England that would not otherwise have existed. I can only hope that the initiative will be continued, financed and recognised for the value it has, by any new agency.
We tried to do some practical things on the ground. After all it is not governments who create jobs; they can only provide the setting for others to create jobs. We recognised the whole time that our primary task was to inform government about the rural condition, not least the problems raised today, the problems of distance and sparsity that are so often overlooked, not deliberately but through lack of experience, by the urban dweller. At the same time we recognised that fundamental employment creation in truly rural areas is, and always has been, based on agriculture. I am therefore very glad indeed that the point was made earlier, not least by the noble Lord, Lord Williamson, in an excellent maiden speech, and by the noble Viscount, Lord Selborne.
The impact of what is happening in agriculture today is perhaps not sufficiently recognised. It is experiencing its worst crisis in 60 years. There has been appalling weather which, incidentally, in my view, is responsible, to a greater extent than any changes in agricultural practice, for the decline in skylarks and other ground-nesting birds. Cold springs have helped to wipe them out. I wish that that was more readily recognised by the RSPB. But it is not only appalling weather which is making farming—obviously very weather dependent—extremely difficult. There has been an absolutely massive fall in prices over the last year of some 30 per cent. right across the board in virtually every commodity except potatoes.
Even with subsidy, most farms in Britain today are now running at a loss. This has a profound effect on the rural economy. Basically, food is too cheap to give a living return to those growing it. This is not just a United Kingdom problem; it is worldwide. We always argued that the CAP was far more important to the rural economy than the RDC. That remains the case. Indeed, it will remain so because any new agency cannot possibly have anywhere near the same input in rural areas as the CAP.
Although agriculture ostensibly employs only between 1.5 and 2 per cent. of the population, it actually employs many more if one adds in service-dependent

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and related industries. It is still overall the biggest industry in the United Kingdom, bigger than the agricultural sectors of Australia and New Zealand combined. Agricultural prosperity really does lie at the heart of rural prosperity, particularly in deeply rural areas where the main social and economic problems are to be found.
It may be useful to analyse the problems behind the worldwide crisis. Such an analysis is often overlooked. Nations starve if they run out of food, so governments encourage the production of food. That creates a surplus. That, in turn, leads to low prices. There are then calls for subsidies. Those continue until the next generation of politicians becomes bored with the whole thing and decides that all subsidies should be scrapped. To maintain a living, farmers then increase production. Prices get even lower; massive bankruptcies result; governments panic; and the whole cycle begins again with new subsidies.
That is precisely what is happening in the world today, with America's wall-to-wall "grow-anything" policy. The price of wheat in Chicago is at an all-time historic low in real terms. There are massive numbers of farm bankruptcies in both the United States and Canada. One could say that the market is correcting. However, there is no way in which the United Kingdom could possibly substitute—in a hurry, anyway—the 25 million tonnes of grain that it grows. And there is no way in which the EC could substitute the 150 million tonnes of grain that it grows. We simply must nurture our own. Farming and agriculture must remain central.
That begs the question: what can any government do about this? There is not enough time to spell out the answer, but government at all levels should strive to help to bring supply and demand into balance and restore equilibrium to the market so that prices recover to their proper level.
Finally, I hope that if any new agency is a multiple agency, the department that is charged with looking after rural affairs will be a discrete arm of it, with dedicated staff. If that is not the case, rural problems will be overlooked and will be treated as secondary to urban problems instead of rural life being seen as part of the whole spectrum of our society.
4.42 p.m.
Lord Beaumont of Whitley: My Lords, I too thank my noble friend Lady Miller of Chilthorne Domer for having initiated the debate. As we reach the halfway mark, perhaps I may say what a good debate this has been so far. I should like to thank particularly the noble Countess, Lady Mar, for her remarks about slaughterhouses. I hope that the Government will take that point on board.
Perhaps I may advise the noble Lord, Lord Gray of Contin, that I do not think that land reform is necessarily a bad thing. Perhaps we should remember that most of this century's industrial giants, including all the countries of South-East Asia, had major programmes of land reform before they managed to take off and become prosperous countries. There is much to be said for what
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might be described as "wholesale land reform". I am not suggesting that that should be a policy for my party, although when the noble Lord, Lord Grenfell, was a member I remember that he advocated the nationalisation of land at our party conference in Llandudno.
A living, working countryside is absolutely essential. Many of us remember such a thing in our own lifetimes. Admittedly, its highest point was in wartime, but we should not need a war to protect our countryside. Nevertheless, it does no harm to look back and see what we had then. We had a countryside which was primarily dedicated to producing food. The food that it produced was bought and consumed by the people of Britain. We fed our own nation.
Now, free trade has ensured that only a few food products can earn a farmer enough to keep his family alive. As for the main staples, you cannot give them away. The problems of beef have become legendary and have been discussed in this House over and over again, and it is difficult even to give away lamb and pork.
There used to be something called "animal husbandry"—do your Lordships remember that?—when the ratio of workers to animals was such that every cow was known by name and appearance to everyone on the farm; when the object of the government was to get people onto farms; when we had land girls, Italian prisoners of war, and schoolchildren working in the holidays and even in term time, planting potatoes; and when we used muck to fertilise the land, thus achieving an admirable level of integrated housekeeping without poisoning the countryside. Although there were some excesses of production and bureaucracy—the old WarAgs were not always sensitive or efficient—we left behind us a good-looking countryside and held the balance between producing food and caring for the land. I do not remember any great threat then to biodiversity.
Now, the countryside is becoming increasingly denuded of country workers and the state of agriculture and rural life is such that family farmers are going bankrupt by the score and committing suicide by the handful. That is no exaggeration. At the same time—and this is a source of great trouble—we must face the fact that the next generation does not want to farm. Very few farmers have children who want to continue farming after their parents.
The countryside is also becoming a desert; not because nothing is growing—the countryside is very green—but because it is a landscape without figures. There are not even any animal figures, as animals are concentrated more and more in large areas of factory accommodation, where more and more animals are kept in less and less space. The populations of wild birds and butterflies are virtually disappearing. What is the result of that depopulation? In spite of the influx from the urban middle classes, we are seeing a decline in public transport because the middle classes have cars and the railways were destroyed long ago. There is also a deficit of shops; the middle classes shop in supermarkets.
Is everything then terrible? Well, most things are, but there are countryside agencies of various kinds which are doing their best. We have started to protect our

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national parks. I speak as a vice-president of the National Parks Association, which is now celebrating its 50th anniversary. The church and parish system still has a great influence. Organic farming is thriving—I am sure that we shall hear more about that—and farmers' markets are beginning.
But what basically needs to be done? We must not throw up our hands and admit defeat. We must not hand over our countryside to the insurance companies and the factories, or even to such attractive and energetic people as Oliver Walston. We must realise that some trends have gone too far and that trends do not continue in a straight line for ever; they more often describe a sigmoid curve, which, as your Lordships know, flattens out following a large rise. It is not inevitable that what happens on the 14-acre farm is dictated by money made in Washington behind closed doors.
Our fight back must start with the big international organisations. It must start when our Ministers are talking to those in the WTO and GATT. We must be able to have the freedom to put our house in order. We must keep and cherish our countryside. In this Parliament, we must remember that directions are changed little by little. We must not give up hope. A 1 per cent. divergence today in our actions may be only a tiny step, but as the future radiates out, the difference in destination becomes vast. It is time that we stopped going in one direction and that we chose another—one that produces a living, working countryside, such as we see probably once every 50 years, but which we never manage to keep. This time, let us find it, let us make it work and let us keep it.
4.49 p.m.
Earl Peel: My Lords, I too thank the noble Baroness for introducing this timely debate. I also congratulate the noble Lord, Lord Williamson of Horton, on his excellent maiden speech.
My noble friend Lord Kimball slightly wrong-footed me by making reference to the game conservancy work at Langholm and its effects on red grouse. As chairman of the Game Conservancy I declare an interest. But I do not particularly wish to be tempted down that path of debate this afternoon, important though it is; no doubt it is something to which we will return at a later stage.
I am sorry that the right reverend Prelate is not in his place; he mentioned lapwings, peewits or green plovers, whichever terminology one likes to use, and his perception of their decline in this country. There are certainly less than there were, but it is clear that it is on the well-managed grouse moors of England and Scotland that the green plover is to be found because the management there is right for them.
The introduction of regional development agencies and the new Countryside Agency herald a new beginning for rural England. I sincerely hope that it proves to be successful. I regret the emasculation of the old Rural Development Commission and have my doubts as to whether the RDAs will be able to bring to the countryside the same expertise as the Rural Development Commission did in the past—a point to which my noble friend Lord Vinson referred.
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I am also slightly baffled by the cobbling together of what was left of the Rural Development Commission and the Countryside Commission. They do not seem to me to be natural bedfellows. I am surprised that the Government did not emulate what has been done in Scotland and Wales; that is, merge the Countryside Commission with English Nature. I am wondering whether that implies that the Government have doubts about the success of SNH and CCW. Perhaps the Minister will be kind enough to give us his views on that question.
I congratulate Ewen Cameron on his appointment as chairman of the new agency, but with the Government's announcement on Monday to legislate on the right to roam and given the Countryside Agency's remit on that subject, I suspect that it could well turn out to be an agency destined for countryside damage limitation only. That would be a great pity.
It is essential that those living and working in rural areas and their representative groups have access to and confidence in the government agencies. It is important that each one has a clear and distinctive role. Some of us would say that there are perhaps already too many such bodies in the countryside resulting in duplication of responsibilities, inevitable overmanning and a certain degree of confusion.
I wish to take an optimistic view of the new Countryside Agency. As its name suggests, it must speak out and act for the wellbeing of rural England as a whole. But confidence among country people is very low. So there is a crying need for the new agency to champion the interests and aspirations of all those living in, working and managing the countryside. It must do so despite external pressures and the ever-increasing ascendency of an urban culture.
The noble Lord, Lord Mackie of Benshie, mentioned one of the most important issues in the countryside at the moment; that is, the question of planning. Farming is changing. Inevitably, regrettably, farm sizes will increase. It seems to me that there remains a pressing need for the Government to promote a less rigid and more flexible planning system. There are too many examples of intransigent planning officers impeding sensible progress despite the more enlightened central government planning policy guidance. Therefore I urge the Government to tackle this issue. I hope: that the RDAs and the Countryside Agency will be able to monitor such schemes and provide government with information on the success or otherwise of such policies.
The noble Countess, Lady Mar, and the noble Lord, Lord Beaumont of Whitley, mentioned the question of abattoirs. I must declare an interest in my involvement with the Duchy of Cornwall. In the south-west of England this is becoming an extremely serious problem. Small abattoirs are being closed down and the effect of that on animal welfare is obvious, and also on schemes the Government are backing to try to induce home produce being sold from farm shops and through farmers' markets. It is important therefore that abattoirs are preserved. There is a perception both by local butchers and vets that it is a deliberate policy by the inspectorate to seek closures to reduce costs and

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inspectors' workloads. I hope the Minister can refute that. It is a serious allegation and I sincerely hope that it is not true.
Finally, I know that the Minister will be well aware that a number of rural Back-Benchers in another place produced a report in which they asked for the standard spending assessment formula to be reconsidered. That report recommends that a set of rural indicators be developed and adapted in order to consider why metropolitan areas receive an average 20 per cent. more of SSA per head than rural areas. It is a serious matter. I am sure it is one at which the Government are looking, but I would be grateful if the Minister could assure the House that they take it seriously.
The Chancellor claims to have given us a "give-away" Budget. Let us hope that under these new initiatives and the forthcoming White Paper, the countryside gets a generous deal as well.
4.55 p. m.
Baroness Maddock: My Lords, my noble friend Lady Miller of Chilthorne Domer introduced a timely and important debate. It has been extremely wide-ranging and some of us have been going down memory lane this afternoon. My noble friend Lord Beaumont reminded me that my very first paid job was picking up potatoes in a field for 1s 9d per hour.
However, I am grateful today to be given the opportunity to highlight the importance of housing policies in a living, working countryside. People living and working in the countryside need homes and jobs. They will go on needing housing when they are retired. It is therefore extremely important that the regional development agencies recognise, along with local authorities and other government departments, the importance of housing provision as part of the social and economic structure of our regions.
The availability of housing, both public and private, is central to achieving sustainable communities. In practical terms, where inward investment is being attracted and jobs created, account must be taken to audit the availability and quality of housing and, equally, the socio-economic profile of the residents who will inhabit that housing. If economic regeneration occurs in an area where there is not a significant supply of housing, problems arise; for instance, problems of transport, which can be two-fold. An enormous increase of pressure on transport infrastructure can bring real misery to people living in some of our small towns in trying to get to work. Some employees will not have the opportunity to get to work other than by using personal transport. If they are young or elderly they may not possess that.
If we are not careful it may also lead to the over supply of and excessive demand for housing in certain localities. That too can bring associated problems. Sometimes it will lead to excessive house prices. That is a problem in some rural areas for young people who are trying to stay in the area. Also, as was mentioned earlier today, people who cannot have access to services
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may be excluded from obtaining employment which is important if we are to have a living, thriving community.
I know that some of us—this was raised in the debate on the Bill setting up regional development agencies—had concerns that the agencies may be led and staffed by people who were more committed to economic regeneration and who did not have sufficient appreciation of the social policy agenda which is integrally linked to it. I am grateful to the noble Lord, Lord Whitty, because he gave us assurances at an earlier stage in those discussions that the regional development agencies would be able to take part in facilitating the provision of housing—though not be direct providers—and that they would have similar powers to those of English Partnership. I hope that the Minister can perhaps give us some indication today about what further steps he thinks the Government can take to ensure that that is a reality.
I am particularly pleased that one government department—indeed, I might almost call it a "quango"—has taken up the challenge here. I have in mind the Housing Corporation. However, I am rather disappointed that the noble Baroness, Lady Dean, is not present in the Chamber, because I wish to complement her on being the chairman of that organisation. The Housing Corporation recently produced a news release about its new funding proposals, which actually put the RDAs right at the heart of such matters. Such proposals include,
"using Regional Housing Statements to help guide decisions on Corporation investment".
The release continues—and this is most important:
"These statements will describe the local housing, economic, demographic and planning context and will take a three to five year view".
That is good news. Indeed, if other agencies can work in that way, that would prove to be a very good way forward.
The provision of affordable housing and a cross section of types of housing in rural areas is an increasing problem. We have all seen villages that have become commuter villages. Indeed, sometimes that is the reason why the shops and the other facilities close. We have also witnessed the problems experienced by young people trying to find somewhere to live in rural areas. That also affects their ability to obtain jobs.
Only this week Shelter produced a report outlining the great difficulty experienced by young couples when they try to get into the housing market. Many of them will be on low incomes, and may well have just started out in life. Moreover, the changing pattern of jobs is a further difficulty. Very often, the people who are made homeless in rural areas are those who cannot keep up with their mortgage payments and subsequently their homes are repossessed. As one speaker said earlier, there is also the problem of second homes in our rural communities but I do not have time today to go into that situation.
The development of RDAs and regional chambers, which I personally hope will lead to regional government, does, as my noble friend Lady Miller said,

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give us an opportunity to bring forward fresh thinking and new levels of co-operation and co-ordination between the various bodies. It will not be easy. The present planning framework is not an easy process. You cannot put into your plans what type of housing you want, whether it be private or social. Indeed, it is usually the market that decides such matters. I hope that those issues will be tackled by the various RDAs and local councils in the coming months and years. That co-operation and new thinking must be at the root of our approach to ensuring that we have a countryside which remains a place where people can live and work.
5.3 p.m.
Lord Rotherwick: My Lords, I have a recurring nightmare: a nightmare of all these agencies, guided by the Health Education Council; abetted by the Sports Council; supported by ASH and other quangos and charities all advising the British to abandon their sofas, their computer games and their TVs in favour of a Good Brisk Walk. I have a nightmare of thousands of cars pouring out of town and city to tear up grass verges, to block farm gateways and to choke village streets. I have a nightmare of thousands of dogs chasing wildlife:
"Over hill, over dale, Thorough bush, thorough brier, Over park, over pale".
disturbing feeding grounds and destroying nesting sites.
Noble Lords may think that I am being unduly alarmist. So I should like to draw the attention of the House to some of the comments that have been given in evidence over recent months to various inquiries. First, in its evidence to the Environment Sub-Committee in the other place, the Ramblers' Association stated:
"We have real concerns that the environment will lose out to rural development unless there is proper integration and balance between the economic, environmental and social strands of sustainable development".
Tony Burton of the CPRE told the committee:
"We produced a methodology which defined tranquillity. It showed that since the 1960s England had lost an area of rural tranquillity almost the size of Wales".
That was followed by a submission by Miss Greaves of the National Hedgelaying Society, who said:
"Our landscape has been created by agriculture. Even the so-called 'open spaces' which many people consider not to be farmland are, in fact, managed, usually by grazing with sheep, native cattle, ponies or deer, the grazing maintained by cutting bracken, heather, etc. regularly".
She then went on to say:
"Without this hard work…the much valued access would cease to exist, as routes became impassable".
In specific comments on the draft prospectus for a countryside agency, the RSPB said:
"Biodiversity is an integral part of the health and viability of our countryside. Biodiversity and wildlife are often the very reason that a large number of people have an attachment to the countryside. This fact is not acknowledged anywhere in the document".
The society also pointed out that the Countryside Commission has a remit that extends to biodiversity under the terms of the Countryside Act 1968.
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The Moorland Association provided a comprehensive response to the consultation paper on access, in the course of which it made a number of points. For example:
"There is evidence from surveys done in the Peak District and South Pennines that birds like golden plover, curlew and lapwing are particularly sensitive to too much disturbance at breeding time. Continual disturbance leads to cold eggs or chicks dying of exposure and also makes the nest more prone to predation".
It continued that theme by saying:
"…an individual walker, present in the wrong; time in the wrong place on a moorland area, may entirely unwittingly disturb both mammals and birds, particularly at the time of territory establishment (February/March), nesting (March/June) and fledgling (May/June)—
that is, a six-month period—
'The effect of the disturbance is very much compounded if he has a dog, whether on a lead or not, but in almost all cases each walker will be unaware of the damage he is doing".
The association makes a plea that:
"Any provision for access to heather moorland must make effective and enforceable provision for restricting or removing the right of access at times of high fire risk",
and concludes by saying,
"managing access to heather moorland by closure for particular periods is simply not a practicable management solution".
The problems of "open access" have to be recognised and used to inform the debate on access generally. The most important of these is the preservation of wildlife, which has a prior claim on the open countryside. At a time when the countryside is under pressure to have the "right to roam" legislated upon it, the countryside would have warmly welcomed any new help given in the Chancellor of the Exchequer's Budget yesterday; an acknowledgement of the continuing and deepening plight of the countryside's economy. That opportunity was missed.
However, the Chancellor of the Exchequer did lavish money on politically sensitive areas, For example, £300 million extra on capital spending on the electorate of Scotland and Wales to help cut crime and modernise schools. That is a part of the UK which already enjoys higher spending in these areas. The Chancellor said that the,
"Budget places environment at the heart of government".
This policy is tough on those rural people who use their cars to go everywhere. If one spends £10 on petrol, £8.50 of it will now go to the Government in taxes. In 1997, 75 per cent. of rural parishes in England had no daily bus service. Moreover, of 9, 000 surveyed rural parishes in 1997, the vast majority had no food or general shops, no post office, no police station, no public nursery, no elderly daycare centre, no bank or building society and no job centre or benefit agency. As most noble Lords have already said, private transport is of great importance. I find myself, unusually, in the position of that arch villain, Topol, "I think I had better think it out again". I hope that this Government will be able to reverse the present demise of our countryside.
5.9 p.m.
Lord Chorley: My Lords, as other noble Lords have said, this is a timely debate, following, as it does, hard on the heels of the Government's consultation paper.

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I certainly warmly welcome the consultation process but I am a little disappointed in the document itself. Unfortunately I do not have time to go into that, but it seems to be rather full of what I would loosely call "motherhood" statements and I am not sure where it gets us. There is a good deal to be said for the rather old-fashioned Green Paper approach which explores practical possibilities and analyses problems.
For my part, I start with my concept of the countryside as a precious landscape of extraordinary diversity and quality which is perhaps unique in such a small island, but which, as a result, is subject to tremendous pressures and threats. What I seek are policies which help to protect the countryside and enhance our environment and, of course, enable the communities who live there—and who shape the countryside—to enjoy a good quality of life.
As 80 per cent. of our rural landscape depends in one way or another on our farmers, agricultural policies should be our starting point. That has been fairly evident from the speeches of most speakers today. But first I must flag up what I loosely call the housing issue; that is, the perceived need for 4.4 million houses in England by 2016; that is to say, four Bristols every 25 years if, as expected, the demand is likely to continue at that level. This issue was hotly discussed a year ago and the Government made a number of changes. However, I suspect that unwittingly some of those changes will turn out to be more cosmetic than real. This is an ongoing debate but I simply make the point that even if government policy manages to achieve its objective of 60 per cent. of the need being met from brownfield sites, the erosion of our countryside, especially in the south-east and the south-west of the country, will be pretty awful, and in fact unacceptable. The solution must lie in making our cities more attractive places in which to live. That, to me, is where the real interdependence in this matter lies. The Government have, of course, the noble Lord, Lord Rogers, and his committee working on this matter. I eagerly await his report. He has a challenging task.
I return to agriculture because it is so central to a living, working countryside. I am puzzled that it earns only a few mentions in the consultation document. As almost every noble Lord who has spoken has mentioned agriculture—I refer in particular to the outstanding speech of the noble Earl, Lord Selborne—I shall confine myself to making one point to draw attention to some of the work of the National Trust, in which I no longer have to declare an interest. Country Life states, in regard to the work of the National Trust,
"The National Trust is offering a range of packages for its 700 tenant farmers on a farm-by-farm basis. These include delaying or phasing rent payments, supplying cash support to upgrade farmhouses for bed-and-breakfast, developing marketing schemes and using meat from the tenant farmers in Trust restaurants. The Trust is also employing farmers to carry out environmental work on their own property and other land, and funding organic farming enterprises".
I am so glad that the Trust is doing what it can to help.
So much for agriculture. I now turn to the rural economy itself. We must recognise that farming is no longer the huge employer that it used to be. The
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structure of the rural economy is, at any rate in England, not that different from the national picture in terms of employment. Moreover—I find this amazing—given the steady loss of jobs in agriculture, the rural economy has had a relatively more buoyant economic performance than the urban economy, with twice the rate of increase in jobs—8 per cent. as against 4 per cent. nationally—from 1991 to 1996.
As I see it, the rural problem is not so much one of low paid jobs but is much more of a social problem of poverty and social exclusion. It is a problem of considerable patchiness at village level, of pockets of unemployment and lack of job opportunities. There are patchiness problems of affordable housing, as has been mentioned. In general there tends to be—perhaps partly inevitably—a much poorer provision of essential services, especially public transport provision, as we all know. Schools have not been mentioned in this connection but shops have. These facts are well known and were well rehearsed by the Rural Development Commission, whose demise a number of speakers have regretted, as I do. It is in this area that the RDAs will be of crucial importance.
On this I have time only to make a few bullet points. First, above all, I am worried that the RDAs and the chambers will be urban dominated. There is an exceedingly tight timetable for drawing up regional economic strategies, a timetable which is out of kilter with the regional planning conference frameworks. There is the danger that sustainable development policies will be poor relations, despite the useful draft guidance, due to the timetables and the pressures for immediate results. The lack of environmental expertise in the RDAs has been mentioned by some. It has been mentioned that MAFF still after all these years has not merged its offices with the GORs. The Countryside Agency, with its new shape and its new chairman—incidentally I warmly welcome the choice of Ewan Cameron as chairman—is not yet up and running and is not therefore in a position to fight the countryside corner with the RDAs. I have run over my time and I shall sit down.
Baroness Farrington of Ribbleton: My Lords, I hope I may ask noble Lords to keep to their allotted time; otherwise, the Minister may not have time to reply to any of the points that have been made.
5.17 p.m.
Lord Inglewood: My Lords, as I have explained in a number of previous debates on similar subjects, I have several rural interests which I should declare, and which I hope and believe I have accurately included in the register.
In his impressive maiden speech, the noble Lord, Lord Williamson, referred to the noble Baroness, Lady Miller. He said that they both came from Somerset. What they can do well in Somerset, we in Cumbria can do better. I am delighted to speak after the noble Lord, Lord Chorley.
There is no point in beating about the bush. It is pretty depressing in the rural north-west these days. After all, farm incomes are down at 1930s levels in real terms.

