Lords Sitting of 22 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 Lincoln.

National Curriculum
Lord Quirk Lord Quirk asked Her Majesty's Government:
What progress is being made on revising the national curriculum for schools.
The Minister of State, Department for Education and Employment (Baroness Blackstone)My Lords, the Qualifications and Curriculum Authority will be making recommendations for revising the national curriculum to my right honourable friend at the end of March. We shall consult widely on draft proposals for revisions to the national curriculum during the summer. My right honourable friend will then make final decisions in the early autumn, before the revised national curriculum is sent to schools. Schools will then have most of the 1999–2000 school year to prepare for any changes from September 2000.
Lord QuirkMy Lords, I am grateful to the Minister for that Answer. One hears talk about slimming down and if that is to come about, I hope it stops well short of anorexia. Does the Minister agree that breadth is of vital importance in the curriculum, with arts, music, foreign languages, design and history all providing an opportunity for a spark of interest to be generated among every pupil?
Does the Minister further agree on the importance of teachers building out from the core curriculum of maths and English, showing the connections and continuities with other subjects on the curriculum? For example, that would obviously involve maths extending into science and technology and English into everywhere, with the vocabulary enhancement that comes with the observation of lexical distinctions in every subject on the curriculum.
Baroness BlackstoneMy Lords, I entirely agree with what the noble Lord said about the need for a broad and balanced curriculum, covering a wide range of subjects. His emphasis on breadth is well taken by the Government. I also entirely accept that the key core subjects of maths and English should be well linked with other parts of the curriculum. I know that the noble Lord has a particular interest in English. It is very much the Government's intention to encourage such links right across the curriculum.
The Earl of LauderdaleMy Lords, can the Minister say whether the Government have any ideas for improving and encouraging the teaching of the French and German languages?
Baroness BlackstoneMy Lords, the Government are utterly committed to high quality teaching of the modern languages of French and German as well as other modern languages. We face a problem in the recruitment of modern language teachers to our schools, but it is our intention to continue to find ways of recruiting good students of modern languages to teach, so that we can maintain the quality to which the noble Earl referred.
Lord Janner of BraunstoneMy Lords, will my noble friend do her best to ensure the continued inclusion in the national curriculum of Holocaust studies, which first appeared in the previous curriculum? That has made a big difference to the teaching of history throughout the country.
Baroness BlackstoneMy Lords, I can give my noble friend that assurance. The national curriculum for history has always required that 11 to 14 year-old pupils in maintained schools be taught about the Holocaust. That will continue to be the case.
Lord Pilkington of OxenfordMy Lords, what are the Minister's views on the leaks which have appeared in the press that the Government are to start the teaching of modern languages for those aged nine? Can she also say whether it assists discussions in this House if we have to consider leaks in the papers before we have a Statement from the Front Bench? We are all puzzled as to whether the Government will start the teaching of languages for pupils aged nine or later. It seems to be a common characteristic of the education pattern that we read about it three weeks before it appears. Can the Minister comment?
Baroness BlackstoneMy Lords, I cannot comment on leaks about the teaching of modern languages for pupils aged nine and above. However, when asked about leaks I always say that we should be careful about believing speculative stories in the newspapers. The Government have not yet received advice from the QCA about any aspects of changes to the curriculum. That includes the teaching of modern languages in primary schools. We await that advice. Frankly, I have no idea what it will be, but when we have had a chance to consider it, we shall consult on it.
Lord AnnanMy Lords, can the noble Baroness say whether it is correct that children stop learning history and geography at the age of 14? If so, will she ensure that they continue learning it until they are 16? Will she also put in a plea that children should be taught to recite poetry and learn it by heart?
Baroness BlackstoneMy Lords, on the first part of the question from the noble Lord, Lord Annan, on the teaching of history and geography, it is not true that pupils stop learning history and geography after the age of 14. Geography is a compulsory subject in

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the national curriculum. History is an optional subject and many students carry on with it after the age of 14.
The noble Lord raised the issue of whether it should be compulsory. The Government look forward to receiving advice from the QCA on that and other matters. As for reciting poetry, yes, there are great advantages for pupils in being involved in the reading of poetry and sometimes learning to recite it aloud.
Lord TopeMy Lords, although the Minister may still be unaware of the QCA proposals, can she at least confirm that the Government will ensure that they fully embrace the proposals in the Crick report on the teaching of citizenship?
Baroness BlackstoneMy Lords, one of the matters that the Government have asked the QCA to look at is the teaching of citizenship in our schools. We expect to receive advice about those very important areas so that all young people leave school with a better understanding of our democratic institutions.
Lord Campbell of CroyMy Lords, although the national curriculum has never applied to Scotland, where the Scottish curriculum has been in place and the Secretary of State for Scotland has been responsible for education, is there an intention now or in the future to have a separate curriculum for Wales?
Baroness BlackstoneMy Lords, the Welsh Office and Welsh Ministers will be advised by the equivalent authorities in Wales about the national curriculum there. Of course, the Welsh language is taught in Welsh schools but not in English schools, but there are very many common characteristics of the curriculum across both countries.
Lord AveburyMy Lords, although I am glad to hear from the Minister, in answer to the noble Lord, Lord Janner, that the inclusion of Holocaust studies within the national curriculum is to be continued, will the Government reconsider their refusal on previous occasions to include the Armenian genocide of 1915–16 in these studies, bearing in mind that all of the bibliographical references, 400 of which I have sent to the Foreign Office, make clear that that was a genocide within the meaning of international law?
Baroness BlackstoneMy Lords, given the unfortunate number of genocides that have taken place this century, it is very difficult for the Government to be too prescriptive about the details of the national curriculum in the way that the noble Lord requests. All I can say is that I believe that senior pupils, certainly those in the sixth form, should read the book written by my former colleague Eric Hobsbawm on the 20th century in which all of this is well set out.

Manchester United Football Club: MMC Report
2.45 p.m.
Lord Morris of Manchester Lord Morris of Manchester asked Her Majesty's Government:
When they expect to receive the report of the Monopolies and Mergers Commission into the future ownership of Manchester United Football Club plc.
Lord McIntosh of HaringeyMy Lords, the Monopolies and Mergers Commission's report on BSkyB's proposed acquisition of Manchester United was received by the Secretary of State for Trade and Industry on 12th March.
Lord Morris of ManchesterMy Lords, I thank my noble friend for his reply, but can he now say what happens next and when? Will the announcement of the Government's decision on the MMC report also be the occasion for stating their view of BSkyB's total monopoly of Premier League TV coverage, thus excluding many millions of licence payers from the action? Was not my right honourable friend the Prime Minister right to say, even before this bid, that:
"Football, the people's game, is being too driven by money and not enough by the sporting spirit"?
Why should millions of people be excluded from seeing the best of the people's game?
Lord McIntosh of HaringeyMy Lords, I thought that my noble friend intended to comment on the view that football was not just a matter of life and death but more important than that. As to when the Secretary of State will respond to the MMC report, I can say only that it will be as soon as practicable. There is no statutory limit. As regards the options that are open to him, if the MMC concludes that the merger may be expected to operate against the public interest, the Secretary of State will announce what action, if any, will be taken to remedy or prevent the adverse effects specified by the MMC. If the MMC has cleared the bid, the Secretary of State has no power to act but can only publish the report. I have not seen the report and I do not know what it says. Therefore, I cannot speculate as to what the Secretary of State may say.
Lord BorrieMy Lords, does my noble friend recall that a Statement was repeated in this House by my noble friend Lord Simon of Highbury on 10th March in which the Government indicated that they no longer wished to second guess an adverse report by the Monopolies and Mergers Commission? Can the Minister say whether that Statement was to be instantly effective or whether it awaited legislation? Can the Minister indicate whether the reference in the Statement on 10th March to a special exemption for defence industries may be extended in the Government's mind to such matters as take-overs affecting the media?
Lord McIntosh of HaringeyMy Lords, as my noble friend is aware, at present the Secretary of State acts on

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the advice of the Office of Fair Trading in deciding whether to refer a proposed merger to the Monopolies and Mergers Commission. I do not believe that he would expect me from this Dispatch Box to anticipate any major change of policy.

Cuba: Exports
2.48 p.m.
Lord Sandberg Lord Sandberg asked Her Majesty's Government:
Whether any progress has been made in persuading the Export Credits Guarantee Department to reinstate Cuba as an insurable risk for British exporters.
Lord McIntosh of Haringey: My Lords, Export Credits Guarantee Department cover is available for United Kingdom project exports to Cuba provided payment is made from foreign currency funds held outside Cuba. A senior ECGD delegation recently visited Cuba to explore the scope for expanding this cover and resolving outstanding debt issues. Good progress was made with the Cuban authorities on both issues.
Lord Sandberg: My Lords, I thank the Minister for that reply. However, I am sure he is aware that the Spanish, Germans and Canadians are queuing up in Cuba to the detriment of British exports. Will the forthcoming visit by Mr Brian Wilson of the DTI cover those points?
Lord McIntosh of Haringey: My Lords, Brian Wilson will indeed visit Cuba again; he was there before Christmas. The occasion of his next visit is the opening of the British Airways direct route to Cuba. No doubt he will cover these issues as well. We are aware of the other countries which have succeeded in embarking on turnkey deals—for example, in airport construction or tourist industries. But they depend on a line of credit which produces revenue from outside Cuba; in other words, hard currency revenue, as I indicated in my first Answer.
Baroness Young: My Lords, I welcome what has been done through the ECGD to seek improvements for our exporters to Cuba. Can the Minister assure us that negotiations are continuing? No doubt the visit of the noble Lord's honourable friend, Mr Brian Wilson, in conjunction with the BA direct route, is intended to increase trade. Will this most important issue, which is holding up British trade, be pursued vigorously?
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Baroness. I pay tribute to her work as chairman of the Caribbean trade advisory group. As she well knows, one difficulty we have is that there are outstanding short, medium and long-term debts due from Cuba. We are pursuing vigorously the issue of
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repayment of short-term debts through the private market and of longer-term debts through the Paris Club. If and when those questions are resolved, many other matters will fall into place and trade will be easier.

Ambassadors: Selection and Training
2.52 p.m.
The Earl of Carlisle The Earl of Carlisle asked Her Majesty's Government:
What measures they are taking to improve the selection process, the preparation and the language training of Ambassadors and Ministers prior to their appointment to lead the 212 British Embassies and Legations abroad.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, ambassadors, other heads of mission and ministers who act as deputies in the largest embassies are chosen on merit by Foreign and Commonwealth Office selection boards. They receive individually tailored programmes of training and briefing, including relevant language tuition, before their postings. We plan further improvements to these arrangements. From the end of 1999, promotion into the FCO's senior management structure will depend on successful performance at new assessment and development centres. There will also be enhancements to training packages prior to officers' overseas appointments.
The Earl of Carlisle: My Lords, I thank the Minister for her most helpful reply. Does she recall that on 9th January last year I asked when Her Majesty's Government would appointment an individual who had shown distinguished service from one of the minority ethnic communities to head one of our embassies or legations abroad? Fourteen months have passed. What consideration has the Minister given to that issue? Why is there the delay?
Will the Minister assure us that ambassadors can be given at least nine months' warning before they are in place in their embassies so that they can seek to fulfil Diplomatic Service Regulation No. 28, thereby learning the principal language of the nation to which they are posted, so that they do not make complete fools of themselves before the host nation or the 10 million of us who live and work abroad and bother to learn the language?
Baroness Symons of Vernham Dean: My Lords, before I answer the noble Earl, perhaps I may take this opportunity to express on the record of the House my condolences to Lady Gillmore on the sad death of Lord Gillmore of Thamesfield. I am sure that the House will join me in recognising the great contribution he made to this country both in recent years as a Member of your Lordships' House and previously as one of our most distinguished diplomats. He was an example of the

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Diplomatic Service at its very best. He was authoritative, highly skilled and unfailingly courteous. He was also an extremely kind man.
I turn to the specific points raised by the noble Earl. Very occasionally, it is possible to appoint an individual to a particular post, but, on the whole, they are political appointments, or appointments on short-term contracts such as the contract we have with the FCO's ethnic liaison officer. Most appointments are rightly made on the basis of fair and open competition. That fair and open competition for the most part—we depend on the expertise and experience of our diplomats—comes from within the Foreign Office. On occasions it is possible to have open competitions. We have held three such open competitions in the past year or so. But we tend to rely on the recruitment end to ensure that more women and more people from the ethnic minorities come into the Foreign Office.
I believe that we have succeeded modestly in the past year. At the DS8 level—the policy entrance level— 9 per cent. come from ethnic minorities. There are some 13 per cent. at DS9, the operational level.
The noble Earl's second point related to linguistic competence. I do not think that any of our diplomats are in danger of making what the noble Earl describes as "fools of themselves" abroad. Sometimes people have to be posted at short notice. Events happen. They cannot always have the language training that we should like, but I can assure the noble Earl that when they are not up to the required level the language training continues in post.
Lord Wright of Richmond: My Lords, first, I endorse the warm remarks of the Minister about my successor at the Foreign Office, Lord Gillmore of Thamesfield, whose widow I saw this morning. I know that the remarks of the noble Baroness will be of great comfort to her.
Turning to the Question on the Order Paper, does the Minister agree that in most cases—of course not in all— the appointment of ambassadors or ministers to head missions abroad is a matter of not 14 months' training but of a lifetime career's training? Is she aware that my experience of learning Arabic 23 years before I was first appointed to head a mission in an Arabic speaking country was by no means unusual?
Baroness Symons of Vernham Dean: My Lords, by the time our diplomats reach the stage in their careers of being appointed as ambassadors they have an enormous wealth of experience. The point we must bear in mind is that ambassadors and other senior officers in our overseas posts, and those in London too, have to be chosen on merit. I am sure there would be many protests if they were chosen on any other basis. They are chosen by the Foreign and Commonwealth Office selection boards at different levels. Those boards are staffed by senior diplomats; and all except the No. 1 Board have women sitting on it; the No. 1 Board does not have a
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woman sitting on it. However, I am an observer on that board as were my predecessors, so I suppose that I provide a female element in that capacity.
Lord Janner of Braunstone: My Lords, does the Minister accept that the tributes paid to Lord Gillmore will be echoed in all parts of this House, especially by those of us who were helped so much by him during his period of office and who enjoyed his friendship afterwards?
Will the Minister also accept that the criticisms on the appointment of ambassadors made by the noble Earl and others are not because we seek to deprecate what they do or the help we receive from them? However, it is totally unacceptable for a country with such a vast proportion of people from ethnic minorities not to have any ambassadors, few deputies of whom I know, and almost no one at the highest level from ethnic minorities. It is no answer to say that we have to wait for 30 years. We have to help people to progress up the ladder by training them. In those circumstances, will my noble friend be kind enough to say how many people at the top levels today are from ethnic minorities; and what hope is there of improving that number while those of us present remain alive?
Baroness Symons of Vernham Dean: My Lords, I am sure that the remarks of my noble friend and those of the noble Lord, Lord Wright of Richmond, will be of comfort not only to the family of the late Lord Gillmore but also to his many colleagues in the Foreign Office who are very, very sad at his passing.
In the Foreign and Commonwealth Office, we are committed to having people who are representative of Britain's diverse society and to developing the potential and maximising the talents of all FCO staff through our policies covering recruitment, career progression, training and different kinds of harassment.
We aim to double at least the number of women in the senior management structure by the year 2003. In the 1998 recruitment campaign, we succeeded in attracting very high levels of young people from ethnic minorities to join the FCO. We started from a very low base and we aim to build on our successes. We aim to do that not only through recruitment but also through holding open days and having individual shadowing not only of FCO officials but also of Ministers. The shadowing that we have done with young people from ethnic minorities may be something—who knows?— which people in other parts of the House may wish to take up as a genuine commitment to ensuring that young people feel that they have a role to play in that respect.
My noble friend asked me some particular questions about numbers at different levels in the Foreign Office. I have many figures here, but I can tell my noble friend that unfortunately, at the highest levels, at present we have fewer than 1 per cent. of people from ethnic minorities. As I say, we are trying to improve that and we shall continue to do so. However, it must be done through fair and open competition.
Lord Beloff: My Lords, does the Minister agree that there is a grave danger in the kind of talk that we heard

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from the noble Lord, Lord Janner? As a member of an ethnic minority which had to wait over 200 years before an ambassador came from its ranks, I ask the Minister to say that in no circumstances will the characteristics of our representation abroad be determined by anything but the merit of the individual? Will she confirm also that quota systems, whether ethnic or gender based, are wholly alien to the best traditions of the British Diplomatic Service?
Baroness Symons of Vernham Dean: My Lords, of course I give the noble Lord that assurance. All appointments, whether on recruitment or through promotion, must be made on the basis of merit. A number of questions about opening up Foreign Office recruitment at different levels are being examined. There are a number of different and important issues. We are determined to ensure that people are aware that whatever their background, as long as they have the ability, they may be able to find a career in the Foreign Office. But everybody must know that such a career will take place only on the basis of merit and that such recruitment will take place only on the basis of fair and open competition.
Lord Chalfont: My Lords, will the Minister accept that when I was a Minister in the Foreign Office many years ago, I visited most of the principal diplomatic posts in the world? Is she aware that I found there ambassadors and heads of mission of the highest intellectual and diplomatic ability? Will she confirm that that situation is still the case all these years later? Will she confirm also that intellectual and diplomatic ability will remain the main criteria for selection to those important posts?
Baroness Symons of Vernham Dean: My Lords, the noble Lord is more fortunate than I. Sadly, I have not visited most of the posts abroad. I am afraid that your Lordships keep me much too busy in this House to enable me to do so. Nevertheless, I can certainly say to the noble Lord, Lord Chalfont, that I have been extremely impressed in those whom I have met by their intellectual calibre, wealth of experience and commitment to the job. It is a job where a good deal of flexibility is needed. After all, governments come and governments go, but the Diplomatic Service is the service on which we base so much of our international effort. I agree with the noble Lord that appointment is and should continue to be based on merit.
Earl Ferrers: My Lords, the noble Baroness said that she wishes diplomatic appointments to be on merit only—and she is quite right. She said also that in the next 10 years she wishes to see the number of females double. Are the two objectives not contradictory?
Baroness Symons of Vernham Dean: My Lords, what a brave man the noble Earl is. No, I do not believe that for a single moment. I said that that is our target. It is not a quota. It is a target to ensure that young women believe that they can have a career in the Diplomatic Service in the same way as young men. Therefore, we
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have raised the target for recruitment from 30 per cent. to 50 per cent. I am sure that all noble Lords who have daughters who wish to become diplomats will be extremely pleased to hear that.
Lord Laming: My Lords, does the Minister agree that it is not inconsistent to have a system based upon merit which also reflects entirely the make-up of our society?
Baroness Symons of Vernham Dean: My Lords, of course I agree with that. I believe also that in trying to convey that message, it is extremely important to ensure that young people, whatever their background, know that there is a possibility of joining the Foreign Office. For that reason, my right honourable friend and, indeed, the whole ministerial team in the Foreign Office have been so committed to trying to open it up. We have put advertisements in the ethnic minority press and we have had open days which have been extremely successful. For that reason, we were successful in last year's recruitment competition in attracting not only a record number of applications from young people from ethnic minorities but in attracting also a record number of successful candidates in the competitions that we held.

Business
Lord Carter: My Lords, after the conclusion of the debate on the report of the Procedure Committee my noble friend Lady Blackstone will, with the leave of the House, repeat a Statement that is being made in another place on education: excellence in cities.

Procedure of the House: Select Committee Report
3.7 p.m.
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the: Motion standing in my name on the Order Paper.
As your Lordships will see, the Procedure Committee report has two main items. The first consists of comments and recommendations of the Procedure Committee on the report of the working group appointed by the Leader of the House on conduct in the Chamber.
The committee is extremely grateful to the noble Baroness, Lady Hilton of Eggardon, and her five colleagues. Indeed, I am sure the whole House will be grateful for the thorough and speedy way in which the working group carried out its task. Your Lordships will have noted that the Procedure Committee did not feel able to endorse all the working group's recommendations, but that in no way detracts from the valuable work it has done.
The House may find it helpful if I emphasise that this afternoon we are debating the Procedure Committee's report and not the report of the working group. The House is being asked to endorse the comments and

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recommendations of the Procedure Committee on the report of the working group and not the report of the working group itself.
I do not propose to go through all the recommendations for change proposed by the Procedure Committee in the light of the working group's report. The changes are set out in the Procedure Committee's report. I shall try to deal with any questions your Lordships may have. However, I remind your Lordships of the importance of the courtesies of the House. Those govern the way in which noble Lords have traditionally behaved towards each other and are usefully set out in the working group's report.
I mention in particular the need to observe our courtesies on business immediately after Starred Questions. The Procedure Committee is concerned about the noise made when noble Lords leave the Chamber after Starred Questions and the difficulty caused for the noble Lord dealing with the next business. That difficulty is especially acute for a noble Lord on the Liberal Democrat Front Bench because departing noble Lords often pass directly in front of him. It is very much hoped that the recommendations of the Procedure Committee, and of the group of the noble Baroness, Lady Hilton of Eggardon, aimed at maintaining the good order and dignity of our proceedings, will be taken to heart.
The second main item in the report of the Procedure Committee is the proposal of the noble Lord the Government Chief Whip that, as an experiment beginning immediately after the Easter Recess, the general debate day should be moved from Wednesday to Thursday. The experiment would last until such time as government business fills the debate day, probably mid-June.
The experiment might require certain consequential changes, such as starting business on Wednesdays at 3 p.m. and on Thursdays at 2.30 p.m. The House will understand that there was strong opposition to the proposal in the Procedure Committee. The committee was divided on the merits of the proposal and, in the end, did not feel able to make any recommendation to the House. There was a strong feeling that the House should decide the matter without any proposal from the committee. That is the purpose of the amendment on the Order Paper in the name of the noble Baroness, Lady Young. There is also the amendment in the name of the noble Lord, Lord Graham of Edmonton.
In the circumstances, I do not believe I would be helping the House if I were to try to summarise the arguments for and against the proposal. It is better that I leave that to other noble Lords once the noble Baroness has spoken to her amendment.
There is also the amendment in the name of the noble Lord, Lord Morris of Castle Morris. Again, I leave it to the House to decide. So far as the mechanics are concerned, it is perfectly possible to provide whatever is necessary. Strictly speaking, if the noble Lord moves his amendment, debate will take place on it. However, I hope that noble Lords will feel free to range over any of the matters in the report and so avoid the need for
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several debates. After the noble Lord, Lord Morris, has spoken, no doubt your Lordships will wish to hear the noble Baroness, Lady Young, and the noble Lord, Lord Graham of Edmonton.
Moved, That the First Report from the Select Committee (HL Paper 33) be agreed to. — (The Chairman of Committees.)
Following is the report referred to:
1. REPORT OF THE GROUP ON PROCEDURE IN THE CHAMBER
At its last meeting the Procedure Committee agreed to a recommendation by the Leader of the House that a Working Group should be established "to consider how the procedures of the House can be improved within the existing framework of self-regulation; and to make proposals for ensuring that Lords are better informed of procedure so that self-regulation can work". 1The Committee has considered the Group's report2 and recommends the House to accept the following proposals for change in the House's present procedures:
Starred Questions
A second topical question each week should be created by reserving the fourth question on Wednesdays, for tabling no earlier than the previous Monday. The second topical question should be subject to the same rules as the existing topical question, in particular the rule that no Lord may ask more than two topical questions in one session. 3
Lords should be limited to one Starred Question (instead of the present two) on the order paper at any one time, unless they are successful in the ballot for topical questions.
The Committee endorses the following additional guidance recommended by the Working Group:

(a) Ministers' answers should be shorter. Their initial answer should not generally exceed 75 words. Supplementary questions and answers should also be shorter and confined to not more than two points.