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CAP reforms do not seem to be going well, and it looks as if the wrong systems of support may be gaining the upper hand. Modulation, which is a serious threat to legitimate UK farming—and, in my view, a stumbling block to economically sustainable reform—seems to be gaining in popularity. The high pound is depressing commodity prices, and that affects not only agriculture but also timber prices. The outlook for the continuation of much of the existing 5b areas is—I am told by those involved—looking distinctly bad. The important tourist industry has, overall, had a bad year.
If rural Britain was, quite simply, a market—a bazaar where anything went—it would be quite understandable to say that that is the way of the world and you must take the rough with the smooth. But, of course, that is not a fair description. Rural land use—which is heavily regulated—and agriculture in particular are not in an open market; rather they are heavily regulated by government, which have given certain pledges in respect of them.
In particular I wish to draw the attention of the House to the provisions of the European Community treaty. I would like to draw attention to two provisions in particular. Article 39(1)(B) states that one of the purposes of the common agricultural policy is,
"to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture".
I suspect that that sounds like a sick joke to most people involved in farming these days. Article 130(a) is concerned with regional policy. It states,
"In particular, the Community shall aim at reducing disparities between levels of development of the various regions and backwardness of the least favoured regions including rural areas".
After all, Article 130 is the policy background to what, as I have already mentioned, I am reliably told looks like being a significant reduction in objective 5b eligibility in the north-west in the middle of the worst agricultural recession for some 50 years.
What will the Government do about their obligations contained in the European Community treaty? In particular—I have already raised this matter with the Minister—will the Government replace whatever may be lost from objective 5b by compensating national aid? I should be very grateful if the Minister will deal with that point during his summing up. If he cannot do that—I understand he may not be able to—will he write to me and put a copy of the letter in the Library?
Had we on these Benches been in government, I know that we would not have added to the complication of the multifarious agencies and tiers of administration that the establishment of the RDAs and the new Countryside Agency entails. But we are not in government and the Government have electoral legitimacy to do what they are doing. I do not complain about that.
As your Lordships may know, I am privileged to be number one on the list of prospective Conservative candidates in the north-west for the European elections. I wish to make it clear that while my party was opposed to the establishment of the RDAs, which it considers to be an error, it is the firm intention of whichever Conservative candidates may be elected for that region
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to work constructively—I hope that this may be of some interest to the noble Baroness, Lady Farrington—with the RDA in the north-west in the region's best interest.
The RDA there, under the chairmanship of the noble Lord, Lord Thomas of Macclesfield, has a big task. No one in the north-west wants him and his fellow members to make a hash of it. As to rural areas, just because they are less populous than the urban areas—this point was made by the noble Lord, Lord Chorley—it is important that they are not overlooked. I know that a number of the RDA members are rurally based and focused, and I am sure that they, and the noble Lord, Lord Thomas, will use their judgment and sense of fair play to ensure that it does not happen.
Finally, I wish to make a plea for simplicity. By any standards the relationship between the various agencies and tiers of government and administration is Byzantine and opaque. Cynics might well suppose that the whole thing had been designed to make the services they provide as non-user friendly as possible. My plea is to have a "one-stop shop" from which all the various services can be delivered in a single place and in a coherent, comprehensible, simple and non-bureaucratic manner. If that can be done they will do a great deal more good than otherwise might be the case. After all, when all is said and done, that is their sole real raison ďêtre.
5.22 p.m.
Baroness Linklater of Butterstone: My Lords, first, I wish to congratulate the noble Lord, Lord Williamson, on a masterly maiden speech. I wish also to thank my noble friend Lady Miller for initiating this important, interesting and complex debate.
I wish to speak fleetingly on two issues with specific reference to Scotland. In three months' time these issues will be the responsibility of the Scottish Parliament, but they share, nonetheless, important common problems with the whole of the UK. The debate in one part of the country will both reflect and inform, I hope, the debate in another. The issues are agriculture and land reform, although I have to admit to a fraction of the expertise of many of the speakers in the debate. These subjects are highly topical; they are distinctive but related in their agendas; and both are at a critical point in their histories.
Policies which will ensure a living and working countryside could not be more important in the Scottish context—not least because to a greater or lesser extent 80 per cent. of the land mass of Scotland is in agriculture of some kind or another. While some of it may have little productive value, some has the highest quality of production to be found anywhere in Europe. Furthermore, I believe that Scotland has countiyside of a beauty unsurpassed in the rest of the world and an environment which we must treasure and nurture as one of the nation's greatest assets.
All this is at grave risk. Never has there been such a crisis as there is in agriculture today. Never before has it been so difficult for those whose lives are devoted to or associated with agriculture to make a living. Yet it remains the economic mainspring of our rural communities. If that dies, then those communities also die.

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The statistics are terrifying. The average net income per farm in Scotland dropped to £416 last year from around £5, 000 the previous year. Many suffered negative incomes. How can any industry survive if such circumstances persist? The answer clearly is that it cannot. The strength of the pound coupled with impossibly high interest rates compared with our competitors in Europe mean that its viability is seriously compromised. The result is that borrowing by those in the industry now stands at £1.2 billion. People are not borrowing to expand but to live—and we are talking about one in ten of the Scottish population.
Where I was raised, in the Perthshire hills, on what my father only half jokingly referred to as a "non-revenue producing asset", where once three people were employed full-time we are down to one; where holiday cottage letting of what was once a shepherd's home is necessary; where a reduction in sheep and an increase in forestry has taken place; and where sporting lets are now an important part of the picture. Survival is now the issue.
Never before have subsidies been so necessary, but they must be restructured so that they are not seen to be linked to production alone but can ensure farmers' livelihoods. Payments for agri-environment measures which are project-based, not production-based, are examples of a way forward favoured by many in the industry. They link payments for good farming practice to good environment and conservation practice. Policies which can combine these economic, social and environmental elements into an agreed strategy in rural communities and pull together all the varied but interconnecting interests are surely the way forward.
Linked crucially to the debate on the crisis in agriculture and the implications for living in rural communities is the question of land reform, now the centre of debate in Scotland since the publication in January of the Government's Land Reform Policy Group's recommendations for action. Its essential purpose was how to,
"best utilise the land resource so as to enhance the lifechances of people living and working in rural areas".
That sounds splendid, but in reality it is a diversion from the central crisis. It covers, among other things, the wider rural community, the legislation relating to land ownership, private, community and public, and the accountability and involvement of all these groups, one with another. But the importance of land owners as key players alongside farmers—they are often synonymous—in the sustaining of the rural economy is crucial.
The development of greater accountability and more communication between landowners, tenants, farmers, local and wider communities is widely, and rightly, welcomed. But investment and job creation must be encouraged as a priority and bureaucracy and uncertainty kept to a minimum. So far, slogans like, for example, the "community right to buy" have simply generated anxiety in the farming and landowning sectors, not least since it is not at all clear what is actually meant by "community" in such a context or how it is all turned into a reality.
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Thus there is an important balance to be struck between the necessary regulation of, say, bad landlords, and those regulations or controls which act as a disincentive to good investment in the countryside. Of key importance is the improvement of landlord-tenant relations across the whole of Scotland, something over which the NFU and the SLF have been in consultation. The availability of let land is vital in the evolution of the rural economy. It is issues such as these which should be focused on as a priority.
If we are to assume, as I do, that our rural communities are an integral and essential part of our society, then all measures possible must be devised to sustain our threatened agriculture industry in its hour of greatest need and all possible encouragement should be given to those who can invest and sustain the rural community in all its forms. Without that commitment and support we put at risk the very essence of the society in which we live.
5.30 p.m.
Lord Willoughby de Broke: My Lords, I join other noble Lords in thanking the noble Baroness, Lady Miller, for providing the opportunity to discuss this important subject. The objective of a living, working countryside is one that we all share. That has been clear from all the speeches that we have heard. Britain's rural economy is presently facing one of its most serious crises. On top of a damaging drop in farm incomes, Britain's meat industry is on the brink of disaster, thanks to the rigid, inflexible implementation of EU meat hygiene directives, to which both my noble friend Lord Peel and the noble Countess, Lady Mar, referred. I wish to enlarge on the subject as it has a big impact on the rural economy.
From 1st April, hundreds of meat firms will find themselves liable to pay hugely increased charges for inspection—charges which small businesses simply cannot afford. They will have to sell out or close down. The results will be felt by thousands of farmers, butchers, hotels, restaurants, and of course individual consumers—in fact, by the whole local economy.
Noble Lords may think that that is a generalisation too far, but that is not so. Perhaps I may give just two examples of the kind of business that will face ruin unless the Government seriously rethink the matter.
Pipers Farm is a specialist meat business in Exeter, employing seven people. It enjoys an enviable reputation throughout the country for providing top quality beef, lamb, chicken and sausages. Its suppliers do not use intensive farming methods. The stock are all extensively reared, without the use of growth promoters, routine antibiotics or artificial additives. The produce is sold by special delivery throughout the country to hundreds of satisfied customers and the farm has won numerous awards for its superb quality. Most notably, the farm is supplier to the Gidleigh Park Hotel on Dartmoor, whose chef, Michael Caines, recently won his second Michelin star. It is one of the very few restaurants in Britain to achieve that award.
In short, Pipers Farm is a roaring success, the sort of business that we all admire. It has got there not by cutting corners, skimping or cheating, but by investing

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in quality: quality in its raw materials, quality in the processing, and quality in service—and of course, quality people.
But the farm faces ruin, not through any fault of its own but under the beetlecrushers of the hygiene police in the shape of the Meat Hygiene Service. On 1st April its new charging structure will come into effect. Nationally, according to a Written Answer given to the noble Countess, Lady Mar, by the Minister, the noble Lord, Lord Donoughue, the new charges will be £21.5 million to enforce EC regulation of the disposal of specified risk material. A further £21 million will be required to comply with an EC ruling that British meat firms should have 100 per cent. cover by official veterinary surgeons.
That is not all. The Food Minister, Mr. Rooker, in reply to a parliamentary Question, confirmed that the cost to the meat industry of the Meat Hygiene Service will be £33.1 million to March this year. The industry will thus face total costs in a full year of £75.6 million. That is an eye-watering 128 per cent. increase.
But, of course, it gets worse. Those increases will of necessity hit the smaller firms hardest. Pipers Farm is supplied by a small local slaughterhouse in Ottery St. Mary, run by a local farmer, Mr. John Coles. At present, Mr. Coles pays a subsidised charge of £61 a week for two MHS inspectors—one of whom, incidentally, is a Spanish gentleman with a limited command of English. But from April he must pay the full costs for the whole week, even though he slaughters and dresses on only one day each week. His costs will rise from £61 to £702 per week, or £36, 500 for the whole year. It does not take a rocket scientist to work out that these charges will make his business completely unviable.
This is institutionalised lunacy. Mr. Coles, a local slaughterer who meets a local need, will close. Pipers Farm, which is a nationally successful business, will have to close. Pipers Farm employees will lose their jobs. The 25 local farmers who supply Pipers Farm will have lost their best customer. Transporters and suppliers will lose yet more business—a loss that could tip them over the edge as well. In short, it is a total disaster, a huge hole blown in the delicate web of that area's economy.
My second example is in Norfolk, where a top-class poultry processing business which employs 72 people is faced with further veterinary inspection charges which will jump from £400 a week to £1, 600 a week—an increase of £62, 000 a year. The owner of that business will have to shut up shop. Bang go not only the 72 jobs there, but at least another 150 which depend on that business in one way or another.
What makes this even worse is that these costs which will ruin so many British businesses and do incalculable damage to the rural economy are, in the rest of the EU, met by the state, by the taxpayer. Ministers in this country seem to be seriously under-informed on this matter. The Food Minister denied in a radio interview last November that the French Government paid these costs. But that is the case.
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What is so deeply depressing is that these small businesses, encouraged only yesterday by the Chancellor in his Budget, which are now under threat are the engine room of the rural economy. They should be nourished and supported, not cut off at the knees because they do not fit some bureaucratic procrustean bed.
In the light of that, I hope that the Minister will treat as a matter of urgency a review of the Government's position. If, as is the case, the costs of our European Union competitors are being paid by the state, then surely it is only fair that the inspection costs of the meat industry in this country should also be paid by the state. I thought that that was what the single market was all about. I understand that there are derogation procedures which have not yet been explored to enable extra support to be given to small abattoirs and meat processors. My noble friend Lord Vinson hoped that this debate would be influential. I share that hope. This is an important matter.
5.34 p.m.
Lord Geraint: My Lords, I thank my noble friend Lady Miller for initiating this debate and for her constructive opening remarks. I thank also the noble Lord, Lord Williamson, for his maiden speech and wish him well. I am sure that we shall hear a great deal from the noble Lord in the years to come.
I am very concerned about the severity of the crisis in the countryside and its effect on the local economy. Farm incomes in the United Kingdom have fallen by nearly 100 per cent. in the past two years in the worst recession for decades.
Once again, I urge the Government to set up a Royal Commission to look into the state and role of the countryside and agriculture. When I made that plea a few months ago on behalf of my colleagues on these Benches, the Minister refused point-blank to consider it. But how the scene has changed in a matter of months. Now the Government are willing to set up a Royal Commission to look into the problems of this House. If a Royal Commission is good enough for your Lordships' House, I am sure it is good enough for the countryside and agriculture. I wonder what the Minister will say today.
I turn first to the tenanted farm sector which plays a major role not only as a source of lifetime family farms but also as a means of entry to the industry for young farmers. The provision of smallholdings by county councils makes a vital contribution to the tenanted sector. They provide a structure of starter units and larger units to which the tenant can progress. County councils should be discouraged from further disposal of such smallholdings. They should, whenever possible, increase their resource of land available for letting. I urge the Welsh and Scottish parliaments, when established, to consider providing extra financial resources to local authorities to buy more land within the next three years.

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EC structural measures should be made available to farmers in the United Kingdom. Similarly, young farmer entrants on smallholdings should be offered low-interest loans and other incentives such as direct income aids for a limited period to assist in their establishment.
The abolition of agricultural subsidies would cause major problems in the countryside for producers and consumers alike. The health industry is almost entirely funded by the Government, as, too, are education and training, the police and the Armed Forces. Those industries are important to our society and their services should be encouraged. Underfunding would create untold damage to the rural economy in Wales.
Let us look at the policy of the New Zealand Government over the past 10 years. There are no government payments of any kind coming back through the farm gate in New Zealand and for some farmers the past 12 years have been a real pain. Over the 10-year period from 1986 to 1996, the overall number of farmers has declined by 17 per cent. Sheep farms have declined by 44 per cent. I wonder whether it is the Government's intention to pursue similar policies for the United Kingdom.
Farm size has to increase to cope with lack of profitability in New Zealand. Sheep farms have increased in size from an average of 1, 057 acres to 1, 485 acres; dairy farms from an average of 215 acres to 304 acres. The number of sheep in New Zealand has come down from a peak of 70.3 million in 1983 to 46.2 million in June 1998. The number of people involved in sheep and beef farming decreased by 32 per cent. between 1986 and 1996. But statistics like those do not show the full effect of such changes on farming couples and their families. I hope that that type of policy will never be pursued by any British Government.
We on these Benches press for the creation of an independent appeals panel for Wales and other countries within the United Kingdom to adjudicate in disputes between government and farmers involving the processing of grant support applications and their payments. Many farmers suffer financially every year because of these rigid and unwanted rules and regulations imposed on the industry. What we need is a little common sense to prevail on both sides. On behalf of my party, the Liberal Democrats, I urge the Government to introduce an independent appeals panel forthwith to make sure that justice prevails within the agricultural industry.
We must ensure that the Government safeguard the future of family farms and maintain the rural infrastructure before it is too late. I also believe that we need a supermarket watchdog because United Kingdom producers have little influence in the market place. When farmers bargain with the big supermarket buyers they often have to take the price they are offered, however low.
Farmers may understandably be reluctant to criticise the retailers who are their biggest customers. The public may be more sympathetic to the plight of producers in the developing world. However, pointing out that many
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UK farmers face problems too need not trivialise the issues facing producers in developing countries. If supermarkets can support farmers in the developing world by signing up to the ethical trading initiative, then surely they can adopt a more ethical stance with UK farmers.
5.42 p.m.
The Earl of Clanwilliam: My Lords, I thank the noble Baroness, Lady Miller of Chilthorne Domer, for introducing the debate. I wish to refer particularly to the needs of the countryside and the dependence of its environment on agricultural and local employment.
Agriculture as an employer has been in decline in direct proportion to the rate of intensification of farming methods. On the other hand, extensive methods such as organic farming and the management of ESAs, countryside stewardship and other scheduled areas all provide opportunities for increased labour input. My noble friend Lord Selborne referred to organic farming as a "niche" market, but at 100, 000 acres out of 24 million it is not only a niche market but a niche niche market. If my noble friend Lord Selborne would allow us to extend to 10 per cent. of the market, we would then be in a position to make an effective contribution to local employment in agriculture.
It is the small employer who needs support, particularly at present. His business is being greatly affected by supermarkets. RDAs may be able to assist with the increasingly popular farm gate shops—another of my noble friend's niche markets. The small farmer has particular difficulty in getting his cattle to market. Ever-decreasing in number, the abattoirs become larger and larger, and it is becoming more difficult and expensive for the small farmers to get to the abattoirs. The noble Countess, Lady Mar, has already referred to the matter, and the possibility of mobile abattoirs has been mentioned.
Under Agenda 2000, funds will be available from the savings resulting from CAP reform, but the proposed 25 per cent. is not nearly large enough a slice to compensate for the damage done. The agricultural environment is delicately balanced and the inroads of CAP-inspired insensitive intensification have caused enormous damage. There has, incidentally, been a considerable move among so-called conventional farmers towards extensification in the light of public approval of organic methods, which I call conventional; the other methods are modern.
But overall there has been much damaging activity, such as the ploughing of the shallow turf of downlands which for generations, up to 50 years ago, were the exclusive preserve of sheep, and also the ploughing up of watermeadows, with the resultant annual flooding of crops. That is all in response to the opportunities offered by the common agricultural policy. If that is competitive farming, is it sustainable?
Undoubtedly the best thing for the rural environment would be the reform, if not the scrapping, of that evil monstrosity, the common agricultural policy. We have yet to see an accommodation between the, now sparring,

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partners in the original design—that is, between Germany and France. Until that valuable day, we are unlikely to see much reform.
Employment will be the responsibility of the new RDAs, supervised by their senior partner, the Countryside Agency. A major problem they face is the exodus from the urban areas into the countryside, with the increased demand for housing and its concomitant pressure to encroach on the green belt. While urban areas are becoming wastelands, the all-powerful supermarkets are driving the countryman and the urban dweller alike into the motor car. The village shop is fast disappearing and 70 per cent. of our villages now have no village shop.
What is the result? You have to drive to the supermarket along country lanes which, at that rate of growth, will not be able to carry the traffic generated. A 50 per cent. increase in rural traffic is forecast over the next 25 years.
Another factor in the urban exodus is the demand for the so-called right to roam. These roamers seem to be enthused by some irrational desire to have their way at any cost. At a recent meeting convened by my noble friend Lord Marlesford, consisting of representatives of all sides of the controversy, it was evident that we could peacefully pursue a course of voluntary action, with the exception of a surly reply from the roamer members of the team answering our questions. There is an unattractive bitterness in their approach which does not augur well for future decisions. There was no acceptance of the cost to society of providing the roamer with his dubious rights. Who is to pay for the inevitable lavatories and car parks which, of themselves, are obtrusive in the sensitive environment that these roamers wish to trample?
There is a well-known phrase: "Keep off the grass". I suggest a new one: "Keep off the heather". The wildlife and biodiversity exist because of the wilderness, itself an ecology that should not be wantonly disturbed.
5.48 p.m.
The Earl of Lytton: My Lords, along with other noble Lords, I have several interests to declare. I am a member of the Country Landowners' Association, a chartered surveyor and a part owner and manager of a hill farm, I am glad to tell my noble friend Lord Williamson, in the Somerset part of the Exmoor National Park. Very proud of it I am too.
I describe myself as a rural entrepreneur, and I am not a fan of the dependency culture of grants and subsidies. The VAT bill I pay substantially exceeds those grants and subsidies that I receive. I am particularly interested in rural land use outside the towns and villages, especially the difficult to manage, less favoured areas.
The nature of the Motion tabled by the noble Baroness denotes part of the problem: too many interests and a painful lack of focus. I do not regard CAP reform as the Holy Grail of rural economics and I am sure that many noble Lords share that view. I believe that we should be developing our own rural strategy, in particular a socio-economic one. Part of the problem is
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administrative baggage from the past: land use planning and control, the regime of consents and designations and regulations. I do not say that they should not be there but that they should be properly focused. If one follows the argument adopted by the noble Countess, Lady Mar, we do not even have a playing field, let alone a level one.
My estate thrives on income from sport and tourism. I am very proud to say that I regard the public as a resource. In that context I should also like matters such as public access, which I have tried to foster, to be regarded as a resource and not a burden on countryside management. I accept that my situation is probably untypical. As the noble Earl, Lord Selborne, pointed out, this is a niche operation. Some good land will always be profitable. At the other end of the scale not only is land unprofitable, but there is no realistic alternative because it is too remote and there is no possibility of diversification. These areas will require continuing and large support measures unless we are to witness substantial landscape and land use change. Particularly at risk are the uplands. However unprofitable it may be, the only method of management in some areas is agriculture, but we cannot simply throw money at the situation because the dependency culture is itself not sustainable. Nor can we parachute urban uses into the countryside willy-nilly unless there is a real need because such uses may be substitutes for other rural employment and so they will destabilise the rural economy in their own right. We need a basket of measures and a "can do" mentality.
The noble Earl, Lord Selborne, made reference to the need to add value. I accept that. There must be farm diversification but, please, it must be related to land use and there must be a proper planning, rating and fiscal regime in place to deal with it. At the moment there is a scattergun approach. I should also like to see producers acting as processors. If the example cited by the noble Lord, Lord Willoughby de Broke, is adopted no one will ever make a start down that road. I believe that that is a terribly bad message to give.
Service industry in rural areas is fine if it adds value, but it needs to be locked into the rural economy for rural purposes and for the reasons for which the land is to be managed; it should not be something that is totally different from it. The Government's initiatives on organic production are particularly welcome. One wonders whether they will stack up. Presently I shall tell the Minister about this. I am looking into this myself to see whether or not it can be done on my estate.
There is also a need for a change in the buying culture to which the noble Lord, Lord Peston, made reference. Whether we buy elsewhere or from abroad, we export the fundamental worth of our countryside, which is not right. As for tourism, we need to consider the quality of accommodation to see whether it is possible to extend the season in the face of fairly unpromising weather. We need a culture of doing that. I have a special interest in country sports which I hope will continue to be the backbone of my estate. I hope that others will be able to enjoy their countryside pursuits. Further, I should like to see greater emphasis placed on bio-fuel and biomass—the use of low-quality timber products—to

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add value to land use management. I should like to see access as a resource, not a threat. Perhaps we can encourage business sponsorship of environmental works in the countryside. One hopes that it will be possible to use existing manpower, not to supplant it and thereby bypass that part of the local economy.
The methods to be adopted must be varied and there must be a multi-warhead approach. Land use planning must respect economic and social aspects as well. We will probably require dwellings for non-agricultural estate workers—that is a problem which particularly afflicts me—as well as for an increasing rural population. The agencies require a common strategy that is focused on objectives with some pooling and streamlining of resources. Finally, I hope that local authorities which in many cases have tried to put rural strategies together will be encouraged to do so. Perhaps the Government and the various agencies will pick up that ball and run with it as well.
5.54 p.m.
Viscount Thurso: My Lords, I begin by congratulating the maiden speaker, Lord Williamson of Horton, on an excellent contribution. He will forgive me if I do not wax lyrical about it. Given the constraints of time I should like to crack on. This has been an absolutely fascinating debate. It is a testament to my noble friend that she has managed to achieve a good attendance in the House as well as a number of contributions to the debate. I note the number of noble Lords who, although they have not spoken, have sat in their places throughout the debate listening to all the contributions. Those contributions have been varied and of great skill. Perhaps attendance is a little thin on the Government Back Benches; nonetheless the quality has been good.
It is impossible to reply to every point that has been made and therefore I shall canter through and cherry-pick. I hope that noble Lords will forgive me for doing so. I congratulate my noble friend on tabling the debate and on her consummate skill in drawing together the Motion before the House. It casts a general net across the countryside, which has certainly caught quite a few interesting fish. However, my noble friend has focused on two key issues. One is the coupling of the words "living" and "working" countryside. It is almost like saying "living and breathing". That very important element has clearly emerged from the many contributions we have heard. The other dart, thrown very accurately by my noble friend, relates to the number of agencies, the wide diversity of functions they perform and the newness of many of them. Some of these bodies have not yet come into being. She is also to be congratulated on having raised that issue.
I turn to the second of those topics. A number of speakers have referred to the RDAs. I believe it was the noble Baroness, Lady Young, who referred to the potential of the RDAs not only in economic terms but in other areas. Broadly speaking, we on these Benches warmly welcome the RDAs. However, I have some concerns; I wish to refer to three.
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One may be forgiven for forgetting sometimes that the "R" in "RDA" does not stand for "rural" but "regional". That is where my first concern begins. I refer to the sheer size of these bodies. For example, my office is established just outside Tring in Hertfordshire. I understand that the RDA stretches from East Anglia in the north to Sussex and Kent in the south. It is like a huge doughnut with the hole in the middle representing London. My worry is that the people in the northern and southern parts of that area will not have a particularly homogenous view of what they want to happen. That is particularly true of tourism where the approach at the two ends is quite different.
My second concern is the urban context of the RDAs. There is a danger, particularly in the more affluent southeast—or (if I may say so), compared with Scotland, the affluent southwest—that the number of cities in RDAs will give those bodies a rather urban feel. We need to ensure that rural issues have their place in RDAs.
My third concern about RDAs is that their remit lies largely in regeneration in economic terms. Speaker after speaker on all sides of the House has pointed out that the preservation of the countryside is not simply about profit and loss and balance sheets but much greater issues than that. Perhaps we should consider giving the RDAs a wider remit.
I turn to the first of my noble friend's darts: the combination of the words "living" and "working" countryside. This highlights the fact that very often there are two aspect to the countryside. There is the countryside that is very often close to a large city—usually in the south—which is fairly affluent and perhaps lived in by people who do not work in the countryside. In the truly rural countryside, the more distant areas, people live and work there. As many speakers have said those areas are genuinely in crisis. We must not use the term too lightly. As the noble Lord, Lord Peston, mentioned, there are real problems of rural poverty. There are real problems of sub-standard houses, as my noble friend Lady Maddock mentioned. There is considerable social deprivation. Those problems are largely hidden from the gaze of the city dweller by the leafy surrounds in which they exist.
Perhaps I may make one small party jibe at my neighbours. I find it somewhat rich that after 18 years in power noble Lords on the Conservative Benches attack the Government for what they have not done for the countryside. I think, frankly, that it was Thatcherism that ripped the guts out of the Highlands. I have no doubt that the policies pursued by the previous government were not helpful to the countryside. However, over the past two years it is equally true that the crisis has widened and deepened. It is now a requirement for the Government to take action. Whatever may have been true two to three years ago, we now have a much graver crisis.
The noble Lord, Lord Peston, referred to the fact that people in the countryside have no greater right to a living than those in the city. He was right to bring that to our attention. I largely agree with him. However, he went too far when he accused farmers of living in a