(b) The problem of how supplementary questions should circulate around the different parts of the House cannot be resolved by a rigid rule. The Government side should not expect to have every alternate supplementary. In giving guidance, the Leader should be mindful of the interests of all backbenchers, including the Liberal Democrats and the Crossbenchers.

(c) If two or more Lords rise at once, they should be more ready to give way immediately, rather than provoke a shouting-match, which is undignified and wastes time. If the Leader rises, other Lords should sit down at once.

The Committee reminds the House that the Lord who tabled the question has no automatic right to ask a final supplementary question. 4
Business immediately after Starred Questions
The Committee is concerned at how much noise is created when Lords leave the Chamber after Starred Questions. Lords should do so silently; those remaining in the Chamber should avoid conversations at this point. It is in order for the Lord moving the next business to pause for a short period until the House is quiet again. The Clerk should not start the clock until he begins to speak..
Drafting of amendments
In appropriate cases amendments should take the form: Page x, line y, leave out paragraph (b), and not: Page x, leave out lines 1 to 3.
Grouping of amendments
For an experimental period until the summer recess, government departments should produce draft groupings of amendments for consultation by 2.30 p.m. on the working day before debate (rather than at lunchtime on the day, as at present). To enable departments to do this, marshalled lists of amendments should be published on the working day before the debate (rather than on the day of debate, as is normal at present). Lords should be encouraged to facilitate this by tabling amendments no later than 5 p.m. two days before the

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debate, whenever possible. Amendments handed in later than this will be published in a revised marshalled list or in a supplementary list. The experiment should be confined to committee stage.
Tabling of amendments
Outside recesses, the deadline for handing in amendments for printing the next day should be 5 p.m. (4 p.m. on Fridays) instead of 6.30 p.m. (5.30 p.m. for a marshalled list, 4 p.m. on Fridays) as at present. During recesses the deadlines will remain unchanged (10 a. m. to 5 p.m.).
Repeal amendments
An amendment identical (or of identical effect) to one pushed to a vote by the mover and defeated in committee should not be retabled for report stage. The amendment should be changed more than cosmetically if it is to be retabled. However, it would not be desirable to restrict the reopening at report stage of an issue debated and voted on in committee.
An amendment agreed to on division in committee should not be reversed at report stage except with the unanimous agreement of the House.
Divisions
The time for divisions should be extended from six to eight minutes; the time for appointing Tellers would in consequence be extended from three to four minutes.
"Bill do now pass"
The motion "That this bill do now pass" should be moved formally and should not normally be debated. Ministers should if necessary respond to points raised on the motion by other Lords. The motion should not be an occasion for thanking those involved in the passage of the bill.
Statements
The Committee does not accept that the number of statements repeated in this House is unreasonable. They are important policy announcements. While there will be exceptions, the time for the two Opposition front benches and the reply to them should be limited to 20 minutes, as for the backbenches. 5 Backbenchers too should exercise restraint, restricting themselves to brief comments and questions rather than speeches, so as to allow more Lords to intervene within the 20 minutes available.
The time when a statement is to be taken (for example, "after amendment 20" or "after the first debate"), once agreed between the whips, should be put on the annunciator. A Lord who was not present to hear a statement should not speak on it. The practice of noting unrepealed statements on the cover of Hansard should be revived.
Courtesies
The Committee endorses the following reminders of the courtesies of the House:

(a) Lords should bow to the Cloth of Estate on entering the Chamber, though not on leaving. 6 Lords should also bow when the Mace passes.

(b) A Lord who is taking part in a debate is expected to attend the greater part of that debate. It is considered discourteous for him not to be present for the opening speeches, for at least the speech before and that following his own, and for the winding-up speeches. Ministers cannot be expected to answer, orally or in writing, points made by a speaker who does not stay to hear the Minister's closing speech. A Lord who becomes aware in advance that he is unlikely to be able to stay until the end of a debate should normally remove his name from the list of speakers.

(c) Reading of speeches is alien to the custom of the House. In practice, some speakers may wish to have "extended notes" from which to speak, but it is not in the interests of good debate that they should follow them too closely.

(d) Lords should never address one another in debate as "you".

(e) Lords should refer to "the noble Lord, the Minister", or simply "the Minister", but not "the noble Minister".

(f) The Lord who follows a maiden speaker (and only that Lord) should congratulate him on behalf of the whole House. Other Lords should not leave the Chamber while this takes place.

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(g) Lords should not pass between the Lord who is speaking and the Lord on the Woolsack or in the Chair. 7

(h) Lords should not move about the Chamber while a Question is being put from the Woolsack or the Chair. This does not apply when the Lord Chancellor is speaking as a Minister from beside the Woolsack.

(i) Lords should not bring books or newspapers into the Chamber, except for reference in debate. 8

The Committee reminds the House that private conversations in the Chamber are not desirable.
Training
The Committee agreed that the Working Group's proposals for training (paragraphs 71–78) should be considered further. The Clerk of the Parliaments informed the Committee that he proposed to begin a revision of the Companion to the Standing Orders for issue by the beginning of the next session.
The Committee expressed its gratitude to Lady Hilton of Eggardon and the members of the Working Group for their work on procedure in the Chamber.
2. THE GENERAL DEBATE DAY
The Committee considered a proposal from the Government Chief Whip that, as an experiment from the return of the House after the Easter recess, the general debate day should be moved from Wednesdays to Thursdays. The experiment would last until such time as government business filled the debate day, probably mid-June 1999. The Committee noted that there was strong opposition to the proposal. If such a change were to be made on an experimental basis, the Committee recommends that the House should meet at 3 p.m. on Wednesdays and 2.30 p.m. on Thursdays" However, in the absence of agreement on the Chief Whip's proposal, the Committee makes no recommendation on the proposal or on sitting times. The issue should be left to the House to decide.

1 4th Report (1997–98), HL Paper 144.

2 The report is printed as HL Paper (1998–99) 34.

3 See Companion to the Standing Orders, p 86.

4 Companion, p 85.

5 As recommended in the Procedure Committee's first report 1994–95, agreed to by the House on 10 January 1995.

6 Standing order 17(2).

7 Standing Order 17(1).

8 Companion, p 64.

9 The committee was led to understand that this would be because party meetings would be held on Wednesdays.

3.15 p.m.
Lord Morris of Castle Morris Lord Morris of Castle Morris rose to move, as an amendment to the Chairman of Committees' Motion, at end insert ("save that, in paragraph 1 ("Report of the Group on Procedure in the Chamber"), on page 4, in the sub-paragraph headed "Divisions", leave out ("in consequence be extended from three to four minutes") and insert ("remain at three minutes")").
The noble Lord said: My Lords, the proximate cause for the amendment standing in my name lies in the alarm I felt recently when I encountered a noble Lord whose age can best be described as "mature" and whose build invites the label of "sturdy" who was exhibiting a remarkable turn of speed at imminent peril to his cardiovascular system and who nearly ran me down in the precincts of the Palace in his determination not to miss a Division. His assiduity put me upon reflection. I recalled that the Hilton group had recommended that Division time be extended from six to eight minutes which pleased many noble Lords because it made things easier for those getting in from workplaces outside the

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Palace or from distant spots within it and because of the weight of numbers now taking part in at least some Divisions.
The group also recommended an extension of the time allowed for the appointment of tellers from three minutes to four. This was accepted by the Select Committee with one subtle change, the phrase,
"in consequence be extended from three to four minutes".
I submit that the cases are not parallel. The Clerks, acting as tellers, are, as I have observed them—and there are only four at any given time—young persons, fit, agile, nimble, and very quick off the mark. They can go far in three minutes. In 10 years in your Lordships' House I have never found them absent from their posts or breathless from exertion.
Noble Lords, on the other hand, tend to be less lissom, to move more slowly, stumble a bit and occasionally get in each other's way. They need all the time they can get to reach the Lobbies and process through them; often there is quite a considerable crush. The phrase, "in consequence", implies the unquestioned assumption that the two periods in a Division must be of equal length. I submit that that assumption is unsupported by any evidence and has no basis in fact. It has all the virtues of symmetry but no other virtues.
I have been given to understand that Division time is measured by the action of what is described as "an hourglass" which runs for three minutes and must then be inverted to measure the second period of time. I do not wish to be pedantic but an hourglass, by definition, measures an hour and a three-minute glass is more accurately described as an egg-timer. An egg-timer is a useful and often artistically pleasing example of the glassmaker's art. But it has one manifest drawback. It can only measure its allotted span of three minutes and then has to be turned over. It is excellent for its purpose, producing a boiled egg. However, given that a new hourglass or egg-timer would be required if the period were extended to four minutes plus four—a sort of hard-boiled egg-timer—this cannot be an argument against three-plus-five. In any case, technology has developed and new and exciting possibilities have been opened up by the invention of the stop-watch. It is an accurate, flexible and readily available machine, very much fitted for its purpose and now quite cheap in price.
The purpose of the proposed amendment on page 4, line 25, of the report is to allow a little extra time for noble Lords to reach the Division Lobbies and pass through them in comfort and in a settled frame of mind. I beg to move.
Moved, as an amendment to the Chairman of Committees' Motion, at end insert ("save that, in paragraph 1 ("Report of the Group on Procedure in the Chamber"), on page 4, in the sub-paragraph headed "Divisions", leave out ("in consequence be extended from three to four minutes") and insert ("remain at three minutes")"). —(Lord Morris of Castle Morris.)
Baroness Hilton of Eggardon: My Lords, I have been invited to take part in the debate at this point because the report of my group applies only to the first
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part of the Procedure Committee's report. It therefore seemed sensible that I should speak now rather than after the two amendments to the second part of the Procedure Committee's report.
I support the amendment moved by my noble friend Lord Morris of Castle Morris. I suggest that the mechanical problems could be overcome by having two egg-timers or hourglasses, one timing three minutes and one timing five minutes.
I turn briefly to the report of the cross-party committee I chaired. I begin by stating that it was an enjoyable experience. I express thanks particularly to the other members of the rather disparate group that we were and to the many noble Lords who wrote to us. I thank especially our Clerk, Andrew Makower, who managed to make sense of our sometimes rather disjointed discussions.
The main thrust of our report is to underpin the existing procedures, courtesies and practices of this House which give us our unique style and authority. I hope your Lordships find our report a useful summary of the most important procedures and courtesies and consider that it makes sensible recommendations about administrative procedures.
I am delighted that the Procedure Committee has felt able to accept about two-thirds of our recommendations, especially those on the timing and grouping of amendments which I am sure will be of assistance to us all. I am, however, personally disappointed that the recommendation with regard to a Victorian tradition, much practised in the other place—I refer to the habit of Front Benchers placing their feet on the Clerks' Table—was not accepted and that that practice is to be allowed to continue.
Finally, we made a number of recommendations about introductory courses for new Peers which the Select Committee did not really have the time to discuss in detail. I hope that they will be taken forward at future meetings of that committee. I refer in particular to our suggestion that there should be an introductory day on the history, geography and culture of the House, which would only later be followed by a second day on the technicalities of legislation and Bills. An introductory day which enabled new Peers to understand the way in which we behave and provided them with a formal guided tour of the House and some talk of its history and traditions would enable new Peers to feel comfortable in the House and would assist them with those aspects of our behaviour which we all prize and cherish.
I hope that the work of our group will reinforce the self-regulation of the House and that the recommendations of the Select Committee on Procedure will be accepted.
Baroness Young: My Lords, in commending my amendment on item 2 ("The General Debate Day") on page 5 of the report of the Select Committee on Procedure, I should like to start by saying that when the matter was discussed by the Select Committee concern was expressed about the proposed change by Members in all parts of the House. I believe that that concern will be expressed again today in your Lordships' House.

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If I may put this in shorthand, the issue at point is to change Wednesday into Thursday. I should like to make three points about that. The first is a point of principle. I believe that the House of Lords has two main functions. The first is to amend legislation and the second is to hold general debates. In fact, the Select Committee was reminded that during the discussions at the time of the 1968 reform of your Lordships' House the function of holding general debates was placed first. We are all well aware of the interest that those debates hold. They provide an opportunity to have a wide-ranging discussion of topical subjects. They are an excellent opportunity for Back-Bench Members of the House to take part. I am thinking particularly of the two debates initiated by noble Lords on the Labour Benches on the BBC and on the British Council. I think also of the interesting debate on AIDS in Africa, which was initiated by the noble Earl, Lord Sandwich, and of the debate introduced last week on democracy by my noble friend Lord Waddington.
That leads me to my second point. If we were to agree to the change, the first three days of the week would be taken up entirely with legislation. That function would therefore be assumed to be by far the most important. There would therefore be a real danger that Thursdays would be seen as a kind of afterthought, or a dead day, when it was not necessary for most of your Lordships to be present and most Peers could go home on Wednesday evening. We would then be in great danger of becoming a three-day-a-week House. I regret to say that we would also be in great danger of becoming like the House of Commons where, as far as I can see, a great many Members leave at lunchtime on Thursday.
Many Members of your Lordships' House are already very worried about any weakening of this House. I believe that the proposed change would signal such a weakening. Even if, as is proposed, it was for a trial period, all of us in public life know that such "trials" usually turn out to last a long time. If accepted, this proposal would signal that the fourth day of the week would be for general debates and only those taking part in them would feel it necessary to attend. Thursday would be in danger of becoming rather like Friday, which is usually used at the end of a Session for private Bills and for orders. At first glance, this looks like a small proposal; in fact, I believe that it is of fundamental importance to the working of this House.
That brings me to my final point. Next week we are to debate the Second Reading of the Bill to reform the House of Lords. Whatever the outcome of that, the House is very unlikely to be the same at the end of it. What is the point of altering tried and trusted procedures which matter a great deal to noble Lords in all parts of the House, procedures which have worked well for many years, at this stage in the lifetime of your Lordships' House? I believe that we should stand with those arrangements which we believe are right, which we believe are in the best interests of the House and which we believe reflect what the House of Lords ought to be doing as the second House of Parliament. I suggest that we are not here simply to serve our own convenience; we are here to serve the House and I hope that, in serving the House, we will all feel that we are
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serving the nation. It is in that respect that I think we should stand by our procedures. I commend my amendment to the House.
Lord Graham of Edmonton: My Lords, as the procedure has been outlined, it is my pleasure to speak to the Motion which stands in my name on the Order Paper. At the end of this debate, I hope to have the opportunity to move my amendment.
I am bound to say that the case made by the noble Baroness, Lady Young, is fair and reasonable. It is a case for the status quo and for no change. It is a case made on behalf of those who have benefited from, and enjoyed, the existing system and who want to continue to do so. However, it means that those who have been disadvantaged will continue to be disadvantaged.
Colleagues are doubtless aware that for many years, and certainly since I have been a Member of this House—that is, for some 15 years—there has been a general grumble about the fact that business on a Thursday can sometimes extend to 10 o'clock, 11 o'clock, or even later, irrespective of whether it is government or other business. I am not making a party political point because this has been said from all Benches. A point that I picked up quickly on becoming a Member of this House, and subsequently as Chief Whip, was that, although our present arrangements are fair and reasonable, they deny a great many Members— I cannot quantify this—the ability to do that which a great many others can do. That is simply because they seek to serve both the House and their party.
I happen to live in Loughton in Essex and, if required, I can catch an underground train at 11 p.m. and be home not much after midnight. However, many Members of this House who want to be similarly assiduous face a human dilemma. The noble Baroness, Lady Young, has told us what this House is and what we are here for, but I have to tell her that many noble Lords, on both the Opposition and the Government Benches, face a dilemma on a Thursday. Having been here on Monday, Tuesday and Wednesday because they are good party members, they then look at the Whip and reflect that, in order to get home on Thursday—not at a decent time, but before midnight—they will have to leave here at, say, three o'clock, four o'clock or five o'clock. It is not for me to comment on how that dilemma is resolved by individuals, but that dilemma nevertheless exists. I do not have to face that; nor do many other Members of this House; but I am simply saying that if one wants to plead "no action" because of the imminence of a possible change, we must nevertheless recognise that that dilemma exists—and that means not accepting the amendment from the noble Baroness.
Perhaps I may illustrate this from my experience in the other place. Exactly 25 years ago this month I made my maiden speech—on a Friday. The Member I followed is now the noble Baroness, Lady Chalker, and I was followed by Dr. Rhodes Boyson. Fridays then ended at four o'clock. Later, Friday sittings ended at 2.30 p.m. I am delighted that the noble Lord, Lord Jopling, is in his place. One of the recommendations was that the House shall not sit more than 10 Fridays. Then, for the convenience of Members, for the conduct

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of legislation and for good order and discipline, Thursday sittings were considered and changes were made. They were enormous changes compared with the modest one that I am suggesting; that the general debate day should be changed from Wednesday to Thursday.
The noble Baroness, Lady Young, may be right. It may well be that fewer people will wish to participate in a general debate on a Thursday. However, I tell her from my experience that when one comes into the Chamber at six, seven or eight o'clock on a Wednesday, the only persons present are those who are waiting to speak, or to hear the wind-up speech, in order to carry out their duties. The general debates are an essential part of the operation of this House. But my plea is that for a short period of about six weeks, from the middle of June to the end of July, we see whether these proposed changes meet the wishes of Members. Unless my amendment is carried, there will not be an opportunity for them to express their views. I believe that in 1999 the House, which has proved to be flexible, should be flexible on this occasion. Without diminishing the amount of legislative time or the quality of the debates, my colleagues should be given the opportunity of considering these new proposals. I believe that we shall then have a happier, more satisfactory and beneficial House.
3.30 p.m.
Lord Denham: My Lords, perhaps I may comment on the proposal before the House. Before I do so, may I ask the noble Lord the Lord Chairman of Committees whether he will tell your Lordships, when he comes to reply, what provision he has made for the next meeting of the Procedure Committee which, he will remember, was originally scheduled for the same afternoon on which the second day of the Second Reading debate of the House of Lords Bill is now to be held? As we are discussing the last Procedure Committee report, it will be useful to know on what day that particular meeting of the Procedure Committee will now be held.
At the time of the 1968 proposals, as my noble friend Lady Young has mentioned, the first of the five functions of the House were described as the provision of a forum for full and free debate on matters of public interest. This is the all-important function which she and I believe will be downgraded by the switch of days. It will also, as she has said, turn the House into a three-day-week Chamber.
It will vastly inconvenience Peers who, for a long time, have had the practice of fixing up important meetings on Wednesdays because it is then that no Divisions are likely to take place. Peers whom I know, if they are to take part in the debating day on a Wednesday, will find it very inconvenient indeed. The most important point from my point of view is that the experiment will be distracting for this House at a time when it is considering the most important Bill, as far as it is concerned, probably since the year 1911. To have this particular six weeks as an experiment seems to be rather unkind in distracting the House at such a time.
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The final point is that it may all be for nothing and, in effect, no trial at all because what works well for the existing House will not necessarily work well for the interim House, let alone the definitive one, after full reform has taken place. So why are we bothering to have this experiment now? If it is to be made, it is far better to let the new House make it and then judge for itself whether that is what it wants.
When this matter came before the Procedure Committee, as the Chairman of Committees has said, it ran into so much opposition that the committee felt unable to make a recommendation to the House. Therefore, I am very sorry indeed that the noble Lord, Lord Graham of Edmonton, has seen fit to table such an amendment today. As a former Chief Whip, he of all people knows that this House works by consultation and consent. I cannot remember a previous government of either colour trying to force through a purely procedural matter such as this with such tactics as these. I hope that, if possible, the noble Lord, Lord Graham, will undertake not to move his amendment today, but that if he does so your Lordships will reject it overwhelmingly.
Lord Graham of Edmonton: My Lords, before the noble Lord sits down, perhaps I may remind him that the words we are considering in the report say that the matter should be left to the House and that is exactly what I have done.
Lord Gordon of Strathblane: My Lords, perhaps a declaration of interest is unnecessary, as from my accent noble Lords may divine that I am not from the Home Counties. I often face a journey to Scotland—not the far north, but the central belt—and I ask your Lordships to take into account the proportionate inconvenience which is suffered under the existing system and under the proposed amendment. So far as I am aware, this is unwhipped business today and there is no question of the Government trying to force through anything. My understanding is that Members are free to form whatever view they like. I imagine that views may well be split according to the place of main abode rather than the party viewpoint.
Perhaps I may put a very simple point. In terms of what one might call the law of proportionate inconvenience, noble Lords who find it convenient to attend on all four days and who live in and around London will experience no inconvenience whichever day is held to be the general debate day. However, noble Lords who have public interests which they should discharge elsewhere will experience considerable inconvenience if in order to fulfil those obligations they have to travel north and then return.
The attraction of general debates is their intrinsic merit and not the fact that one is forced to attend them because one is sandwiched between a Tuesday and a Thursday when one is down here anyway and cannot be bothered to go home. For example, on Wednesday 21st, despite the fact that I have to be in Lochinver in the very far north of Scotland on Thursday morning, I shall certainly try to attend the debate to be introduced by the noble Viscount, Lord Astor, on digital broadcasting. I believe that most of us prefer general debates to the