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dependency culture. One of my noble friends pointed out that the income of a hill farmer is £416 a year. I do not think that one can accuse them of living in a dependency culture. Agriculture is at the heart of the countryside and is extremely important.
I wish to touch on one other issue: tourism. It would be difficult for me to speak on any issue without trying to bring tourism into it. A number of noble Lords have been slightly dismissive of tourism, saying that it is on the periphery of what can be done in the countryside. I draw noble Lords' attention to a recently published document entitled Tomorrow's Tourism. It sets out the Government's tourism strategy. While I congratulate the Government on the document, I have some severe complaints about some of it. However, on page 53 a case study of the Crocker Farm in Devon sets out what can be done to sustain existing jobs and provide new jobs in agriculture. I do not have time to tell your Lordships about it, but it is, I suggest, a document worth reading.
To ask hill farmers, as some of us believe the Scottish Office would like to do, at one leap to swap the ploughshare for the serving spoon, and sheep for tourists, is redolent of Marie Antoinette's, "Let them eat cake". It is insulting to hill farmers and hoteliers. In many of the worst hit rural areas tourism will not have an impact. It will have an impact in those areas which are already slightly more affluent.
My noble friend mentioned that on these Benches it is our policy to have a rural affairs ministry. I have been struck during the debate by how integral farming is considered to be within the rural community and the extent to which it is interdependent with so many other rural activities. I believe that the time has come when rather than having a Ministry of Agriculture, Fisheries and Food we should have a ministry of rural affairs which can look after agriculture and fisheries in the context of the countryside. Food can be looked after elsewhere.
There is a crisis in the countryside. I look forward to hearing the Minister. I hope he will have some crumbs of comfort for us.
6.4 p.m.
Baroness Byford: My Lords, I, too, would like to congratulate the noble Baroness, Lady Miller of Chilthorne Domer, on bringing this debate before us today. The question we are debating is in two parts. It calls attention to the case for policies which will ensure a living working countryside; and it seeks to clarify the relationships between the many agencies involved.
I have said it before, and I say it again: unless our farmers are able to make a profit, the countryside that we enjoy today will be destroyed. Confidence is low, as my noble friend Lord Peel said. The fact that this is our fourth farming debate within the past three months indicates how this House appreciates the dire situation faced in the countryside.
But farmers are not the only ones working in the countryside. Market towns, village shops, craft businesses, our farmhouse bed and breakfasts, village pubs and churches are all part of the interwoven pattern
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of our countryside today. Whether we earn our living there, whether we live there but work in the town, or whether we visit it for enjoyment, we should acknowledge that the countryside exists as it does at present thanks to those who have worked the land and cared for it over many generations.
In the debate following his Statement on Monday, Mr. Meacher stated,
"we have always made it clear that the protection of wildlife and environmental crops is our priority". —[Official Report, Commons, 8/3/99; col. 24.]
In saying that, he put his finger on one of the most important aspects of the definition of countryside. Unfortunately he confined protection to meaning,
"temporary and limited closures, probably in a wide area of countryside, during the lambing season and the breeding season, particularly between April and June". —[Official Report, Commons, 8/3/99; col. 33.]
In the debate that followed the announcement in this House, the noble Lord, Lord Whitty, replied to the noble Lord, Lord Rotherwick, in reference to the closing off of access for periods of time:
"We would not envisage that being a very lengthy period … the landowner would be able to close the area for up to 28 days. That would probably cover most of the situations the noble Lord has in mind". —[Official Report, 8/3/99: col. 51.]
Those two responses contrast unfavourably with the submission by the Moorland Association —it was touched on by the noble Earl, Lord Peel —in its response to the access consultation. It stated that disturbance can be caused particularly during territory establishment, nesting and fledging, all of which lasts from February to June. Clearly the needs of the countryside are seen differently by differing agencies and resulting policies will be heavily influenced by the relative power wielded by each of those particular agencies.
The constitution of the bodies is of vital importance to the sustenance of our countryside. It should represent and reflect the constituent parts; namely, the villages; through their parish councils, the WIs, local churches, old people's organisations, and so on. It should also include the farming community, the local landowner, local businessmen, local authorities, national authorities and —dare I say it? —Europe. Many of its directives, and some of its bureaucracy, have a huge impact upon the living and working environment of the countryside. The RDAs should reflect different shades of political opinion. They should reflect the young and the old, those who work away from home and those who stay in their villages. Concerns have been expressed to me with reference to the regional development agencies. Indeed, some noble Lords have referred to that today. Their rural and political appointees do not always fully represent their constituents. Perhaps the Minister will inform us of the rules of selection which have been operated. For example, Lincolnshire is very different from Leicestershire and Nottinghamshire, but the representation on the Lincolnshire authority is not as good as it might be.
The noble Baroness, Lady Miller, most astutely highlighted the challenge of legislation on open access by stressing the importance of agreement between the various agencies. My noble friend Lord Kimball spoke of the powers that pass respectively to the regional

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development agencies and the Countryside Agency from the Rural Development Commission: two heads; two minds; and two hearts where there was previously one. The Government are now demanding an effective relationship between those agencies, plus the European Commission, the Government, local authorities and the new local fora which have been envisaged by Mr. Meacher. What a plethora of agencies is involved!
The maintenance of the countryside as a living, working environment; as a source of rest and recreation; as a sustainable entity and as a valuable resource for prosperity means providing adequate funds; setting up viable planning parameters, to which many noble Lords have referred today; monitoring progress; evaluating developments; incorporating expert advice; recognising changing needs and encouraging small businesses. The noble Countess, Lady Mar, highlighted what a niche market can do. There are many other examples in existence. What most people want is less legislation not more. They also want a level playing field to enable our business people to thrive.
To enable these agencies to fulfill their objectives the Government must provide sufficient resources to support these activities. Perhaps the Minister will give us assurances that the necessary funding will be made available not just in the initial stop-gap, but on an on-going basis. Pilot projects are necessary and a reasonable way of testing expert opinion, but those that are shown to be successful should be supported for some little time after that to ensure their long-term success.
For instance, I refer to Monday's Statement on open access. It is not sufficient,
"to ensure that resources are available to local authorities to cover…the building of stiles, the gates and signs and possibly some rangering services"
if those same stiles, gates and signs fall down or are pulled down or damaged through fire, flood or tempest and there is no more money to replace them. Arguments about who is to finance it cause serious dissension between government departments and local authorities and far less the discussions about matching European moneys on some of the agri-environmental schemes. How are the Government planning to handle the continuing development of such projects?
The countryside is home to countless animals. The noble Baroness, Lady Young, referred to that earlier. In fact, I shall have to read Hansard carefully tomorrow. I thought she said at one point in her speech that the present government were going to adopt Conservative policies and just put "Labour" on them. I shall have to look at that very carefully. The countryside is also home to 23 per cent. of the population of the United Kingdom and a source of about 30 per cent. of our gross domestic product. For instance, in places such as North Yorkshire, over 50 per cent. of the population lives in isolated rural communities. For these people the decline in local services, the lack of public transport, the increase in petrol tax announced only yesterday, which will hugely affect rural areas; the closure of community hospitals; and the delay in planning decisions spell the beginning of the end for some of these communities.
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I quote from the Countryside Alliance about the low level of car ownership in urban areas reflecting poverty while people in,
"rural [areas] rely on cars and own cars, no matter how battered or old as the lack of public transport leaves [them] no alternative".
Many noble Lords have referred to housing, planning and commercial competitiveness. The contribution of the noble Earl, Lord Selborne, this afternoon was very worthwhile. In that respect I also congratulate the noble Lord, Lord Williamson of Horton, on his excellent maiden speech.
The new government agencies must look to their duties in a spirit of co-operation and refuse to allow the polled opinions of many people to destroy one of our most treasured possessions; namely, our English countryside.
6.13 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, I thank the noble Baroness, Lady Miller of Chilthorne Domer, for initiating this debate and everyone who has taken part. The subject has been dealt with so fully that I am not sure that I can cover all the points raised in the time allocated to me. I shall attempt to do so. I pay a particular compliment to the noble Lord, Lord Williamson of Horton, who made a formidable maiden speech. If a speech made by a survivor of 108 Agricultural Councils can be called a maiden speech, then the term needs looking at again.
Although for half a century I have been an inner-city kid, I recently moved to the countryside and to Dorset rather than Somerset although I can see Somerset from my back garden. Therefore, I have some sympathy with the first two speakers in the debate. After a few general remarks I shall concentrate primarily on the area of the institutions to which the Motion draws attention. I shall try to answer some other points, but many will have to be dealt with in writing.
As the debate has shown, the rural agenda is very diverse and quite different in some parts of the country from others. Much that is positive is being done already in rural areas. There is a good quality of life for most people who live in such areas and a quality of environment which is of benefit to us all. Nevertheless, the pace of economic development in many of our rural areas has not been substantial. Despite official unemployment being relatively low, there is much hidden and exported unemployment. There are also serious social and poverty problems. As a number of noble Lords have pointed out, there are also serious problems as regards access to services and a lack of transport.
This Government have recognised the problems. We have taken action on a number of fronts specifically to help rural areas. We shall spend an extra £150 million over the next three years to support rural public transport. We have increased to £174 million the money spent by my department on countryside programmes. We have included specific rural areas in health and education action zones where there are problems. We have introduced rate relief for single village shops and

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post offices. We have supported the agricultural community in terms of a special aid package for livestock farmers. A further £35 million will be spent for a new cattle tracing system. As regards planning in general, we have developed a new approach to encourage greater use of brownfield sites for housebuilding while protecting greenfield areas.
These and many other targeted measures illustrate the Government's commitment to a living and working countryside and give the lie to the allegations sometimes made, to which my noble friend Lord Peston referred, that this Government and perhaps to some extent their predecessors have ignored the interests of the countryside. We are a government for the whole country. We recognise the specific and difficult problems some parts of our rural countryside are facing.
Yesterday's Budget will disproportionately benefit the countryside. There is help for the low paid in the taxation system plus the national minimum wage, help for those employed in the countryside and those who are failing to get jobs. The level of poverty and incomes is disproportionately low in those areas. Having taken those specific measures we now intend to develop them into a comprehensive rural policy. The noble Baroness was a little impatient that we should get through the consultation process on the White Paper. We believe that we need a further round of consultation. The discussion document was issued a few days ago. It invites questions and comments. I have no doubt that a number of your Lordships will wish to contribute. Perhaps I may remind noble Lords that the closing date is 30th April. In addition, we are having seminars in each of the English regions in order to listen to the views of local and rural organisations. We intend it to be a very inclusive process. We shall produce a White Paper on rural policy later in the year.
We have already set up a number of agencies. There is some logic in what the noble Baroness said about the order of events, but there is a much better logic in the sense that it takes a long time to establish organisations. They will deliver the policy which we shall announce in the White Paper. I understand, and have some sympathy for, the central point of the noble Baroness's Motion. There are a number of agencies involved, all of which are making a contribution to the delivery of policy in the countryside, although I do not necessarily concur with the noble Lord, Lord Geraint, that it requires a Royal Commission to sort out all the different institutions.
As regards the farmer, entrepreneur or the inward investor into our countryside, I believe that there is need for something closer to what the noble Lord, Lord Inglewood, referred to as a one-stop shop. We may not be quite capable of delivering that, but we need to convey the role of each of these organisations and to guide people seeking help and advice to the appropriate one in an understandable way. The Government are committed to do so.
There has been a demand from the Liberal Democrat Benches and elsewhere to create a rural ministry of some kind. Examined in detail, that has no great logic. A note passed to me indicates that this is a matter for
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the Prime Minister, just to stop me making policy on the hoof! But the reality is that the present government departments are acting increasingly together. The noble Baroness noted that the Ministry of Agriculture and the Department of the Environment, Transport and the Regions are working closely together on delivering the White Paper and on many other programmes. MAFF has had an input in the regional development agencies and so forth. The Government Offices increasingly operate in covering all government departments, incorporating their relation with MAFF—not physically in the same office, but there is a great deal of joint working.
Furthermore, there is much closer working between local authorities and the agencies of central government, bringing together local authorities and regions as a whole in the new planning structure and process. Parliament's job is to ensure that all these; agencies work closely together to ensure that their functions are performed efficiently and effectively. There is a change in institutions, some of which will require organic development, but once we have a comprehensive policy it will become clearer which of the agencies delivers which aspect of policy. They have clear objectives in terms of economic and countryside development, rural transport and so forth. It is not appreciated how much there is joined-up government in the rural areas. The existence of a comprehensive rural policy will make more evident how the agencies are pursuing the same objectives.
A number of specific questions were raised about the institutions. It is important, for example, that the RDAs and the regional planning bodies work closely together to develop their strategies, not least strategy towards the rural part of their remit. There has been some public concern, repeated today by a number of noble Lords, that the transfer of the RDC's regeneration function to the RDAs may militate against rural areas. The Government believe that the rural areas will benefit from being included in the rural strategy for the: whole region and not marginalised into what is seen as a solely rural dimension. To ensure that rural issues have due rate, the RDAs are being given specific remit to serve rural areas. It is the case that at least one member of each RDA board, except for London, has rural experience. As the noble Earl, Lord Peel, indicated, RDAs will also benefit from the expertise and knowledge of staff transferring from the RDC as they have substantial experience of rural regeneration issues.
Our commitment to rural representation will continue to be reflected in the RDAs' funding of rural areas. Rural funds will be separated to ensure that the needs of rural areas are addressed and will be allocated specifically to those areas. We are also giving guidance about how RDAs should use their rural budgets, including how they determine the rural needs within their regions.
A number of questions were raised about the role of RDAs in relation to European funds. Some complex issues arise. They were mentioned by the right reverend Prelate, among others. The RDAs' role in general strategy is clear. They can co-operate in the delivery of structural and other regional funds. However, as the

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RDAs are also involved in decisions on individual programmes, we must avoid any lack of propriety in that respect. Therefore, we have yet finally to define the RDAs' relationship with the delivery of structural funds to rural and other areas.
A number of noble Lords asked about the role of the Countryside Agency. We are determined that the agency will play a major role in addressing rural needs and complement the work of the RDAs. The RDC's research and advisory role will transfer to the Countryside Agency next month. At the same time, the RDC's old regeneration activities will transfer to the RDAs. The combined experience in the new Countryside Agency will provide a national source of research and advice about countryside and rural issues. The agency will be able to develop a more integrated approach to conserving and enhancing the countryside and helping to meet the needs of rural people. The agency will continue to advise government on social and economic issues in rural areas and it will continue to play an important role in assisting the development of rural services and identifying new approaches. It is also important that the Government Office in each region, the RDAs, the Countryside Agency and local government work closely together.
I have spoken mainly about England, although I appreciate that several noble Lords raised points relating to Scotland and Wales. Most of those issues will become the responsibility of the devolved Scottish Parliament and Welsh Assembly. The question of how the Scottish and Welsh executives approach rural matters will be for them. That will include the issue of land reform, which has been prioritised in Scotland. It has a different history of land tenure and slightly different geography and climate. Agriculture and other land use issues are different in Scotland and it is appropriate that land reform together with agricultural and rural development policy are as far as possible devolved to the Scottish executive and Parliament. The same is largely true for Wales where, as noble Lords have indicated, there has already been progress in that direction.
Many issues were raised about agriculture. I gently chide the noble Baroness, Lady Byford, who said that this was a farming debate. It is not a farming debate; it is a debate about rural development as a whole. Agriculture is of vital importance to land use, the environment and the rural economy of rural areas, but it is not just agriculture that defines the interests of the rural economy. I believe that, in reality, the noble Baroness recognises that.
Agriculture is vital as a direct and indirect job provider, an economic motor and as the manager of the countryside, the environment and many aspects of rural life. We respect that. We also recognise that there is a serious problem in much of the agricultural sector at present. As a city dweller, I used not to feel sorry for farmers, but at present I feel very concerned about many aspects of the agricultural sector. The Government are helping in turning them around but, in the long run,
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reform of the agricultural policy needs to be of benefit to agricultural managers as well as to consumers and the interests of the environment.
The noble Lord, Lord Williamson, referred positively to reform of the CAP. Others, including the noble Lord, Lord Inglewood, cast scepticism on the process. Nevertheless, in the medium term it must be to reform of the CAP that we look for a better system of improving both the efficiency of our agricultural system and the degree of protection that it gives to the more vulnerable elements, particular hill farmers in this country. The original CAP among the original six was a very successful regional and social policy. It then turned into something more of the monster referred to by the noble Earl, Lord Clanwilliam. We need to return it to its original purpose which was to upgrade and modernise agriculture; to provide social support for those areas which are most vulnerable; and to protect consumers and the environment. If we can achieve that it will not only benefit the agricultural sector; it will also benefit the whole of the rural economy and environment.
A number of points were raised in relation to rural housing, rural transport and access to the countryside which we dealt with at some length the other day. There may be some continuing disagreement which will be resolved, it is to be hoped, when the legislation comes before this House—or possibly not!
Important issues have been raised relating to rural housing and transport to which I shall respond in writing. Such has been the enthusiasm of noble Lords in contributing to the debate that I must leave some time to enable the noble Baroness to sum up. The debate has shown the wide range of concern in this House about the rural economy and a great deal of experience has been brought to bear on the issue. The White Paper will provide a focus for what we can do for the countryside not only in the short term but also in the medium term so that whether we visit it, or live or work there, we can have a countryside which delivers both economic benefit and a great deal of enjoyment and quality of life for us all.
Lord Beaumont of Whitley: My Lords, before the noble Lord sits down, will he undertake to write to the noble Countess, Lady Mar, and other noble Lords, who raised the extremely important point about the scandal of the slaughterhouses? That is a major problem at present and we need a quick answer from the Government.
Lord Whitty: My Lords, I shall consult my colleagues and provide an answer on that matter.
The Countess of Mar: My Lords, in an effort to be helpful, perhaps I may suggest that we receive an answer by Monday when I shall be asking a Starred Question.
6.31 p.m.
Baroness Miller of Chilthorne Domer: My Lords, first, I thank the Minister warmly for his positive and

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helpful reply. I thank all noble Lords who have contributed to the debate. I have learnt a great deal. It was a good debate because we did not spend too much time hand-wringing. Many positive suggestions were made for a way forward which is extremely refreshing. I thank too all noble Lords who listened to the debate. I shall not detain your Lordships any longer as I know that the Minister is to reply also to the next debate. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Business
Lord Hunt of Kings Heath: My Lords, before we move to the Statement on enterprise and competition, I take this opportunity to remind the House that the Companion indicates that discussion on the 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.

Enterprise and Competition
6.32 p.m.
The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Trade and Industry. Documents referred to in the Statement as being available in the Vote Office are available in the Printed Paper Office. The Statement is as follows:
"Madam Speaker, I wish to make a Statement on enterprise and competition. The Chancellor yesterday delivered a Budget for Britain to succeed in the new knowledge-driven economy and to promote prosperity and fairness. Today, I wish to announce a number of complementary measures which will boost enterprise and competition.
"First, I am publishing a detailed implementation plan for our White Paper on the knowledge-driven economy. For each commitment, we have set a series of targets, a timetable, and the contact details of the officials in my department responsible for delivering these commitments. This unprecedented step demonstrates our belief in open government, our desire to work closely in partnership with business, and our determination to deliver on our commitments.
"I am also publishing today a strategic framework for the DTI, setting out the objectives for my department, and the work we will undertake in pursuit of those objectives. Copies of both documents have been put in the Library and the Vote Office.
"The policies in the White Paper we published before Christmas apply to all sectors—traditional and high-tech, manufacturing and services. Work is well under way on many of the proposals contained in that White Paper. I have established a review of bankruptcy and insolvency law—examining whether
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we can encourage responsible risk-taking while coming down hard on those who set out to defraud creditors. It will report to me next month.
"Separately, I am reviewing arrangements for business rescues to see if the law should be changed to give businesses in difficulties more chance and more time to turn things round. I shall announce our conclusions in the summer.
"This afternoon I want to announce four new funds to support business. First, we will be providing £20 million to support our target of high quality support for 10, 000 start-ups by 2001. The programme will be launched this summer.
"Secondly, a new enterprise fund will stimulate the availability of finance for the SME sector. I have increased the fund to £160 million. It will lever in £350 million from the private sector ensuring that over half a billion pounds is available to support: loan guarantees for small firms; support for regional venture capital funds aimed at the provision of small scale equity; and a national scheme to support high-tech businesses.
"Thirdly, following the Chancellor's announcement yesterday of a further £20 million for high-tech venture capital investment, we will create a new fund operating across the UK. This will focus on young high-tech firms needing small amounts of equity.
"And finally and fourthly, I can announce today that I have decided to expand the successful 'Smart' scheme. From April of this year, a wider range of individuals and businesses, in particular those in the manufacturing sector, will be able to get help to research or acquire technologies needed to turn good ideas into commercial reality. We shall increase annual spending by over a third and provide almost £100 million over the next three years.
"Science and the commercial exploitation of scientific research have a key role to play in improving Britain's competitive position. That is why we will develop a strategy to improve knowledge transfer, stimulate the flow of scientists and engineers into industry and encourage knowledge-based industries. We will publish our proposals in this key area by the end of the year.
"Following yesterday's Budget we are today publishing four documents on tax changes to stimulate innovation and enterprise especially in smaller companies.
"The introduction of a tax credit for research and development will be a major step on the road to raising the UK's performance, giving real help to those thousands of smaller firms working to introduce new products and processes. It will underwrite almost one-third of R&D costs for small business, giving this sector a boost of some £150 million a year.
"Enterprise management incentives will allow smaller companies to give tax-advantaged equity remuneration.

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"We will also be publishing today our proposals on corporate venturing and tax reform for intellectual property. Together these papers demonstrate our commitment to a framework in which small business can thrive.
"But small and medium-sized firms need practical help too. I intend to establish a new body—the Small Business Service—specifically designed to meet the needs of smaller businesses. I can announce to the House this afternoon that it will have funds of over £100 million new money to support its important work.
"This body, which will report to me, will be headed by a high profile chief executive and will have two key responsibilities: to act as a strong voice for small business at the heart of government; and also to improve the quality and coherence of delivery of government support programmes for small business and ensure that they address their needs.
"Some of the areas in which I expect the service to be involved include the following: a new payroll service for all new SMEs; supporting the Revenue in providing business support to discuss problems with small businesses; give advice with Customs and Excise for exporters and importers; working with the Revenue on Internet filing of tax returns. Consideration will need to be given regarding the relationship between the service and the newly-established regional development agencies.
"Finally, a modern, effective competition regime is necessary to reward innovation and enterprise, and to bring real benefits to consumers. The Director-General of Fair Trading is already investigating a number of areas, such as cars, supermarkets, and private medical insurance, and he has also referred over-the-counter medicines to the Restrictive Practices Court for examination.
"But I believe more needs to be done. I have therefore decided that I will be exercising the powers I have under Section 12 of the Fair Trading Act to give the director-general directions indicating considerations which he should take into account in determining his priorities, and my power under Section 13 of the Competition Act 1980 to ask the director-general to investigate particular prices.
"In relation to prices, there is widespread concern that prices paid in the UK for goods are higher than in other countries. I have begun today a study on international price comparisons, which will help competition authorities to identify markets which require their attention. It will be made public, so that consumers and others can comment. I will then decide which prices I will ask the director-general to investigate.
"We are also taking action to provide a modern framework for utility regulation. Electricity standing charges are a matter of pressing concern—they account for around 13 per cent. of a typical household bill and can rise to 20 per cent. for low volume users. Figures which I am publishing today show a wide variance in standing charges by region and method of
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payment. I have today written to the Energy Regulator asking him to look at the issue of standing charges to ensure that pensioners and the poor, in particular, are not disadvantaged.
"I also believe that the time is right to modernise the merger regime. Businesses need stability and confidence that decisions in this important area are not taken for short-term political considerations. I believe the system could be improved if merger decisions were normally taken by independent competition authorities against a competition-based test. A small minority of cases will raise important wider public interest issues, such as those in relation to the defence industries, and Ministers should continue to have a role in this decision-taking process. I intend to publish a consultation document to initiate a full debate.
"To secure real competition we need knowledgeable and well informed consumers. To that end we shall be publishing a consumer strategy White Paper before the summer. But there is one area of particular concern. A mortgage is the largest and most complex financial commitment most people will ever enter into. I have today announced proposals to improve the information available to customers in relation to the marketing of mortgages and other credit. Our proposals will give them access to clear, comparable information about the interest rates on offer.
"I believe the measures announced today show our determination to support enterprise and to succeed in the knowledge-driven economy of the future. They complement the radical proposals set out yesterday by the Chancellor and I commend this Statement to the House. "
My Lords, that concludes the Statement.
6.43 p.m.
Baroness Miller of Hendon: My Lords, I thank the Minister for repeating the Statement on enterprise and competition which, as he said, announces measures complementary to those announced yesterday by the Chancellor.
Of course, as a general principle we support competition and enterprise, and we welcome the initiatives for small and medium businesses. However, I have a few questions for the noble Lord with which I hope he will be able to help us. While we would support changes that would assist business rescues, is the Minister aware that many companies find themselves placed in difficulties by debtors who become bankrupt but who then turn up at the bankruptcy sale or go to the liquidator to buy equipment and start up again under another name?
While we also welcome the new availability of finance for SMEs—although it does seem as though that finance has been announced several times—would not the Minister agree that what SMEs really need is fewer increases in hidden taxes, a diminution of regulation and lower business transport costs? Also, hiking up the national insurance contributions of the self-employed will surely not be particularly helpful. I know the