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nitty-gritty of procedural amendments and the scrutiny of legislation in Committee when frequently one cannot see the wood for the trees. Frankly, general debates are much better fun, but we must place them in the proper context. At the top of page 2, the report states:
"They make the House uniquely well-equipped to carry out what is currently regarded as its major role, namely the revision of legislation".
In all honesty, however much we enjoy general debates and however much I agree that they are extremely important, they are subsidiary to legislation. I cannot see how it is in anyone's interest to divide the block of legislation into two parts, Monday and Tuesday and then Thursday, when it would be equally convenient to have Monday to Wednesday. Then, it is to be hoped that those who can stay on for the Thursday debates will do so, particularly if they have an interest in the subject. Those who have urgent business elsewhere are not faced with the problem of leaving at four o'clock.
Several times last year I was faced with the problem of Divisions taking place after midnight on a Thursday. I tried to reach British Rail in the late hours of the evening to cancel the sleeper I had booked. I contacted British Airways, via its New York office, to book a flight for first thing Friday morning in the hope that I would get it.
I ask noble Lords to consider this point. The House is justly renowned for its courtesy. Members who find it convenient to attend four days a week will not be upset if Wednesday's business is moved to Thursday. However, those of us who have to travel very long distances will considerably benefit from the change and I urge noble Lords to make it.
There is one final point that should be borne in mind. The public purse is to be considered. People who have to attend each side of the break are claiming two amounts of travelling expenses, which I do not believe is justified in the public interest. It would be much better if we dealt with legislation in one block.
Baroness Carnegy of Lour: My Lords, I live even further away than the noble Lord, Lord Gordon. But on the face of it I agree with him. Since I first came here I have longed for the business to be turned around.
However, that was when I did not understand the role of the Opposition. I am just beginning to understand that role. The noble Lord said that he does not much enjoy the nitty-gritty of legislation, although he admitted that it is the most important function of this House. Since this Government came to power, most of the organisations which want Bills changed have been funnelling their amendments through the Opposition and not through Government Back-Benchers—not all, but most of them.
I should like to cite the example of the Health Bill, which is still before your Lordships' House. That Bill is one reason for my considerable change of mind. It would have been impossible to do it as much justice as we have if we had taken the Committee and Report stages on two days running; for example, Tuesday and Wednesday. It has been a terrible rush to get the amendments through. Because of the way in which the
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Bill is drafted, doctors and nurses have come to understand quite late the implications of this Bill for them. Last Thursday's debate would not have been possible on the Wednesday.
The earlier part of the report contains the findings of the working party, which suggests that amendments should be brought forward earlier. That will help, but it still will not help this issue. My noble friend Lady Young was absolutely right on this and I shall back her.
In relation to the working party on the procedure of the House, I should like to pay tribute to the noble Baroness, Lady Hilton of Eggardon, for the way in which she chaired that working party. I had not worked with her before but greatly admired the way she did that job. She was even-handed; she was patient; and she was fully on the side of the Back-Benchers, which was an important role for that working group. We came to consensual decisions on our recommendations, and when it turned out that our report was to go before the Procedure Committee on a certain day we were all invited to attend. However, I was horrified when I discovered that the noble Baroness. Lady Hilton, had not even been sent the agenda of the Procedure Committee; she had no idea how the report would be handled and how the Leader of the House would deal with it. I have said personally to the Leader of the House that next time a working party is set up, it would be nice if it knew how its business would be handled by whichever committee to which it reported.
I support the Procedure Committee's response. I am happy that it turned down some of our recommendations and accepted others. I slightly regret that we talked about "training" of noble Lords. One does not train people to be parliamentarians. I would have preferred to call it "providing information". However, I am sure noble Lords understood what we meant. We made some: good proposals and those are clearly still on the table.
Lord Orme: My Lords, I support my noble friend's amendment, which relates to a change of day for debates from Wednesday to Thursday.
I speak as a provincial Member, along with many of my noble friends. In many parts of the House people have a long way to travel home at weekends. The change proposed will not reduce the hours in the House; it will underwrite the fact that the debate can take place on a Thursday just as it presently does on a Wednesday.
There was a contradiction in what was said by the noble Lord who referred to the fact that he made appointments on a Wednesday and was not in the House because his arrangements had, in that sense, become regularised. The noble Baroness, Lady Young, referred to the fact that people want to keep Wednesdays for normal debates as such. However, the changes proposed are moderate and very much in line with modern thinking. For instance, the British Parliament sits longer than any other democratic parliament in the world— both this Chamber and the other place. To alter the procedure, as my noble friend from Scotland suggests, illustrates the great problem of travelling home after the House rises.

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I speak as a Member who arrives on a Monday, and who is here Tuesday, Wednesday and a large part of Thursday. Therefore I am not trying to say that people should be away from the House. They should be here whenever possible. When we get a reformed House of Lords we will see a great difference. A lot of provincial Members will come in from Scotland, Wales and other outlying areas, and it will make a radical difference to them. Perhaps I can suggest, therefore, that we should allow the experiment. I hope the House will support it. Many people need and demand that the change takes place and I hope that your Lordships will vote for it.
3.45 p.m.
Lord Jopling: My Lords, the noble Lord, Lord Graham, was good enough to refer to me in his speech, perhaps because of some reforms in another place with which I was closely involved. But speaking—like him and my noble friend Lord Denham—as a former Chief Whip, I profoundly disagree with him. I am much more concerned about the democratic rights of opposition than about the individual convenience of Members of your Lordships' House.
I strongly support the comments of my noble friend Lady Young. She is perfectly right. The classic way in which governments get their foot in the door and start changes is under the guise of "experiment"; many of us have done it.
I was struck by paragraph 7 of the report from the group on procedure which said:
"Procedure in [this] Chamber has traditionally been marked by a degree of courtesy, good manners and good will across the various political divides".
I just want to refer to the "good will" element. The Government have serious duties with regard to good will towards both individual Back-Benchers and also Opposition parties and groups. In your Lordships' House individual Back-Benchers have little about which to complain over the opportunities to let off steam or to examine legislation; indeed paragraph 4 refers to that when it says,
"back-bench members of the House enjoy very extensive procedural freedoms",
many more than in another place, if I might say so.
However, I am concerned about the proposals in paragraph 2 of the report of the Procedure Committee to change the general debate day from Wednesday to Thursday. It most seriously erodes the duty of good will owed by government to Opposition parties and groups. After all, the Wednesday general debates are the prime time in the week for opposition parties to try to chivvy the Government and to do their constitutional duty of opposing. Of course I understand the reason for Government Back-Benchers wanting the change but I hope they understand that the Opposition are entitled to prime time during the week. I calculate that over the years since World War II my party has been in power 37 years, while Labour has been in power 22 years; so in the long run what I am saying will probably be to the disadvantage of Conservative Back-Benchers. However, I believe that the proposition is wrong constitutionally.
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Votes rarely follow general debate days. A Written Answer that I received last week stated that there have been only eight Divisions on general debate days over the past 20 years, so everybody knows that such days are unlikely to end in a vote. We used to have a procedure like that in another place called Private Members' Motions. The noble Lord, Lord Graham of Edmonton, will remember that the committee of which I had the honour to be chairman did away with them in favour of even better prime time. On Fridays when we had Private Members' Motions in another place, they rarely ended in a vote and the Chamber was virtually empty. The only persons present were those taking part. The noble Lord, Lord Graham, said that one could come here on a Wednesday evening and find few people in attendance. If we change Wednesday for Thursday, even fewer people will be here on Thursday nights. It would often mean the Opposition talking to virtually an empty Chamber. As a former Government Chief Whip, I know the effect on an Opposition of putting their bull points to empty Benches. It is a most effective way of dealing with an Opposition who are trying to put over critical points. If the place is empty, the media take little interest.
I do not believe that the Opposition should be sidelined in that way. In the days when I was the Government Chief Whip and my friend—if I may call him that—the noble Lord, Lord Cocks of Hartcliffe, was my opposite number, he would have gone into orbit if I had tried to move Opposition days to Friday or the end of the week. I am glad to see the noble Lord nodding his head. He would have made my life totally impossible.
The Government have a duty to keep the great occasions for Oppositions, be they the Liberal Party, Cross-Benchers or the Conservative Party. All Opposition groups deserve prime time and should continue to have it.
Lord Richard: My Lords, I did not intend to say anything until I heard the noble Lord, Lord Jopling. I did not follow his argument at all. He said that moving general debates, which on his own admission rarely have a vote attached to them and are not well attended, from Wednesday to Thursday erodes the duty of good will owed by government to Opposition parties and groups and somehow interferes with the democratic rights of the Opposition. I do not see that for an instant. What democratic rights are infringed? The only difference is that the House will be empty on Thursday instead of Wednesday and that votes will not take place on Thursday instead of not taking place on Wednesday. If the Opposition have a topic that they wish to air, they can air it on Thursday with just as much fervour, skill and determination as on a Wednesday.
There may be other arguments for keeping Wednesday, but the idea that a change would erode the democratic rights of the Opposition is, with great respect to my noble friend—as I would call him—Lord Jopling, somewhat fanciful and a little over the top.
Lord Harris of Greenwich: My Lords, I wish to indicate—I suspect on behalf of all of us—our warm support for the broad recommendations made by the noble Baroness, Lady Hilton. Her committee produced its report

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with considerable dispatch and the overwhelming majority of it was endorsed by the Procedure Committee. We owe a debt to the noble Baroness and all other members of the committee.
When the committee began to debate the Wednesday/Thursday issue, I did not hold a strong view on its merits and thought the argument was evenly balanced. However, I have reached the conclusion— speaking entirely for myself, and with a free vote as far as we are concerned—that I shall vote for the amendment of the noble Baroness, Lady Young. I will do so because I do not believe that major procedural change should be supported unless there is a broad consensus of support. There is no broad consensus of support for the proposal, as was made clear in our debate in the Procedure Committee.
If the change is made in the way that is explicit in the amendment of the noble Lord, Lord Graham, I fear the consequence will be a three-day week. It was put that way by the noble Lord, Lord Denham, and he is entirely right. One of the things that we prize dearly in this House is the quality of our Wednesday debates. I believe that there would be a significant deterioration if we were to find ourselves on a three-day week. In a thinly attended House on Thursday, there would be less of a disposition to hold the Executive to account in a satisfactory fashion.
We are being invited to decide not simply a narrow and insignificant procedural question but an issue of fundamental importance. I hope that the House will recognise that when it votes.
Lord Howie of Troon: My Lords, I follow three old friends of mine—my noble friend Lord Richard, my former noble friend Lord Harris and the antagonist, the noble Lord, Lord Jopling. From my accent, people might think that I would want to get away from this place on Thursday and go elsewhere in order to enjoy life there. But I live in NW11 and would be perfectly happy to come in on Fridays.
What is odd about this debate is the idea that because few noble Lords attend on a Wednesday, few would come on a Friday.
Noble Lords: Thursday.
Lord Howie of Troon: Or a Thursday, my Lords. I beg your pardon. My colleagues would obviously attend on Thursday to deal with the important matters that the noble Lord, Lord Jopling, said nobody votes on. If they do not vote on Wednesday, they probably would not do so on Friday.
Noble Lords: Thursday.
Lord Howie of Troon: My Lords, it would not make much of a difference. The debate would still remain terribly important. The sort of persons who are interested in debates on Wednesday and had something to contribute would come on Friday.
Noble Lords: Thursday.
Lord Howie of Troon: Whatever day of the week it is, my Lords. I would come myself. I would not actually
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contribute but I would like to look handsome on the Back Benches. We are talking about something slightly weird—the notion that the Opposition would be deprived of some kind of strength that they would have otherwise. Of course they would not. They would still have all the parliamentary time needed to deal with the issues they think important and requiring to be dealt with. That would be more convenient to most people. I shall not go into the matter of Thursday and Friday. There seems to be a problem—a little difference—here between myself and the House. I believe that my noble friend Lord Graham of Edmonton has the argument right and that he should be supported.
Earl Ferrers: My Lords, the noble Lord, Lord Howie of Troon, made a fascinating intervention. I am not quite sure what he wants. I think that he wants not to be here on Thursdays but on Fridays, which is a curious combination. I have the privilege of being a member of the Procedure Committee, although I regret that I was not present at the one meeting. I was also a member of the group on procedure of the noble: Baroness, Lady Hilton of Eggardon. I reiterate what my noble friend Lady Carnegy said; namely, that the noble Baroness, Lady Hilton, conducted the group with extraordinary flair and understanding, and with Back-Benchers' views in mind.
If your Lordships were to read the report of the group—I have no doubt your Lordships will not do so, although it makes good reading, which I can say because I did not draft it myself—your Lordships would see that paragraph 6 states:
"It is not always appreciated that the freedoms of individual members of this House are wider than in any other legislative assembly".
That is a pretty big statement. It is worth reminding ourselves of that. The report continues at paragraph 8,
"Courtesy should not be seen as an optional extra. Without a high degree of courtesy and self-restraint, self-regulation will become unworkable".
The courtesies which go with the House are important. We do not have a Speaker, other than the noble and learned Lord the Lord Chancellor who, of course, does not operate in the manner of the Speaker in another place. I hope that we shall not have a Speaker. However, that requires us to exercise the elementary courtesies. Those are referred to on page 5 of the report of the Procedure Committee. It says:
"It is considered discourteous for [a Lord] not to be present for the opening speeches, for at least the speech before and that following his own, and for the winding-up speeches".
That may seem fairly elementary. But it is astonishing how often the convention is broken. I recall my noble and learned friend Lord Hailsham when he was Leader of the House rebuking the late Lord Arran. He said that you cannot blow in, blow off and blow out! That is something we might well remember.
The report continues:
"Reading of speeches is alien to the custom of the House".
That might prove an inconvenience to many noble Lords. However, the report states that extended notes are permitted. If noble Lords were not to read, debates

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might become more interesting to other noble Lords but not to the noble Lord concerned who was inconvenienced.
The report also states that noble Lords should not address one another as "you". That seems fairly obvious, but one hears it day after day. With great respect, I must say one even hears it from government Ministers. I hope that we shall keep to the third person and not to the second person. The report reminds us that,
"Lords should refer to 'the noble Lord, the Minister"',
not to the noble Lord, the Minister, but either the Minister or—I apologise. I have that wrong. This is what happens when one does not read. The report states,
"Lords should refer to 'the noble Lord, the Minister', or simply 'the Minister', but not 'the noble Minister'".
That important convention is frequently broken.
The report states:
"Lords should not pass between the Lord who is speaking and the Lord on the Woolsack or in the Chair".
The idea is that one ought to pass behind. Periodically people used to duck when in the line of fire. Now it seems the practice is to go ahead like a ship in full sail, straight across the line of fire. That is discourteous to the House.
The report further states:
"Lords should not move about the Chamber while a Question is being put from the Woolsack or the Chair".
Of course when that happens it gives all of us an opportunity to shout, "Order, order", which we think exciting, but it does not actually help the running of the business of the House.
I hope we shall try to remember these courtesies. Some people say it is difficult for new Peers because they have not become attuned to them. However, we have all been new Peers at one time or another and we had to adjust. I do not think it a good idea to alter the procedures just because it is difficult to familiarise ourselves with them.
The biggest problem arises, of course, at Question Time which is also the most exciting time and the most important time. The report suggests that questions and answers should be shorter. I say with the greatest of respect to the Government Front Bench that it would be a good thing if ministerial answers were shorter. That would make matters much more fun and much more interesting. I also believe matters would be far more interesting if questions were shorter. Nothing is more likely to flummox a Minister and not give him time to think of an answer than to ask "Why?" or "Why not?" If three questions are asked, the person concerned has time to think up an erroneous answer which probably lasts twice as long as the time taken by the questioner. It would be of great convenience if we could keep questions and answers short.
In the good old days—as a schoolboy would say—if two Peers got up to speak, one would graciously give way to the other. That does not happen now. People stand like two bulls pawing at the ground, each trying to outstare the other in the hope of winning the right to speak. Or there is the other schoolboy attitude of saying,
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"It is my turn". If noble Lords were to sit down immediately when someone else has risen to speak, it would stop all the awful rowing and eliminate the need for the noble Baroness the Leader of the House to make a choice. No Leader of the House likes doing that, and it is quite unnecessary. It is also pretty discourteous of noble Lords to stand their ground. When noble Lords give way, some do so without too much grace and sit down slowly. A speaker can be half-way through his question and the noble Lord who has been put out is still descending. It is rather like letting the air out of a balloon with your hand over the nozzle so that it escapes slowly. It would add greatly to the courtesies of the House if noble Lords sat down quickly. If we did that and all the questions and answers were shorter, everything would be far simpler. I hope that that will happen.
I hope that your Lordships will not change the general debate day. Wednesday has always been a general debate day. It splits up the government business. It is all very fine for some noble Lord—I forget who it was—to say that we can have government business on Monday, Tuesday and Wednesday. However, that would impose quite a strain on Ministers and civil servants, as it would sometimes on people in opposition who might be involved on all three days. I hope that that proposal will not be adopted and that we keep Wednesday as a general debate day. There is no doubt that if the general debate day were moved to a Thursday, people would stay for that debate only if they are interested in it. Some say that everyone would disappear on a Wednesday evening. I fancy that we could see that. One noble Lord said that he would like to return to Scotland on Wednesday evenings and I dare say he would. But one would see a massive exodus on Thursdays after Questions. People will find it convenient to be present for Question Time (if I may be vulgar, because they wish to claim their expenses) and then clear off home, leaving an important debate to just those who are interested in it. That would be a retrograde step and I hope that it will not happen.
Lord Howie of Troon: My Lords, before the noble Lord sits down—
Noble Lords: Order! Cross-Benches!
Lord Wigoder: My Lords, as regards the Thursday issue—assuming I have the days of the week correct— I would be sad to think that your Lordships decided this issue on the basis of individual, personal convenience. With respect, it seems to me that the issue we ought to consider is whether or not the proposal will promote the efficiency of the conduct of our business. I want therefore to echo in a way what the noble Baroness, Lady Carnegy, said. If we were to conduct legislative business on Monday, Tuesday and Wednesday, it would open up the possibility—the probability will perhaps be disputed by the Government Chief Whip—of sitting three consecutive days in Committee in order to deal with an urgent Bill. Even if the Government Chief Whip says that he would have no intention of doing that, it still opens up, as the noble Baroness, Lady Carnegy,

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pointed out, the increased mathematical probability in any week of spending two consecutive days in Committee on the same Bill. I regard that as undesirable from the point of view of the conduct of business in your Lordships' House.
As all of us who have taken part in a debate in Committee know, at the end of the first day many matters arise which require a little thought and reflection before one proceeds with the second day. Those matters may require further research; an outside body may require to be consulted; an amendment already tabled for a subsequent stage may have to be altered; and, on occasions when there is an extremely co-operative Minister, there may be the possibility of discussing an issue in order to find an agreed solution before proceeding to the second stage.
It is in the interests not only of the Opposition but of the Government Ministers who are conducting business, if they will allow me to be so presumptuous as to make an observation on their behalf. It is highly beneficial to the conduct of the business of this House that during the Committee stage of a complicated Bill there are intervals for consideration. It is important that we do not proceed from one day to the next, as is almost bound to happen unless the amendment proposed by the noble Baroness, Lady Young, is agreed to by your Lordships.
Lord Weatherill: My Lords, I will not detain your Lordships for long. I cannot speak for all Cross-Benchers—nor would I presume to do so—but perhaps I may remind your Lordships of an old parliamentary adage: "Only the temporary is permanent". I have a suspicion that if we proceed to this experiment we shall be stuck with it.
I disagree with the noble Lord who spoke earlier about Wednesday debates being subsidiary to the legislative work of your Lordships' House. An important debate was initiated last Wednesday by the noble Lord, Lord Waddington, and a Cross-Bench debate is to take place this Wednesday, "to call attention to the economic and social role of marriage", a subject that would never be discussed in the other place. One needs only to attend such debates to realise that it is extremely important that matters of this kind are discussed in your Lordships' House.
Although I fully understand that it would be for the convenience of many Cross-Benchers—certainly those who live in the north of England and Scotland—to get away earlier on a Thursday, I strongly feel that, on balance, and bearing in mind the old adage, we should stay where we are, at least until we know the complexion of the new House when all kinds of changes may have to be made.
Lord Burnham: My Lords, I wish to speak briefly to the amendment standing in the name of the noble Lord, Lord Morris of Castle Morris. I make no comment about the extension of the time for a vote from six minutes to eight minutes—although I have an opinion— but the question of changing from three minutes to four the moment at which noble Lords may vote is another matter. As a frequent Teller, on every occasion I see noble Lords straining in the slips at three minutes to get
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back to their work or to their tea. If the period went from three minutes to four, they would be almost uncontrollable. I have also seen the Government Chief Whip having to restrain physically with his wand noble Lords of either party who wish to get back. In my mind there can be no argument in favour of changing from three minutes to four, leaving aside the problem of the egg-timer. I do not consider that an adequate matter of inconvenience to your Lordships. I therefore fully support the amendment of the noble Lord.
4.15 p.m.
Lord Clinton-Davis: My Lords, perhaps I may, for a moment, turn to the speech made by the noble Earl, Lord Ferrers, with which I agree in very large measure. However, when talking about courtesies, he did not refer to a very considerable lack of courtesy shown in this place only the other day during the passage of the Access to Justice Bill. One noble Lord—I shall not mention who it was—made a quite considerable personal attack on a Government Minister and then, having made that attack, saw fit to leave the Chamber soon afterwards before the end of the debate on the amendment. I think that is an extreme act of discourtesy which should not happen. I hope that it will be noted by the House.
In the proposition advanced by the noble Lord, Lord Weatherill, I found an uncharacteristic lack of consistency. No argument has been put forward as to why debates on Thursday—not Friday, or even Good Friday for that matter—would be any less effective. People who are interested in the topics will attend, just as on Wednesdays. There are many noble Lords who are interested in the topics which are constantly raised. Of course, there are exceptions. If the draconian consequences spelt out by a number of noble Lords during the debate were to occur, would they not be revealed in the course of the experiment suggested by my noble friend Lord Graham of Edmonton? If such consequences occurred, I would have thought that the House would have little difficulty in deciding that the experiment was a bad one and should not be proceeded with. However, simply to assume that all these consequences would arise is a dangerous way of proceeding. It would be within the capacity of your Lordships' House to say very clearly, "We do not like what has happened; we have given it a chance and it should be rejected". But to say that we should give it no trial period at all seems to me to be extraordinarily inconsistent.
It has been suggested that somehow or other the media will cease to have much interest in this House if we undertake this experiment. Quite frankly, it does not seem to have much interest in this House anyway. I do not think that is a very powerful argument. The media does of course report proceedings inadequately. "Today in Parliament" used to devote rather more time to the affairs of this place and it now interjects other issues during discussions occurring in another place.
Like my noble friend Lord Richard, I do not see that there will be any weakening of the position of the Opposition if we proceed with this trial period. They will have every opportunity, particularly if they are an

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effective Opposition, to ensure that people will come and listen to important debates. It is incumbent on Members of this House to table matters of interest for the Wednesday debate. Sometimes the subjects are a little esoteric, but there is nothing much wrong with that because one makes an assumption that not too many people will attend anyway.
I think the best way to proceed would be to accept the proposition put forward by my noble friend of a trial period for just a matter of weeks. In my view, it is a very sensible proposition.
Lord Elton: My Lords, following on from what the noble Lord, Lord Wigoder, said earlier, I think that your Lordships should give the matter a little more thought. I have been both a Minister and a spokesman in opposition. The strain of two consecutive nights in Committee on a major Bill is considerable. The strain of three consecutive nights on a major Bill would be verging on the intolerable.
Whether in government or in opposition, when one has a Monday and a Tuesday consecutively on a Bill one is desperate for Wednesday so that one can catch up on one's briefs for the Thursday. One has no opportunity on Monday and Tuesday to talk to one's advisers or to ring them up because one is actually in the Chamber. By the third day one has moved into a new part of the Bill which requires new briefing. I therefore think that to preserve an interlude in which there is a possibility for Ministers and opposition spokesmen on Bills to do the work out of the Chamber that enables them to do their work in the Chamber properly and effectively is very important. That happens to chime in with what other noble Lords have said, which was summarised by the noble Lord the Convenor of the Cross-Benches, about preserving Wednesdays, with which I heartily agree. But I would not wish your Lordships to think only of that point because I believe that the legislative efficiency of this House could suffer if we lost that interval.
Baroness Lockwood: My Lords, I wish to support the amendment in the name of my noble friend Lord Graham. I do so as a northern Member of the House and one who usually leaves on a Thursday evening. I occasionally stay over when there is business on Friday in which I am involved but usually I leave on a Thursday evening. I leave not because it is a matter of convenience to me as an individual. I leave because I have commitments in the north which it is important for me as a Member of the House to fulfil.
I remind your Lordships that this House meets, for half the Session at any rate, for five days a week and not four days a week. There is business on Friday as well as on Thursday. I also remind your Lordships that we are not a full-time, professional, paid House of Lords. We are a part-time House. Very few Members spend the whole of the four or five days on the business of the House. Indeed, we are made Members of the House because of the experience we can bring to the House. We like to refresh that experience by being involved in matters other than debates and legislation.
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I will not go into the detail of what I do on a Friday. However, it is much easier for Members who live in London and the south to fulfil their obligations to the House and at the same time to extend their experience so that they can contribute that experience to the work of the House. Therefore, I should like Members to consider that point carefully.
I agree with the noble Baroness, Lady Young, and other noble Lords on the importance of the general debates on Wednesday but I disagree profoundly that the importance and status of those debates would be downgraded if they were held on a Thursday rather than on a Wednesday. Those debates are initiated by noble Lords who are fundamentally interested in the subject they are raising. The speakers who support them come forward for the same reasons. That would continue. Some of us attend the Wednesday debates out of interest in the subject being debated. That would continue if the debates were held on a Thursday rather than on a Wednesday.
A number of noble Lords have asked whether it is convenient to have three consecutive days on legislative work. We rarely have three consecutive days on one Bill. In fact, one could count on the fingers of one hand the occasions when we have had three consecutive days on a Bill. But there may be some substance in what has been said about the difficulty of getting up to date for the next day of the Bill and that it may therefore be important to have a break between the days. We do not know about that. It may be a valid point and we would find out if we had an experiment.
The experiment would be linked to one of the changes that is being made as a result of the excellent report of my noble friend Lady Hilton and her committee; namely, that amendments will have to be submitted earlier than has previously been the case and that the grouping of the amendments will be available by 2.30 p.m. on the last working day before the debate on the amendments. Those changes will have an effect not only on us but also on the outside bodies which brief Members of the House of Lords on these subjects.
I suggest to the House that it would be valuable to have the experiment of changing to Thursday the day of the general debates along with those changes that are being initiated as a result of the Hilton Report. I hope that we shall give an opportunity to the House to change the day of general debates from Wednesday to Thursday.
The Countess of Mar: My Lords, I support the amendment of the noble Lord, Lord Morris of Castle Morris. It may be of interest to noble Lords to know that our egg-timer is not always perfectly accurate. Sometimes it is jinxed and therefore we may not get three minutes. Therefore, in view of all the modernisation that is going on at the moment, perhaps a modern timepiece would be more appropriate for your Lordships' House.
One point that the noble Earl, Lord Ferrers, did not bring to your Lordships' attention was the reminder that conversations should be carried out in the Prince's Chamber rather than on the Benches of your Lordships'

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House. Not all of us are professional public speakers and it can be disconcerting to have to speak against a conversation that is taking place on the Benches either in front of or behind you. In addition, not all of us have perfect hearing. It can sometimes be difficult to hear what a speaker is saying when conversations are going on. In my role as someone who occasionally sits on the Woolsack, in a debate last week initiated by the noble Lord, Lord Waddington, I was struck by the fact that, during the speech of a noble Lord which was not perhaps as interesting as other speeches had been, conversations were being held on all three Front Benches, and not sotto voce. It was extremely difficult for the individual who was speaking to make himself heard to other noble Lords. I would be grateful, and I am sure other noble Lords would be grateful, if conversations could be carried out in the Prince's Chamber rather than in this Chamber.
I have listened to all the speeches that have been made on the subject of the Wednesday debates. I have yet to make up my mind. I have served for nearly 25 years in your Lordships' House. I cannot believe I am the only one who recalls the time when we sat only on Tuesdays, Wednesdays and Thursdays. We used to have a three-day week. Therefore, that argument is spurious. However, as I said, I have yet to make up my mind which way I shall vote when we come to a Division.
Lord Hacking: My Lords, I wish to make a brief intervention. This is not a Whipped matter on my side of the House. It is a free vote. I rise to say, first, that, regrettably, I will be unable to support my noble friend Lord Graham if he puts his amendment to the House in a Division. I very much hope that my noble friend will not put his amendment to a vote. It seems to me that the proposal is premature and that it would be better considered in the new House which will form after the end of this Session.
Secondly, it is important that there should be a real consensus on this issue. Clearly, from this afternoon's debate there has not been. Thirdly, as far as concerns the carrying out of experiments, it does not seem to be a very good time to carry out an experiment in April and May when the Government's business is welling up and when the House is under unusual pressure. If the experiment is to be carried out, the appropriate time will be when there is a reconstituted House and at an earlier time in our proceedings.
4.30 p.m.
Lord Strathclyde: My Lords, I thank the noble Baroness, Lady Hilton of Eggardon, and congratulate her on the quality of her report. I was initially rather suspicious about the setting up of this group. I shared those suspicions with the noble Baroness. However, she and her team have done a very good job. This resulting debate has demonstrated that there is, on the whole, little disagreement with the proposals of the Procedure Committee.
Turning to specific points, I entirely agree that ministerial Answers should be shorter. On many occasions during the past few months ministerial
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Answers, and questions to Ministers at Question Time, have been far too long. Any proposal designed to shorten them should be carried out forthwith. I hope that the Government will have found a mechanism whereby they can reduce the desire of their Front Bench for long Answers.
On the matter of Divisions, I initially did not feel strongly about the points made by the noble Lord, Lord Morris of Castle Morris, on changing the Division time from six to eight minutes; and therefore, if we were to keep the egg timer idea, it would also mean that the first stage would be four minutes. But having heard the debate, and in particular the persuasive words of my noble friend Lord Burnham, I wonder whether it might not be better either to have two egg timers or to use a stopwatch for the first three minutes.
My final point on the noble Baroness's report relates to the working group's proposals for training. Like my noble friend Lady Carnegy, I prefer the term "information", or at least "advice", on the procedures of the House. Since the general election an enormous number of new Peers have entered this House. The overwhelming majority have taken to its customs and traditions extremely well. They have made a tremendous effort to understand exactly how we operate. There are normally very good reasons why the House operates as it does. But I think that there has also been recognition that we need to find better ways of giving that advice to new Peers. I hope that we shall not allow this proposal to be dropped entirely, and that the Procedure Committee will be advised as to how it will be advanced.
The noble Baroness's report is very much in contrast to Part 2, dealing with the general debate day. The noble Baroness dealt with some extremely controversial issues. She carried out wide consultation with various parts of the House and asked for evidence from the Front Benches. That information was turned into a report which was debated through the usual channels before being presented to the Procedure Committee. I suspect that that is one of the reasons why there has been so little debate over that part of the report.
The issue of the general debate day has been dealt with in a different way. This proposal was put forward to the Procedure Committee by the Government Chief Whip. Not a great deal of consultation took place. During the course of the Procedure Committee's work, it became increasingly obvious that there was no consensus whatever. That is why the committee made no recommendation.
The noble Lord, Lord Harris of Greenwich, was absolutely right. The point is that the House should proceed on agreement. It is one of the great traditions of this House, where there is no Speaker, that on procedural matters every effort is taken to reach a broad consensus on these kinds of matters. That is why I rather regret the fact that the noble Lord, Lord Graham of Edmonton, has tabled his amendment. I hope that the noble Lord will not press it to a Division—first, because I believe that he will lose, but also, this debate having taken place, it may be better for the proposal to be put back into the usual channels for wider consultation.

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I am in a slightly difficult position. When I was Government Chief Whip I recommended this change to my own Front Bench. At that time my Front Bench said that they did not want to undertake such change for some of the reasons that have been given. They saw no advantage in it, as well as the principled argument. I withdrew my recommendation—in fact I do not think I even discussed it with the noble Lord, Lord Graham of Edmonton, who was then my opposite number as Opposition Chief Whip.
If the noble Lord, Lord Graham, presses his amendment to a Division and wins, then we should agree certain principles in relation to this House. The first is that a Bill should not be taken on three consecutive days in the same week. Secondly, there should be an understanding that it will make business on Fridays—especially controversial business— considerably more difficult than has been the case up until now. Thirdly, if Thursday is to become the general debate day, secondary legislation on Thursday evening following those debates will also be much more difficult. I should like a recognition from the Government that they will not seek to do that. That is not for the convenience of Front-Benchers; it is because of the great interest that Back-Benchers have in secondary legislation. Therefore we should not be obliged to do that.
One of the reasons that this has gone wrong is that Peers did not have enough warning that this experimental stage might take place. I was approached last week by one of my noble friends who is on the boards of various charities and other organisations. He said that he had made appointments for every Wednesday purely because that fitted in with the way the House arranged its business, and that if this proposal were to be accepted he would have to change them all.
The most important point of principle and practice is that this is an experiment at a time when the whole House is about to undergo a massive experiment if and when the reform Bill that is before this House goes through. For that reason, if there is a Division, I shall support my noble friend Lady Young.
This has been a useful debate. I conclude from it that, if we are to make these procedural changes in the future, it would be far better for it to be done in the way suggested by the noble Baroness, Lady Hilton, rather than as presently suggested.
Lord Carter: My Lords, I had not intended to take part in this debate because it is a matter for the House. However, the noble Lord the Leader of the Opposition asked about specific matters. I shall certainly agree that, if the debate day is switched from Wednesday to Thursday, we shall do exactly the same on Thursdays as we now do on Wednesdays in relation to debates and Unstarred Questions. I will undertake that, for the six weeks of the experiment—we are only talking about six weeks—from the beginning of May until the middle of June, there will be no week in which we take three days
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on the same Bill. I would remind your Lordships that, from mid-June until the end of the Session, we deal with whipped business on four days a week.
Lord Brightman: My Lords, perhaps I may put a short question to the Lord Chairman of Committees. It arises out of paragraph 79 of the working group's report. The second part of the paragraph reads:
"It might be useful to the House to have an arrangement for back-benchers to meet semi-formally, with a Clerk, to exchange ideas and concerns, whether about procedure or about other aspects of membership of the House. Lords might feel easier raising minor matters in such a forum rather than going straight to the Procedure or Offices Committee".
I do not know whether the noble Lord might feel that that suggestion should be considered by whatever may be the appropriate quarters.
I have in mind that a semi-formal group of that kind might be a useful receptacle for ideas which could be tested and, if considered suitable, passed on to the Procedure Committee. I do not envisage that such a small, informal group need sit more than once during a Session. Perhaps the Lord Chairman of Committees may care to comment on that matter.
4.39 p.m.
The Chairman of Committees: My Lords, I begin by clarifying two points. First, the change in the Division time will take effect after the Easter Recess. As far as concerns Starred Questions, in particular the proposal for the second topical Question each week, the changes will be introduced gradually, as soon as there is a Wednesday with fewer than four Starred Questions tabled. At the moment, that is 21st April. Perhaps I may reassure noble Lords that no noble Lord with two Starred Questions tabled now will be required to remove one of them.
As I indicated at the outset of the debate, I put forward no view about the proposed change in the debate day. Therefore, if your Lordships will forgive me, I do not propose to reply to that part of the debate, which was the substantial part.
Perhaps I could attempt to reply to some of the other specific points. The noble Baronesses, Lady Hilton of Eggardon and Lady Carnegy of Lour, referred to training matters. That will come up for further consideration. The Procedure Committee thought that the usual channels would be asked to give further consideration to the matter. I do not anticipate that there will be anything to put forward on the matters before your Lordships at least until the autumn, if then. However, I sound one warning note to your Lordships. If those matters are pursued—and some seem to be desirable—then there will be not inconsiderable resource implications for them.
On the amendment by the noble Lord, Lord Morris of Castle Morris, my reference at the outset of the debate to being able to cope with the mechanics of any change which your Lordships might make was intended to refer to the means of timing the two parts of the Division. So there is no difficulty about being able, if it is agreed, to implement what I hope will be acceptable mechanical means.

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I do not believe that the noble Lord, Lord Morris of Castle Morris, or any other noble Lord needs to become too worked up about the nomenclature as concerns the historic timing device that we have used so far. We can avoid using the inappropriate hour-glass or even the egg-timer. Anyway, I have nearly always heard it referred to as a "sand-glass".
The noble Lord, Lord Denham, asked me about the proposed next meeting of the Procedure Committee. I am conscious of the difficulties. As he indicated, it is timed for one of the days on which your Lordships will be considering the House of Lords reform Bill. As your Lordships will know, the Procedure Committee is very large. I can see that a number of noble Lords who would wish to be present in the Chamber are likely to be incommoded, whether or not they are speaking on such an occasion. For the moment, perhaps I may try to satisfy the noble Lord by saying that consideration is being given to the matter, and leave it at that.
The noble Earl, Lord Ferrers, dealt with some of the courtesies of the House. With respect, he is one of the most qualified of your Lordships to talk about them because he is one of our most courteous Members. I wholeheartedly support his endorsement of the proposal that we should continue to observe the correct form of nomenclature for Ministers. As he and the committee said, they should not be referred to as the "noble Minister", but as, for example, the "noble Lord the Minister". As your Lordships all know and acknowledge, that is simply because their nobility does not stem from their ministerial position; it stems from their personal capacity. Of course, all Ministers, from whatever side of your Lordships' House they have ever come, act in a noble way, but, as the noble Earl, Lord Ferrers, rightly said, they are not noble Ministers.
The noble and learned Lord, Lord Brightman, raised a point about the possible need for an informal standing group. I am grateful to him for characteristically letting me know beforehand that he proposed to raise the point. Your Lordships will appreciate that no view was taken about the matter in paragraph 79 of the report by the noble Baroness, Lady Hilton. If there were to be such a proposal, it would need to go before the Procedure Committee. It has already been possible for informal discussions to take place before matters have been referred to the Procedure Committee. Very often, Chief Whips of the various parties and the Convenor of the Cross-Bench Peers are consulted about them. It was as a result of a suggestion originally referred informally to the noble Baroness the Leader of the House that the working group of the noble Baroness, Lady Hilton of Eggardon, was set up in the first place. So there are mechanisms and procedures in which this kind of informal consultation can be carried out. However, I shall consider further what the noble and learned Lord, Lord Brightman, said to ascertain whether any additional way of proceeding might be necessary. I am grateful to him for his suggestions.
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Those were the general points which arose: out of your Lordships' debate. As indicated, I leave the other matters to your Lordships.
Lord Morris of Castle Morris: My Lords, I am grateful to my noble friend Lady Hilton of Eggardon for her support for my minute amendment. No one in your Lordships' House has thought more deeply or more recently on these matters than she has. I am grateful to the noble Countess, Lady Mar, for her support and also for the eloquent support of the noble Lord, Lord Burnham. On the matter of the egg-timer, he and I are clearly "yolked" indivisibly together. As I feel a general sense of acceptance for the three-minutes plus five-minutes amendment, I hope it may be possible for your Lordships to agree to it without a Division.
On Question, amendment agreed to.
Baroness Young: I beg to move, as an amendment to the Chairman of Committees' Motion, at end insert ("save that, notwithstanding paragraph 2 ("The General Debate Day"), Wednesday shall remain the general debate day").
Moved, as an amendment to the Chairman of Committees' Motion, at end insert ("save that, notwithstanding paragraph 2 ("The General Debate Day"), Wednesday shall remain the general debate day". —. (Baroness Young.)
4.47 p.m.
On Question, Whether the said amendment shall be agreed to?
Their Lordships divided: Contents, 225; Not-Contents, 87.

Division No. 1

CONTENTS

Aberdare, L.

Brightman, L.

Ailsa, M.

Broadbridge, L.

Aldington, L.

Brougham and Vaux, L.

Alexander of Tunis, E.

Bruntisfield, L.

Allenby of Megiddo, V.

Burnham, L.

Alton of Liverpool, L.

Burns, L.

Ampthill, L.

Buscombe, B.

Anelay of St. Johns, B.

Butterworth, L.

Annaly, L.

Byford, B.

Annan, L.

Cadman, L.

Astor of Hever, L.

Caithness, E.

Attlee, E.

Calverley, L.

Avebury, L.

Campbell of Alloway, L.

Baldwin of Bewdley, E.

Carlisle, E.

Beaumont of Whitley, L.

Carlisle of Bucklow, L.

Belhaven and Stenton, L.

Carnegy of Lour, B.

Beloff, L.

Carnock, L.

Belstead, L.

Carrick, E.

Berners, B.

Carrington, L.

Biffen, L.

Chalfont, L.

Birdwood, L.

Charteris of Amisfield. L.

Blaker, L.

Chesham, L.

Blatch, B.

Chilver, L.

Blyth, L.

Clancarty. E.

Boardman, L.

Clanwilliam. E.

Brabazon of Tara, L.

Clement-Jones., L.

Bramall, L.

Conglelon, L.

Bridgeman. V.

Cowdrey of Tollbridge, L.

Bridges, L.

Cox, B.

989

Craig of Radley, L.

Maddock, B.

Craigavon, V.

Mar, C.

Craigmyle, L.

Marlesford, L.

Cranborne, V.