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Minister said that he would be exercising his powers under Section 12 of the Fair Trading Act to give the director-general directions, but can he tell the House what directions the Minister is going to give to the director-general?
Can the Minister also tell the House whether there is any significance in the fact that the Statement today refers to prices for goods in the United Kingdom being higher than in other countries, whereas yesterday's Budget Statement said:
"It is wholly unacceptable that consumer goods can still cost up to twice as much in Britain as in America".
Could it have been toned down—because the Chancellor's statement was rather silly, given that VAT in this country is 17.5 per cent. while the state taxes in America vary from anything between 0 per cent. and 7 per cent.? Is the Minister aware that there are also wide variations in prices in this country: for example, the price of petrol in rural areas?
The Minister mentioned modernising the merger regime by setting up an independent competition authority, although that seems to be a way of simply ridding himself of responsibilities for these matters—the "not me, guv" syndrome, similar to the way in which the Government hived off the setting of interest rates to the Bank of England. Would not the setting up of such an authority strip the Secretary of State of the power to rule in high profile takeovers such as the BSkyB bid for Manchester United? Given the Government's excellent spin-doctoring and wooing of the press, is that not one reason why there has been no statement, either now or previously, on the Government's policy on these matters?
Will the Minister please confirm that the Secretary of State will retain his personal powers in the case of newspaper mergers under the Fair Trading Act? Also, why is there nothing in today's Statement about the very important matter mentioned by the Chancellor yesterday, that obstructing investigations into the matter of cartels and restrictive behaviour will become a criminal offence?
Finally, the Chancellor announced yesterday that the Deputy Prime Minister was to review competition at airports. There is no mention of that today. Can the noble Lord say whether that means an investigation into the British Airports Authority's monopoly of London and other airports—because obviously the shareholders will want to know—or whether it will be an investigation into landing slots, in which many carriers consider that British Airways has a monopoly?
6.47 p.m.
Lord Razzall: My Lords, I join the noble Baroness in thanking the Minister for repeating the Statement, not only because it raises a number of important matters but also because, certainly in the view of these Benches, it represents a clear account of the new role of the DTI as a proactive enabler and empowerer of the business community. It is very nice to see that the department has clearly abandoned the rather depressing laissez-faire approach of the previous administration.
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If I were to make an overall comment, it would be that the Statement is long on what the Government are going to do and rather short on what has been done. We have already had two Secretaries of State in the department and are now on the third. It is almost as if we were running a race and had had two false starts, and were starting again for the third time—the Minister smiles.
The Statement is very detailed and I do not want to bore your Lordships by going through every item, but perhaps I could take two of the major issues. The Minister touched upon two major points. The first was "Rip-off Britain!", to coin the phrase used by various newspapers. The Statement refers to the fact that the British consumer is being overcharged in comparison with our foreign competitors. We are, after all, more than halfway through the period between the last election and the next election, and I would welcome the Minister's confirmation that words will be replaced by actions and recommendations in this area. The Government are long on benchmarking and timing, but when will an answer be given to the allegations about "Rip-off Britain"?
The second area which is touched on in the Statement is the regulation of the utilities. How they are regulated is clearly a major issue which the Labour Party in their manifesto were very concerned about. At this point we would like to know when the Government are going to decide finally exactly how the utilities are going to be regulated. Will they be regulated primarily by competition and, if so, what sort of competition will be introduced into the regulations—or is it going to be left to the great regulator in the sky to determine how these issues are going to be resolved?
Perhaps I may make two final points, on which the Statement touches but does not deal in detail. The first relates to mortgages. It is interesting that the Statement refers to a mortgage as being the largest and most complex financial commitment that most people will ever make. It is interesting also that the DTI is now beginning to take an interest in mortgages. I should like the Minister to indicate whether the DTI will go further and whether there is an agenda to try to control this and to move more people into fixed-rate mortgages. There would be an obvious advantage to the Government in doing that with regard to their approach to the decision on the euro. Moving more towards a European model, with more people having a fixed-rate mortgage, would remove the concentration on short-term interest rates. Will the Minister confirm that beyond the agenda of transparency is a further agenda of trying to encourage people to take out fixed-rate mortgages?
I refer secondly to small and medium-sized enterprises. When concentrating on that sector, we often disregard those small and medium-sized listed companies which are not quoted, but which form part of the alternative investment market. Those companies are often ignored in terms of DTI business activity, but they provide a large motor for employment in this country and account for much economic activity. I know that the Treasury and the DTI have both been concerned about the fact that that sector of the stock market has not done as well as the large company sector, with which the

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Minister is familiar. There are all kinds of technical reasons for that, but the fact is that there is a capital strike at the moment in relation to many institutions providing funding for such companies. In the same way as SMEs have a problem raising money, so do the companies to which I am referring. Can the Minister say whether the DTI intends to come to their assistance also?
6.51 p.m.
Lord Simon of Highbury: My Lords, I thank both the noble Baroness, Lady Miller of Hendon, and the noble Lord, Lord Razzall, for their general welcome of the direction of the Statement. I think that we are in general agreement. I sense from their responses that we all recognise that we now need a better deal for enterprise and small business in this country. That is a fundamental part of improving productivity, of better applying new technology, and of stimulating employment. I think that we all agree that, in the small and medium-sized enterprise sector, attention, the right encouragement and the right policies will bring dividends.
Given that we all agree broadly on the principle that, through a more competitive marketplace, we can encourage enterprise, innovation and particularly the development of small businesses, perhaps I may comment, as did both speakers, on certain elements of that in policy terms.
I very much agree with the noble Baroness that the key issues for the smaller business community are lower taxes, less regulation and lower running costs. We have certainly done what we can in terms of lower taxes, with a lower rate of 20 per cent. and a lowest rate of 10 per cent. being introduced for small businesses. That will benefit all businesses up to a £50, 000 profit level. As the noble Baroness will know, that will help very many small businesses. In terms of regulation, we are certainly not aiming to achieve the high levels of regulation achieved by the previous government. We are trying to avoid that, but we must have a balance between a sensible structure and fairness within the community.
We are also trying to ensure better research and development funding possibilities for small businesses by giving rebates and tax credits against their R&D spend. We hope that that will mean that such businesses are better able to use R&D early in their lives. A tax credit is a most effective way of achieving that because many such businesses do not make great profits on which to carry forward such expenditure. A tax credit would therefore be a big advantage to them. We very much want to encourage the small end of the market by recognising that we need a low tax base, the least regulatory structure that we can achieve while maintaining fairness in competitive terms for small businesses, and a better application of R&D and new technology early in the life of a business.
In that context and while thinking about small businesses and how best to help them, perhaps I may comment now on the noble Lord's helpful intervention about the role of the DTI. The role of the DTI is not
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to leave small businesses in a laissez-faire marketplace because one in three such businesses—if not one in two—fail within the first three years. Clearly, that is not attractive in terms of creating a growing sector. Therefore, we do not agree with the laissez-faire approach, but, on the other hand, we do not want a nanny DTI which sees its job as handing out subsidies to whoever asks for one when starting up a business. That is why we have a discriminating series of policies to target government funds, in the best way possible, in partnership with business. That means a lot of consultation. That is why we have set up a new service for small businesses which seeks to deliver funds in the most targeted way. I believe that those in the business community will find most helpful the new organisation and the new strategy for small businesses, which is clearly laid out in the new documents which have been placed in the Library. That strategy and those documents focus on the department's approach to this problem and on the way in which we want to deliver services.
Both the noble Baroness and the noble Lord referred to prices, as did the Statement. That was because there is much concern about the potential relationship of prices internationally. As the noble Baroness pointed out, this matter does not involve only the USA. Although we know that selective goods are priced much more cheaply in the USA, we are thinking also about the European context. There is much hearsay and interesting publicity on this, but there is not enough good, current information about comparative international pricing. We shall be conducting more work on this matter, building on the work carried out by the European Commission, in order to establish a good database. If we are asking the Director-General of Fair Trading to look more carefully at what can be done about pricing, it is important that we work from a sensible database. Achieving that is our first intention.
I was also asked about the utilities. It is clear that the regulators must look more carefully at the competitive pricing structure in certain sectors. I am sure that that will receive the support of the House.
I was also asked about mortgages and the attempt to provide more transparency not only in the mortgage market, but also in other lending markets, for the benefit of consumers. The noble Lord, Lord Razzall, made a good point in referring to fixed-rate, as opposed to variable-rate, mortgages. I would say that the marketplace is making the decision easier for the customer. More fixed-rate mortgages are now being taken out because we have a low interest rate regime and a Budget which gives people hope that that regime will be sustainable. That is one of the most important things that the Budget has attempted to lock in; that is, sound and sustainable low inflation and low interest rates. We will always let the customer and the market-place decide what choice consumers make about their mortgages. The outcome the noble Lord is seeking—a higher, fixed rate proportion—is likely to be the outcome of the sound budgetary policies that we are continuing to pursue.

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In summary, this is a Statement for innovation, enterprise, better competition, particularly for small businesses which we need to see become more successful if we want sustainable growth and higher employment in this economy.
7 p.m.
Lord Clinton-Davis: My Lords, I welcome the Statement that has been repeated by my noble friend. However, yesterday, my right honourable friend the Chancellor announced in his Budget speech an employee shares-for-all scheme as part of the quest for generating greater enterprise in our economy. Nothing was said about that in this Statement. Will my noble friend indicate what steps the Government propose to take to give further details to the House and to the country about the scheme? Is it to be subject to further consultation? If so, who is to be consulted? What is to be the scope of that consultation? And within what period is it to take place?
Finally, will my noble friend agree that this ambitious but necessary scheme requires to be assisted by giving incentives to employers to provide shares for their employees? Failing which, it is difficult to see how it will be implemented successfully.
Lord Simon of Highbury: My Lords, in response to the factual questions from my noble friend, the position is as follows: the Statement today did not mention share ownership because clearly that is a Treasury matter and this was a DTI Statement. However, my noble friend can be absolutely sure that the DTI, following his own good works in office last year, totally supports the Treasury plan to expand employee share ownership. It is a fundamental part of improving productivity across the firm as a whole and in getting the entire workforce committed to improved performance. We are therefore extremely supportive of it.
As to the scope of the scheme, the Revenue has laid documentation in the Library today and the scheme is now a public proposal. It will be developed by a group of tax practitioners and experts who will be looking at the proposals. It is our intention to have draft clauses published as part of the pre-Budget report package and the new scheme is intended to be in the Finance Bill 2000.
My noble friend's final question was whether there would be stimulation for employers as well as for employees. The intention is that in the matching scheme there will be advantages for employers as well as employees in terms of encouragement to participate in the scheme. At the same time I should like to mention, because it gives another facet to share ownership, the enterprise management incentives scheme which is being introduced in the Budget. That will seek to stimulate new people and experienced executives coming into ownership in small businesses via a more attractive ownership option for shares and a tax regime which gives them more option to grow capital quickly at less cost to them, vis à vis the Revenue, in their taking a new post.
The Earl of Dartmouth: My Lords, what the Minister has said is all very well, but when it is all added
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up it makes nothing like sufficient contribution to putting right the damaging and harmful effects on small and medium-sized enterprises caused by the working time directive introduced as a direct consequence of the Government's signing up to the European Social Chapter.
The working time directive imposes onerous record-keeping on small businesses and restricts the number of hours employees of all businesses can work. Frankly, in that context, what the Minister has just said is a complete nonsense. The damaging effect of the enterprise-destroying monstrosity that is the working time directive, is exacerbated and made much worse by the total shambles in the Minister's department which cannot produce a straightforward explanatory pamphlet on the working time directive even at the third attempt.
Lord Simon of Highbury: My Lords, I did not actually get the question.
The Earl of Dartmouth: My Lords, that does not say much for the noble Lord's intellect; I made myself abundantly clear.
Lord Simon of Highbury: My Lords, I did not get the question, but I certainly noticed the lack of hyperbole!
I felt I had just given a reasonably sensible answer on the issues of share ownership to my noble friend, who seemed interested in the way the workforce, the owners and managers in our society build a better partnership. What the noble Earl fails to recognise in the working time directive is that it is a basis for fairness which is usually worked out in agreement between the owners, the managers, the shareholders and the workforce. In my past experience in my own company those were matters that were handled by agreement between the workforce and the management. There is nothing surprisingly new about it, therefore, for many companies.
Lord Jacobs: My Lords, I thank the Minister for his Statement and I welcome it. If it is permitted to be wildly enthusiastic in this House about any part of a Statement, then I must express my own wild enthusiasm for the decision to investigate internationally competitive pricing. As one who has spent the past four years studying prices both in the United States and Europe, and comparing them with the UK in four areas—pharmaceuticals, cars, supermarkets and electrical goods—I have become aware that we may not be paying twice what they are paying in the United States, but we are certainly paying 30 to 40 per cent. more net of VAT. The people of this country would see a vast improvement in their standard of living if there was as little as a 7 per cent. reduction in the cost of living. Therefore I welcome what the Government plan to do.
My question is this: if, as is planned, these various industries or retailing areas are sent, for example, to the OFT for investigation and if, as I believe, in most cases—not necessarily all—it is found that nothing illegal is being done; nobody has breached any rules and everybody has behaved according to the regulations that

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exist, will the Government then consider entering into negotiations with various suppliers and manufacturers to discuss ways and means by which they could get them to bring down their prices to the levels consumers are charged in other countries? Most of those companies are international companies. If the Government will consider such an approach after the OFT and so forth have done their work, we could make a lot more progress.
Lord Simon of Highbury: My Lords, I welcome the noble Lord's support for the attention given to international price comparisons and I know from answering in this House that he has a great knowledge of the subject. He has been tireless in trying to bring the more difficult areas to our attention.
On the question of how we can ensure that competition is realistic in situations where there is no problem in legal terms, there are probably two relatively simple ways of ensuring improvement. First, there is very much in our minds the issue of an educated and active consumer. That seems to me to be the best test of competitive capacity in the pricing sector. As I pointed out, we want to bring forward a consumer White Paper, and no doubt we will be thinking in terms of exactly the sort of issue that the noble Lord raised when considering such challenges.
The second means is to use the pressure of the supply chain in business itself. When you have information of this nature, it seems to me from my past experience that the best people to ensure that prices are moving in the right direction are the peer group of companies and those in a supply chain which are involved with the particular product. I see it less as a bureaucratic process of government forcing people to move prices in particular ways—that is to say, a sort of governor's raised eyebrows or a headmaster's little rap over the hands. In the long run, it is best to educate your consumers and have an extremely vocal and vibrant consumer sector, while activating your supply chains in the business peer group.
Lord Berkeley: My Lords, I welcome the Statement and have two quick questions for my noble friend the Minister. The first relates to utilities. My noble friend said that he was going to ask the regulators to look at prices more closely. However, does that cover the regulators of all utilities? Further, would that include rail regulators? I suppose that the latter is a question that I would ask, but it would be most interesting to hear my noble friend's reply.
Secondly, and more generally, the Government recently announced similar measures in several areas—for example, in the competitiveness White Paper, in the Budget and in today's Statement—such as supporting SMEs, science and technology and research. Is there a danger that, in particular, SMEs may be getting indigestion? Will my noble friend assure the House that he will try to keep the bureaucracy attached to all these measures as minimal as possible in accordance with
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good government, so as to ensure that there is no conflict between the different documents that have been produced and the announcements that have been made?
Lord Simon of Highbury: My Lords, my noble friend's first question concerned which utility regulators are likely to be looking closely at prices. When delivering the Statement in the other place today, my right honourable friend specifically raised the question of electricity charges. I am not aware of the same question having been raised in terms of the rail regulator. However, as a result of my noble friend's question, I shall certainly make it my business to inquire into the position.
As regards the apparent duplication of the Government's attention to issues concerning small businesses, funding and science, I can confirm that we are well aware that we may be complicating life for the individual small business. In a sense, that is the purpose of setting up the small business service within the DTI, which will focus on clarifying the delivery of these services to small businesses.
My noble friend also raised another important issue which deserves a response. When we are talking about increasing competitiveness, increasing capabilities across the business community and increasing collaboration between government and businesses, we know that we have to indulge in a great deal of co-operation between government departments. This is not a single department issue. The Department for Education and Employment is deeply involved in the issue of capabilities and the Department of the Environment, Transport and the Regions is greatly involved with the services to small businesses out in the regions. It is very important that all government departments should be aware of the application of micro-economic policy. That is what we are really talking about; in other words, the balance between macro-and micro-economic policy which, if I may say so, has failed so often in the past in our economy. We need to bring together many departments and ensure that the priorities are understood across government, while still providing a focus of delivery for particular services.
If we take together the Pre-Budget Report, the Competitiveness White Paper, the Public Services Agreements—public sector agreements which are most important in getting departments to focus on their priorities and their capacity to deliver policy—we see joined-up government. I do not like using that phrase, but it is an apposite one because these are very complex issues which need pulling together.
Lord Pearson of Rannoch: My Lords, I trust that the Minister will forgive me if I treat him a little more delicately than the noble Earl, Lord Dartmouth, who, I regret to see, has now left the Chamber. Nevertheless, I suggest to him that it is pure Alice in Wonderland for the Government to pretend that they are promoting enterprise and small businesses while they remain so enthusiastic about the European single market and our adherence to the Treaty of Rome.
If the Minister thinks that I am being unfair to him, perhaps he can tell the House how the contents of this Statement will do anything to fend off all the

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over-regulation from Brussels which led our Federation of Small Businesses to vote to leave the EU some three years ago and which continues to cause such deep unrest among our medium and small businesses, as the Minister may have noticed in the weekend press reports? Further, does the Statement give any assurance that the red tape coming from Brussels and elsewhere will be reduced? When answering that question, the Minister will of course bear in mind the system of qualified majority voting under the treaty.
Moreover, and in the same vein, can the Minister specifically justify the Government's claim that they intend to modernise our merger regime? If his claim is honourable, I assume that the Minister can assure the House that this proposed takeover directive is dead and buried. As the noble Lord knows, this directive proposes to submit the findings of our excellent Takeover Panel to the interminable delays of the Luxembourg Court and thus threaten our mergers and acquisitions industry in the City of London, and elsewhere. Can the Minister assure us that this threat has indeed been removed?
Lord Simon of Highbury: My Lords, as regards the question of red tape from Brussels, I do not think that the Statement was intended to comment on the amount of legislation that is likely to be imported in the future. All I note is that there is a great deal less regulation currently coming from Brussels under this presidency than there has been under any previous presidency. Rather like our Government who have managed, I think, to reduce by one-third the number of regulations that the previous government put in place, we are all trying to deregulate, simplify regulation and make the environment easier for small businesses.
On the issue of the takeovers directive, as I believe the noble Lord is aware from my last answers to such questions, we are still discussing such matters. There is no agreement yet in Brussels as to any change of regime. Indeed, the matter is still under discussion.
Lord Wade of Chorlton: My Lords, I have three questions for the Minister. However, I should begin by welcoming the Statement and its support for small businesses and especially the proposal to review the bankruptcy laws, which I believe will be an essential element in stimulating the economy. First, can the Minister give us his views on the importance of business incubation units to develop the businesses which have been referred to—that is to say, the 10, 000 new businesses—in a short period of time?
Secondly, will the Minister consider the value of setting up either a national or regional trust which would act as a support mechanism for seedcorn capital, which is very important for the development of small businesses but which, nonetheless, is a difficult structure to develop without the right support? If the Minister indicates that he is interested, I shall be most happy to write to him with a more detailed proposal.
Thirdly, will the Minister refer again to the issue raised earlier by my noble friend Lady Miller; namely, that in order to stimulate competition and bring forward new businesses you must reduce the cost of entry into business. Is he satisfied that the Government are looking
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closely enough at the regulatory regime? Could we not find methods to make it easier for companies to start up in business?
Lord Simon of Highbury: My Lords, I welcome the noble Lord's encouraging comments as regards the first two issues that he raised. As regards a venture capital trust, as the noble Lord is probably aware we are putting in place at the regional level regional development agencies. As regards the £50 million fund for venture capital for the regions, that will probably end up, after discussion between the Small Business Service and the regional development agencies, as a fund which is structured and deployed very much as the regions would wish. The concept of local trusts is not inappropriate at all as regards this kind of operation. I should be grateful to receive any ideas that the noble Lord may have about how that could work at the regional level. I would pass that information to the appropriate sections of the department. As regards reducing start up costs for business, that is a difficult matter but it is an objective. However, I agree with what the noble Lord, Lord Wade, and the noble Baroness have said; namely, that we have to tackle the matter.

Rail Industry
7.21 p.m.
Baroness Thomas of Walliswood Baroness Thomas of Walliswood rose to call attention to the case for greater investment in rail infrastructure to enable the rail industry to play its full part in an integrated transport policy while maintaining the highest safety standards; and to move for Papers.
The noble Baroness said: My Lords, in opening this debate I should say that I shall concentrate on railways as defined by BR in pre-privatisation days. We are currently seeing a rapid rise in the use of rail for both passenger and freight transport. Passenger kilometres have risen by 22 per cent. since 1994–95. Freight tonne kilometres increased by 12 per cent. last year compared with the previous year. That increase is welcome but it has also led to problems of overcrowding, breakdowns, delays and frustration, all of which are reflected in a higher rate of complaint.
New initiatives for better and more imaginative use of existing track can open up new routes, particularly what might be called cross-country routes. The recently announced initiative by Anglia Railways to connect Ipswich and other East Anglian towns with Watford and Basingstoke via north London is a welcome example. But most of the initiatives require either restoration of unused lines or chords, the building of new sections of rail or new signalling, or indeed a mixture of all of these. Future funding from the train operating companies may taper off as subsidies decline.
We recognise the investment already being made on the track, including, as a major example, the building of the Channel Tunnel rail link with government backing. But the fact is that we need more investment in rail infrastructure to overcome the lack of investment of the past and to provide for future growth in passenger and freight traffic. The problem in a privatised and

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fragmented industry is how to achieve this investment. In a word, do the Government accept responsibility for ensuring that a strategic approach is adopted to investment in rail infrastructure as governments used to do for road infrastructure? Or does the responsibility rest with Railtrack and whatever will be its equivalent in London? If so, are the regulatory and financial systems in place to facilitate the strategic exercise of this duty? These are some of the questions to which we hope to get answers tonight.
Quite soon now Railtrack's annual network statement will be published. Following last year's statement the rail regulator stepped in and negotiated an amendment to Railtrack's licence, requiring the development of the network. We welcome this determination on the part of the regulator to keep Railtrack up to scratch. We hope that this year's report will signal Railtrack's determination to satisfy the new requirement. After all, the value of Railtrack's shares has quadrupled since privatisation, reflecting a healthy profit situation and handsome dividends for shareholders, all based fundamentally on the transfer of public subsidy into Railtrack's trading accounts via its charges to the train operating companies. The public have a right to know that their money is being used to respond to their demand for better services. Our thesis is that strategic planning of network expansion requires long-term thinking, a recognition and implementation of public policy, as well as private opportunities for profit and the correct financial and regulatory context for decision-taking.
Let us look at some detailed proposals. My first example is Thameslink 2000. The increase in capacity of this essential north/south link through London has been postponed until 2006, due, it is said, to delays in the arrival at St. Pancras of the Channel Tunnel rail link. King's Cross/St. Pancras is due to become a major hub for international, national, suburban and London Transport routes. But it is difficult to see why moving the Thameslink 2000 station from east of King's Cross along the line to a position on the western side of St. Pancras should be delayed by the delays to the CTRL. Would it not be better to get on with it? After all, previous studies showed this scheme to have the highest return of all the London rail schemes. Is it not the case that at flotation some of Railtrack's inherited debt was written off in return for an undertaking to build Thameslink 2000? What is happening to that money meanwhile? What importance does the Minister give to this upgrade in terms of relieving congestion on London's roads? What action could be taken to hasten its implementation?
I now turn to the thorny subject of freight on the West Coast mainline. The UK's two major freight companies, Freightliner and EWS, are both heavily committed to investment in rolling stock—locomotives and wagons—as their contribution to a rapid increase in their business in line with government policy. They also require increased track capacity. I have already raised with the Minister in Questions for Written Answer and in the House the difficulties faced by EWS as it tries to increase its operation from 30 to 115 trains per day on
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the West Coast mainline over a 10-year period. Despite the regulator's instruction that Railtrack should demonstrate how sufficient capacity could be achieved, no conclusion has yet been reached by Railtrack. Moreover, Railtrack has already stated that it is not willing to upgrade the West Coast mainline to piggyback standard, partly because the Government are not willing to fund the upgrade. Yet this reluctance, wherever the fault lies, means that the chance of introducing new systems of rail freight, which could result in enormous gains in respect of easier transition between road and rail, will be lost. Do the Government have a view of the best solution and could the Government affect the outcome if they wished to do so?
An alternative strategic freight route from Glasgow to the Channel Tunnel has been announced and would be an acceptable conventional route from the point of view of the freight companies. But the question of capacity at key points, and of who pays, is becoming a major issue between Railtrack and the operators. Railtrack maintains that freight loses it money, despite access fees of £150 million per annum, and that its variable income from freight does not cover its variable costs. While the regulator investigates the balance between fixed and variable costs, no investment is taking place and the freight industry, like others, awaits the 1999 network management statement with some anxiety.
A commitment to investment in both routes and a retention of the present charging structure are regarded by the carriers as essential to maintaining the drive towards a bigger rail freight industry. Is the Minister satisfied that Railtrack has adequate incentives to make increased freight traffic financially attractive? In particular, can he explain to the House what combination of strategic rail authority, regulator and DETR powers and funding are, or will be, available to ensure that rail transport can play its part in the Government's own plans for an integrated transport system? After all, there may be a number of schemes which could deliver real social or environmental benefits but where the capital costs will exceed the available return in terms of paths sold.
I now turn to the matter of pinch points where the concerns of the Secretary of State to push ahead with action in the system has our full support, as does the availability of a government fund to assist with the action. This effort seems to be an excellent result of knocking heads together on the part of the Secretary of State. I hope that it has a successful future.
Next, there is the whole problem of maintenance, which is essential for the safety and comfort of passengers. Headlined in the last network management statement were 10-year programmes of £2 billion each for track renewal, for signal modernisation and for stations and structure—all good stuff and clearly funded. But it would be interesting to learn from the Minister what proportion of the £60 million which we are told is being spent on Paddington station is being spent, first, to benefit the passengers and train operating companies and, secondly, to raise Railtrack's revenue from retail premises. While we are on the matter of property, can the Minister assure us that sales of railway land really are under control and that profits from such