Marsh, L.

Cross, V.

Masham of Ilton, B.

Cuckney. L.

May, L.

Cullen of Ashbourne, L.

Mayhew of Twysden, L.

Dahrendorf, L

Mersey, V.

Davidson, V.

Miller of Hendon, B.

Dean of Harptree, L.

Molyneaux of Killead, L.

Denbigh, E.

Monro of Langholm, L.

Denham, L. [Teller.]

Monson, L.

Desai, L.

Montgomery of Alamein, V.

Devonport, V.

Morris, L.

Dholakia, L.

Mountevans, L.

Dixon-Smith, L.

Munster, E.

Eden of Winton, L.

Mutton of Lindisfarne, L.

Ellenborough, L.

Napier and Etrrick, L.

Elliott of Morpeth, L.

Naseby, L.

Elton, L.

Nelson of Stafford, L.

Exmouth, V.

Newall, L.

Ezra, L.

Newby, L.

Falkland, V.

Newton of Braintree, L.

Ferrers, E.

Nickson, L.

Flowers, L.

Noel-Buxton, L.

Foley, L.

Norrie, L.

Gilmour of Craigmillar, L.

Northesk, E.

Gladwyn, L

Norton of Louth, L.

Glanusk, L.

Nunburnholme, L.

Glenarthur, L.

O'Cathain, B.

Glentoran, L.

Ogmore, L.

Goodhart, L.

Oppenheim-Bames, B.

Gormanston, V.

Palmer, L.

Gray of Contin, L.

Perry of Walton, L.

Haddington, E.

Pilkington of Oxenford, L.

Halsbury, E.

Platt of Writtle, B.

Hamwee, B.

Plummer of St. Marylebone, L.

Harlech, L.

Poole, L.

Harris of Greenwich, L.

Rankeillour, L.

Harris of High Cross. L.

Rawlings, B.

Hayhoe, L.

Razzall, L.

Hayter, L.

Reay, L.

Hemphill, L.

Redesdale, L.

Henley, L.

Renton, L.

Holderness, L

Renton of Mount Harry, L

HolmPatrick, L.

Rodgers of Quarry Bank, L.

Home, E.

Rotherwick, L.

Hooper, B.

Rowallan, L.

Hooson, L.

Russell, E.

Hothfield, L.

St Davids, V.

Howe, E.

St John of Bletso, L.

Howe of Aberavon, L.

Sandberg, L.

Howell of Guildford, L.

Seccombe, B.

Hussey of North Bradley, L.

Sharp of Guildford, B.

Hylton-Foster, B.

Shaughnessy, L.

Iveagh, E.

Shaw of Noithstead, L.

Jacobs, L.

Simon of Glaisdale, L.

Jenkins of Hillhead, L.

Skidelsky, L.

Jopling. L.

Slim, V.

Kelvedon, L.

Stair, E.

Kinloss, Ly.

Steel of Aikwood, L.

Laming, L.

Stewartby, L.

Lane of Horsell, L.

Strange, B.

Lauderdale, E.

Strathclyde, L.

Lincoln, Bp.

Swansea, L.

Lindsey and Abingdon, E.

Swinfen, L.

Listowel, E.

Taverne, L.

Lloyd-George of Dwyfor, E.

Temple of Stowe, E.

Long, V.

Tenby, V.

Ludford, B.

Teviot, L.

Lyell, L.

Thomas of Gresford, L.

McFarlane of Llandaff. B.

Thomas of Swynnerton, L.

Mackay of Ardbrecknish, L.

Thomas of Walliswood, B.

Macleod of Bone, B.

Thurlow, L.

McNair, L.

Tope, L.

McNally, L.

Trefgarne, L.

990

Trenchard, V.

Westbury, L.

Tryon, L.

Wigoder, L.

Vivian, L.

Wilcox, B.

Waddington, L

Williams of Crosby, B.

Wade of Chorlton, L.

Williamson of Horton, L.

Warnock, B.

Winchilsea and Nottingham, E.

Weatherill, L

Wise, L.

Young, B. [Teller.]

NOT-CONTENTS

Alli, L.

Jeger, B.

Amos, B.

Jenkins of Putney, L.

Balfour of Incteye, L.

Judd, L.

Barnett, L.

Kennedy of The Shaws, B.

Bassam of Brighton, L.

Kennet, L.

Blackstone, B.

Lockwood, B.

Blease, L.

Lofthouse of Pontefract, L.

Bragg, L.

Macdonald of Tradeston, L.

Brookman, L.

McIntosh of Haringey, L.

Brooks of Tremorfa, L.

Mallalieu, B.

Burlison, L.

Mason of Barnsley, L.

Carmichael of Kelvingrove, L.

Molloy, L.

Carter, L.

Monkswell, L.

Christopher, L.

Morris of Castle Morris, L. [Teller.]

Clarke of Hampstead, L.

Clinton-Davis, L.

Orme. L.

Currie of Marylebone, L.

Murray of Epping Forest, L

Davies of Oldham, L.

Peston, L.

Dean of Thornton-le-Fylde, B.

Pitkeathley, B.

Dixon, L.

Plant of Highfield, L.

Dormand of Easington, L.

Puttnam, L.

Dubs, L.

Ramsay of Cartvale, B.

Elis-Thomas, L.

Randall of St Budeaux, L.

Evans of Parkside, L.

Richard, L.

Farrington of Ribbleton, B.

Sainsbury of Turville, L.

Gilbert, L.

Scotland of Asthal, B.

Gladwin of Clee. L.

Sefton of Garston, L.

Gordon of Strathblane, L.

Shepherd, L.

Goudie, B.

Sheppard of Liverpool, L.

Gould of Potternewton, B.

Simon, V.

Graham of Edmonton, L. [Teller.]

Smith of Gilmorehill, B.

Grenfell, L.

Stoddart of Swindon, L.

Hardy of Wath, L.

Strabolgi, L.

Harris of Haringey, L.

Symons of Vemham Dean, B.

Haskel, L.

Taylor of Blackburn, L.

Hollis of Heigham, B.

Thomas of Macclesfield, L.

Howie of Troon, L.

Thornton, B.

Hoyle, L.

Tomlinson, L.

Hughes, L.

Turner of Camden, B.

Hunt of Kings Heath, L.

Uddin, B.

Islwyn, L.

Varley, L.

Janner of Braunstone, L.

Walker of Doncaster, L.

Jay of Paddington, B. [Lord Privy Seal.]

Whitty, L.

Williams of Elvel, L.

Williams of Mostyn, L.

Resolved in the affirmative, and amendment agreed to accordingly.
On Question, Motion, as amended, agreed to.

Education: Excellence in Cities
5 p.m.
Baroness Blackstone: My Lords, with the permission of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Education and Employment. The Statement is as follows:
"Madam Speaker, with permission I wish to make a Statement on excellence in cities

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"On 11th March I announced to the House that with the extra investment in public services from the Budget we would provide much wider access to information technology—with a clear focus on inner cities. In our White Paper, Excellence in Schools, we promised to modernise the comprehensive principle. Today I can announce a major new framework for our inner city schools—taking these principles forward in the six largest cities in England.
"It means shifting the focus decisively from the institution to the individual, irrespective of geography or birth, so that every gifted pupil will be stretched and special needs met. It means a substantial expansion of specialist and beacon schools promoting diversity and excellence. It means that every youngster who would benefit will have access to a learning mentor, with extra help available for those who need it most. This is a strategy which will give every pupil an entitlement to new and more challenging opportunities.
"There are particular problems in inner cities that have created a long-standing culture of low expectation. Today's action plan—which will be backed by £350 million over the next three years— will build on measures already taken to raise achievement.
"Sure Start and expanded nursery education will give every child the best possible start in life. The daily literacy hour is teaching children to read, write and spell effectively for the first time in 30 years. From September, our numeracy strategy will restore mental arithmetic to maths teaching. This is underpinned by a rapid reduction in infant class sizes.
"There are many teachers and pupils already performing very well in difficult circumstances. We must build on and spread their success. Just as the city multiplies the barriers, we have to multiply the opportunities. Initially, our action plan will be taken forward in six areas—inner and north-east London, Manchester/Salford, Liverpool/Knowsley, Birmingham, Leeds/Bradford and Sheffield/Rotherham. As the programme develops, we will link into other initiatives for regeneration and spread success.
"We will strengthen leadership in our inner city schools and provide gifted pupils with new opportunities to succeed. This means setting into appropriate groups in their own school, as well as extra classes linked to specialist schools. If a child with a talent for languages wishes to study German or Italian, but his own school offers only French, he should be able to do so.
"All of us would want to ensure that those who have the ability can go to university. We will establish new university summer schools for 16 and 17 year-olds in the inner city. This will build on links already developed by individual schools and colleges with some universities.
"Madam Speaker, many youngsters in our inner cities lose out because they drop out. All secondary school pupils in these areas who need one will have access to a learning mentor, to assist in overcoming barriers—someone who can cut through red tape to
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offer support. This will benefit those who have been traditionally failed by the system, especially children from minority ethnic and disadvantaged backgrounds.
"This year, we will make a start with £17 million to employ over 800 mentors in our schools. Mentors will guide pupils towards extra help and extra tuition where they are falling behind. Nor can we allow a disruptive pupil to wreck the chances of others. Excluded youngsters miss out on education and often turn to crime. Seventy-five per cent. of those on remand have a reading age of 10 or below. We are already acting to tackle these problems.
"Today, I propose that in these areas every secondary school should have access to a learning unit for disruptive youngsters. They will receive a full time-table and will return to class only when they can do so without disruption.
"Madam Speaker, turnover and the use of supply teachers are major challenges to the continuity of education in inner cities. We will introduce new measures to attract and retain good teachers, through enhanced retention bonuses and targeted training and development.
"Alongside today's measures, we are strengthening diversity and excellence across the education system. Today, I can announce the expansion of our existing target for specialist schools from 500 to at least 800 by 2002. This will mean that nearly one in four secondary schools in England will offer a specialism, linked to neighbouring schools and colleges.
"Our new network of learning centres will include specialist schools with a strong ICT focus and adult computer learning. The first 80 centres will be placed in our inner city areas at a cost of £100 million. I can also announce a five-fold increase in our beacon school programme from the current planned number of 200 by September to 1, 000 by 2002.
"There has been great enthusiasm for education action zones—and we will invest up to £24 million to extend the programme to support an additional 40 smaller zones. We will also accelerate Ofsted inspections of inner city local education authorities.
"I am pleased to say that, to spearhead this drive, the Prime Minister has today appointed my honourable friend, the School Standards Minister, to hold special responsibility for inner city education. She will lead a strategy group which will include successful heads.
"For too long the specific educational characteristics of inner cities have been ignored. Today, I believe we have set in train action which will lead to a step change in aspiration and expectation. Our ambition is real diversity and excellence—from world-class primary education to a comprehensive system which works for all our children whatever their background.
"Madam Speaker, I commend this Statement to the House."
My Lords, that concludes the Statement.
Baroness Blatch: My Lords, I am grateful to the Minister for repeating the Statement. The Government having attacked selection on the ground of ability for months if not years, this Statement is seriously astonishing. It would be helpful to have some questions answered on finance, but I shall return to those in a moment.
No one, but no one on this or, I suspect, any side of the House would argue with the aim that education should meet the needs of all children from the very brightest through to those with the most special needs. That is common ground between us. Indeed, our specialist schools were designed by the previous government to expand the strengths of many of our schools; and I am delighted to see that the expansion will continue.
The Statement reveals the hopeless confusion at the heart of the Government's education policies. They have spent two years attacking any attempts by schools to specialise with more able pupils. Schools are losing their power over their admissions policy. They will no longer be able to introduce a policy of selecting any students on the basis of ability. Furthermore, all our grammar schools are under threat; and it is my prediction that with the rigged balloting system few will survive the next decade.
Now the Government have come up with this scheme for selecting more able pupils in inner city comprehensives. Why is that form of selection by ability being imposed while all existing forms of selection have been banned? The Government have taken all the rungs out of the ladders and now have a dog's breakfast of a system in which they are trying to put one or two of them back.
This hare-brained scheme will be virtually impossible to operate in practice. Are the Government listening to the teachers and the heads of department and the people who have already been reading, in some detail, over the weekend about those proposals? I listened to Radio 4 this morning when the matter was gone into in great detail. That is another example of how the Government prefer to go public with their Statements before respecting the sovereignty of Parliament.
Are we suggesting that more able pupils should be taken by bus to other schools for special lessons? What was wrong with able children attending schools which could provide for their needs? Will the noble Baroness confirm that the Government ban specialist schools from selecting by ability? Under the Government's present plans, schools can specialise in music but they cannot specialise in mathematics because that smacks of selecting by ability. Are the Government now saying that pupils can be taken to another school because of their ability at maths but cannot be enrolled at that school? Is that not tying the policy up in knots?
The Secretary of State has made clear on so many occasions his hostility to selection on the basis of ability. Those special classes are to take place in pupils' own schools. Is that with or without the very teachers who are failing to meet the needs of the children in those schools or are the teachers in those schools to be set aside? Very often, inner city children have enormous problems at home. The end of the school day is not a time when they are at their brightest. But they must sit down with their
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new teachers who will start to teach them literacy, numeracy and other subjects. Those children, tired and exhausted, have been holed up in schools during the week and they will then be taught after school and on Saturday mornings.
Why can those special lessons not take place at normal times during the school day? Do we not owe it to our children to meet their needs during the course of a normal school day? Are we back to setting in schools? I thought the Government were against that. On this side of the House, we certainly support the notion of setting.
This hardly constitutes the transformation of inner city education. The Secretary of State famously remarked— and it is well recorded—that:
"I am having no truck with middle-class, left-wing parents who preach one thing and send their children to another school outside the area".
Of whom was he thinking? Is it all right now, provided that the children travel by bus to a specialist school, in an evening, from inner city schools where the children are enrolled already?
Mentoring can be a useful way of helping pupils. When I was at the Home Office, we did a great deal to encourage mentoring, especially of children in inner city schools. We worked closely with the Prince's Trust. So many of our young civil servants encouraged people in business and commerce to lend their most able people to work alongside young people, particularly those who were disruptive in school, to see whether they could be brought back on track. So we do recognise that work.
But the Secretary of State makes great play of that and of the money that is to go to inner city schools. Will the noble Baroness confirm that that is part of the education settlement which has been announced already? How is the money to reach the schools? Is the Secretary of State aware of the frustration and anger among schools when they hear yet another glitzy announcement from the Government, but they know it is to be financed out of the money which should have gone to them as part of their core funding? Instead, it is held back for yet another central departmental initiative.
Over the weekend, I was talking to the head of a school which is having to shed 10 members of staff. It is a secondary school—it was a grant-maintained school— and is a specialist school. Is it to shed 10 staff and then to look forward to a glitzy, presentational mentor who will arrive at the end of the school day? Would it not be better for that school to keep those members of staff?
It is true that the way in which money is now being top-sliced in education means that the core funding going into school is being corrupted and distorted. The best way forward is to give schools the greatest possible power to shape their own characters and to call them to account. The Government say that they will allow schools to select by aptitude (for example, music) but not ability (for example, maths). That is ludicrous.
Having attacked selection on the ground of ability for so long, how is it that the Government can now present us with the kind of weasel words which we see in this document? What provision will there be for a highly academic, able young person in a school which does not

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meet that child's needs? What will happen? Will that child not be selected on the basis of ability as a child with special needs?
In repeating the Statement, the noble Baroness said:
"Our ambition is real diversity".
That is perhaps so, as long as that does not involve selecting a child on the basis of ability. Or does it? How do we take that from the Statement?
I should like the noble Baroness to clarify the financial aspect. I have asked for a breakdown of the £19 billion which was allocated to education over three years. I am finding it extremely difficult to get information from the department about that. Is that money additional to the £19 billion or is it part of it? To what extent has the £19 billion been eroded from core provision for schools into those specialist schemes? Will all the revenue costs of those measures continue to be funded beyond the planned period? Many schools across the land are receiving money from the Government for one scheme or another, but then are left to pick up the costs. Even in relation to the class-size pledge, they may have the classrooms and extra teachers this year, but there is nothing in their budget which will provide for the continuing revenue costs of refurbishing those classrooms and providing teachers and staff for the children.
The noble Baroness is, at the moment, making evaluative statements about action zones. That is another area about which I have been asking questions. But we are not receiving any information about how they are performing. I can tell the noble Baroness that in places they are so bogged down with communicating, meetings and co-ordination that the very last people to benefit from those activities are the children in the schools. This Statement is breathtaking in its arrogance and in its double standards.
Lord Tope: My Lords, in your Lordships' House, I am used to following the noble Baroness, Lady Blatch, and I usually try to be more positive in my response. I shall do so again today. However, I share some of her concerns and I admit to a growing irritation over the past 48 hours and a growing feeling that this initiative received more and more publicity not only on the day of the announcement but even the day before the announcement. It seems to me that this Statement is now something of an afterthought rather than, as I believe it should be, the first action, followed if necessary by all the glitzy publicity.
I want to try to be positive and to give a welcome to the general thrust of the Statement. I say that for two reasons: first, because it recognises the special position of some inner city schools. It is turning towards praising and raising rather than the previous practice of naming and shaming. I certainly welcome any additional resources which may be coming to inner city schools, indeed to any schools.
Secondly, I welcome it because it recognises that gifted children also have special needs. My first question is whether the Government intend to review the provisions of the 1996 Act in that regard actually to recognise that special needs include those children with particular gifts,
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a point which we discussed in your Lordships' House when that Bill, as it then was, was going through this House. Do the Government intend to review that?
Not all inner city schools are disadvantaged and certainly by no means all disadvantaged and/or gifted pupils are in inner city schools. While I recognise that any initiative must start somewhere, I must ask the Minister when the Government expect to be able to extend that programme to the many schools in suburban and other metropolitan areas and in particular rural areas which face very real problems similar, albeit in very different settings, to those which we are addressing today in our inner city areas.
Much of the Statement and the booklet—I have had the opportunity to glance quickly at it—have a rather familiar ring. There is extensive reference to initiatives already announced by the Government. Some have been announced by the Government several times. Indeed, I sometimes liken the Government to a cow which has seven stomachs. This Government seem to have to regurgitate each initiative at least seven times and announce it each time before it is finally digested.
Perhaps I may repeat a question asked by the noble Baroness, Lady Blatch, in a different way. How much of the money is being announced for the first time today and how much is money previously announced as specific initiatives or as part of the education settlement generally? To the extent that any of it relates to part of the previous education settlement, schools all over the country will have been expecting some share of that and will feel some disappointment—I put it no stronger—that even that small funding will not be coming their way. I return to my earlier question: when is this programme expected to be extended?
What will be the delivery mechanism of the funding? How will the funding reach schools, and, perhaps more importantly, the pupils at whom it is targeted? Will it be on the basis of need? Or will it be yet another bidding process which does little in recognition of need but responds much more to those who are good at putting in bids? I hope the Minister can tell us what the delivery mechanism will be and how it is to reach those for whom it is intended.
Finally, reference has been made to the 800 mentors. I believe this to be a welcome initiative, provided it is done properly and well. I wonder whether the Minister can tell us where the 800 mentors are to come from— I nearly said "800 Ministers"; God forbid!—and who they will be. What training will they receive? How will they be able to carry out their jobs? I believe that in another place the Secretary of State made reference to the fact that such mentors would also use volunteers. I believe my question is even more relevant. Who will these volunteers be? What training will they have had? What is the extent of their professionalism? What supervision and support will they receive? This is a very welcome initiative but only if done properly. If done improperly or badly, it could be disastrous.
As always with such initiatives, it begs more questions than it answers. However, I conclude by giving a general welcome at least to the recognition that gifted children also have special needs, wherever they live.
5.22 p.m.
Baroness Blackstone: My Lords, I am grateful to the noble Baroness, Lady Blatch, for at least welcoming the increase in specialist schools. However, I am sorry that she was disparaging about so much of the package. It is designed to provide additional support for schools in our inner cities and to ensure that pupils in those schools are stretched and taught in such a way that all fulfil the potential of which they are capable. That includes the most able pupils and also those who are disaffected and not at present getting what they should from their experience in our secondary schools.
I emphasise that the Government's announcement today is not just about gifted and able pupils but also those at the other end of the spectrum, including those who are disruptive in our schools. We want to ensure that such pupils do not disrupt the education of others but that they are adequately taught in special units pursuing a full timetable and then brought back into the classroom as soon as possible.
The noble Lord, Lord Tope, was a little more welcoming but somewhat unfair in suggesting that there is not very much that is new in the announcement made today. I should like to correct the noble Lord. I believe that when he has had the opportunity to read what we are setting out to do he will see that a great deal of what is contained in the document published today is, in fact, new.
I turn to the more specific questions. The noble Baroness made some scathing remarks about the intention of the Government to abandon selection in some areas but reintroduce it in others. I remind her that the Government are not reintroducing selection here but making it possible for pupils in all schools, wherever they are, to have the kind of programme that is appropriate to their needs. That will be done partly through setting but also through after-school activities, Saturday activities and ensuring that they have access to programmes provided by neighbouring specialist and beacon schools.
There is no suggestion in what has been announced today that large numbers of pupils will be "bussed". They will be able to benefit from the teachers in beacon schools visiting neighbouring schools and providing the best practice that such excellent teachers are able to provide, supporting the training of teachers in schools that have not been designated as beacon schools, and so on. Therefore, I believe that the noble Baroness is wrong to suggest that, somehow or other, as a result of focusing more on the needs of gifted pupils, we will be moving large numbers of pupils around.
The noble Baroness was very dismissive of the excellent after-school and Saturday activities already in place. These are the kind of programmes that have been paid for, quite often, by people who send their children to private schools. I cannot imagine why pupils in our state schools should not benefit from additional provision of that sort. It seems to me highly desirable to make such provision available. I think the noble Baroness was a little "over the top" in her suggestion that all pupils are so exhausted at the end of the school day that they cannot benefit by such programmes.
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The noble Baroness asked about the funding of the initiative, as did the noble Lord, Lord Tope. Perhaps I may explain that the cost of the initiative will be about £350 million. It will be funded with approximately £150 million of new money provided for in the Budget and £200 million out of the existing settlement secured under the comprehensive spending review.
I believe that this is an enormously welcome announcement for teachers. It means that they will have access to resources they have not had in the past. The noble Baroness said that she was unable to obtain information about the breakdown of the £19 billion of additional money. Of course, the Government have not yet announced how all of that will be spent. They have not yet announced how the third year of the additional £19 billion will be spent. However, the Government have published countless documents of one kind or another concerning the first two years. I have tried to ensure that the noble Baroness is sent copies of all such documents which have been made public.
The noble Baroness also asked about education action zones. She said that no information was provided about their performance. Perhaps I may say that it is still early days. The Government are evaluating the education action zones but most were established only recently and are part of a larger programme. It is rather too soon to give any clear cut indication of how they are performing. However, anecdotal evidence indicates that they are hugely more successful than the noble Baroness suggested. I deeply regret her extremely hostile remarks about the great effort that has been put into the education action zones. I am surprised because I had thought that the noble Baroness welcomed them.
The noble Lord, Lord Tope, asked about mentors and where they will come from. Those additional staff for inner-city schools will be recruited from a variety of different professions. Some will be additional trained teachers; some will be youth workers; and some could be from the educational welfare service. They will come from different backgrounds and will be expected to work with all children who require mentoring. That includes those who are in some difficulty in deciding to commit themselves to their work and their learning as well as those who are very able. In particular, we want to help children from disadvantaged backgrounds. We want to help able children from disadvantaged backgrounds who may need advice about access to post-school education, including university. I am glad that there was some welcome for the proposals to develop university summer schools. I regard that as a very important initiative. It will encourage young people from homes where there is no tradition of higher education to make the most of their talents and abilities.
5.31 p.m.
Lord Carlisle of Bucklow: My Lords, does the Minister agree that in so far as the Statement relates to pupils in comprehensives in inner-city areas it confirms the totally disastrous nature of the decision taken by this Government to abolish the assisted places scheme, a decision taken purely on the basis of ideological bigotry? Will the Minister accept from me that the assisted places scheme, introduced in 1979 by, among others, my noble

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friend Lady Young and myself, had the main and specific aim of providing educational opportunities for bright children living in inner-city areas, working through the old grammar schools? Sadly, the Statement shows that inner-city comprehensives, through no fault of their own, have been unable to provide such opportunities. How many children does the noble Baroness estimate have had such opportunities taken from them by the decision that this Government took? Is it not time that the Secretary of State apologised to them and their parents for the opportunities that they lost?
Baroness Blackstone: My Lords, the noble Lord will not be surprised to hear that I am afraid I do not accept what he says. I know that the noble Lord is very attached to the scheme he introduced as Secretary of State for Education and Science some time ago. That scheme took a tiny number of bright pupils out of local state schools and put them into private schools. The scheme involved very, very small numbers. It did nothing for the 98 per cent. —or, rather, the 99 per cent. —of pupils left behind in the schools from which those pupils had been removed. This Government are determined to make it possible for all children in comprehensive schools in our inner cities to get the education they deserve. It is not a question of plucking out small numbers.
The noble Lord used the strong words "ideological bigotry" in relation to the abolition of the scheme. It may be appropriate to say that the introduction of that scheme was ideologically motivated. I would not want to accuse the noble Lord of "bigotry" because I think that such language is unnecessarily strong and even a little abusive.
This programme is about developing opportunities for children in their own neighbourhoods, in their own schools. It is about local schools being of really high quality. I am amazed that noble Lords opposite are not welcoming that.
Lord Sheppard of Liverpool: My Lords, first, does my noble friend agree that schools in areas such as I knew in east London in the 1950s and 1960s suffered considerably because the brightest children in the neighbourhood were siphoned off to selective schools? Will this scheme help the brightest children to play a part in the leadership of their own schools while they receive additional help?
Secondly, with reference to what was said by the noble Lord, Lord Tope, does my noble friend agree that with regard to priority areas, "priority" needs to mean priority and not trying to spread the butter too widely over everything, and that schools in priority areas have needs that are different not only in scale, but in kind?
Baroness Blackstone: My Lords, I am most grateful to my noble friend. He is absolutely right to draw attention to the leadership that able, committed, motivated and bright pupils can provide in a local comprehensive school. We all know from countless pieces of research the role of peer group pressure and the role that pupils who really want to get on can play in encouraging others. The ethos of a school can be changed by those young people staying in their local areas and working with their teachers to ensure that their school is a success rather than a failure.
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I accept what my noble friend says about the great needs of priority areas. We know that many inner-city schools have lacked the resources they need to do the excellent job they all have to do, as required by the Government. One of the really important outcomes of today's announcement is that they will have both the extra funding to help them to do that and, just as importantly, they will be linked with schools which have demonstrated by their success that they can achieve things that some other schools do not. This Statement is about trying to raise quality and standards in all our inner-city schools through such a mechanism.
Lord Pilkington of Oxenford: My Lords, I should like to ask the Minister what I think are two rather practical questions. However, perhaps I may begin with a short statement about the enormity of the problem she faces. As I am sure the noble Baroness knows, there are about 160 very despised secondary modern schools left in England. They score better overall than 700 compirehensives, mostly in the inner cities—that is, better than one-quarter of our comprehensives—and in maths and science, they score better than 900 of our comprehensives—that is, better than one-third.
My first practical question is this. In view of the enormity of that failure in inner-city areas, does the Minister really think that: simply bringing in someone from another school, holding a summer school or possibly introducing a Saturday morning school will help? The noble Baroness has been in the academic world almost as long as I have, and she knows as well as I do that it is continuous good teaching from 9 a. m. until 4 p.m. that helps both those who are low achievers and those who are high achievers. Does she not agree that the Statement is merely rhetoric when faced with the reality of the figures I have quoted? That is my first question. I put it without ideology but as a former teacher.
I come to my second practical question. The noble Baroness knows, and has said, that the culture of the inner cities, particularly in families which have not received higher education, is often, sadly, against learning. Yet she believes she can persuade the children of those families, who are wholly different from those at private schools, to spend their summer holidays on university courses. I can assure the Minister that that has been tried, that some such children go, but that many do not. To expect such pupils to attend school on a Saturday morning when their friends are taking their girlfriends to the cinema is demanding a lot, even from a middle-class child. In other words, has the Minister faced the total reality of the failure of the inner-city comprehensives? I agree that that reality is terrible. I ask that because these measures will not achieve what she hopes.
Baroness Blackstone: My Lords, perhaps the noble Lord, Lord Pilkington, has been a little over-dramatic in so roundly condemning all our inner city comprehensive schools.
Lord Pilkington of Oxenford: My Lords, I did not.
Baroness Blackstone: My Lords, the noble Lord suggested that the culture of the inner cities was very

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much against learning. His conclusions were pretty defeatist and rather condemnatory of many of the schools. He suggested that there is not enough good teaching in them to lead to the kind of success that the Government hope to achieve from this new programme. I entirely accept that these schools need continuous good teaching. That is central to the issue and no one can get away from it. At the same time, many other measures can be taken which may perhaps raise the spirit of the schools and help to transform the teaching, including some of the matters that I have already mentioned, but about which the noble Lord is so deeply sceptical.
As regards summer schools, reality flies in the face of what he said. The Government have set up a number of such schools. Some of them started last year for pupils to develop literacy and numeracy skills. Large numbers of pupils attended from disadvantaged families in the inner cities. The noble Lord is being grotesquely unfair to many of the parents who want their children to do well. As yet some of them may not have understood the importance of learning, but many of them have. We should give them the tools to make it possible for their own children to succeed just as well as those children who attend private schools.
Lord Bridges: My Lords, it would appear that the Statement is not universally popular in all quarters. Therefore, perhaps I may give a particular welcome to that part of it which announces the establishment of summer schools for 16 and 17 year-olds to be taught foreign languages. That follows a recommendation of your Lordships' Select Committee on the European Community in which we commented on the inability of many young university students to take courses in foreign universities because they felt that they did not have the linguistic capacity to cope with them. Therefore, I welcome this step which appears to be in the right direction.
Baroness Blackstone: My Lords, I am most grateful to the noble Lord, Lord Bridges, for his comment about summer schools for 16 and 17 year-olds. The ability of such students to learn or improve their foreign languages is just one example of how children from the inner cities can be helped. Many children from more privileged backgrounds are sent abroad and gain the opportunity to improve their language skills by that means. Some pupils cannot afford that. However, it is very desirable, where possible, for inner city comprehensive schools to try to arrange exchanges, but I appreciate that it is sometimes difficult. The summer schools can be an important way of supporting learning of this kind.
Lord Elton: My Lords, I thank the noble Baroness for fleshing out what we already know from Radio 4 and other sources. It is very unfortunate that the media will have no interest whatever in the exchanges in this Chamber and probably those in another place. Therefore, our function is not to form public opinion, but to have some effect on government, which I hope the noble Baroness will allow us to do.
Learning units for disruptive pupils are very far from being a new idea. It was in existence 10 years ago when I wrote my report on discipline in schools. It was not a
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new idea then. I am glad to hear that these learning units will be available to every school, but it would be helpful to know whether they will be on or off-site and whether, as I believe is essential, their prime objective will be to get children re-injected into orbit, if I may use that phrase, and back into the classroom as quickly as possible as they so quickly lose the place which they would otherwise be able to maintain.
As regards mentors, the noble Baroness touches on a subject which is close to my heart as chairman of the DIVERT Trust, which provides mentors for children in difficulty in schools. I suspect that the philosophy of the noble Baroness or of her Government is different from ours. I would like to know a good deal more. The noble Baroness has often told us that her Government are engaged in joined-up government and joined-up thinking. One thing that clearly needs to be joined up is the part of a child's life which is lived at school and the part lived outside school. The mentors are described as "learning mentors". Does that mean that they are concerned only with the academic life of the children? If so, that will greatly inhibit their work. If that is the case, will they have formal links with the mentors from the voluntary sector who are looking after the other aspects of the lives of those children?
The noble Baroness is injecting a new creature entirely into the culture of every school in question. That will have considerable effects on the social and other structures within the schools. Can she tell us where these learning mentors will fit in? We read in the main report that they are based in the schools, but will they be in the staff-room? Will they be answerable to heads of department, the deputy head or the head of the school? What status will they have not only in the eyes of other teachers but, most importantly, in the eyes of the children themselves? They will be an invaluable source of feedback on the way in which a school is working. Will that be capitalised on and will the opinions be fed to the school and the local education authority and, if so, how?
Finally, the paper which is the precursor of the Statement says that each secondary school pupil in the areas will have access to learning mentors. I should be grateful if the noble Baroness could tell us how many pupils there will be and what the ratio will be as between the pupils and the 800 mentors. It is beginning to look as though the Government are providing a very small number at a cost—I am sorry to hear—of £200 million to the other schools. As I understand it, £150 million is being provided as new money. If I misunderstood the noble Baroness I am sure that she will be glad to have the opportunity to put that right. It appears that £200 million will come from the general educational programme. I am very relieved to see the noble Baroness shake her head.
As a mentor at heart I cannot refrain from welcoming this approach, provided that it is properly thought through and that it is introduced in the schools in a way that is amicable to their culture.
Baroness Blackstone: My Lords, the noble Lord has asked quite a number of questions and I am not sure that I shall be able to do justice to all of them in the time available. I very much value the excellent work that the DIVERT Trust does in this area. I accept that the idea of

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providing learning support units is not a new one. I am very grateful to the noble Lord for the work that he has done in the past in pressing for them. But what is new is that this Government are investing money into providing them so that they are available to pupils in all schools which need this kind of help.
Most of the provision will be on site, but not all. There may well be smaller schools where pupils in need of help will have to go to other schools. The prime objective is to get the pupils back into the classroom. That is something with which everyone in your Lordships' House will agree. When they are excluded and drop out altogether, they get into trouble with the police. They can finish up filling our gaols later on, which is something we should try to avoid at all costs.
We foresee the mentors working with the voluntary sector and supporting volunteers working in their own schools. That is a very important part of their role. We can increase the numbers involved in giving their time willingly, particularly those who have experience of disaffected young people. The noble Lord also asked to whom the learning mentors would be answerable. They will be answerable to the head teacher in the schools where they are based. I cannot give the noble Lord a precise answer as to how many pupils each learning mentor will have. I doubt whether anyone can give that answer at this stage. However, if I am wrong about that I shall write to the noble Lord.
As regards funding, the £200 million will not be taken away from other schools; it will come from the extra money that the Department for Education and Employment has secured from the Treasury. Some of it will be spent through the Standards Fund and some will come from the department's reserves.
Baroness Lockwood: My Lords, is my noble friend aware that I welcome the Statement? It is an injection of new money into inner city schools. Am I right in assuming that it is not only the bright children who are the target of the new funding, but also the average children? The proportion of young people who now go into universities has vastly increased, and that growth has surely come from the children of average ability. It is important therefore to motivate those children in the inner city areas who have been demotivated in the past.
I welcome too the fact that Leeds/Bradford is to be one of the areas to form part of the initiative. Is my noble friend aware of some of the initiatives that have already taken place in that part of the world? For instance, during literacy year volunteers were brought into schools to help with literacy and the University of Bradford held a Saturday morning class for the Asian community to try to encourage more of its members to consider entering the universities. Will the initiative build on that kind of activity in those localities?
Baroness Blackstone: My Lords, on the last point, I am grateful to my noble friend for referring to the kind of scheme that exists in the Leeds/Bradford area with Saturday schools for the Asian community. Those are exactly the kind of schemes on which this initiative will want to build. Indeed, we want local education authorities to work directly with such schemes.
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I am glad that my noble friend drew attention to the fact that the extra money for these inner city schools will help average children, too. Quite a lot of the funding will go to the provision of world-class IT centres in our inner cities. We want all of our children to be computer literate; as we move into the 21st century, it will be vital that they are able to use IT. Many jobs will require them to be proficient in that area. That is one respect in which the funding will help average children.
My noble friend suggested also that these are children we need to motivate to go on to further or higher education. That is certainly the case. Many of them will want to go on to do some kind of full-time course, not necessarily in a university, but perhaps a vocational course in a further education college.

Future Financing of the European Union: ECC Report
5.53 p.m.
Lord Grenfell Lord Grenfell rose to move, That this House takes note of the Report of the European Communities Committee on Future Financing of the EU: who pays and how? (6th Report, HL Paper 36).
The noble Lord said: My Lords, with your Lordships' leave I begin by paying some well-earned tributes. The members of Sub-Committee A, whose names are listed in Appendix 1 of the report before this House, worked very hard over the five weeks available for conducting this brief inquiry into the future financing of the European Union. I thank each and every member warmly for a report which is well focused, convincingly argued and extremely timely.
It being a short inquiry, we dispensed with the services of a specialist adviser, but were excellently assisted by our Clerk, Dr. Elizabeth Hopkins, whose insights into the subject and drafting skills contributed immeasurably to the inquiry and to the writing of our report. We are very grateful to her for that.
The committee felt that it was important that this inquiry be conducted, and the report produced and then debated in your Lordships' House, before the Berlin European Council which begins the day after tomorrow. That meant that we had to act fast and I am pleased that the Government, in their written response, told us that the report has been taken into account in formulating the UK's position for the forthcoming council.
Because of the short timeframe, we were unable to take account of developments in negotiations on the Agenda 2000 package occurring after 21 st February. But nothing which has happened, including the resignation of the Commission, renders this report obsolete. Many of the problems it discusses are those with which the new Commission, when it is put in place, not to mention current governments, will still have to grapple even if agreement on Agenda 2000 is reached in Berlin.
We had first-class witnesses in London and Brussels; their names appear in Appendix 2. We thank them for their enlightening and authoritative contributions. We are grateful also for the excellent briefing given to us

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by Britain's Permanent Representative in Brussels— Sir Stephen Wall—and by his embassy staff. We are equally grateful to Her Majesty's Treasury and in particular to my honourable friend the Economic Secretary for providing the Government's response to this report in the unavoidably short time between its publication and this debate. We look forward to hearing more of the Government's views on this when my noble friend the Minister replies.
I should add that the report was agreed unanimously and I congratulate my colleagues on that. But I hope that where there were differing shades of opinion, which eventually merged into a consensus, no one will hesitate to ventilate them in this debate.
Our inquiry was prompted by a Commission report published last October which took a hard look at the revenue side of the EU budget and at the impact of expenditures on member states' net contributions. The Commission's broad conclusion was that all was not well and that there would have to be changes made if the expenditure proposals put forward in Agenda 2000 in July 1997 were to be successfully implemented. At 719 billion euros over the next seven years—the equivalent of just under £500 billion—the Commission's proposals for EU expenditure are modest compared to total public sector expenditure in most member states. Nevertheless, as my honourable friend the Economic Secretary reminded us, the UK's contribution to EU expenditure this year amounts, after abatement, to 1 per cent. of our GNP or 4p on our standard rate of income tax.
That is what we pay now, and it worried our committee members from the very outset of our inquiry that the British people at large have virtually no knowledge of what they are paying and what they are paying for. Enshrined therefore in two of our opinions is a call for greater transparency in funding and even closer national scrutiny of EU spending than at present, and on a continuous basis. With that in mind, our inquiry focused on the potential sources of funding and the problem of budgetary imbalance; that is to say, the issue of inequity among member states' net contributions. I will certainly not weary your Lordships with a recital of the 24 opinions we reached; they are set down and summarised in Part 2 of the report. But let me rather draw attention to some of our more important conclusions and how we reached them.
As your Lordships will know, the 1995 "own resources" decision, described in paragraphs 26 and 27 of our report, set a ceiling of 1.27 per cent. of the EU's GNP on the amount of resources that could be raised from EU member states which, since the EU cannot borrow, also sets the ceiling on expenditures. That ceiling must be reached in steps by 1999 and remain at that level thereafter.
Though we in the committee were aware of the effects of lower growth rates now forecast for both existing members and candidate members, our report agrees with the Treasury's view that the 1.27 per cent. should be sufficient up to the end of the Agenda 2000 period, including therefore funding enlargement, as the evidence of the Economic Secretary said,
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"provided we get stabilisation and the reform of the Common Agricultural Policy".
But whether that ceiling will give sufficient headroom after 2006 struck us as highly uncertain, depending as it would on the future growth of an enlarged Union and the extent to which it had proved possible to reform existing spending programmes. Consequently, we did not share the Government's implied expectation that the ceiling would not have to rise after 2006. Although gross contributions to the EU budget are roughly proportional to members' GNP, some consider that under the present arrangements they are contributing too much to the EU in relation to the benefits they receive in return.
In a union of richer and poorer countries, equity would never demand equality of net contributions but there is no disputing that the present system of contributions does not produce equitable results. Germany, currently financing some 28 per cent. of the EU budget and paying a net contribution equivalent to 0.6 per cent. of its GNP, says that it will not go on paying such a disproportionate share. The Netherlands, at 0.7 per cent., is worse off and Sweden and Austria are not far behind—slightly worse off than the United Kingdom at 0.16 per cent., and lying in fifth place among the five biggest net contributors.
Paragraph 54 incorporates an analysis by Professor Iain Begg of South Bank University of the 11 remaining states, explaining why some are net contributors and others net recipients. It would be simple to conclude that some relatively prosperous states contribute fairer shares. We considered the principle of the juste retour— getting back from the EU in financial terms what one puts into it, and we agreed with Senor Colom I Naval of the European Parliament and rapporteur of its Committee on Budgets, that many benefits of membership had nothing to do with the budget.
In London, the Economic Secretary to the Treasury told us that
"membership of the European Union is immensely valuable to the United Kingdom as well as to other Member States".
Nevertheless, our report notes that however great the benefits, financing the EU on the present basis can continue only if all members are content—and they are not.
Remedies to perceived imbalances will not be found simply through changing the pattern of gross contributions. Remedies will also have to be found on the expenditure side, through changes to the amounts spent overall and/or their distribution among individual member states.
On the revenue side, we looked at the three options for change proposed in the Commission's October 1997 report—revision of the own resources system; modification of the UK's abatement; and the introduction of a generalised correction mechanism in the form of a general reassessment of contributions. One member of our sub-committee doggedly and absolutely rightly insisted throughout that there must be a simpler way of raising the required revenue from member states. With that in mind, we looked first at the four own resources—the two traditional own resources of