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sales are being ploughed back into the network? More importantly, is the Minister satisfied that the track and signalling renewal and maintenance programme is sufficient to guarantee levels of safety as use of the railway increases?
I fear that the Minister will be tempted to reply to my questions by referring me either to the strategic rail authority or to the rail regulator, but I cannot accept that either of those two institutions really has the task of considering where strategic new investment in rail infrastructure is required, over what timescale, and with what cost benefit analysis as a justification. As far as concerns investment in track, Britain sometimes seems stuck in the age of make do and mend. We have always been very good at that, but one has only to consider the efforts which went into the planning, justification and construction of the motorway system to feel that nowhere in the present rail set-up is there any person or group capable of taking a similar approach to track provision. We want to know, the industry needs to know, and rail users need to know that the regulatory and financial frameworks which will ensure that rail plays a full part in government policy are, or very shortly will be, firmly in place. I challenge the Minister to convince us that that is the case. My Lords, I beg to move for Papers.
7.31 p.m.
Lord Berkeley: My Lords, first, I declare an interest as an adviser to Adtranz and as chairman of the Rail Freight Group and the Piggyback Consortium.
I congratulate the noble Baroness, Lady Thomas, on initiating the debate and on her thoughtful and wide-ranging speech. She covered many of the infrastructure concerns that I certainly have. I should like to expand on one or two of them, but before doing so I wish to reflect on just how much has changed on the railways in the past five years. We spend some time in the House criticising the awful service, short trains and delays. Occasionally we praise the railways as well. We often forget that there was as much if not more that was awful with the old British Rail but then we could blame the government of the day directly. Perhaps that is what is missing today. It is more difficult to get information. I shall come back to that point later in my speech.
Railtrack, for better or worse, now owns our railway infrastructure and we must ask ourselves whether the company is fulfilling its licence obligations to maintain the network and enhance it to meet the reasonable demands of its customers. As the noble Baroness, Lady Thomas, said, maintenance is patchy. Some good work is being done, but there are two many stories of even worse bureaucracy now than in the days of BR.
Noble Lords may have seen today's publication by the Health and Safety Executive into the Bexley accident in February 1997. It gives me great cause for concern. Noble Lords may recall that a ballast train was derailed. The report blamed Railtrack, the South East Infrastructure Maintenance Company and the Southern Track Renewals Company for the accident. It was caused by the two rails moving apart because the
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sleepers were rotten. To me, that is plain bad maintenance, which was reflected in the fines on the companies totalling £150, 000.
In how many other places on the network is that happening? There could be a disaster. We do not know. We do not know whether Railtrack is maintaining the network efficiently, at the minimum rate for a safe railway or even to modem equivalent form. We need more information. We have a right to that information because the Government are providing more than £1 billion of subsidy to the railways. That information must be provided and verified independently. Whether that should be done by the rail regulator or the SRA is to be discussed but they must have sufficient resources in order to do that.
As the noble Baroness said, the challenge now is to cope with growth. Rail freight showed a 16 per cent. increase last year and passenger traffic grew by 7 per cent. If one projects that forward, there will be a doubling of traffic in 10 years. Yes, we can make the trains longer, we can make them heavier and put more coaches on the passenger trains, but we will still need double the number of trains in 10 years. The train builders can build plenty of trains and one can probably improve stations and other facilities. But can the infrastructure cope and how will it be done? Yes, more trains could be run at night, but not all passengers want to travel at night. To a large extent freight is moved at night but some freight must be moved when the customer wants it to be moved, which is often in the daytime.
We can run trains seven days a week, which does not always happen at the moment. Many passengers would be pleased not to be put on a bus when they want to travel on Sunday morning. We can also build more flyovers and junctions and we can lengthen platforms, but we still have to double the number of trains.
I have two solutions which I hope will be considered worthy of consideration. The first is to make the network a real seven-day-a-week, 24-hour-a-day railway. The main routes would be signalled for bi-directional working with regular crossovers to allow work to be done on one track while trains operate on the other. There is nothing new about that—it has been done on the Continent for years—but it needs to be done here. One of the freight customers who sells milk wants to use rail but will not do so until that kind of service is provided. Cows produce milk all the time and the customer wants to have trains run all the time. Bi-directional signalling and more crossovers would certainly enable that to happen. However, it means someone—probably Railtrack—investing in the equipment so that it can be done safely.
The other solution is signalling. Two years ago Railtrack told us and the world that there was such a shortage of signalling engineers that it was having to sub-contract some of the work to Australia and that this problem was constraining its growth and investment. Two years on, the signalling industry is complaining of few if any orders and is warning of major redundancies. On the ground very little new work on signalling is going on apart from at Euston. The reports on the development of the transmission-based signalling for the

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West Coast Main Line, as the noble Baroness, said, seemed to indicate that development work is continuing but is not going very well or very fast. I certainly have my doubts whether that signalling system will, in the near future, be able to provide Virgin with the contractual commitment to which Railtrack has agreed. That has a severe impact on the capacity for other passenger and freight trains.
The other way of increasing capacity is to build more lines. We have seen the Channel Tunnel rail link and Central Railways. But that is expensive. What is needed to increase the number of trains is major resignalling in many places in order to reduce the headway or distance between the trains. If we are not investing in signalling and if signalling engineers are going on the dole, it seems to me that not much strategic thought is going into the problem at the moment.
Where does Railtrack come in? At the rail summit a couple of weeks ago, which the Deputy Prime Minister chaired, Railtrack showed £45 billion of investment over 11 years from the year 2000, of which £6 billion was in rolling stock, £19 billion in maintenance and £19 billion in infrastructure enhancement. But investment by whom? Railtrack states that it has invested £1.4 billion in the past year, and that the amount will rise.
But let us examine some of those claims. I have the document in front of me. One problem relates to bottlenecks. The noble Baroness gave some examples. There is one in Leeds. Railtrack has taken a year to start work on that and has now begun to improve capacity. However, capacity for freight is not being improved, only passenger capacity, because EWS refuses to pay any more money. EWS says that it has a contract with Railtrack, and that Railtrack must provide the capacity. Railtrack is effectively saying, "Tough". So that is the position. The work is much cheaper now with a passenger enhancement, but that is not being done. Railtrack says that it has identified 90 new freight depots, indicating that it has paid for the work. I know that it has not paid a penny.
The noble Baroness mentioned Thameslink. As she said, there is no reason why work cannot be started now. What annoys me is that the document which was sent to 300 or 400 people states that West Coast upgrade, Thameslink, and Channel Tunnel rail links were all committed to from 1996 to 1999, and that before 2002 delivery will be well under way. The last announcement I saw indicated 2006 for Thameslink. That is not giving the whole picture to those who fund the work.
My question to Railtrack and the Government is: how much of Railtrack's investment relates to new work, or is it enhancement of capacity or capability; and how much is maintenance? We need the figures broken down separately. We also need to know how much is Railtrack's money and how much comes from grants. Unless we receive that information, we shall not receive a final answer as to whether Railtrack is capable of investing and whether it will invest at all.
The rail regulator is studying all these issues before further developing his decision on Railtrack's access charges and the regulator asset based regime. However,
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I understand that the regulator has three people working for him and Railtrack has 40. Will the regulator again be pushed into a situation where there is a lack of information?
My message is that I hope the SRA and the regulator will get a grip on the information, so that these issues can be debated. We are continually told that documents are confidential. Even the study that Railtrack did under the trans-European network fund in relation to the south-west of Cornwall was confidential until my noble friend the Minister kindly placed a copy in the Library. There are many other people who also wish to see it.
The railways have always been secretive. Now is the time for them to open up the information for debate, consultation and then action. I welcome Sir Alastair Morton's appointment as chairman of the SRA. I hope that there will be an equally strong and fair rail regulator when that appointment is announced. In the end, if Railtrack will not fulfil its licence obligations, the SRA must have the power to take action to ensure that someone else does. That is the only solution to achieving forecasts of double the number of passenger and freight trains on our network in 10 years.
7.43 p.m.
Viscount Weir: My Lords, I begin by declaring an interest. First, I am chairman of BICC, a company which not only has, through its Balfour Beatty subsidiary, extensive involvement in railway maintenance and renewal, but has also won the first two major contracts for the West Coast mainline. Secondly, I am also a director of the Canadian Pacific, one of the world's most famous railroads.
There are many aspects to the subject that we are discussing. However, I wish mainly to touch on the financing of rail investment. Perhaps I may begin with a little story. When I was a small boy, we had in our house the skin of an enormous grizzly bear. The poor bear was shot by my Canadian great grandfather with his trusty Colt revolver. My forbear (if I may use that word) was the leading civil engineer in Canada and he plugged the beast, which was being unfriendly, while surveying the route of the Canadian Pacific.
Driving that railroad through the formidable barrier of the Selkirks and the Rocky Mountains remains to this day an outstanding triumph of willpower and engineering. But if that was a challenge of astonishing difficulty, raising the finance required was in its own way scarcely easier. Then, and now, the financing of railway infrastructure—and indeed much infrastructure generally—has always met with the same problems.
The first difficulty is that the return on the investment is so often long term. Modern capital markets are fundamentally very competitive, so infrastructure financing, if by way of equity, has to compete with the equity returns available from other alternatives, and the total returns that shareholders expect today are high and often pretty quick.
Equally, the financing of infrastructure projects by debt often carries a higher risk element than, in simplistic comparison, fixed interest lending to a stable government.

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The problem is made more acute for many infrastructure projects by the cost of dead money; that is, the cost of servicing capital during prolonged construction periods before the investment starts to produce cashflow. In that context, I am open to correction, but for the Channel Tunnel I believe that the dead money cost was pretty close to the actual cost of driving the tunnel.
An even more important consideration in infrastructure financing is the real destination of the return on the investment. If any of us builds a factory, the profit—that is, the benefit of the activity—goes into our profit and loss account. But for many infrastructure investments, that is not the case at all. To return to the Canadian Pacific, it eventually made, and still makes, good profits. Those profits, however, are microscopic compared to the general economic gain (it may be called profit, if we wish) that Canada gained from the construction of the railroad.
I would add two comments. First, the general national economic gain may be very real, but it is also very difficult to quantify. Secondly, there can still be an important economic gain of that kind even if an infrastructure project may not itself appear to show a profit at all in conventional accounting terms. Those factors hardly make conventional financing easier.
Again, if noble Lords will forgive my delving into history, the Canadian Pacific could never have been built at all if it had had to raise its finance in simple financial market terms on a stand-alone basis. What happened in Canada was that the splendid ancestor of the noble Lord, Lord Strathcona and Mount Royal, in the face of great political opposition, prevailed upon the government to guarantee some of the debt. Moreover, as an additional and very valuable incentive the railroad was given huge federal land concessions.
I say all this, not to recount ancient history, but simply to demonstrate that there have always been the same basic problems in financing railways. They therefore often need to be addressed by government not only with imagination, but with the recognition that capital markets have developed primarily to meet the needs of conventional business, rather than those of peculiar beasts like railroads and that there may often be an unquantifiable, and sometimes large, public benefit.
I do not know whether Mr. Prescott has a motto or slogan above his desk. But if he does not, he should have one that reads simply: "He who wills the end must will the means". And he should send that motto in triplicate to the Treasury.
Finally, I believe that for the best end result the system under which our railways operate should correspond closely and in a complementary way to the timescale and manner in which its infrastructure is financed. I am not sure that that is entirely the case today.
To illustrate what I mean, it is not helpful, where a long-term view is needed, to give concessions to train operators for periods which are too short. If you do so, those operators will simply act in a short-term way. It is
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stupid to expect them to do otherwise. They will not make enough long-term investments in rolling stock or, more important, in modern operating systems.
Equally, if operators' returns are subject to the changing whims of the regulator, we will have just the same result. Similar considerations apply to those involved in railroad maintenance, where every party's interest is always better served by long-term alliance agreements rather than short-term contractual confrontation.
Above all, Railtrack must be treated in a sensible way. It is absolutely unhelpful to talk, as some outside this House have done, about obscene profits. That blows off populist steam and does nothing constructive whatever. Railtrack needs to make good profits simply because it has such large ongoing investment requirements. To put it rudely, it needs money to pay for decades of shameful neglect by governments of all persuasions.
I happen to believe that the railway industry has a great future. I do not say that because I am a railway fan or enthusiast or even because I am somewhat involved in the industry. I say it because only by developing our railways have we the slightest hope of relieving the ghastly congestion of our roads and cities. In conclusion, I wish to thank the noble Baroness most sincerely for making the debate possible.
7.51 p.m.
The Lord Bishop of Hereford: My Lords, I, too, am glad that the noble Baroness, Lady Thomas of Walliswood, has introduced this timely debate. Her opening speech was excellent; she threw so many shrewd and searching questions at the Minister that he will need all his 20 minutes to answer them. We have also had two excellent speeches from the noble Lord, Lord Berkeley and the noble Viscount, Lord Weir.
This is an opportunity for us to raise the essential question of the urgent importance of ensuring a process of continuing, coherent and consistent investment in our railway system. I believe that we are only just beginning to understand both how urgent it is on environmental grounds to transfer traffic from road to rail—that must be both passenger and freight traffic in large quantities—and the huge potential that still exists for such a change.
There have been some encouraging signs. Speakers have already referred to the significant upturn in passenger traffic. Figures have been given for the increase in freight traffic. I was told by English, Welsh and Scottish railways recently that it was 60 per cent. in the first three years of its existence. That is one of the few but really beneficial fruits of the privatisation process: the infinitely more efficient and enthusiastic management of the rail freight business by EWS and by Freightliner.
But we are starting from an unhappy position. It is common knowledge that the last government were unenthusiastic about public transport in general and railways in particular. That led to a long period of disastrous under-investment and a collapse of confidence in the industry. I believe the roots of our

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problems in fact go much further back in history. When most European countries were rebuilding and electrifying their war-damaged railway systems from the late 1940s onward, we had a so-called "modernisation plan" in 1955 which was essentially backward-looking and unimaginative: simple, rugged steam locomotives; small, unbraked freight wagons; enormous marshalling yards where freight was stuck for days or weeks. It was, in retrospect, a recipe for absolute disaster, the recreation of a 1930s railway, not the birth of a system for the end of the 20th century.
Our present problems have been exacerbated by the absurd fragmentation of the privatised railway industry. We urgently need a properly integrated national transport system, but we have not even retained a properly integrated railway system. That creates enormous difficulties in terms of investment. Those have already been touched on, but I believe that there are two fundamental problems: first, the conflict between short-term and long-term interests and objectives, to which the noble Viscount referred; secondly, the inherent difficulty which he also spoke about, of persuading a private company which needs to please its shareholders to make the long-term investments whose benefits may take 20 years or more to emerge and which inevitably entail some element of risk.
A railway is a long-term business. Most of our railway lines have existed for 150 years or more. New railways involve immensely expensive civil engineering work, which is particularly difficult in our small and crowded country. But those new railways need similarly to be built to last. It may be a generation at least before a return on the capital investment is seen. Locomotives and carriages have a life expectancy of 30 years or more, yet franchises to train operating companies are let for short terms like seven years. That makes it impossible for train operating companies to justify buying new stock, so a system of leasing is developed instead. But the leasing companies need maximum flexibility so that their locomotives or rolling stock can be leased to a different train operating company if need be. That means that they need to be flexibly deployable; it means carriages which will fit within the maximum number of loading gauges, and the most restrictive. So we have the ludicrous production at the moment of the Class 170 Turbostar trains for ScotRail, Anglia Railways and Midland mainline which are the most cramped carriages to be built for many years. It also means diesel, not electric traction.
We face the ludicrous and appalling prospect of railway engineers speaking of decommissioning electrified railways—perhaps even the Great North Eastern Railway—because of the dilemma created by the conflict of long-term and short-term interests and because of the extreme difficulty in financial and business terms of justifying new electric locomotives, with a limited number of lines on which they can be deployed. There are no plans at all for any further significant electrification of main lines, like the Great Western and Midland main lines, both of which use the ageing and now rough-riding 125 high-speed trains.
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I am sure we all welcome the Government's intention to establish a strategic rail authority. We wish it well and hope that it acquires great skill quickly in wielding the limited range of sticks and carrots which I can see will be at its disposal. But it will need to think radically about how private companies can be persuaded and/or enabled to deliver an integrated railway system in the public interest and especially how the crucial aim of adequate long-term investment can be achieved.
Some of the players are in it for the long term, notably Railtrack—and speakers have mentioned how eagerly we await the network management statement. Will it promise a vigorous programme to address the critical pinch points or the notoriously rundown track: Euston-Rugby-Birmingham and Reading West; the Settle and Carlisle and the Glasgow and South Western? What about Thameslink 2006, or whatever it has become? What about gauge enhancement, if we are really serious about freight traffic?
There are some hopeful signs, not least that the problem seems to be beginning to be understood by Railtrack management. Perhaps I am naive and optimistic, but their chief executive, Mr. Gerald Corbett, said on 15th January, apropos the commitment to spend £165 million on Leeds station—though I recognise the partial character of that work:
"The Regulator questioned our willingness to take risks and commit to projects without a guaranteed return. We believe that this initiative takes us out of the model of a boring utility, and puts us on track to becoming the key to integrated transport".
I wish it were true. I welcome that statement but it is only the very beginning and there are good reasons for doubting how seriously Railtrack takes that commitment.
Public money will certainly be needed for rail investment. I hope that the Minister will be able to assure us that the strategic rail authority will address ways of making that kind of investment possible. I hope also that he may give us assurances that electric traction, so clean, efficient and environmentally desirable, will be extended and certainly not curtailed.
Perhaps I may say a word about safety, since the Motion includes a reference to the maintenance of "the highest safety standards". I echo the recommendation last autumn of the Transport Committee of the other place that the work presently carried out by Railtrack's Safety and Standards Directorate should be transferred to an independent rail safety authority along the lines of the Civil Aviation Authority, and that Railtrack itself should be required to obtain a safety case from that independent authority. That might give one some confidence about the kinds of accident that we have heard described. This authority must be publicly funded and entirely separate from any of the private organisations involved in the rail industry. That new safety authority would also ensure fair and accurate attribution of responsibility for delay and the award of compensation. If Railtrack and all the train operating companies had to relate to an independent safety authority there would be no room for confusion, less scope for delay in the award of safety cases and much greater public confidence in rail safety.

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Finally, I should like to relate a brief story about the high-tech, modernised railway. Yesterday I went to the booking office at Hereford to buy my ticket. I asked for a saver first ticket, with a senior rail card, to London. The booking clerk scratched his head and said, "Hm! We've got 17 different fares to London. I don't think we have that one in the machine". Since I knew the fare I said, "What about £55.20?" His response was, "Done!". I must be a trustworthy-looking chap.
8.1 p.m.
Lord Steel of Aikwood: My Lords, I too join very warmly in congratulating my noble friend Lady Thomas of Walliswood for initiating this excellent debate. We have enjoyed listening to some knowledgeable speeches including that by the right reverend Prelate. I am tempted to suggest that he should be appointed honorary chaplain to the railway network. His was a most authoritative and optimistic speech.
I begin with an apology to the Minister who is to reply to the debate. I do not expect from him any reply to the points that I raise in my speech for two reasons: first, everything that I intend to say relates to the responsibilities of the Scottish Office, not his department; secondly, I hope to escape from the debate before the end, a practice of which I thoroughly disapprove.
I intervene briefly in this general debate to raise a specific example of the problem of investment in railway infrastructure; namely, the position of the railways in and around the city of Edinburgh. When I was elected a Member of Parliament in the Borders in 1965 I inherited a situation in which the Border railway line was under threat of closure following the Beeching Report. I refer to the attractive 95-mile-long line between Edinburgh and Carlisle through the Borders. That line was in the event closed in the late 1960s. The other day my wife came across my ticket for the last train to leave Galashiels to head for London on the night sleeper. I do not believe that the decision to close that line would be made today by any government for two reasons. First, attitudes have changed completely over the past 30 years. We are well aware that we have been putting far too much traffic into our cities from surrounding areas. We are also very concerned about pollution and the effect on the environment. Secondly, referring specifically to Edinburgh, there has been an enormous expansion in housing over the past 30 years to the south of the city on the very route that was closed.
The hopeful sign is that Border Transport Futures Ltd has produced plans over the past few years to reopen at least parts of the line, beginning with the southern section. That is to be a freight-only service. Plans are well advanced to extract wood from the great forest of Kielder and, rather than clog up the roads in that locality, transport it when mature via the railway line through Longtown to Carlisle. As to that, the tender process is about to begin, and I am sure that we all wish the new freight service well.
My main concern is for the future passenger service at the north end of the line. A pre-feasibility study has already been conducted by Border Transport Futures of
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a branch line from Edinburgh to Galashiels. The Government have themselves commissioned a study concerned with the same route that is now under way. It involves Railtrack, Richard Branson's company and the Scottish Office.
I become very suspicious when I consider the number of studies and consultancies involved. Possibly it is a means of putting off decisions. I recall that at the time of the closure—which we campaigned against—the local authorities in the region, with my full encouragement and support, commissioned a feasibility study from Professor Hibbs. That could be dusted down and looked at again. It recommended a single track branch line from Galashiels to Edinburgh. Perhaps we are re-inventing the wheel two or three times in paper studies. However, I do not in any way disparage the study which is now under way. The economic situation in the Borders is so grave that we look forward to a positive outcome to the study and the restoration of that route in the interests of the whole of the Border counties.
My particular plea—this is all I say tonight—is that, without considering the long-term possibility of reopening the whole line, work should proceed immediately on the extension of the Edinburgh suburban rail network at the northern end of that line. It is rumoured that there will be an announcement by the Scottish Office, possibly tomorrow, of agreement to fund the crossrail project put forward by Edinburgh City Council to extend the existing suburban network, which has been so successful, from the west to the east of the city. I very much welcome that. When my honourable friend Mr. Donald Gorrie, the Member for Edinburgh West, was councillor for that area he was very successful in the campaign to reopen Gyle station. That has proved an enormous success. It brings people from the outer housing estates to the west into the city centre. A week or two ago I went to look at the even older example of the reopening of the branch line to Bathgate. There I observed the number of commuters who arrived in the late afternoon. To reopen stations and lines in the Edinburgh area has proved successful. I wish the crossrail scheme all success.
The plan is to extend the suburban line through Waverley to Kinnaird Park with a station at Brunstane. I believe that a mistake has been made in not reopening the station at Portobello. A large population in that area would prefer to use rail rather than take their cars into the city centre. Since this scheme is supposed to be up and running by 2002 I am bound to question why there is not to be a station at Holyrood where the new Scottish Parliament is to be established. I am informed that the cost is very substantial. I cannot understand how a station on an existing line can cost £5 million All that is needed is a platform and a shelter. I believe that the future Scottish Members of Parliament should set an example by providing access by train to the new Parliament. I hope that the matter will be reconsidered.
I give a warm welcome to the project, which, if I am right, is to be announced tomorrow. It will enable the northern part of the old Waverley line to be reopened. I urge the Government—it will be the responsibility of the Scottish Office and the Scottish Parliament, together with the rail authorities—to press on beyond Kinnaird

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Park to Millerhill and the new housing areas of Newtongrange and Gorebridge. If that is done it will be relatively simple to extend the line south to the Borders, as I hope will happen.
One of the main blockages to the restoration of that suburban link is the new Edinburgh road bypass. The Scottish Office is faced with a repeat problem. The traffic on the bypass is greater than was forecast. Just as at the western end of the bypass, at the Gogar junction, there was first a roundabout, then traffic lights, and eventually an underpass—which should have been constructed at the very beginning—so the same story is being repeated at the eastern end at the Danderhall roundabout. At that end we are now at the traffic light stage. The new Edinburgh Royal Infirmary is under construction just north of the roundabout. We should now be beginning to construct an underpass or overpass. That should be wide enough to accommodate the rail link to avoid a long argument about future expenditure and disruption to the Edinburgh bypass. My plea is that we have some real forward thinking to integrate the road and rail networks and that a decision about the necessary capital expenditure is taken in time.
8.9 p.m.
Lord Cadman: My Lords, we are grateful to the noble Baroness for raising the subject today. We seem to be having a good crack of the whip lately, given the debate of the noble Lord, Lord Berkeley, in January, and the more recent discussion on the Severn Tunnel last month. The Severn Tunnel debate highlighted the importance of keeping our rail infrastructure in good order, and any lack in that direction could have drastic economic consequences. Shutting part of a system even at weekends for repairs tends to put many people to vast inconvenience. Perhaps more lines should be dual signalled—the noble Lord, Lord Berkeley, mentioned this—so that one line can remain in use while the other is worked on, a practice which is widespread in Europe.
Investment is the key to unlock the future potential of the rail industry to meet the greater demands that will be made on it in an integrated transport policy. Railtrack is responsible for the biggest part of that investment. It has to justify the many improvements and upgrades, to say nothing of eliminating pinch points in the system to provide the train operating companies with a suitable railway for their needs. Passenger growth over the past five years has been around 20 per cent. and rising, which presents quite a challenge. Freight is similarly growing. Railtrack has a difficulty in that in the private sector strict commercialism seems to reign supreme whereas the railways provide a public service. Many recent studies have revealed that many schemes are somewhat difficult to justify without considerable subsidy. That has led Railtrack to concentrate initially on station regeneration schemes which provide a greater return through increased business development of the premises. Railtrack has been inclined to ask users to-help with the finance of upgrades and new route development. That really is the role of Government who respond by providing the infrastructure investment fund and freight facilities grants. It is likely that in the not
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too distant future, the demands made on those funds will be considerable, and their augmentation will be essential.
Railtrack has been unwilling in the past to take risks, a lamentable policy indeed, but unfortunately somewhat necessary in commerce. Therefore it is to be congratulated on making a start on modernising Leeds Station where £160 million is to be spent on increasing the train paths available from 24 to 40 per hour, and shouldering much of the commercial risk itself, despite a certain lack of commitment to freight.
In the main, the train operating companies are investing heavily. Some 1, 800 new carriages of various descriptions are currently being built or on order. That will release many older vehicles for scrapping and less old stock for refurbishment and re-use. Anglia Railways' plans to start a new service from East Anglia to Watford and Basingstoke via the Feltham gateway to Heathrow involve the use of new trains. Its more controversial and competitive plans to connect Waterloo with hitherto untapped areas in Southampton and Romsey will use refurbished stock cascaded from the Gatwick Express which is to receive new rolling stock this year.
Virgin Trains is committed to massive investment in its West Coast mainline and cross-country fleets for which it has contracted Railtrack to produce a suitable railway to enable those new, in the main tilting, trains to operate properly. This investment by Virgin, along with Railtrack, now brings the total committed private sector investment in those projects to above £4 billion over the next six years.
Other companies also operate on that railway, especially freight; and Railtrack seems to be having some trouble accommodating them. Providing for piggyback and high cube traffic within the upgrade does not, it seems, appear commercially viable. I have to say that since the completion of the Channel Tunnel, this country needs somehow to provide a route properly to connect our system with that on the Continent where such traffic is widely carried without a problem. If Railtrack is unwilling to get to grips with this, one's mind is directed towards another scheme which continues to lurk in the background. I refer to Central Railways whose highly controversial and ambitious scheme involves a high cube route from Liverpool and Manchester, crossing the Pennines using the redundant Woodhead Tunnel, thence to the London area using the old Great Central Formation via Nottingham, Leicester and Rugby, eventually connecting with the Channel Tunnel at Folkestone and then on to Lille in France.
It may be of interest to your Lordships to learn that that scheme is actually 100 years old and was conceived back in the 1890s by the late Sir Edward Watkin who, as a railway baron, planned to use the Metropolitan Railway and Brunel's tunnel under the Thames to connect his Great Central London Extension with the South Eastern Railway to the nascent Channel Tunnel at Dover. It is interesting to speculate that had Sir Edward's plans come to fruition, we would have had a bern gauge route east-west across London, making Crossrail unnecessary and providing much improved