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agricultural levies and customs duties; the third resource of contributions based on VAT; and the fourth resource of contributions collected from states on the basis of their GNP.
Paragraphs 61 to 70 set out how we reached the view that the two traditional own resources and VAT-based resource, which are all declining as a proportion of revenue raised, are not only generators of bureaucracy and highly prone to fraud, but are arguably systematic sources of inequitable burdens on member states. We felt that they should be abolished, which would certainly help some large net contributors.
That left the GNP-based resource and we had much sympathy with Commissioner Erkki Liikanen's view that exclusive reliance on that resource would improve the fairness of the system as the most objective criterion for national capacity to contribute. The Economic Secretary agreed that that would bring an improvement in equity, if only small. Therefore, we considered how that equity could be improved further. We concluded that the revenue raised from each state should be based on GNP per capita rather than straight total GNP—and that gross domestic product might be a better proxy for the contributory capacity of states than GNP.
We grant that relying solely on per capita GNP or GDP-based resources is not so popular with people such as Senor Colom I Naval, who argued strongly that unless the EU obtains through taxation some real own resources that do not transit through national budgets, the financial autonomy of the EU is bound to be undermined further. The Economic Secretary told us that the Government do not see more financial autonomy for the EU as desirable. In any case it was the Treasury's hunch that there probably would not be a consensus for renegotiating the existing own resources decision. Neither did Commissioner Liikanen see the need for modification at an early stage.
The committee remains strongly convinced that renegotiation of the own resources system would be necessary in due course and that should be sooner rather than later.
That brought us to the difficult question of the UK abatement—an arrangement which has brought significant benefits to a country which is the fifth highest net contributor to the total budget but only the tenth or eleventh most prosperous state among the 15, depending on the measurement used.
The abatement is based on the decision made at the 1984 Fontainebleau Council that any member state bearing excessive budgetary costs in relation to its relative prosperity could benefit from a correction. Paragraphs 85 to 91 set out why the Government feel strongly that the abatement, currently worth £2.1 billion a year, remains fully justified on the ground of fairness under the present system of contributions to the EU budget and why the Commission thinks otherwise.
Commissioner Liikanen says that the world has changed since 1984 and Britain's abatement is not an easy case to defend. We readily accept, in Opinion 16, that without abatement the UK would remain one of the largest net contributors, but we could not ignore that whereas in 1984 the UK was the only member state
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making a substantial net contribution in terms of percentage of GNP—as seen in graph 3 on page 4—four states are now making larger net contributions. They are the Netherlands, Germany, Sweden and Austria. In the same opinion, we agreed that some way of remedying the situation would need to be found, given that those four countries are dissatisfied—to say the least—that they are not accorded similar relief.
It became perfectly clear that if the existing rebate mechanism from which we benefit were applied to those four countries making excessive net contributions, that would—in Professor Begg's words—blow such a hole in the budget that the whole thing would collapse. Therefore, we looked for alternative remedies. A proposal by the four countries to grant budgetary corrections to all member states which qualified, but setting a threshold below which corrections could not be claimed, has support in some important quarters but is seen by the UK Government as a means of reducing the burdens of other net contributors by increasing Britain's burden and was, in the words of the Economic Secretary, grossly unjust. We agreed with her that to substitute one injustice for another will not improve matters, but a problem remains for the five net major contributors, Britain included. We felt that the rebate system, of which we are currently the sole beneficiary, may no longer be the best way of solving that particular problem.
In Opinion 18, we state our view that a realistic negotiating result for the United Kingdom would be agreement to forgo the abatement on condition that, and only when, the loss could be made up on a permanent basis through the savings of a reformed CAP and the stabilisation of expenditure overall by 2006 and, possibly, increased EU expenditure in the UK.
I stress the conditions that we set. Nothing could have been further from our minds than to recommend unconditional surrender of the abatement. That brought us naturally to the possible alternatives. We included increased expenditure in the UK tentatively because, as a net contributor, increased expenditures here, unless matched by cuts in other countries, simply add to the burden. The likely solutions lay in radical reform of the CAP, which currently accounts for 50 per cent. of the EU budget, and stabilisation of expenditures overall.
Since we closed our inquiry, negotiations on CAP reform have progressed, but there is no agreement yet at heads of state level on where to set the limit on direct payments between 2000 and 2006. The committee was in favour of the proposal to introduce co-financing by member states of agricultural spending of perhaps 25 per cent. of the total cost, provided the level of support agreed by the Council was adhered to by each member state and that savings for the EU budget would be real, not simply spent on other programmes.
While this would not have been an alternative to CAP reform, it would have reduced overall EU expenditure and, as the UK receives relatively modest amounts of CAP funds, its net contribution would have benefited somewhat from the effect of the overall savings to the budget. It is regrettable therefore that France—

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a substantial beneficiary of the CAP—has blocked the proposal, but I sincerely hope that we have not heard the last of it.
This brought us finally to the question of an overall stabilisation of EU expenditure by 2006 at the present level of 85 billion euro. As the Economic Secretary told us, the UK and the majority of member states regard stabilisation by 2006 as essential to provide the room to finance enlargement. But more than that, it would, in her words, be,
"the most effective way of limiting net contributions to the EU budget and thus would help other states who are large net contributors".
Our report fully agrees with this and rejects the view of the Commission that stabilisation would make reform of the CAP impossible. We agree with the Government that the circle could be squared if "degressivity"—that terrible word meaning the reduction over time of compensation to farmers—was part of the reform package. At present it is not, and one can only pray that it will be by the end of the Berlin negotiations.
The other area where spending reductions could be sought is structural operations. We agreed that there is a need to continue to provide substantial funding for the most disadvantaged regions, but we also believe that cuts in funding received by existing member states are inevitable. The important point is to ensure that those cuts are manifestly fair. As to the cohesion fund, we echoed the conclusion of an earlier Select Committee report to your Lordships that continued cohesion funding cannot long continue for those member states which have attained convergence and have entered monetary union. However, as we note in Opinion 20, it is crucial that the cohesion fund be continued in some form so that new member states may be helped along the road towards convergence.
On a personal note, I feel that the chances of an agreement at Berlin are looking a little less gloomy today than they were a week ago. The seismic events in Brussels seem to have galvanised those who will be negotiating in Berlin. It now seems likely that the British rebate will survive, but with modifications which may not be attractive to the Government. Spain may get its way over continued access to cohesion funds, but for how long? Italy may recalculate and raise its contribution to the budget after the year 2000. In other words, a deal is likely to be done at the very last minute.
However, the impression remains that what will be brokered in Berlin will be only an incomplete reform. That is better than nothing, provided it does not further delay enlargement. But it still leaves many problems to be resolved: the continuing problem of budgetary imbalances between states; the need to reform the own resources system; the need for greater transparency in funding the budget and greater accountability in spending it; eliminating the continuing shortcomings in the CAP, to mention only the most obvious; and dare I add—although our report did not go into this—a move perhaps to zero-based budgeting in the European Union? These problems will still remain after the heads of state
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have left Berlin. That is why I humbly suggest that the report remains highly relevant and, I hope, helpful to the continuing debate.
In our report's concluding opinion, we suggest that Europe is a concept which to most goes beyond mere deal making. In relation to the security and prosperity of Europe, the budgetary costs to each member state, although not negligible, are none the less not exorbitant, but they are not yet equitable and that, they must be. That is the essential message of our report. I beg to move.
Moved, That this House take note of the report of the European Communities Committee on Future Financing of the EU: who pays and how? [6th Report, HL Paper 36]. —(Lord Grenfell.)
6.14 p.m.
Lord Skidelsky: My Lords, I start by congratulating the noble Lord, Lord Grenfell, and the Select Committee on their report on the future financing of the European Union. It is a fiendishly complicated subject, which the report has reduced to exemplary clarity. However, the Select Committee's hope—just reiterated by the noble Lord, Lord Grenfell—that greater transparency can be achieved under the present system; that, in its own words, we should know,
"what we are paying—and what we are paying for"
strikes me as being somewhat Utopian.
I doubt whether one person in a hundred understands the fiscal operations of his own government. The idea that the accounts of the European Union might become an open book seems to me to be a pipedream. It would certainly be a nightmare to all those who live off the honey pot. The recent mass resignation of the commissioners was a very belated recognition that fraud and corruption are endemic in the way the Commission uses the funds member states place at its disposal. This is always a danger when any group of people are given control over other people's money.
In national administration we take enormous care to ensure that politicians and officials are accountable to the taxpayer. Eight hundred years of our constitutional history can be read as a struggle to achieve such accountability. The officials of the European Union to whom we entrust £8 billion a year, or 5p in the pound of our taxpayers' money, are in practice, largely unaccountable to anyone for how that money is spent.
Most of the report's conclusions and recommendations are sensible, and will not give rise to political controversy. I would like to draw attention to three. First, the committee endorses the Government's view that, by the year 2006, the Union's expenditure should be stabilized, at its present level of 85 billion euros. Contrary to the Commission's own view, it concludes that with an "own resources" ceiling of 1.27 per cent. of the Union's total GNP, this will give it an adequate margin to spend on enlargement—although not necessarily thereafter—depending on what growth assumption is used. It points out rightly that this margin would be greater if the common agricultural policy were reformed, and the cohesion and structural funds more accurately targeted.

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Secondly, the committee states:
"We do not see a directly collected own resource as a viable option at present, in either political or practical terms".
We agree with that. To give the European Union its own independent tax base is to cross the line between a confederation and a federation, and we are pleased that the committee resisted this step, despite, I think, some prodding from the noble Lord, Lord Desai, and the noble Baroness, Lady Sharp.
Thirdly, there will be a general welcome for the report's conclusion that,
"cuts in the structural funding received by existing Member States are inevitable, "
and that,
"continued cohesion funding cannot be justified for those Member States which have met the convergence criteria".
However, these conclusions, however sensible, fail to tackle the root problem of lack of accountability. In the long run we face a choice between two alternatives: eliminating the so-called "democratic deficit" at the Union level or handing back a large part of the Union budget to the member states. Since we in this party, and I believe most people in this country, do not want a federal Europe, we logically support the policy of budgetary repatriation.
The report is considerably less robust when it comes to the question of Britain's rebate, negotiated by the noble Baroness, Lady Thatcher, at Fontainebleau in 1984. This rebate was made necessary by the fact that Britain's net contribution to the Community's budget—the difference between its gross contribution and its receipts—was greatly in excess of its relative prosperity.
The present financing crisis—to which the noble Lord, Lord Grenfell, alluded—has arisen because four other countries, Germany, Austria, Sweden, and the Netherlands, also believe they are paying too much relative to the benefits they receive, and have formally asked for rebates. Germany, in particular, has indicated "vociferously", as the report put it, that it no longer wants to be Europe's milch cow. In the words of one of the witnesses, Professor Begg, who has already been quoted, the request for a general rebate will, if granted,
"blow such a whole in the budget that the whole thing would collapse".
The general principles of the matter are reasonably clear; indeed, they are relatively uncontentious. Each member state should contribute according to ability and receive according to need—where have I heard that remark before?—so the richer states should be net contributors and the poorer ones net recipients.
However, these lofty ideals are very difficult to translate into practice for two reasons. First, it is very hard to agree a formula for contributions which is generally accepted as fair. For example, the report asks: should contributions be proportional to GNP or to GNP per capita? If one were to design a proportional tax system within a single state, the obvious measure of ability to pay would be the size of an individual's income; and, by analogy, money raised from member states should be a share of that state's national income per head. On this basis Britain's gross contribution to the budget would not be the third largest but the tenth
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largest. Although of course there are different ways of measuring per capita GNP, they do not affect the rankings by much, though they are at the source of the conundrum about whether Italy is more prosperous than Britain. As my noble friend Lord Boardman—I do not know whether he is here—argued in Appendix I to the report, a per capita funding formula would make rebating unnecessary. The report had a lot of sympathy with that view. Unfortunately, that is not how it is done, and nobody seems to be in favour of doing it that way.
The other problem, as the Treasury memorandum to the Committee pointed out, is that,
"there is no clear relationship between receipts and prosperity".
Net receipts do not necessarily go to the poorest. For example, France, the seventh most prosperous economy, receives exactly as much as it contributes, whereas Britain, the tenth most prosperous, is a net contributor, even with the rebate. That is because 50 per cent. of the EU's transfers go not towards helping the poor but to subsidising the wealthy—in this case France's farmers—through the operation of the CAP, from which Britain's relatively efficient farmers receive disproportionately little. In other words, the total pattern of net transfers fixed by the Union's history, the original deals by which the Union was constructed, is haphazard and irrational.
The report then argues that Britain's rebate should be traded for a reform of the CAP and other funds, which would also help the other large net contributors. The idea is that price support for Europe's farmers should be run down and their replacement subsidies should also be run down. Britain's gross contribution would then be reduced and its net contribution consequently cut. In this connection, I very much regret that the report has given currency to the horrible word "degressivity". We now have an unholy trinity of progressivity, regressivity and degressivity. My computer showed good judgement by underlining each one in red, telling me that it did not recognise any of them. What is the opposite of degressivity? "Gressivity", I suppose.
All the report was saying was that income support for farmers should be tapered off—a sound phrase expressing a sound idea—but how likely is that to happen? The noble Lord, Lord Grenfell, referred to "co-financing" of farm support. The French have vetoed "co-financing" and the Commission will have no truck with tapering. It was rather bad luck that when the report was written it was not implausible to suppose that,
"the political will for CAP reform was reported to be emerging".
All one can say is that the reports of the CAP's death were premature.
The Treasury memorandum therefore argued perfectly cogently that, desirable though reform of the CAP was in the general interests of the EU consumer,
"There is no medium-term prospect either of reform leading to a dramatic reduction in CAP expenditure or of the UK's share of that expenditure increasing substantially".

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That being so, we should go on vetoing any reduction in our rebate unless and until we have a proposition on the table to make our net contribution equitable without the rebate. I wish the report had stated that in those terms.
Noble Lords: It does.
Lord Skidelsky: My Lords, not quite. The report says that we should be prepared to trade our rebate for things that are very unlikely to happen.
In its Agenda 2000, the Commission has its own proposals for what it calls "a general corrective mechanism" for dealing with the financing problem. In each of its possible correction scenarios, designed to accommodate Germany and other countries, Britain would lose between 2 billion and 3 billion euros. The Economic Secretary rightly judged that,
"such a solution would be grossly unjust".
It would be quite possible, though, to design a rational corrective mechanism. I offer one today. It would be based on the principle that the pattern of payments and spending should aim to achieve zero net budget balances for all member states, except for the structural funds. The structural funds would then be the chosen instruments for net transfers between member states. That would mean that some key members, such as France, Luxembourg, Belgium and Denmark, would have to pay a fair share for the first time. They would not like it; nor would Ireland. That is why it will not be considered.
This makes it all the more surprising that the report should apparently be willing to trade the solid ground of the abatement that we now have for what is little more than a blast of hot air. So the financing crisis will not be solved, certainly not by the time of the summit in Berlin in two days' time. The Select Committee's report has not suggested a solution but it has made an admirable contribution to the elucidation of the problem, and for that I am sure the House will want to express its appreciation and thanks.
6.26 p.m.
Baroness Sharp of Guildford: My Lords, I was honoured to be asked in December to join the committee which, at that time, was just beginning its work on this report. For me, as a new member of your Lordships' House, it has been a learning experience. I had a high regard for the work of the committees of your Lordships' House, having appeared before them as a witness on some occasions. I have also been an extensive user of the reports of your Lordships' House. It was quite pleasant and enjoyable to be a poacher turned gamekeeper in this respect. I wish to extend special thanks to the other members of the committee, in particular the chairman, the noble Lord, Lord Grenfell, who made me so very welcome. The noble Lord, Lord Tomlinson, was ill for a while during our deliberations and it is good to see him back in the House today.
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It is quite clear that the crisis in the Commission which burst last week will dominate the agenda of the discussions in Berlin in the next few days. As the noble Lord, Lord Grenfell, said, any deal on the budget will be an incomplete deal. But the budget issue will not go away. In the end it will have to be an integral part of what will be a new constitutional settlement. That will be a requirement if the EU is to proceed along the agenda it has set for itself.
I have become well aware in the relatively short time that I have been here that some of your Lordships would prefer not to see the EU proceed with a future agenda but rather to wither away on the vine and proceed no further. I am not one of those. I was born just before the Second World War and I am very much one of the generation which has seen the creation in Europe of what Churchill, in the aftermath of that war, called "A kind of United States of Europe". He said, "We must create a kind of United States of Europe". It is amazing that in the past 50 years we have seen the two old antagonists of Germany and France coming together under the umbrella of what we now call the European Union.
However, perhaps more important is the fact that we have also seen countries like Greece, Portugal and Spain, which were dictatorships, using the rock of the European Union to anchor their fragile democracies and build their new economies. The agenda of the European Union will provide the rock on which the newly established democracies of central and eastern Europe, for so long under the yoke of the Soviet Empire, can anchor themselves and go forward. That is the task which underlies the constitutional settlement and, for that matter, the budget settlement. That is why we are considering the budget issue today. It is an extremely important step for the European Union and one that we should not underestimate.
Some noble Lords may have heard of Amartya Sen, Master of Trinity and Nobel prize winning laureate in economics, talking the other day about his new book, Development and Freedom. I heard him on the radio and I was struck by what he was saying. He said that he had become convinced over the course of his life that, on the one hand, freedom of speech and freedom of conscience but also freedom from hunger and freedom from disease were the right aims for development—not GDP growth or GDP per capita, but freedom. But, he said—this was the most significant feature—freedom is both the end and the means by which to achieve that end. In helping the fragile new democracies of central and eastern Europe, we are both helping them to anchor representative democracy to their way of life and creating in the future new and prosperous markets for our own goods and services. However, in order to do that, we must be in a position to divert some of the resources from the present EU budget towards them. That is why there is a crisis in the budget and why we need to consider these issues.
I wish to turn now to the budget and to make two points about it. First, the European Union's annual budget is approximately 100 billion euros. That is about £70 billion. It is not an insubstantial sum but, equally, it is less than we in the UK spend annually on social

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security. That £70 billion is spread over some 380 million people in the 15 nations of the European Union. A disproportionate share of the budget—some £30 billion—goes on the common agricultural policy. Another 35 per cent. —£25 billion—goes on the structural funds. Those are the two main demands on the European Union's budget. The British rebate is worth 3 billion euro—£2 billion or the equivalent of 1p on income tax. However, the problem with the budget arises from the unsatisfactory and archaic way in which the funds for the budget are raised and spent.
As the noble Lord, Lord Grenfell, made clear, although there are many different sources, what is paid in is roughly, for most countries, 1 per cent. of GDP. The discrepancy arises in what different countries receive from the budget. The UK, because it does not qualify for large payments under either the common agricultural policy or the structural funds, receives very little. That is the logic for the UK budget rebate. It is the logic that underlies the settlement made in 1984 and it remains the logic for our special treatment today. However, I think that the Treasury is disingenuous in some of the arguments that it makes. We could receive much more funding under the structural funds and under the common agricultural policy if we were prepared to co-finance.
Under the common agricultural policy new initiatives are being introduced which aim to move away from paying large subsidies for vast fields of wheat towards helping the rural economy restructure itself. But those require financing side-by-side with the funds that are available from Brussels. We are not paying out to co-finance such schemes. Exactly the same point arises with the structural funds. We could receive far more from the structural funds for our areas of urban deprivation if we were prepared to put more money into our own regional budget.
The discrepancy between what we pay in and what we get out of the budget need not be as great as it is. Even so, there would be a considerable gap under the present system. As I have said, that remains the logic underlying the UK abatement. As the noble Lord, Lord Grenfell, made clear, the problem is that the discrepancy arises in relation to other countries. Sweden, Austria and the Netherlands have made a claim for special treatment. Germany has done so also. In many senses it remains the paymaster of the Community and, with the burden of the integration of the eastern länder on its budget, is by no means as rich as once appeared to be the case. Germany has always made a special contribution towards the UK rebate and is now saying in effect that it wants to renegotiate the whole budget. Sweden, Austria and the Netherlands argue that, if the UK receives a rebate, they should have one too. But if everyone followed the same logic as the UK, the EU budget would collapse. That is the crux of the issue.
The Community is in the process of renegotiating the common agricultural policy. A good deal of movement has been made. If we are to follow the route of enlargement, it is essential that we reform the CAP, because we cannot possibly afford to have Poland within the Community if we retain the CAP as it exists today. There is movement there, whatever the noble Lord, Lord
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Skidelsky, says. At long last there is a wish on the part of the Germans to see some renegotiation within the CAP.
In the report we argue that there is potential for reform of the CAP and that that would not be at the cost of jeopardising the enlargement process. To my mind, enlargement is the vital next step for the Community. We must help the countries of eastern and central Europe to retain the freedom which we have so long enjoyed and which will in turn help them restructure and rebuild their economies. I commend the report to the House. I believe it is the right way forward.
6.39 p.m.
Lord Harris of High Cross: My Lords, I congratulate the noble Lord, Lord Grenfell, on his forthright opening remarks. I readily pay tribute to the Select Committee for all its justly acclaimed work. This report, Future Financing of the EU, is well up to the outstandingly high standards that we have come to expect. It is a matter of some regret to me that I shall have to launch into some criticism of the apparently unanimous central conclusions. First, I applaud the committee for its lucidity, although it invests the EU mumbo-jumbo with undeserved coherence. Its diligence in marshalling so much complex data provides matter for half a dozen Ph. D theses.
Thus one might go deeper into the question of GDP versus GNP as measures of economic welfare on which national net contributions are supposedly based. I would argue that net national income is a better guide than gross national product, although all these measures have a degree of arbitrariness, because they are severely distorted by the rampant black markets that are caused by over-taxation throughout Europe. Another study might examine the idea of a single tax levied from Brussels rather than fiddling further with this rag-bag of so-called own resources. Yet another might look closely at the Commission's own list of eight possible candidates for still further taxes, such as an EU-wide energy tax; a communications tax; a corporate income tax; an earmarked personal income tax; a Euro-supplement to VAT, or to tobacco and alcohol duties. Finally, I should like to see an honest Ph. D assessment of the costs and benefits of this ever-encroaching Europe project.
To speak frankly as an increasingly convinced Euro-sceptic, my chief criticism of the committee is that its membership, like the witnesses, may not sufficiently reflect the fundamental balance of doubts shared by the majority of independent economists known to me. The latest scandals over EU fraud and incompetence must surely provoke doubts about the amiable indulgence with which the committee views the shambolic finances of this long-running Brussels pantomime. Buried beneath the jargon of "own resources, traditional resources, third and fourth resources", to be supplemented perhaps by a "fifth resource", lies a tangled web of levies, duties, VAT-based and GNP-based contributions. That is the debit side. On the credit side are the kick-backs received by some in the form of CAP, cohesion, structural and administrative payments.