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communication around the capital. Having built his London extension from Nottinghamshire to Marylebone, unfortunately takeovers and mergers thwarted his plans and, sadly, he died before anything else could happen.
Central Railways have had considerable presentation problems, but I feel that the scheme is worthy of some consideration, if only to goad Railtrack into accepting that if it does not get to grips with this piggyback traffic, others perhaps will. That will surely be to Railtrack's loss.
Continuing with the freight theme, there will be a need for terminals, both intermodal and more basic ones to load and unload rail vehicles. The planning regime associated with those facilities is very obstructive and time-consuming and needs to be reviewed. Perhaps that is an issue that the strategic rail authority can address. While the Transport and Works Act can be used to facilitate the provision of rail services to those terminals, their inevitable need for buildings is not covered by that Act and local planners become involved. Many of those authorities are quite co-operative, but some still seem to be living in the dark ages and need to realise that the renaissance of the railways will need their blessing. Planning for those projects must be speeded up if a real part is to be played by the rail freight industry in removing some of the traffic from our roads.
I should like to cite a project at Colnbrook near the junction of the M. 4 and M. 25, which is rail connected and will provide a much-needed facility in that perhaps sensitive area but close to London. There is also a useful project at Avonmouth where a large area of wasteland is being redeveloped to provide an intermodal terminal and other industrial premises.
Thus we see that privatising the railways has been somewhat successful with both an increase in passenger numbers and the number of freight tonne/miles up and rising. The system is struggling to cope now and will continue to do so in the future unless investment keeps pace. The railway industry welcomes the setting up of the strategic rail authority and looks forward to the legislation which will enable that body to provide the appropriate strategic direction. Unfortunately the Government seem to have got their priorities wrong in that constitutional matters are to take precedence over important matters such as transport, food standards, health and welfare, and now even access to the countryside. I am sure that the voters will not thank the Government who, in their zeal to emasculate this House, neglect to address those more important matters that they were elected to get on with.
The rail industry needs strategic support now; otherwise we would not be having all these complaints about poor service. Let us hope that this debate can go some way to help achieve the renaissance that the rail industry needs and is willing to provide.
8.17 p.m.
Lord Hooson: My Lords, I, too, congratulate my noble friend Lady Thomas of Walliswood. I have learned a great deal in the debate. We have heard some good and informative speeches. I am in the same class as my noble friend Lord Steel. I have no expertise
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except as a passenger. It was while I was seething as a passenger that I allowed my name to be put down for the debate. I express the communal feelings of my noble friend Lord Geraint and myself. He has decided that I shall let off steam on behalf of the both of us because we were involved in the same incident.
We travelled together about a fortnight ago. It was not an unusual incident, but the worst of our experiences. We left here at 4 p.m. to catch a train from Euston at 4.45 p.m. We should have reached our local station at about 8.25 p.m. We reached there at about 11 o'clock that night. We were delivered by a minibus. The noble Lord, Lord Geraint, had to drive me home which is on the way to his home. I do not know what time we got home. It was our worst, but not an unusual, experience.
We were travelling on Virgin trains and should have changed at Wolverhampton. We were told at Birmingham that there had been trouble on the track on the other side of Coventry. We had not noticed it. When we reached Wolverhampton we expected to change to Central Trains. Its train had left 10 minutes before we reached the station. There was no other train for another two to three hours. I have travelled on this line for the best part of half a century from Aberystwyth to Paddington. I have never experienced as bad and unreliable a service as I have done in the past few years. It might be more comfortable in some sections, but the service is nothing like as reliable as it was.
What happened was because of trouble on the line. It has happened repeatedly. The noble Lord and myself travel on average once a week during parliamentary sittings. It is amazing the number of occasions something has gone wrong. We hear anecdotal evidence from other passengers.
When I say that I have no experience of railways, I had a transitory one some years ago. I had to object to some of the Beeching proposals as a Member of Parliament concerning my own constituency. I was also briefed many times by local authorities and pressure groups and had to attend public inquiries in order to object. I learnt a few things about the railways then which I had forgotten until today.
The contribution of the noble Viscount, Lord Weir, was interesting. He spoke about the capital cost of railways and the long-term investment they represent. I am a great admirer of French railways. I believe that France has got it right. It has taken a long-term view In this country we have been inclined to take short-term decisions on most issues over the past 20 years. We have failed to take the long-term view.
I objected to privatisation of the railways. I thought it was a mistake at the time. I believed that we should have more freight on the railways. It is very much easier for people to travel on the railways. Many of my friends in mid-Wales travel to London by car because the trains are so unreliable. Most of them would much prefer to travel by train if the service was reliable.
A major problem faces the Government. I am very glad to hear about the setting up of a strategic rail authority. Is it going to be provided with additional money? I suppose it has no money at all at the moment.

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Is it going to be properly funded and carry out a proper investigation of the kind of investment that is required in this country over the next few years? Trains are held back because of difficulties on the track or with the overhead lines. Sometimes one has to change from one line to another. Is the strategic rail authority to be allowed to hold back a train operated, for example, by Central Trains, and so on? All these things need to be considered.
The noble Lord, Lord Cadman, mentioned the Severn Tunnel. I have an interest to declare, as I did on a previous occasion. I am chairman of the Severn River Crossing plc, which provides the road links. It is very important to have a reliable service through to South Wales. We depend so much on the engineering works of the Victorians as regards the rail track. They performed marvellous feats of engineering. I do not know how many tunnels I go through between mid-Wales to Euston but there are many. The tunnel under the River Severn is a masterpiece of engineering. We could not hope to rival it today because it would cost an enormous amount of money. I suspect that the tunnel, and many like it, need careful investigation to see whether more work should be done now to give them additional support.
In our debate on the Severn Tunnel about a fortnight ago it transpired that work on the rail track through the tunnel required the tunnel to be closed for about six weekends, if my memory serves me right. It transpired that all that was being done was changing the rail track, which has to be changed in any event from time to time, whether the track goes through a tunnel or not. No work was being done on the tunnel as such.
The strategic rail authority needs to look at the whole rail network to see what is required to bring it up to modern standards. It will have to start with the main lines. I am sure that my noble friend has performed a great service by raising this point at this time. It is obvious to anyone that major investment is needed. It will be virtually impossible to raise that money on the market and therefore one can only look to the Government to provide the funds.
8.26 p.m.
The Earl of Leicester: My Lords, I remember that at about this time last year the noble Baroness, Lady Thomas, led a debate on more or less the same subject. I suspect that the catalyst for that debate and what prompted her to bring it forward was her intense frustration, which I remember very well, at the appalling lateness and overcrowding of the trains on her particular sector.
Regrettably, the trains are still late, overcrowded and dirty. This continuing unpleasantness, if one can so call it, really prompts us to believe that privatisation was, and is, a disaster and that perhaps the only way that we can remedy the defects of that process is by throwing more money at Railtrack.
We have heard very little about what Railtrack does well. It would be a great shame to ignore the progress in growth. By that I mean the growth in passenger
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traffic, freight and investment. Perhaps I may give your Lordships a few facts. Ten years ago at the height of the boom there were 21.3 billion passenger miles travelled. In 1995 it had dropped to a low of 17.8 billion passenger miles, but now it is back at 21.3 billion passenger miles again. That is an enormous increase in passenger numbers. As we have also heard, freight levels have risen accordingly.
Every day 20, 000 trains run on the network. There are 1, 000 more passenger trains now running each weekday than there were three years ago at the start of privatisation. At peak times the railways run at capacity. I can never quite understand why the railways should be immune from peak time delays when the roads are not expected to be immune from such delays and indeed not only at peak times. In the 20 years prior to privatisation the average investment by BR at 1998 prices was £850 million a year. We have heard that this year Railtrack is investing £1.4 billion. It has a programme of some £17 billion for the 10 years from 1997 to 2007.
In 1996, at the start of privatisation, Railtrack had a staff of 400 planning, designing and monitoring investment. Such is the volume of work today that it has increased the number to 1, 200. The range and amount of work that has been undertaken is astonishing. Approximately half of Railtrack's 2, 500 stations have been improved, modernised and generally refurbished. One-third of those stations now have CCTV security monitoring and 90 freight depots have been opened. In addition, there are the major capital projects about which we have heard.
Is it doing enough? The short answer is no. The politicians and pundits are right in pointing to the 20 years of under investment with which Railtrack must catch up, never mind the past three years' growth which it must sustain.
Can it do more? I bow to the technical expertise of the noble Lord, Lord Berkeley, who outlined ways in which during the next 10 years a great deal more can be done and the number of trains can be doubled. However, as a layman, I believe that certain practicalities dictate how much Railtrack can do. There are logistic difficulties of undertaking track maintenance and improvements, especially bearing in mind that most of the work can be done only at night and at weekends when it can work flat out.
We heard from the noble Viscount, Lord Weir, about the other big constraint; finance. The £17 billion investment over 10 years is the largest investment project ever undertaken by any British company in this country. By 2004, Railtrack will have a debt of £4 billion. It will be one of the largest borrowers in the City. Any company which has to service a debt of such magnitude must eventually face a reduction in profits and therefore potentially lower dividends and fewer investors. If Railtrack does not retain the confidence of its investors and the financial markets, no money will be forthcoming. The noble Viscount told us that most eloquently.
There have been calls for a massive increase in investment. Railtrack states that it needs to spend £37 billion, but I suspect that that will cause enormous

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strains on the company. Apart from the physical constraints, I am not sure how it can raise the money unless it is allowed to earn more. I suspect that that means that the rules will have to be changed; for example, charging for each train on the line rather than the fixed charge which it generally receives.
I have said nothing about integration, which is part of the Motion, but I understand that there is a great deal of integrated bus and train ticketing all over the country, especially in Scotland. Safety has hardly been mentioned, but I am told that taking into consideration the number of train miles, the number of serious accidents has halved since 1994.
We all want greater investment, but realities must be faced. In the meantime, I believe that the facts, which have not been mentioned tonight, support Railtrack's claim that it is doing a good job under difficult circumstances.
8.34 p.m.
Lord Mountevans: My Lords, I, too, am grateful to the noble Baroness, Lady Thomas, for giving us the opportunity to debate railways, investment, integrated transport and safety. I congratulate her on attracting several speakers beyond the list of what might be called "the usual railways suspects" and I hope that we shall hear more from all of them.
I wish to concentrate on investment and safety. Not only is rail investment a good thing, but it has been a necessity for decades. That necessity is only now being addressed seriously as an anticipated result of privatisation. The private sector has abilities to raise money which the old nationalised industry, under Treasury constraint, lacked.
The noble Baroness gave us the traffic growth figures and several noble Lords repeated them. The industry, reacting to those figures, is investing at unprecedented levels, as the noble Earl reminded us. In infrastructure terms, we must welcome all the routes which are open; shared risk projects such as the long awaited refurbishment of the West Coast main line. We must also welcome Railtrack's commitment to spending £165 million—that figure has risen by £5 million between the two briefs I received last week—by 2001 on more track, new signalling, improved passenger environment and, not least, a bus station. That is all at Leeds station, which won the station of the year contest in the days when I presided over that venture.
I congratulate Railtrack on committing itself to a major project addressing the needs of its immediate clients, the train operators, and its remoter clients, the PTAs and the passengers. I look forward to seeing the results, but I have one reservation. It is that the project has been under consideration for quite a while. Under a former legislative regime I took the enabling legislation through this House, in 1992 or 1993. Even then the legislation had cleared another place, before which there must have been a certain amount of planning. Therefore, we are rapidly reaching the stage where the project has existed for about 15 years. If privatisation enables it to proceed, who am I, and who is anybody else, to condemn it?
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If we wish to see the investment which such a project requires and which the Motion seeks, we must make sure that the regulatory environment is as good as the financial one and that neither is allowed to kick major projects into touch. I hope that the Minister will have something to say on regulation, not only as it affects the railways directly but as it affects the wider environment, be that planning or other matters, not least the wider social benefits which accrue from integrated transport.
Railtrack, too, has a further role to play. I look forward to the next addition of the Network Management Statement which is due later this month. It seems to me that previous editions have been more statements of intent, laudable but without timescales or financial commitment, than serious commitments. I hope that that situation is changed. But that is not simply a matter for Railtrack; it is also a matter for the Government, the financial sector and many other interests. One cannot assess risks nor make commitments unless there is some measure of predictability. It cannot, as the media pundits would often like to believe, on this scale be viewed like instant coffee—you just add water and go.
My second topic is safety. I address it secure in the knowledge that between 1986 and 1995 rail travel was the second safest mode of transport in terms of casualties per billion passenger kilometres after aviation. In a bus or a coach, I am five times more likely to be a casualty than I am on a train. In a van, the multiplier becomes nine times, and it is 15 times in a car. We are all obsessed with road safety, and both the previous government and this one have done a great deal to reduce the number of road casualties. At the same time, the number of railway casualties has been fairly low, and yet if there is an accident, it is a major incident. It has to be a very serious car crash to rate the same status as a train crash. As the noble Lord said, there is a double standard. If we are delayed on the motorway we say, "Oh dear, oh dear", but if we are delayed on a Virgin train we say, "Damn Virgin". The most risky means of travel is as a pedestrian, when the multiplier becomes 200.
Your Lordships will understand that I feel safe on a train; safe, but not complacent, for as long as there are humans there will be scope for human error. One error is one too many and as today's HSE report into the Bexley derailment, which has already been referred to, shows, errors can be compounded. In the case of Bexley, four bystanders—not passengers or even railway employees—were injured because of a combination of Railtrack error, the errors of two contracting companies, poor driver training and inadequate locomotive maintenance. As we have already been reminded, Railtrack and the two contractors were subsequently convicted and penalised.
I have mentioned only the highlights of the HSE press release, but that in itself raises concerns. The first is divided responsibility—no single and united accountability. I wonder whether we need an enhanced HSE, funded and staffed to set and enforce the standards rather than a whole number of parties none of which, in this instance, was either setting or sticking to its own safety objectives.

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Going further, should the providers of services—and at Bexley, all five parties were providers of services—also act as regulators at the lowest level, which is a legacy of the old British Rail regime or should regulation be more arm's length? The right reverend Prelate the Bishop of Hereford is not in his place, but I echo what he said about the Civil Aviation Authority. For decades, ever since I can remember, it has, for example, employed checking captains to inspect and ratify the flight-deck performance of the pilots in the commercial sector. More recently, it has recognised that structural change has followed privatisation—there is a paradox to be drawn there—and the CAA is taking steps to ensure that its regulation is not only arm's length but is also tough and accountable and seeks to eliminate absolutely the multiplication of opportunities for buck-passing, which, for example, Bexley showed us in the first instance.
My second concern, again arising out of Bexley, is timescale. In the high summer of 1940, when we were at war and there were other complications, driver error led to a sleeping car train colliding with a freight train just west of Taunton at Norton Fitzwarren. The Railways Inspectorate issued its report and its recommendation in time for the Christmas Eve newspapers. That was four or five months, a timescale so brief as to be admirable when in the case of Bexley the accident was in February two years ago, so we are talking of 25 months.
More recently, and more modestly, my wife—and perhaps I should declare an interest on her behalf because she carries out PTS medicals nowadays, which obviously have a safety element—was injured on a train. The process then was internal inquiry, possible external inquiry by the Railways Inspectorate, conclusions, recommendations and, if necessary, litigation. In our case, all that was concluded and the damages claim settled within months.
Nowadays, things drag on and on and bucks are passed, as Bexley illustrates. That hardly seems satisfactory for consumers, injured parties, operators, regulators or, indeed, anybody else. We all need to draw the conclusions from every accident as quickly as possible in order to act upon them. In overhauling our railways, I hope that the Government will not overlook the fact that safety is paramount and that perhaps the safety regime, too, needs overhaul.
8.43 p.m.
Lord Methuen: My Lords, I too thank my noble friend Lady Thomas of Walliswood for introducing this debate. The debate has been about investment in rail infrastructure, integrated transport and rail safety. It is a coincidence that the report on the Bexley accident on 4th February 1997 was published today, as has been mentioned by other noble Lords.
Reading the summary of that report shows dramatically the pitfalls in the fragmentation of the railway industry into its present disconnected portions. None of the participants at Bexley comes out with any credit; neither Railtrack nor its sub-contractors nor the
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train-operating company concerned. It is lucky that there were no fatalities in that instance. The situation of the Railways Inspectorate and the length of time it took to report on the accident are significant and, compared with the recent accident in Germany, our showing is very poor.
The railway industry grew, grudgingly, a culture of safety during the last century. The companies of those days had to have legislation passed before they would install such matters as continuous braking systems which we take for granted now. Boilers blew up, bridges collapsed and there were horrendous accidents when hundreds of people were killed due to wooden coaches and gas lighting. The institution of the Railways Inspectorate in the last century was predominant in achieving the levels of safety we now have. I should like to see its independence preserved.
Most, but not all, accidents now are due to some form of human failing, and that was certainly so at Bexley. Railway signalling—and I speak as a sometime railway signal engineer—has led the way to safer railways, minimising the effect of human errors and permitting greater traffic density and higher speeds.
We are about to see a new generation of railway signalling which should give greater traffic densities and better regulation of the mixed traffic; that is, the high speed and suburban passenger trains and the freight trains. The modernisation of the West Coast main line and London Transport lines is highly dependent on that new transmission-based signalling system to deliver the benefits mentioned above without compromising safety.
Improved signalling, however, is but a minor factor in the story. I am told that the new signalling will offer only some 25 per cent. improvement in track capacity on the West Coast main line, reducing the headway from five minutes to four minutes between trains. Further improvement is constrained by the track and by traffic considerations—the need to load and unload trains and things of that nature and speed restrictions which exist, particularly in the Shap area.
The huge improvements we need to handle the projected increases in both passenger and freight traffic must come from major changes to the physical infrastructure, the reinstatement of lost track formations—for example, the redoubling of the Glasgow and South Western Railway, the restoration of the Matlock-Buxton link and the provision of flyovers in places like Reading, or new chords, as at Ipswich and similar at the identified 15 major pinch points.
I suspect that many of us have received a briefing document from EWS. It talks about a new strategic north-south route using the old Glasgow and South Western, Settle and Carlisle and Midland mainline and thus to London. I do not believe that those proposals directly help the piggyback consortium, due to the restricted loading gauge on the Settle to Carlisle railway. But I wonder whether that might not be countered by singling the tracks at those portions of the lines with heavily tunnelled routes and slewing the track to the centre of the tunnels to achieve adequate clearance. With modern centralised traffic control and a double track where it is practical, that might provide adequate capacity for EWS and piggyback.

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But what about elsewhere on the West Coast main line? I am told that the main congestion is south of Rugby. Would it not make sense, therefore, to reinstate that part of the old Great Central route between Rugby and Banbury? The Great Central route crossed the West Coast main line at Rugby over a large bridge. I do not know whether or not it is still there. From Banbury, access to London already exists and that section of the line was redoubled between Princes Risborough and Banbury quite recently.
That is part of the central rail scheme but I cannot help feeling that that is probably financially more beneficial than the rest of what is proposed.
The danger is that the West Coast main line proposals will be pared away down to something quite insignificant during the current debates. However, we are already seeing improvement in investment in some pails of the system—£9 million has been spent on the Felixstowe branch so that Freightliner trains can now pass. However, I cannot help feeling that, whenever that line was built, the Victorians built it with the earthworks for a double track. Why did they not put the double track in on those bits where it was practical and thus virtually do away with the passing loops but have a double track railway? The cost of doing that would have been fairly minimal. The Princes Risborough to Banbury line was already installed as a double track, as I have said, but this is nothing like enough. As the right reverend Prelate the Lord Bishop of Hereford said, surely we should be examining the cost-effectiveness of electrifying between Paddington, Swansea and Plymouth, for instance.
The high speed trains are now 30 years old. By all means let us replace those on the Great Western line with East Coast main line-style electric stock. There is the added benefit that regional Eurostar services could then use an electrified line to Bristol and Cardiff and beyond. But to get this done the train operating companies would need longer-term contracts to encourage them to make the necessary investment in such stock.
The right reverend Prelate also mentioned that certain lines had been de-electrified or may be de-electrified. I would remind him that has already happened with the Manchester-Shepperton-Wath line, which is the Woodhead tunnel line, which has already been mentioned in connection with the central rail service. We shall have a better idea of Railtrack's proposals when their management statement is published. In the words of last night's airline debate, I hope they will put the customer first, and I look forward to the establishment of the strategic rail authority.
8.51 p.m.
Lord Dixon-Smith: My Lords, the noble Baroness, Lady Thomas of Walliswood, deserves all the thanks that she has received tonight for initiating this debate. I am happy to add my thanks to those of so many other noble Lords. As the noble Baroness said in her introduction, and as so many other speakers have also mentioned, the railway business has expanded
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enormously over the last four or five years. On both the passenger and freight side we now see plans for major expansion across the country.
That fact does not indicate that the system is in imminent danger of collapse. Indeed it would seem to indicate that perhaps privatisation has had some merit in that the benefits have still to work fully through the system. The problems, if problems there are now, are largely those of success. Indeed some areas, as again has been mentioned, particularly the London commuter area, have reached the physical limits of their capacity for the first time ever. We have seen reports that capacity can only increase as a result of track signalling and station improvements to permit more and longer trains to run on the same lines: a common theme in tonight's debate.
The question is not whether there should be greater investment in railways, but how best to achieve it. The history of British Rail, while it was under the control of the Treasury, was one of consistent long-term under-investment, under governments of all political persuasions—I am sorry, "all" is too many in a House which has three political parties. In the situation in which we now find ourselves, we know that funds can be made available and the question is whether the Government and the regulators between them can or will create conditions for that money to come forward.
The previous government invested large sums in the national railway network and the Channel Tunnel was funded entirely with private funds. That of course has created enormous opportunities for enhancing both passenger and freight operations. Since privatisation Railtrack, which raised less money as a result of its sell-off than should have been the case because of the activities of the Labour Party when in Opposition, has seen that access to private sources of funding through the markets has produced investment programmes in the upgrading of the existing network and indeed in existing rollingstock on a scale that the Treasury could not have made possible.
Many noble Lords tonight have rehearsed details of those programmes, so it would be superfluous to go into them again, but one success has not been referred to and so I will mention it. The British Airports Authority invested £300 million in the Heathrow Express: a good example of integrated transport. However, we need to recognise that continuing success in this field will depend on confidence in the stability of the railways' political and financial support.
Much of the current debate takes place about train performance or, in other words, unreliability. Railtrack is criticised for causing delays to train services, but I sympathise. How do you upgrade track and signalling services which really are major engineering works when you have to keep the system running at the same time? It cannot be done without some disruption, and short-term disruption has to be the price that we are prepared to pay to bring in long-term improvement. The option of closing lines does not exist, although it can be done in the case of roads. Indeed we saw, with the closure of the Mall here in London, the ensuing traffic problems that such closures cause.

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Of course disruption must be managed and minimised. Perhaps this will be the real job for Sir Alastair Morton and the Strategic Rail Authority, since the comprehensive spending review projections do not suggest that they will come forward with a dowry of additional money to invest from the public purse.
While on this theme of public financial support, reliable industry sources are suggesting that the Government are planning to pay track access charges direct to Railtrack rather than through the operators as at present. Will the Minister, in his reply, confirm that this does not contravene any European directives, since the change results in rail infrastructure being directly funded by the Treasury? In any event, such a change may well put aspects of improvement, such as Thameslink 2000 and the modernisation of the West Coast mainline at risk, since those improvements depend on the willing participation of the train operators who will lose funding as a result of the change.
As so often in the past, there is a danger that "hands on" by the Government may lead to "hands off by the commercial world. Will the Minister assure the House that there will be no disruption to present programmes of improvement as a result of these rumoured changes, if they are introduced?
It is not possible to have a debate such as this, despite the self-denying ordinance of the noble Baroness, Lady Thomas, without having some mention of London Underground, which is in every real sense a part of rail infrastructure. Present proposals suggest that as a result of the formation of public-private partnership the Treasury's funding support will cease as from 1st April 2000. To break even and maintain the network in its present state, the Underground has to achieve a gross operating profit of around £400 million. In 1997–98 that margin was only £265 million, leaving a funding gap of £135 million to be bridged next year.
Are we to assume that the large rail fare increase we saw this year will have to be repeated next year in order to cover that deficit? Perhaps the noble Lord, the Minister, could confirm what is to happen when he replies. In any event, the Government have been relying on their formation of a public-private partnership to raise £7 billion of private funds for Tube infrastructure improvements over the next 15 years. Are we to assume now that these improvements must be further delayed? I read in yesterday's Evening Standard that the new Tube ownership arrangements will now be postponed until after the next general election because of the impracticality of the present proposals. It appears that the potential bidders for participation are falling by the wayside. Can the Minister tell us what is to happen? London is desperate for practical solutions, not theoretical paper exercises. Can we be assured that there will be no delay in the maintenance and modernisation of the network? How is that to be achieved?
The truth is that the Government face an intractable dilemma. By history, tradition and philosophy, they would prefer to deal with a nationalised industry even though history shows quite clearly that that system has led to permanent, chronic under-investment and has
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therefore clearly failed. By history, tradition and philosophy, they find the implications of the privatised, free market solution difficult to accept—and so they search for a third way. In this area, it seems that the third way is becoming less and less clear.
9 p.m.
Lord Whitty: My Lords, I join other noble Lords in thanking the noble Baroness, Lady Thomas of Walliswood, for initiating this debate. From the Government's point of view, its timing is particularly apposite, coming as it does fast on the heels of the National Rail Summit, which was held on 25th February. The summit brought together the operators, infrastructure companies and others involved in the railways. It crystallised the Government's determination, together with the industry, to develop a new strategy, replacing the present unsatisfactory position which in part we inherited and which in part has been due to the inadequacies of the operators and infrastructure developers.
I must get this point off my chest before I go any further. The noble Lord, Lord Dixon-Smith, tried to blame the inadequacies of the privatisation on what the Labour Party did in opposition. I am quite prepared to stand here and defend the Labour Party's decisions in government. But our decisions in opposition reflected what was clearly a rushed and botched privatisation—whether or not one believes in the principle—and we are still living with the consequences.
It is true, as the noble Lord, Lord Dixon-Smith, said, that the history of the railway network under nationalised control was not one of great or appropriate investment. However, the noble Lord neglected to say that for the last 17 years of that nationalised operation the government he supported were responsible. Nevertheless, the fact of the matter is that under neither rigid centralisation nor the present privatised system are we getting the investment we need.
The debate is also apposite in its timing because, as the noble Lords, Lord Berkeley and Lord Mountevans, pointed out, the report of the Health and Safety Executive into the Bexley freight train accident was published today. In one sense, we welcome publication of the report. We endorse its findings and recommendations, which were spelled out by the noble Lord, Lord Methuen. We view with serious concern the fact that an underlying cause of the accident was Railtrack's poor management of its contractors. We note that revised procedures have been put in place. However, the report demonstrates that Railtrack needs to invest in maintenance and that its procedures must not put profit before safety.
Although Railtrack, as the operator of the network, has the prime responsibility for ensuring the safe operation of the railways, we continue to look to the HSE and to the Railway Inspectorate, by continuing their independent monitoring and investigation of rail safety, to ensure that Railtrack and the train operators meet their commitments and that safety standards are maintained and, where possible, improved. That point was raised by the noble Lords, Lord Methuen and Lord

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Mountevans. In the case of Bexley, the HSE and the Railway Inspectorate will ensure that all the report's recommendations are implemented and acted upon. Ministers are determined to ensure that, as part of improving the railways, safety is not compromised.
The noble Lords, Lord Mountevans and Lord Hooson, and the right reverend Prelate the Bishop of Hereford referred to the safety structure. We have instigated a review of transport safety arrangements, as announced by my colleague, Dr. John Reid, on 8th December. The Health and Safety Commission has also brought forward its planned review of the arrangements for setting and regulating railway safety standards. We need to consider also the extent to which Railtrack's role in enforcing as well as setting its own standards might be transferred. The initial response of the HSE is expected in the spring. The first of those broader assessments is also looking at the system of inquiries, to which the noble Lord, Lord Mountevans, referred, and which may need some degree of improvement. We can never become complacent when considering safety issues. Railtrack and the railway system as a whole have a much better safety record than do many other modes of transport. Nevertheless, when accidents occur they are serious. We are committed to ensuring that the safety regime is appropriate and the best possible.
I return to the subject of the National Rail Summit and investment, which has been a central concern of the debate. At the summit the Prime Minister made clear in his opening speech that the Government believe that the railway industry needs to start doing better and that it needs to start doing so now. He said that there had to be an improvement in two key areas, in service and—the subject of this debate—in investment. My right honourable friend the Deputy Prime Minister then went about, to quote the noble Baroness, "knocking heads together"—he is quite good at that—which led to the summit resulting in a co-ordinated approach. That also indicates that at the highest level in this Government there is some understanding of the kind of frustration about the present system which the noble Lords, Lord Hooson and Lord Geraint, have experienced, along with many hundreds of thousands of other rail travellers.
The summit resulted in a commitment from the rail industry which has stated that investment is already increasing and that some 1, 800 vehicles, trains and carriages have already been ordered and will be operative in the next two years. Railtrack states that its current investment programme, to which the noble Earl, Lord Leicester, referred, is to spend £17 billion by 2007, which is the biggest-ever investment programme undertaken by a UK company in this country.
Nevertheless, despite that level of commitment, the Prime Minister's message was that there must be more investment, not just to replace existing capacity but to expand in a way which addresses the issues of capacity raised by the noble Lord, Lord Dixon-Smith, and perhaps even the specific issues raised by the noble Lord, Lord Methuen, though I doubt all of them. Without that investment, in the face of growth in passenger numbers and rail freight, which has been impressive over the past few years, we run the risk that
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the railway network will lack the capacity to sustain the Government's integrated transport policy to relieve roads, congestion and air pollution.
At the summit the Deputy Prime Minister launched a "spring clean" package for the railways aimed at providing a new railway architecture, putting passengers first and creating a better integrated public railway service. He announced that the Government were prepared to renegotiate existing franchises and specified criteria against which applications would be judged. One of those would be the extra or accelerated investment which renegotiation would generate, which would give the franchisees a longer period—a point raised by the noble Viscount, Lord Weir—and the extent to which that investment could meet passenger needs.
The Deputy Prime Minister also introduced Sir Alastair Morton as the new chairman of the British Railways Board and head of a shadow strategic rail authority. The appointment of a new franchising director and rail regulator will follow. He also launched the consultation exercise which will lead later in the year to the shadow SRA's plan for the railway. He also announced the start of work on a national passengers survey and on ways of measuring more accurately train operators' performance. He promised legislation to establish the SRA on a statutory basis—an SRA which would also regulate the rolling stock leasing companies if they do not voluntarily restrict their market power.
For its part the railway industry gave a commitment that punctuality and reliability—the biggest current problems as the noble Lord, Lord Hooson, pointed out—would be better next year than they are now. Other commitments from the industry were that there would be investment in 2, 300 new vehicles so that by 2002 half the current rolling stock fleet would have been replaced or refurbished; by April next year all stations in Great Britain will have passenger information systems; and, on the safety side, an extra £39 million will be spent on measures to improve the security of passengers.
Those commitments build on the action plan agreed in November. The summit shows that the industry can come together to discuss how to provide a better rail service and increased investment in partnership with the Government. It demonstrates how, despite the fact that there have been failings on all sides in the past and currently, we ought to move away from the blame culture and pull together to achieve our common objectives, being frank with each other but also making commitments to each other which are real.
It is also important that the summit was seen as part of the railway's contribution to an integrated transport policy. Last July's White Paper was an important document. At its heart was the policy of integration. Rail transport's role, as noble Lords have said, is not only to shift cars off the roads and provide a real alternative to motor transport; it is also to improve the efficiency of our freight system, to improve the economies of distribution as a whole and to contribute substantially to environmental improvements, and to provide an interface with other modes of transport, be they bus, road or pedestrian. Therefore investment is not just in railways but in the interface between railways and other modes.

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My noble friend Lord Berkeley expressed a degree of scepticism about Railtrack's commitment and the noble Earl, Lord Leicester, expressed the belief that Railtrack was moving in the right direction. Either way it is clear that Railtrack is responsible for the stewardship of and investment in the railway infrastructure and the system we have. Under the conditions of its network licence, it is required to produce an annual statement—its network management statement—covering a 10-year period with greater detail given for the first three years. The Government look to the rail regulator to monitor Railtrack's investment, the form of the NMS and the period it covers, all of which have to be approved.
Over the past two years the regulator imposed certain conditions on Railtrack to improve the company's accountability and to place it under explicit obligations. In September 1997 Railtrack's network licence was modified to require it to maintain, renew and develop the network in a way which meets the "reasonable requirements" of train operators—both passenger and freight—and of funders. The condition in its network licence makes Railtrack explicitly accountable to the rail regulator and in effect to the train operators and the funders of the railway network for its stewardship.
Nevertheless, it is fair to say, as the noble Lord, Lord Mountevans, said, that the 1998 NMS in practice contained few firm commitments on investment for future years. As a result, further conditions were imposed by the regulator last July. Railtrack was then required to improve its network performance—reducing delays it caused—in 1998 by 7.5 per cent.; to eliminate poor track quality by April 2001; to produce plans aimed at addressing key capacity bottlenecks; and to improve the consultation process with train operators.
Railtrack's new NMS is due to be published towards the end of this month. Many of the issues raised by noble Lords will be addressed in that new plan. The ball is very much in Railtrack's court. We hope and believe that it will have learnt from last year and that the 1999 NMS will meet the needs of the industry, and the broader points raised in this debate and, indeed, by Ministers at the rail summit.
My right honourable friend the Minister of Transport made it clear that the Government will be looking closely at the 1999 NMS to see whether Railtrack's proposed investment is sufficient. The rail regulator will also be looking at the NMS carefully and will be looking for the shadow SRA's view on it and on the outputs it wants Railtrack to provide. We expect the rail regulator to take appropriate action to ensure that the network is maintained, renewed and developed in a way which meets the reasonable requirements of the industry and of its ultimate passengers. In doing so, it will need to provide more information than has been the case in the past. However, I believe that Railtrack is apprised of that fact.
In the immediate terms of the NMS and in the longer term, one of the major problems addressed in this debate is the fact that, although investment is desirable, there are constraints because of the long timescale of return and other market constraints on the funding of that
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investment. One of the messages of the summit was that we are all—that is to say, Government and those in the industry—prepared to talk about how, together, we can provide better funding arrangements, such as the infrastructure investment fund, and so on.
However, investment in infrastructure is still primarily Railtrack's responsibility. It is Railtrack's job and a requirement of its licence. Indeed, Railtrack understood the situation when it took on that licence. Of course, it does have to operate in the market. I do not wish to enter into a debate about whether Railtrack needs a strong share price or a stronger one than it has at present. The regulator has a view on that and has said that the profits of Railtrack are in excess of what could reasonably be expected. That suggests that there is at least some money which perhaps went to shareholders rather than being spent on investment in rail. That is one source of investment, but we also need to establish confidence in the railway system as a whole so that capital markets can see a return, albeit a long-term one, and that that return is reasonably assured.
I shall now address the question of access charges. The rail regulator's periodic review of access charges will shortly be released. The NMS will be a key input to that review. The regulator has made it clear that he wants to use the review to promote investment in growth in rail services and to improve the performance of the network. The Government have obviously endorsed those objectives. We expect the regulator to put in place a charging structure which imposes incentives on Railtrack to invest properly in the future of Britain's rail network.
The rail regulator's work is continuing. Last December, he published a key document on the financial structure for Railtrack, leading to decisions on access charges from the year 2001. He concluded that the current returns earned by Railtrack are excessive and said that where new investment is underpinned by government subsidy and assurances, returns should be lower. If Railtrack is exposed to genuine risk, higher terms and higher returns would be justified.
So the rail regulator has made it absolutely plain that the profits of Railtrack are in excess of what can reasonably be expected. That is already in the pipeline, but let us now look briefly to the future. We shall have a shadow strategic rail authority from 1st April. We are committed to bringing forward legislation in due course. I noted the views of the noble Lord, Lord Cadman, on our priorities, but we are where we are. As of now, the timing of that legislation, whether it be this Session or the next, is at least in part in the hands of your Lordships.
Among other things, the strategic rail authority will promote railway use, plan the strategic development of the network for both passengers and freight and promote integration between transport modes. The legislation will also give the authority and the regulator new enforcement powers so that they can impose penalties or conditions upon train operators and Railtrack more swiftly, and penalise past breaches of franchises and licences.

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Several noble Lords indicated a feeling that rail freight should not be seen as the poor relation on the railway. There has been an impressive improvement in the level of rail freight in this country. Both the operating companies and those who use them are to be congratulated on a more effective way of shifting freight which is more appropriate to an integrated transport policy. We need to develop those provisions for rail freight. We believe that Railtrack needs to take into consideration the needs of the freight industry and that the new regime we are proposing will allow it to do so.
A number of other detailed points have been made, notably on the West Coast mainline which usually features fairly large in these debates. Railtrack is currently taking forward the first phase of its passenger upgrade programme and Virgin Trains has submitted an action programme to the franchising director indicating how it intends to improve its performance. There are capacity problems on that line which Railtrack needs to attend to.
The noble Lord, Lord Dixon-Smith, mentioned issues relating to the London Underground which I was quite relieved the noble Baroness did not mention at the beginning of the debate. All I will say at this point is that negotiations on the PPP are complex and detailed. It is a case of "watch this space. "For the moment I shall not go further than that. I shall certainly not comment on newspaper reports on these matters which in my experience leave a little to be desired.
This has been a good and informed debate. Without engaging too much in a blame culture—as I mentioned earlier—I should say that Railtrack now understands that certain responsibilities exist and it is now taking those on board. We must move into a new era under a new regime where the operators, Railtrack and the Government all accept their responsibilities and all look for the resources which will be necessary for investment, identify the priorities and move together to ensure that we have a railway system which is appropriate for the integrated transport needs of the 21st century.
9.21 p.m.
Baroness Thomas of Walliswood: My Lords, I wish to thank all those who have taken part in the debate. I, like others, was particularly glad to hear from those who are not normally counted among the usual suspects in these debates. I refer to my noble friends Lord Steel and Lord Hooson and in particular to the contribution of the noble Viscount, Lord Weir, who added a fresh and distinctive historical and financial perspective to our debate.
We were reminded once again what an extraordinary expert in these matters the right reverend Prelate is. How he fits rail and the countryside in with all his other responsibilities I am not quite sure. We did not touch on the Underground. That was partly because—the Minister will perhaps be relieved to hear—my noble friend Lady Ludford was not able to be present tonight. Otherwise I can assure the Minister he might have been challenged on that subject, and no doubt on another
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occasion he will be. For the moment at this late hour I thank the Minister and everyone else who has taken part in the debate. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Ageing Population
9.22 p.m.
Lord Dholakia Lord Dholakia rose to ask Her Majesty's Government what changes they expect in public policy in the new millennium as a result of the ageing population.
The noble Lord said: My Lords, I apologise to noble Lords on all sides of the House that the debate is taking place so late in the evening. The fact that noble Lords are present shows the importance of this debate.
The debate does not concern what happens to our ageing population now, but what kind of policies we should pursue in the next millennium. It would be so easy to deal with this subject on a piecemeal basis by increasing pensions a little and making a little more provision for winter fuels as part of the annual budget provision. These are welcome measures, but I think we are talking about issues that go beyond that. The debate is about developing policies and programmes so that every aspect of the ageing process is taken into account.
Britain is getting older. One does not have to look simply at your Lordships' House to confirm that. The average age in our society is steadily rising as a result of falling birth rates and increasing life expectancy. Very soon, for the first time in history, the over 65s will outnumber the under 20s. We will be the oldest society that has ever lived on earth. How will we cope with these changes?
I want today to draw attention to the Millennium Debate of the Age. My purpose is to stimulate debate on this issue in your Lordships' House. The Debate of the Age is co-ordinated by Age Concern and was launched in the spring of last year with messages of support from all three main party leaders. So it has cross-party support. It is an action-based programme which aims to raise awareness of and influence policy about the implications of an ageing society on all aspects of our lives and to encourage government, organisations and individuals to plan how to meet the challenges of the next millennium.
Sally Greengross and her staff at Age Concern should be congratulated on undertaking this initiative. Over the past year Age Concern in the Debate of the Age has held over 1,000 events and debates. It has commissioned surveys and encouraged a mass of public participation through voting brochures, an interactive website and a free phone information line. Running parallel to these mass public participation events are the largest series of citizens' juries and the Millennium Papers. I cannot recall such a massive consultation ever being undertaken by a voluntary organisation. The formal research, public reaction and feedback will culminate in recommendations for future priorities and will be published as the Agenda for the Age, ratified at the final

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debate in December 1999 and presented to government in early 2000. But we should be highlighting our concerns now.
The debate is structured around five themes: the future of health and care; values and attitudes; paying for age; the built environment; and future work and lifestyles. Let us look at some of these aspects and the work done so far. It is in everyone's interest for older people to remain healthy and independent for as long as possible. But as life expectancy increases, how do we ensure that extra years are quality years? In Britain, the majority of expenditure on health goes on people over 60. When Britain's National Health Service was created 50 years ago, few people lived beyond retirement age. Now it is not unusual to live for 25 years in retirement. However, in those 25 years elderly people will be more likely than ever to require medical treatment. Consequently, the NHS will come under ever-increasing pressure. I am sure that my noble friend Lord Clement-Jones will have something to say about that.
A MORI poll carried out in the UK for the Debate of the Age showed that the British public still strongly support the principle of free treatment. Difficult choices will have to be made. We already know a lot about how to stay healthy. Should we be doing more now to ensure that people have healthy lifestyles? If we do our best to stay healthy, should we have to pay for those who become ill because of their own irresponsibility? Medical advancements continue to conquer many ailments. Will we be so healthy that we will not need medical treatment? Or will medicine become so expensive that it will need to be rationed? What are our priorities about who should be treated? Already there is evidence that treatment is being rationed on the basis of age, so the tough decisions obviously lie ahead. Who is responsible for caring for those who cannot care for themselves—the family, the community or the state? The noble Baroness, Lady Pitkeathley, is a member of the group of experts which produced the Health and Care interim report for the Debate of the Age. I am grateful to her for highlighting such concerns.
In looking at values and attitudes, what will life be like when there are so many more older people and fewer younger ones? The challenge is to think ahead, to plan the sort of society we want to live in. There is a danger that society could become more fragmented. In the future more people will live alone. In England by 2016 there will be almost 24 million households, 23 per cent. more than in 1991. More than one in three households will consist of people living on their own. From where will our values come? Should the opinions of young people carry more weight than those of older people? Should older people make the decisions? Should people have their say whatever their age?
Is it important to be independent, or should people rely more on their families? Or should all members of a family be responsible for each other? How can older people remain connected to society? One of the options is voluntary work, with the benefits that it provides to the individual and the community. But is there a danger of voluntary work replacing paid jobs?
Then there are "end of life" issues. In British law euthanasia and "mercy killings" are murder or manslaughter. Should people have more of a say in how they die?
We talk about paying for age. How well off shall we be in the next century? If we are to make the most of longer, healthier lives, we shall all need enough money to live on. In the next century only half the population of the United Kingdom will be working. The other half may be people who are unable to work, including children and pensioners.
Many of these are being raised by the Government in their pensions Green Paper. Should private pensions be compulsory? Who should pay for those who have not worked? What about people who will not save enough? Should it be their choice; or should government help them from the contributions of everyone else?
Is it the responsibility of government or communities, or of families, to make financial provision for people who cannot work? Should young people pay more to fund a growing number of retired people? Are today's young people putting enough money into their pensions early enough? Those are some of the questions that must be asked.
Last week, we heard the Statement repeated by the noble Baroness, Lady Hayman, on the report of the Royal Commission on long-term care. The Government have called for a national debate on the issue. The Debate of the Age is already encouraging people to think about this issue, asking how long-term care should be paid for. Should it be paid from taxes for everyone who needs it, regardless of how well-off they are? Or is that unfair on the five out of six people in the UK who will never need long-term care? What alternatives are there for financing long-term care?
There is discussion about the built environment. Buildings and roads are made to last. So it is important to plan now for how we should be building for the future. Through the Debate of the Age plans are already under way for a nationwide programme for national policy proposals on building needs for the 21st century. The issues will include many points that concern us all.
Britain will need around 5 million new homes in just 20 years. Will they be built in towns, or in the country? Where we live in the next century depends on how far we travel, to work, or to stay in touch. How do we want to travel? And how do we wish to deal with the impact on our environment?
What should new homes be like? Will it be important that houses change to meet a person's needs as that person grows older? Or shall we choose to move into homes specifically designed for different stages of life? Now is the time to think about how to make more buildings, not just houses, more accessible than they are at present.
On the matter of lifestyles, my noble friend Lord Dahrendorf chairs the study group that is looking into this issue. He has considered such matters as changes in employment; future workforce reductions; attitude to paid work; age discrimination in the workplace; and lifelong learning.
There are concerns that we can no longer assume a job for life. The number of men who are over 50 and unemployed is alarming. Who will resource re-training at a later age in life? How shall we equip young people better with the ability to take responsibility for their own learning throughout their lives?
I hope that I have outlined the numerous issues posed by the democratic shift towards an older society. The Government will have to respond to many of those issues. Indeed, in welcoming the Debate of the Age, the Prime Minister said:
"We have got to assess the huge impact of the changes that are all around us which are going to affect all our lives, particularly as we grow old".
I welcome the Government's establishment of the Inter-Ministerial Group examining issues across government which affect older people.
It is worth noting that many of these issues are worthy of special consideration with regard to our ethnic minority communities. On Thursday 4th March, the Debate of the Age ethnic minorities consultation programme was launched at a reception in the House of Lords. Again, I am grateful to the noble and learned Lord the Lord Chancellor for allowing the use of his premises, and also for showing his support for the issues under consideration.
All I wish to do at this point is to highlight one particular problem. By the year 2030 the number of black and ethnic minority people over 65 in the UK will have increased tenfold from 175, 000 to 1.7 million. Ethnic minority elders already face challenges with access to housing, healthcare and pensions and they could increase in line with the demographic shift.
All I ask at this stage is for us to be able to identify the issues that we need to tackle in the next 20 or 30 years. I thank noble Lords.
9.35 p.m.
Lord Dahrendorf: My Lords, like my noble friend who initiated the debate, I am involved in the Debate of the Age. As he mentioned, I am chairman of a group concerned with work and lifestyles and it is in that connection that I wish to make a few brief remarks. I am glad that we are having an intimate discussion here tonight because what I want to say may well be regarded as slightly delicate in your Lordships' House: it concerns old men who have nothing to do.
In his Budget yesterday, the Chancellor of the Exchequer was evidently concerned about men who are no longer employed. He was talking about those who are 50 and older, so hardly old men, or not at least from this perspective. He pointed to the important and serious developments which we face. In 1979 12.6 per cent. of 50 to 64 year-olds were out of work. In 1999, the figure is 27.4 per cent. of those aged between 50 and 64. The Government's answer is that every effort must be made to find employment for as many of those as possible. Who would dispute that intention? The Chancellor of the Exchequer has introduced, or is about to introduce, an employment credit system which is supposed to help those in that age group who find employment.
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That is fine so far as it goes, but the problem is much larger. That is not said with any intention of being critical of the Government's progress. In 1995 the OECD published figures comparing the position of different countries. There are interesting and important differences. The figures relate not to 50 to 64 year-olds but to 55 to 64 year-olds. In the United States, 85 per cent. are employed. In Japan, it is 80 per cent. At the other extreme, in France 38 per cent in that age range are employed, and in Italy 42 per cent. As in so many respects, the United Kingdom is somewhere in the middle, though closer to the European experience. In 1995 56 per cent. of the 55 to 64 year-olds were in employment. Is the glass half full or is it half empty? In that age range 44 per cent. are not in employment.
The UK is not an extreme case, but we are talking about millions of people, not small numbers, at a time when, for a man of 50, the remaining life expectancy is 27 years. For a man of 55, it is 22 years. That raises important questions, not just in economic terms, but in human terms. In economic terms the obvious question is the contribution that can be made by these men to our wellbeing, but in human terms the question is what kind of life people aged 50 or 55, who have perhaps 25 years to live and no firm place in the scheme of things, will have.
I believe that the two obvious answers are right but not sufficient. One relates to employment and the other to an attempt to introduce legislation against age discrimination. I am favourably inclined to both, but I do not believe that either gets to the heart of the problem. One does not stop a tide of this kind by legislating against discrimination, or suddenly find jobs for people who may desire them but who may not be wanted given society's present values.
Perhaps I may pose two or three questions in this connection which concern what governments may be able to do. Age discrimination is one factor. The time has come when we must change our attitude to the retirement age. We cannot continue, either in the UK or elsewhere in Europe, to give the impression that an early retirement age is a good thing. For both the individuals concerned and society as whole it may well be desirable to move in the American direction and not insist on ever-earlier retirement but open opportunities beyond what has come to be the traditional retirement age of 65, or perhaps as early as 55 or 60.
The American experience is quite useful. It shows that people in the higher age groups do not necessarily have positions of responsibility, but they can continue to work in the context in which they have worked in the past. The field that I know best, which is perhaps the easiest to adapt to this point of view, is the academic world, in which retirement is a pretty pointless exercise. It results in the loss to universities of some of the best experience. I believe that the American example is a good one in this respect. But this is by no means confined to universities. Attitudes to retirement age need to be reconsidered, and perhaps the Government can set an example in the areas under their direct or indirect influence.

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The second matter referred to by my noble friend Lord Dholakia is the vexed and difficult question of retirement savings. On what do people live in the long period in which they are not fully involved in the world of employment? We have only just begun to find ways to encourage more effective methods of saving for that period to enable people to make sense of their lives when they reach that stage.
The third matter, also referred to by my noble friend, relates to the voluntary sector. I have considerable involvement in the voluntary sector. I am aware that we are experiencing a paradoxical reality in that those who have the most time are not necessarily those who are the most active in voluntary activities. On the contrary, it is those who have full-time jobs who are prepared to give a great deal of time to that activity. Very often it is women who are prepared to do that, not men aged 55 or 60. They are the mainstay of small and medium-sized charities, or they volunteer in other ways.
An interesting question is whether there should be a change in values, and perhaps in training, to encourage men to become carers. That is one of the obvious and greatest needs. I would not rule out a change in mood, values and lifestyles which encourages men to move in that direction. I think, for example, of our splendid and justly admired doorkeepers. When they retire, many become guides around these buildings. I have taken many student groups through the buildings and have admired the way in which the doorkeepers use their experience in order to inform others about institutions of great importance to us all. That is one example among many of what can be achieved once people are no longer in active employment.
There is a fundamental issue here. It is not for government to resolve. How do we encourage men to take a more flexible attitude to work and life, as women have had to do for some time? It is one of the reasons why there is less unemployment among young women, and why older women on the whole find it easier to cope with the predicament at which I have hinted.
I hesitate to recommend yet another government commission. After many years in which I think that we had too few commissions looking into issues, we may now have sufficient; I shall not say that we have too many. We receive plenty of reports, but if the Government were able to encourage the production of a report on those men who are and will be lost to society, I, for one, would regard that as a good idea. It might stimulate not only debate but further action in relation to an issue of considerable importance to many people.
9.47 p.m.
Lord McNair: My Lords, it may be a record in your Lordships' House that on a day of Liberal Democrat debates we now have four Liberal Democrat speakers following one another. I am pleased to speak in the debate in support of my noble friend Lord Dholakia. I have to declare an interest as one who fully anticipates that he will be intimately concerned in comparing experientially the answer that the Minister will give tonight with the way events work out in practice.
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At this stage in the debate, most of the obvious points have been made. I am not charged with winding up the debate, so I have to put forward a relevant point which has not been raised. Fortunately, I do have a contribution to our discussions which I hope your Lordships will feel is useful. I have had the good fortune to spend a little time in countries with a less technologically sophisticated culture, in which the flow of knowledge, wisdom and useful, and generally accepted advice is from the previous generation to the next generation. In those cultures, men and women acquire status and respect as they accumulate experience and years. In Britain, as in other high-tech countries, that process is reversed. As technology becomes more and more highly sought after, the importance of a lifetime's experience of human affairs appears to pale in importance and usefulness. That can only add to the feeling of exclusion which may make one's years of retirement a trial rather than a welcome relief. If one has been lucky enough to remain in full-time work until the official retirement age, the rite of passage which signals the change from a productive existence to a less purposeful one can be a painful process. In our complex economy, rites of passage often have significant economic consequences.
As chairman of the Unitax Association, what I want to say this evening has an important bearing on the economic transformation of retirement. I am always in a quandary when contributing to debates where the benefits of resource economics and Unitax would have a significant bearing on the subject under discussion, because the benefits may seem remarkable without an understanding of the mechanism which underlies what I am going to say. But this is not the time for digression into theory and I shall confine my remarks to the effect that such a change would have on the way the process of growing into older age is perceived by those experiencing it.
The Unitax mechanism, taken to its logical conclusion with a basic income or citizen's income, would provide under the present calculations a basic income of about £117 per week for every citizen from 16 years of age to the end of life. Because the burden of direct taxation has ended it also abolishes the distinction between employment and non-employment, self-employment and retirement. If noble Lords were to think about this as a new idea and ponder on the difference that it would make to the economics of ageing, it will be realised that it is definitely an idea worth considering.
At the most simple level it is obvious that this would give hugely more freedom of choice to people of all ages as to how they manage their working and leisure activities. It should also make possible a gradual reduction in working hours and make it easier to follow the advice in the wonderful poem, I suppose it was, set to music in the late 1960s called "Desiderata". The advice was,
"Take kindly the counsel of the years Gracefully surrendering the things of youth".
I hope that I can follow that advice.

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There is another hugely important fiscal benefit to the changes I am suggesting. Our present direct tax situation has come under worried scrutiny as we face the prospect, foreshadowed by my noble friend's Question and much discussed this evening, that when my age group reaches retirement age there will be so many more of us than now relative to the number of the working population. Any change from direct to indirect taxation will transform that situation. However that is achieved—I notice my noble friend Lord Dahrendorf smiling—if one moves from direct to indirect taxation, then whoever breathes consumes. If one consumes, one contributes to the tax take.
It is so simple that it is hard to find too much to say about it. In replying to this debate, I do not expect the Minister to have much to say in detailed reply to my suggestions because I did not provide the Department of Health with advance information about Unitax and resource economics. Some basic information is now with officials. Perhaps the noble Baroness will be able to study the papers and write to me after she has studied the previous set of papers about something completely different which I passed to her the other day.
I have one suggestion to add to the point that my noble friend Lord Dholakia dwelt on in his remarks; namely, the cost of healthcare. On a number of occasions I have mentioned in your Lordships' House the question of hydrogen peroxide. I do not believe that my hair is lighter than it was because I take a teaspoonful of hydrogen peroxide every morning, when I remember, against the advice of the Medicines Control Agency. It tastes disgusting, but it is the best prophylactic measure in terms of general healthcare that anyone could possibly adopt. I guarantee that if my generation follows my example the cost of growing old to the National Health Service will be greatly reduced.
9.55 p.m.
Lord Clement-Jones: My Lords, it is not often that I have the pleasure of summing up after three noble friends have spoken, and I must be careful when doing so. I thank my noble friend Lord Dholakia for giving us the opportunity to take part in the Millennium Debate of the Age. As he and my noble friend Lord Dahrendorf said, it is an ongoing problem and important questions are being raised. But far be it from me to attempt to answer many of them. I firmly intend to stick to my last in terms of the health agenda, perhaps touching on a couple of other areas, too.
The recent Royal Commission, which is the vital starting point for the debate, laid to rest some of the more doom-laden scenarios and stated that there is no demographic time bomb. Before Christmas the noble Baroness, Lady Cumberlege, initiated a debate based on the BMJ book, Clinical Futures. It contains an excellent chapter by Professor John Grimley Evans on ageing. He is the professor of clinical geratology at Oxford University. The book contains some good quotations, such as:
"Immortality is a minority taste, and the notion that all humanity is in pursuit of it is merely a health economist's fantasy".
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What is even more reassuring for health economists, he also states that:
"There are good grounds for scepticism about claims that immortality or massive increases in human lifespan are within the general grasp next century".
The Department of Health can take some comfort from that!
The report of the Royal Commission was described by The Times leader as being widely off message, but I wonder whether its proposals are as radical as painted. Its basic conclusion was that public support for the genuinely catastrophic costs of care is needed. My noble friend set the scene, which is glossed by Professor Evans, but there is general agreement that costs will rise and by how much. However, there is less agreement about the significance of that. That was evidenced by the fact that there was a majority report and a dissenting report. There is general agreement that costs will rise from £11 billion to £45 billion in 2051, excluding social security costs. However, as a proportion of GDP, it appears that that will not be a huge rise; approximately 1 to 1.1 per cent, in terms of the existing system. The general view was also that the costs of carers will rise because the supply of informal carers will decrease over time. Again, that was not underpinned by the evidence to the commission.
One of the problems highlighted by the Royal Commission was the poor quality of available data—that is a very important point—particularly that underpinning assumptions about trends in health expectancy. The commission suggested that that was a prime role for the new national care commission. There are also few data about preferences; whether older people will always prefer to be at home and favour domiciliary over residential care in most cases. Anecdotally, there are clear differences of opinion and we do not have the evidence on which to base future preferences. However, we know that the role of government must be to enable choice and that that must be the starting point.
I wonder whether, given time, the Royal Commission might have reached agreement. It had a breakneck timescale within which to reach its conclusions. I agree with the statement of the dissenters that there should be no distorting ideological preference for publicly-provided over privately-provided activity, or vice versa, but I do not agree with the dissenters' conclusions drawn from that. I believe that crucial to the debate—and one can be quite objective about it—is the efficiency of universal benefits over means-tested or targeted benefits. Interestingly, I notice that in this week's Budget there was no resiling from universal benefit. Child benefit was not taxed and continues at a higher rate. I firmly agree with the Chancellor that there are considerable advantages in universal benefit.
Then again, there is the question of how efficient the NHS is as a universal service. I am rather prejudiced in favour of a universal service and I am greatly in favour of the kind of language which the Royal Commission used in terms of risk-spreading or risk-pooling, which is similar.

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We also have some of the emotional arguments, the perceived unfairness. There is a considerable difference between the way some of those with illness or a chronic disabling disease may be treated. One has to look only at the difference between the way in which cancer patients and those suffering from Alzheimer's are dealt with. There is a wide variation in the charges levelled by local authorities for home care. There is more consistency for residential care but home care is the key area.
I believe that the majority report got it right. I cannot yet speak for my party as a whole because it has not yet reached its conclusions on the matter. It is easy to characterise the majority report as speaking from the heart and the dissenters as speaking from the head. There was an attempt by the press to characterise it as such. But I believe that, by and large, the majority got it right—for example, in relation to asset disregard, the need for clear rules, the need for a contract between government and the people and between the generations. That is not just romantic language. It is extremely important that, when you start work, you should know what to expect when you retire and when you begin to need long-term care. Also, there is the whole question of personal care. It seems to me that the logic in the conclusions is right in terms of hiving off personal care and seeing that as something which should be provided universally in the same way that NHS care is provided.
Also, the question of respite for carers was not ignored. It was suggested that government support should be doubled or more than doubled from the recently announced figures in the Government's carers strategy. The report rightly picked up on the need to switch priorities towards supporting people in their own homes and adapting those homes for the use of older people. Of course it deals with the whole question of carers and services provided to those people in their own homes. That will be extremely important.
At the end of the day, it seems to me that the figure which it achieves of £1.1 billion—which is something like 1/44 of the NHS bill—is relatively modest. Yesterday we heard how public spending is coming down as a percentage of GDP. The Chancellor engaged in a bit of old-fashioned redistribution and I applaud him for that. Perhaps I may put into context the figure of £1.1 billion mentioned in the Royal Commission's report. Yesterday, the Chancellor announced £3 billion-worth of measures for older people, and that was in one Budget. In contrast, he announced that £1.7 billion is to be spent on a new computer initiative. It seems to me that the £1.1 billion suggested by the Royal Commission, when put in context, has considerable advantage for us all in the longer term. Therefore, if the Government had the will to implement the Royal Commission's recommendations in full, I am sure that they do have and will have the resources to do so.
I could talk about some of the other solutions—for example, private insurance. Those matters were referred to by the dissenters as having advantages. In particular, David Lipsey talked about the four-year care cover so that there would be a limit on the amount for which one would have to insure. It seems to me that some of those ideas are attractive but they are only for those who have
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more than moderate assets. The Royal Commission did not believe that those solutions—equity release schemes, insurance or whatever—would hit the 60 per cent. of those in longer-term care, and I agree with that.
The whole question has been raised—and I raised it on the Health Bill—of joint working and pooled budgets and whether that goes far enough. Although great detail is not gone into, there is agreement with the Health Select Committee's conclusions and I believe that the Royal Commission was influenced by the Audit Commission's report, The Coming of Age, which illustrates in detail the effect of separate health and social care management.
The commission welcomes the direction of government policy but said that the lack of "coterminosity" may hinder proper working in the future. The dissenters went further than that, which was interesting, and said it could be done via the new primary care route rather than by local authorities. That may be an attractive route and I have no particular ideological preference. But certainly the bringing together of those two strands, which I know goes further than current government thinking, is something in which we on these Benches firmly believe. At the end of the day nearly all those who have looked in detail at this issue believe that a one-stop shop is essential.
Touching briefly on the issue of discrimination, my noble friend Lord Dholakia mentioned this. We welcome many of the actions which the Government are taking: a long-term care charter, the ministerial group on old people, the better government for older people initiative, national service frameworks and so on. However, there are gaps, and we have drawn attention to them. We have drawn attention to the rationing of Aricept and to the Department of Health's own report, Not because they are old, by HAS 2000. Again, there are major points that my honourable friend in another place raised in a debate on discrimination and rationing. These issues are very important and we hope the Government will carry them forward.
Unashamedly, I have dwelt on the question of the fourth age and, as Peter Lazlett recently pointed out, that must be distinguished from the third age. My noble friend Lord Dahrendorf raised key issues relating to employment among the over 50s and the fact that they could not be dealt with merely by non-discrimination provisions or job creation. He also raised the issue of going beyond the traditional age of retirement. The Carnegie Report, which I reread in preparation for this debate, contains some very important conclusions and I very much hope that the Government will dust down that report and have a look at it again because I believe that, taken together with some of the points made by my noble friend, it contains key issues and recommendations which, if put into practice, would be of enormous significance.
10.6 p.m.
Earl Howe: My Lords, the noble Lord, Lord Dholakia, is to be congratulated for bringing such a broad and fascinating subject to the Order Paper this

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evening. We have heard from all the contributors but perhaps especially from the noble Lord, Lord Dholakia, himself, how broad and multi-faceted a subject it is. That is why I shall not attempt in summing up to distil what has been said into a neat portmanteau-type summary. I shall leave that to the more expert skills of the Minister, but what I can do is to pick up some of the themes that have been raised in the debate which to me carry a particular resonance.
The starting point for the Question raised by the noble Lord, Lord Dholakia, is of course demography. For governments whose chief and quite proper concern is to plan for the short and medium term—typically a five-year time-frame—it does no harm to focus exclusively for once in a while on more distant horizons. In asking the kinds of questions posed by the noble Lord, Lord Dholakia, we can at least hold on to one reasonably firm framework of predictable fact; namely, the trends in general population growth and the likely patterns in the growth and shrinkage of different age groups.
It is possible to say now with a fair degree of certainty what those patterns will look like in 2020 or in 2035. However, as we have heard this evening, once we start addressing within that broad framework some of the particular issues which most concern government day-to-day—health needs, housing requirements, transport networks and so on—we find ourselves beset by a whole host of variables: so many variables that the marginal benefits of spending departmental time gazing into the very distant future become less and less evident. That is not to say that we should not be doing it at all; only that we should be aware of the limitations of such an exercise in terms of its usefulness to policy making today.
That feeling came over to me very strongly in reading the report of the Royal Commission on Long-term Care. We know roughly how many people over 65 there will be in 30 years' time, but we do not know how unhealthy they will be. We do not know the extent to which changes in society will increase or reduce the availability of informal unpaid care from families or relatives and we do not know what paid care will cost. We can of course carry out sensitivity analyses, as the Royal Commission did, to show the effects of different assumptions in the key determinates. But the range of those assumptions is so great that what the commission's report refers to as "the funnel of doubt" rapidly begins to resemble one of those brass horns on an old phonograph.
That is why I have some sympathy with the commission in one of its main recommendations, which is the establishment of a national care commission, the remit of which would include the job of updating the projections of long-term care need in the light of changing circumstances. I am not entirely certain why that task should be thought to warrant the setting up of a brand-new, purpose-built body when it could as readily be carried out by an interdepartmental committee of officials. However, there is absolutely no doubt that these matters need regular scrutiny and review.
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However, it would be a mistake to think that there are no areas of public policy-making in 1999 which have a bearing on the way the world will be in 2049. In environmental policy, one need think only of greenhouse gas emissions. With long-term care, just because one needs to monitor and update the projections every few years in the light of new data does not mean that very long-term influences are not also at play. Perhaps the most obvious example of such an influence is preventive medicine. I am not thinking particularly of hydrogen peroxide, with respect to the noble Lord, Lord McNair. A dental technician at this week's RCN Congress referred to cigarette smoking as "slow suicide". The success of an anti-smoking campaign today will yield huge benefits long into the future. In general, the more we can build up awareness now of what a healthy lifestyle actually means, the more healthy our elderly population will be in the years to come.
Nutritional advice—always seen as the classic manifestation of the nanny state—is nevertheless very important when we consider the increasing trend towards the consumption of processed and fast foods. I have nothing against processed foods, but the fact is that some of them contain a great deal of sugar, and others contain a great deal of salt. We need to be generally more aware of what levels of those substances we are ingesting.
The mention of greater awareness leads me to an area to which the noble Lord, Lord Dholakia, referred and on which we touch regularly in our debates on health matters. I refer to rationing. As I visit hospitals, doctors regularly say to me, "If only politicians would be more honest with us about the rationing of care instead of sweeping this issue under the carpet". Perhaps my biggest worry over the new national institute for clinical excellence and the commission for health improvement is that they will act as covert mechanisms for the rationing of healthcare. I should naturally like to think that that is not their primary purpose, but I fear that it will almost certainly be one of their effects.
The three hurdles of safety, quality and efficacy which a new drug treatment has to surmount is now to be joined by a fourth hurdle—that of cost-effectiveness. That hurdle, when combined with an adherence to the fashionable principles of evidence-based medicine, is bound to mean a curtailment of the availability of new treatments. But that curtailment will not necessarily be apparent to the patient and, when it is, it will be the doctor who will appear to be the author of what is actually a politically-driven decision.
If we accept, as I believe that we must, that the demand for healthcare in this country will continue to rise in the years ahead, we owe it to ourselves to have an open and inclusive debate on what treatments are and are not affordable. That debate should not be conducted behind closed doors in Whitehall, because the result of that, as the recent case of Viagra shows all too clearly, tends to be an arbitrary fudge that makes little clinical sense.
The question of affordability brings us back to one of the most important parts of public policy-making. I refer to the management of the economy. If I were to identify

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one of the weaker aspects of the report by the Royal Commission on Long-term Care, it is the rather skimpy treatment that it gives to the need for sound economic management as a means of ensuring that its proposals are affordable in the long term. The report contains some rather blithe assumptions about the growth in GDP over the next 50 years and about higher industrial productivity. Yet the stark truth is that, whereas in 1999 there are nearly four people of working age for every pensioner, the equivalent figure in 2040 will be only two, and the number of pensioners will almost double. That may lead us to reflect on what the noble Lord, Lord Dahrendorf, was saying about the age of retirement, but it also has serious implications for the cost of care.
While the commission's main report projects an increase in personal care costs that it deems affordable to the public purse, the minority report takes issue with that conclusion and the assumptions underpinning it. As the minority report emphasises, small changes in the assumptions can make a big difference to the end cost, so enlarging the "funnel of doubt" even further.
Those factors are extremely important for policy makers because the potential sums of money involved are large. But it is important for another reason as well. One of the main criticisms of the current system, as mentioned by the noble Lord, Lord Clement-Jones, is that people cannot plan ahead with certainty because the availability and quality of long-term care facilities is patchy depending on where one lives. Many people are not in a position to know clearly what they are entitled to in their old age. I suggest that it should be one of the Government's objectives to eliminate that uncertainty in whatever response they make to the commission's recommendations. If free personal care is to be made universally available, then that must be a clear long-term pledge from government. To make such a pledge with conviction, the Government need to be satisfied that, over the long term, it is affordable from the projected growth in national wealth.
If we on this side of the House have a concern about the Government's macro-economic policy, it is that they are making that necessary growth in national wealth less and not more likely. The thrust of the past three Budgets, including yesterday's, has been to increase significantly the tax burden on business. That is not the way to maintain either inward investment or the UK's international competitiveness. The UK is a low-cost—though not a low-wage—economy. The more the Government load British business with additional social costs (as I am afraid they have done by signing up to the Social Chapter and accepting the working time directive) the less competitive we shall be and the more we shall struggle to maintain our flexible labour market which underpins job creation, the importance of which the noble Lord, Lord Dahrendorf, reminded us.
Simultaneously, the Government's decision to tax savings and pensions is already resulting in a fall in the savings ratio—a predicted 7.5 per cent. this year compared with 10 per cent. when Labour came to office. That is not the way to ensure that men and women of
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working age are able to support themselves in the future, once they become pensioners. And the radical reform of pensions that we were promised has not yet come about.
But I want to end on a positive note. The fact that we are able to look forward to greater numbers of elderly people in this country is something which we should celebrate and be proud of. I pay tribute to Age Concern, which has been in touch with me about this debate and whose work in improving the lives of elderly people and raising issues of importance to the elderly is to be wholeheartedly applauded. My noble friend Lady Carnegy, had she been able to take part in this debate, would have wished to hand out similar bouquets to Age Concern (Scotland).
It is time to stop classifying the elderly as a burden on society and time to emphasise instead the contribution that the older generation makes to the economic, cultural and spiritual life of this country. As Age Concern emphasised, it is grandparents who are childminders for the working generation, carers for their peer group and counsellors to young adults—all for free. It is right and proper that public policy should value the older generation appropriately and work consistently towards the quality of life and living standards that our society has a duty to provide.
10.19 p.m.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hayman): My Lords, the noble Lord, Lord Dholakia, has instigated a debate which has been fascinating, though short. It has ranged very wide. I believe that the House will understand if I do not follow the noble Earl, Lord Howe, through some of the issues of macro-economic policy arising form yesterday's Budget and the Government's management of the economy overall. Nevertheless, it was an important issue to raise, especially in this United Nations Year of Older Persons. I agree with the noble Earl that it is important to have the opportunity to take a longer term perspective which has been offered to us tonight than the normal time span of a politician, which was recently characterised to me as that of an intellectually challenged goldfish.
It is valuable to step back and look at the issues, although I must say that I had not perhaps characterised them as the noble Lord, Lord Dahrendorf, did tonight. I always knew that we had a problem with young men with time on their hands, but the idea that older men with time on their hands were also a problem was a new one to me. A little later in my response I may go slightly off message and talk more about the flexibilities and the gender differences involved because they are most interesting.
However, I return to the point at which the noble Lord, Lord Dholakia, started. The Government are also grateful to Age Concern for initiating the Millennium Debate of the Age to raise awareness about ageing among the entire population of this country. That is most important; indeed, it is an issue which is too important to be left to the elderly, if I may put it that way. It is of interest and of significance to the whole population.

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As has been pointed out many times in tonight's debate, people are living longer and older people make up, and will make up, an increasing percentage of the population. By the year 2031 we estimate that 42 per cent. of the country will be over 50, 23 per cent. will be over retirement age and 6 per cent. will be over 80. However, it is important to make the point made by the noble Lord, Lord Clement Jones, namely, that gloomy talk of a demographic timebomb is not justified. Two authoritative pieces of work, the Royal Commission's report, published last week, and the pensions Green Paper, make clear that there is no need to be so dismal about the possibilities of rising as a society to the challenges which will undoubtedly be posed by those demographic changes.
In his foreword to our document Building a Better Britain for Older People, the Prime Minister said;
"Among the greatest achievements of this century has been the increase in life expectancy. We can now look forward to many more years of healthy active life. But society has not kept up with this change … This Government's goal is to build a country where all are valued and where everyone, young and old, can play their full part".
As has been said tonight, we need to recognise the significance of more older people with a lifetime of skills and experiences, who are more active and keen to continue a productive life. We also need to recognise that older people will have more disposable income and will become a powerful consumer force in their own right. Similarly, we need to recognise that the structure of the elderly population will also change; in other words, there will be more single older people, many of whom will be living alone. As the noble Lord rightly pointed out, that has implications for planning policies and for the built environment. It has implications, too, for transport policies. Moreover, we must recognise that there will be more older people from black and ethnic minority groups and the needs of that particular group of elders must be considered.
Perhaps I may put it in the context outlined by the noble Lord, Lord Dahrendorf. We will see a generation of elderly women who are less dependent in many ways, both financially and in terms of their social experience, than was the case with the generations of elderly women who lived on their own in the past. So we must also consider that change.
In all this there are many uncertainties, as has been pointed out. However, the Government have an important role both in changing people's perceptions about ageing and in identifying and helping remove the barriers that stop older people fulfilling their potential. Following the early work of the Inter-Ministerial Group on Older People—I am grateful for the welcome that has been given to that today—we published a consultation document, Building a Better Britain for Older People, in November. This brings together the different strands of the Government's overall strategy. Many individual departments have made their own significant announcements in the past year or so.
The older volunteers initiative aims to increase the quality and quantity of opportunities across England for older people to volunteer. That is an important role that we need to consider alongside the possibilities mentioned by the noble Lord, Lord Dahrendorf, of
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extending paid employment. We need to ensure that people have a role and make a contribution. That may not be exactly the same as the role and contribution they make while in full-time employment.
As regards crime reduction strategies, it has been made clear to local authorities that they need to involve older people specifically in drawing up those strategies. The "Foresight" programme over the next two years will consider the changing age structure, particularly in terms of its social and commercial interface, and some of the possibilities and implications of developments in information technology. That is an interesting area. I understand that the fastest growing group of people using the Internet comprises the over-60s. Interesting possibilities are offered by information technology.
As has been mentioned, we have already consulted on the code of conduct on age discrimination in employment. As announced in yesterday's Budget we shall introduce a New Deal to help the over-50s get back into work. Yesterday's Budget also included measures which will benefit pensioners now, such as the new higher winter fuel payments which will provide much needed help to around 10 million pensioners.
The noble Lord, Lord Dholakia, pointed out that many of the issues which relate to elderly people have particular health aspects. I wish to endorse the attitude that has been put forward that we are not just talking here about health in terms of services but also about health overall. Investment now in children's fitness and in effective anti-smoking measures for young people—the noble Earl, Lord Howe, referred to this—will pay dividends in future generations in terms of the health of the elderly.
I say to the noble Lord, Lord McNair, that I shall certainly read his comments and consider the document he mentioned. I do not undertake to follow his example with regard to hydrogen peroxide. My hair seems to be turning white perfectly well through the natural ageing process and ministerial office. I am not sure that the Chief Medical Officer would endorse the approach the noble Lord mentioned.
We should consider not just health and the importance of improving health for the individual and society in the future, but also the other initiatives. The NHS and social services White Papers, among many other important proposals, aim to break down the barriers between health and social services as regards the care of the elderly and promote better commissioning of social services which are more individually tailored to users, particularly those from ethnic minorities. The need for services to be culturally sensitive was recognised in the Royal Commission report.
The national priorities guidance gives priority to helping adults achieve and sustain maximum independence. The national service framework for older people will set national standards and define service models, put in place strategies to support implementation and establish performance measures and tackle some of those areas regarding access to services about which concern has been expressed.

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In addition, the long-term care charter will be a framework for informing the setting of local standards by authorities, giving users and carers ideas about what local standards might be. Discussions have been held with users, carers, professional bodies, voluntary organisations and statutory agencies about the possible details of the charter and a draft is now being prepared for formal consultation. The National Strategy for Carers is important. Not only do carers look after elderly people but we should not forget that more than a quarter of carers are themselves over 65.
As far as concerns the United Nations Year of Older Persons, we will have a programme of work based on three key themes. One is on active ageing. This will focus on practical measures to help older people to remain active through work, volunteering, mentoring and supporting families. That reflects some of the flexibility to which the noble Lord, Lord Dahrendorf, referred. It is interesting how inactivity in old age has never been considered a social problem for women but it has been for men, even though women retire earlier and live longer. In the same way, generations of women, when working patterns were different, did not need paid employment to define their role in society. There are interesting compare and contrast issues between the sexes.
On care, we need to follow up the Royal Commission report and ensure that the debate it stimulates provides a way of ensuring that people have access to high quality long-term care that is fair both to individuals and to the taxpayer. I agree that what elderly people seek second
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only to good health is financial security and certainty—that ability to plan ahead. That is what the Government are seeking to deliver through the debate based on the Royal Commission's report.
On consultation and involvement, we can only make the most of an ageing society with the involvement of older people themselves. We want a strong public voice in health and healthcare decision-making. We must include those individuals and groups who have traditionally been more difficult to reach; for example, older people and black and ethnic minority groups. If we are to provide a health service that is effective and suitable for meeting needs, we have to ensure that groups like older people who make most use of it are properly consulted.
Across government we are looking at how we can best involve older people in influencing government locally, regionally and nationally. The Better Government for Older People programme is working with local people and local service providers to find out what services they need and how those can best be provided. The Cabinet Office-led programme is already focusing on listening and responding to the voices of older people at a local level, stimulating good practice that can be spread through local government.
I, too, will conclude on an optimistic note, and perhaps most aptly, with the Prime Minister's words in Building a Better Britain for Older People. He said:
"Our population is getting older and is set to get older still. This is not a burden, as often painted, but an opportunity. The task of this Government is to make sure we all seize this opportunity".
House adjourned at twenty-seven minutes before eleven o'clock.