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Struggling to comprehend what goes on risks stumbling into a snake pit of politicians and apparatchiks—all working the system back stage, trying to pay less and get more at the expense of everyone else. Some countries, like the UK, end up receiving less than they pay in, while others appear to run off with the swag. But allowing for bureaucracy, the fiscal freight charges in both directions, and the low priority of many of the structural spending projects, most of the 15 nations are in the position of traders buying euros at 1 euro 20 a time!
One of the committee's top Eurocrat witnesses rejected complaints by net contributors about the cost of Brussels by pointing to the non-financial benefits, such as sharing in a common market. It brought to my mind the picture of Sir Leon Brittan standing at the entrance to a shopping centre rattling a collection box for access to a competitive market. Anyway, what about the costs already imposed on consumers by farm subsidies and business compliance with thousands of directives and regulations?
The same lofty complacency was displayed by another former top member of the Brussels nomenclatura on BBC radio's "Any Questions?" last week. Out of delicacy I shall not mention his name. He excused the latest financial irregularities as only what might be expected from any large organisation. He went on to say how modest were the EU budget and staff, considering—wait for it—that they "look after the affairs of 350 million people". But not perhaps quite as well as they look after their own affairs.
Unfortunately, the economic witness to the committee seemed to share similar Euro-phoric delusions, without a redeeming glimmer of healthy scepticism. Thankfully, the British Treasury witness repeatedly provides a welcome douche of correction. For example, against the trivial claim that trade with the EU is a benefit worth paying through the nose for in taxation, the Economic Secretary calmly points out that this:
"takes no account of increases in exports which might have happened independently of EU membership, nor of the corresponding increase in imports".
The truth—which incidentally punctures the weary CBI case for signing up to the euro—is that our trade (visible and invisible) with America and the rest of the world now exceeds that with the EU and is growing far more rapidly.
Returning to the central issue of the budget, paragraph 15 of Part 2 of the report sets the stage with an astounding admission:
"We are already being taxed to finance EU expenditure, yet we have virtually no knowledge of what we are paying—or what we are paying for".
Alas, the committee does not enlighten us on the second half of that unequal equation.
The committee's economic witness seeks to minimise the burden by expressing it as the average cost spread over the entire EU population, which he says is a mere one-sixth of what we spend on the NHS. Along comes the Treasury with a more meaningful assessment; namely, that the cost to the UK after the abatement is
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£8, 000 million, which is 1 per cent. of GNP and equivalent to 4p on the standard rate of tax. Surely that makes it all the more surprising that the committee should be ready to offer up the UK abatement in negotiation on the future EU budget. Of course the committee wants something back in exchange, but it stops well short of my price, which would be the repatriation of the CAP under World Trade Organisation rules and the phasing out of arbitrary and distortionary cohesion and structural subsidies. That would be a bargain worth striving for. Not only would our abatement become unnecessary, but the so-called "own resource ceiling" could drop well below 1.27 per cent., perhaps closer to 0.27 per cent., and our net contribution would drop towards zero along with everyone else's.
Such a clean, principled renegotiation would have many advantages. Not least, it would finally purify this sordid and sullied project. It would sweep the Augean lobbies clean of corrupting backstage deals, often amounting to little more than Commission payments for support by such perpetual beggars as Ireland, Greece, Portugal and Spain. Above all—and this is my earnest and consistent message—such a fundamental review would redirect attention to the historic engine of economic progress, which is the mutual enrichment of unhindered free trade in an expanding global market.
6.48 p.m.
Lord Barnett: My Lords, the noble Lord, Lord Harris of High Cross, knows very well that my fondness for him is matched by the extent to which I disagree with almost everything he says on European Union matters. With him, it is not simply an emotional spasm; intellectually, I know where he stands. I understand his point of view, and disagree with it totally. In or out of the European Union, there is need for a sensible budget. The noble Baroness, Lady Sharp, says that if we stick to the present system the budget will collapse. I hope that the noble Lord, Lord Pearson of Rannoch, will not mind my saying this; indeed, I am sure he will be delighted. I note that he nodded in total agreement, as he wants to see it collapse.
I start by congratulating my noble friend Lord Grenfell and the committee. They have done your Lordships' House a great service in dealing with this difficult problem. The noble Lord, Lord Skidelsky, made a good point. He said he doubted whether many people understand the UK budget, let alone the European Union budget. He could have gone further and expressed doubt about whether many people understand their own family budget. From my own old days I found that that often applied to clients, their businesses and their families.
I wish to stick to the one point the committee made in relation to the rebate and the general financing of the European Union budget. Under the present system, the committee makes the fair point that equity never demands equality of net contributions. I see that the Government agree with that, and so do I. However, where I strongly disagree with the Government's response, as Ministers may not be too surprised to learn, is in its rigid and inflexible position on the rebate. I strongly agree with the committee and might have

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been tempted to go further than saying that rebates may no longer be the best way of solving the problem. The committee is absolutely right.
It may be a surprise to the Government that I agree with them occasionally, but I do agree with them that nothing in Agenda 2000 would compensate the United Kingdom for giving up the rebate. On that the committee is right. But that is now. It is not necessarily what will happen or what we should seek to change. The committee puts forward a number of sensible proposals for changing the whole budget scenario. It even goes so far as to question GDP and GNP. Everyone who understands their own budget understands that there is a difference between GDP and GNP. But the committee puts forward the question of whether member states should pay as a proportion of their per capita income. That is at least worth consideration in any renegotiation.
The urgency is spelt out by the question of enlargement which has all too often been shirked. Everyone supports enlargement, at least nominally, including the Eurosceptics. They think it an easy way of dealing with the problem. We have such a large Community; we do not need to worry any more about financing or anything else. There is no chance whatever, it seems to me, of achieving enlargement without major reform of the finances of the European Union. I am not at all sure that we will get it even then. There are member states of the European Union, including major ones, who would not be in favour of enlargement. Although nominally they say they are, in practice they do not like it. I am getting worried. I see my noble friend Lord Bruce of Donington nodding in agreement. I have never experienced that previously on European Union matters. I take it that he agrees with me.
Stabilisation will produce only modest gains for the United Kingdom. I refer to the present proposal on stabilisation with which the Government agree. But stabilisation surely cannot be the end of the matter. Negotiations will need to go on. That is only the start, not the end.
I return to my main point about rebates. It seems to me that reform will never be possible if the UK or any other government stick rigidly to not being willing to give up a penny of a £2 billion rebate. If that is the approach and that of other member states, then we can forget about any possibility of reform. Is it not as foolish to say "never" on the rebate as it is effectively to say "never" on joining a single currency? That seems to me just as stupid.
The report makes clear that there is an obvious, simple case, in a complex system, for major reform and an early renegotiation. Of course, it is foolish not to recognise that it would be extremely difficult to get the kind of successful renegotiation most of us want to see. But we must try. In the UK case, to put it into perspective, if we gave up £1 billion of our £2 billion rebate, we should recognise this in the perspective of a money GDP next year of £925 billion. So let us get into perspective what we are talking about. We are talking about petty cash. Here is our Government sticking rigidly to a principle. That would be a crazy situation.
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If we gave up £1 billion of our rebate, in return perhaps we could obtain £2 billion by changes in the budget. So why start from that crazy situation? It seems sheer lunacy to do so if, for rather silly political reasons, there is a fear of being accused of giving up the so-called Thatcher victory. I say sheer lunacy because, with such vital net gains, to stick rigidly to not being willing to give up a penny of a rebate is a crazy way to start a serious negotiation.
I hope that the Government will reconsider what they have said—what the Minister said to the committee and what has been said since. Of course, one does not start by giving up a rebate. But if we are to seek early renegotiation of the whole financing of the European Union, it is vital. If we need those major changes—and I agree with the committee that we do—simply saying no again and again is not a sensible way of seeking to solve the European Union's major financial problem. I therefore agree with the committee and my successor, my noble friend Lord Grenfell, in all that is said in the report.
6.57 p.m.
Lord Howell of Guildford: My Lords, I gladly continue with the theme of fondness and disagreement with which the noble Lord, Lord Barnett, began his speech. Unlimited as my admiration is for the noble Lord, I shall not be able to agree with everything we have heard in the last nine minutes. I must also make a brief apology. As the debate is running late, it is possible that I may have to miss part of the wind-up speeches. I apologise for that, particularly after the lesson we had this afternoon in courtesies. However, we are running late and I must speak elsewhere later.
I confess that I find the report extremely disturbing. In a way that is a compliment. It is meant to be a direct compliment to the noble Lord, Lord Grenfell. He is my noble friend, as a matter of fact, and he is the chairman of the committee. A committee report should be disturbing. A report on this sensitive issue that came out saying, "Everything's fine and it's all going to work out well in Berlin" and so on would be no good to your Lordships' House. To have from such a distinguished and experienced chairman and committee of your Lordships' House the phrase in heavy black type mentioned by the noble Lord, Lord Harris of High Cross, that we have virtually no knowledge of what we are paying, or what we are paying for, needs to send the message that there is something profoundly and fundamentally wrong with the system we are examining. Vast and radical changes will be needed to get round it.
What is the root of the problem? The report describes it accurately. There is inadequate, vague, indeed almost untraceable, accountability. I wish to concentrate on that. We are looking at future financing. But financing is driven by expenditures. That is what it is for. And the expenditures are driven by decisions. The reality is that those decisions come pouring out and unless checked—as would apply to national governmental decisions leading to expenditure and therefore the need for new financing—they will grow. Unless those who make the decisions, with the consequent expenditures and

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generating the consequent financing need, are held to account vigorously and continuously, the whole machinery will expand.
The report talks about achieving stabilisation by 2006. That is a very poor target. I do not believe for a moment that it will be achieved. But even that target would leave the situation that the sub-committee has confronted so perceptively in a very unsatisfactory state. In addition to the very detailed and brilliant questions posed by my noble friend Lord Skidelsky, the question perhaps for the less expert is: who will check all of this? From where will the checks on accountability come? Before we begin to look at new ideas for the financing of this, that and the other by way of new taxes, how is the matter to be held to account? How can we control the driving mechanism for the expansion of expenditure that has been working so vigorously? One answer appearing in the media and current on many people's lips is that it is a task for the European Parliament because it has shown that it has teeth and that it can do it. However, while the European Parliament has performed a signal service with its latest investigation it has not had a reputation for curbing expenditure. On the contrary, it has been a powerful force for increased expenditure. All of its arguments with the Commission each year have been about why more has not been spent on this or that programme. With its co-decision procedures it has now become not only a calling-to-account watchdog and a legislature of the kind that we know in this country but part of the government and executive of Europe. It involves itself in legislative programmes that lead to more and more expenditure. There will be many more programmes like the famous Leonardo programme about which we have heard so much. That is a classic example of unaccountable and unnecessary expenditure.
Before we answer any of the questions on the budget rebate, stabilisation, own resources expansion or, heaven preserve us, the imposition centrally of new taxes directly on the citizens of Europe we must recognise what my noble friend Lord Skidelsky rightly said; namely, that there are two fundamental approaches and we are rapidly coming to the Y-fork in the road. I do not know whether that Y-fork will be recognised at Berlin with all the talk of fresh approaches. I rather doubt it. The Y-fork is the choice between moving towards a centralist or a constitutional European Union. I am aware that "centralist" is perhaps a loaded word. I do not intend to be too critical but that is where we are going now.
We hear suggestions that more power should be given to the parliament and that obviously the Commission should have more expenditure programmes and the power to tax. This is the classic centralist pattern. One has great organisations, perhaps in conflict with each other, trying to hold each other to account. Great organisations, perhaps of a pan-continental size, joust with each other for the government of Europe. I suppose that that was the pattern adopted towards the end of the Roman Empire when the Senate took more power as it ceased to hold the imperial authority to account; it just
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became a very powerful second kind of government. That is the centralist pattern and the path that we have followed.
That is to be contrasted with the constitutional pattern where we now seek to circumscribe much more effectively than in the past the powers and role of the Commission. We question whether it should have the initiative to legislate and propose, as it has in the past. We seek to impose accountability, not by giving more central power to pan-European institutions but by building up the abilities and initiatives of national parliaments. That is the constitutional route, and it is one I prefer. It is not the path we are now following but that may change. We are at the beginning of the talks on co-financing and we worry about the total inadequacy of the past pattern of accountability. That has grown up thanks to weaknesses in both the Commission and the parliament. It may be that when the Prime Minister talks about a fresh start in Europe he is thinking of going that way. It would be wonderful if that were so.
The constitutional role does not rule out the European Parliament which I believe does extremely good work as a watchdog. Obviously, it can play an increasingly effective role in scrutinising and doing the kinds of things it has been doing in the past few weeks. But the constitutional role insists that power should be remitted to the national parliaments. We in the national parliaments should gear up our methods of calling to account to a far higher level than we have so far, excellent though our work is. I am not averse to the possibility of some Members of the European Parliament participating in a reformed House of Lords. They are extremely well informed and see things that are about to happen way up the legislative stream before we are suddenly confronted with an instrument of expenditure.
Our system here is excellent. We have excellent committees and this evening we are discussing the report of one of them. But the system tends to be document-based scrutiny. We have to shift the whole system in the other place and in your Lordships' House into much higher gear and seek to involve ourselves in calling to account initial ideas and procedures that lead to endless growth of expenditure combined alas, as we have seen in recent weeks, with a considerable diversion of expenditure into improper channels.
The choice is between the centralist and constitutional approach. I should like to think that true constitutionalists will now make that choice and that at Berlin a major step will be taken towards circumscribing the Commission, clarifying its role beyond the endless grey area that leads to constant growth, redefining the role of the European Parliament as an efficient watchdog but calling the work of the Commission and the activities of the European Union to account through national parliaments five times more vigorously than we have so far.
7.6 p.m.
Lord Desai: My Lords, I regret that due to the lateness of the start of this debate I may have to leave before the end. I have an Inter-Parliamentary Union

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delegation to receive and it is my parliamentary duty to attend. That is not a private duty. I shall try to stay for as long as I can.
The noble Lord, Lord Skidelsky, said that the system of budgeting was haphazard and irrational. I entirely agree. What we have tried to do is to put it on a moderately rational basis. My argument is that our obsession with the rebate prevents us from doing anything rational about the budget. I go as far as to argue that when the UK won its rebate it was so satisfied with that great national triumph that it took its eyes off the ball and did not play a full part in the subsequent momentous events that took place within the European Community. Now many of the people who were then in power regret that they were so happy with the rebate that they forgot to look out for the single market. That is the only controversial comment that I shall make.
There is an anomaly about the budget. Spending per capita throughout the EU population is £155. That is not a large sum of money. The UK contribution, give or take the odd penny, is £155. At present, with the rebate, we contribute as much to revenue as per capita spending. If we lost the rebate we would spend about £14 more per capita: £170. That is not a gigantic sum. However, a large number of people feel strongly about it and so we should look at it rather carefully. Not only does the method by which the EU budget is financed have no reason or structure to it, but the way in which the whole question is always settled five minutes before midnight by a tired group of 15 heads of state or chief executives is no way to run a whelk stall.
There is nothing to urge the European Parliament or governments to think, "Hang on, there are other confederations and federations around the world. How do they do it?" There is much economic literature on burden sharing. Do we apply those principles? I asked the question of a witness. No one has thought about it. No one wants to start from first principles. People are in entrenched positions which they will not give up, but if they do not give them up we shall be in this mess for a long time.
I have been no friend of enlargement. I have said in your Lordships' House that I wish enlargement would never take place; and if it does, it will be a budgetary disaster. I have also always said that the European Union has not thought seriously about enlargement because it has not tackled its budget seriously. Unless it settles its budgetary problems, enlargement will not occur. Alternatively, it will take place but in such a horrendously messy fashion that we shall continue to have debates like this and there will be much dissatisfaction for a long time to come.
Many people like enlargement because it weakens the centralist tendencies in the EU. I was amused when the noble Lord, Lord Howell, said that there were two approaches: the centralist approach and the constitutionalist approach. The United Kingdom has always taken the centralist approach and it has done us no harm whatsoever. We do not want the European Union to take a centralist path, but there is nothing bad about centralism. We have benefited enormously from centralism. We are one of the most centralised states in
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the world. We would not have considered the welfare state without centralism. A decentralised United Kingdom would not have the same prosperity.
However, I digress. I refer noble Lords to the last page of the report. It has two tables by the European Court of Auditors. They demonstrate that, depending on how one calculates contributions in respect of agricultural levies, sugar and isoglucose levies and customs duties, we are either a net contributor or a net recipient. The difference is £3.5 billion. The figure fluctuates from minus £2 billion to plus £1.5 billion. They are smokescreen mirrors because no one has established correct principles.
In response to the spirit in which the noble Lord, Lord Skidelsky, addressed the issue, I ask: how should we approach it? I believe that the issue does not relate purely to per capita income. Per capita income is one dimension. Given the tremendous differences in the population of the European Union, we should consider per capita income and total GDP. A weighted average—it might be half and half—to decide contributions would, I believe, arrive at a reasonable judgment. I made some calculations, almost on the back of an envelope. The gross contribution of the UK would be reduced, but it would make the position more equitable.
The UK insists on sticking to the principle of per capita income. I feel shocked that our Ministers proudly insist that we are tenth or eleventh in the league and proudly display our poverty. We are a member of the G7. We are a permanent Security Council power. How can we be eleventh in the per capita income league? Why do we not say proudly that we are number three in the European Union as regards total GDP? Why do we always insist on our shortcomings? I have asked our Ministers whether it was Her Majesty's Government's policy always to stick to the eleventh position, perhaps even going down to 12th or 13th, so that they could have a greater rebate. I was given an evasive answer.
I have never liked league tables. They are somewhat fraudulent. I draw your Lordships' attention to the very useful Table 3 in the report. If one adds up the UK's rank on total GDP and per capita GDP, and compares the contributions of different countries by their rank—it takes some calculation but perhaps noble Lords will take my word for it—high ranking countries are the net contributors, including the United Kingdom. There is one anomaly: the difference between the German contribution of 11 billion euros and the next largest contribution, that of the United Kingdom, at 2 billion euros. The difference is far too large. The anomaly has developed and some way will have to be found to correct it. The noble Lord, Lord Skidelsky. said that everything else should be balanced out and only structural funds should be left as an instrument of mechanism. It is an interesting suggestion which we should perhaps follow up.
I also believe that we should devise a system of contributions that is not based on mechanisms which are subject to fraud. The noble Lord, Lord Boardman, suggested a single identifiable contribution—I would prefer it to be based on total and per capita GDP—that was not accompanied by stories of fraud, or debates on

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the income of Italy, and so on. In any such confederation there should be "progressivity" (if I may use such a horrible word) in contributions. The richer countries should contribute more; otherwise we cannot sustain any kind of Community.
I do not believe in a juste retour. If we based a national policy on juste retour the state would be bankrupt. I do not want as much back from the state as I put in because I am relatively better off. I can put in more than I take because that is the only sensible way to finance the state. If we all received as much back as we put in how would we build roads, and so on?
To conclude, we need a serious, rational, calm consideration of the principles of European Union budgeting, leaving aside the rebate for the time being. I very much agree with what the noble Lord, Lord Barnett, said. Until we do so, this mess will continue. The position will not get better but worse. The report points out that there are ways out of the mess. We may not have suggested explicit solutions, but we have suggested that the present system is not the way to go forward.
7.18 p.m.
Lord Williamson of Horton: My Lords, first, I welcome the report of the Select Committee on the European Communities on the financing of the European Union. I have read its reports regularly and I believe that this report is a valuable contribution to improving the United Kingdom's position within the Union. However, I intervene principally on one point: the United Kingdom rebate. I do so because it is an important point; and because I was a member of the team which, under the command—I think that the word is accurate—of the noble Baroness, Lady Thatcher, negotiated this rebate. I was present when the noble Baroness rejected in a convincing manner some offers on the rebate. I was also present when she accepted the rebate. So for my part, that rebate is like a baby son to me.
But I have noted of course, as have many noble Lords here, the Select Committee's views which have been quoted; namely, that the rebate "should be negotiable" as part of an overall settlement delivering the results of fairer net contributions and:
"It seems to us that a realistic negotiating result for the United Kingdom would be agreement to forgo the abatement on condition that—and only when—the loss can be made up on a permanent basis through the savings of a reformed CAP and stabilisation of expenditure overall by 2006, and possibly through increased EU expenditure in the United Kingdom".
I recognise that that opinion is conditional and presented very carefully. Nevertheless, we must be careful that we do not find ourselves on a slippery slope. I do not consider that at this time the conditions will be met and accordingly, I side with the Economic Secretary to the Treasury when she informed the committee that:
"The Government is determined to maintain the rebate".
I believe that there are good arguments for such an approach which I should like to draw to the attention of the House. First, the UK abatement which was negotiated at Fontainebleau is an intrinsic part of the
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current own resources decision. That decision was adopted by unanimity and can be changed only by unanimity. When that was first negotiated, it was an essential point for the United Kingdom.
Secondly, although the Select Committee points out rightly that the sums involved in the European Union budget are relatively small as against total public expenditure in most member states, they are by no means negligible and the present abatement system gives an assurance to the United Kingdom or, more accurately, gives back, as the noble Baroness, Lady Thatcher, would have said, resources which can be used directly to train more doctors, to educate more people and to use for whatever purpose the Government think fit.
Thirdly—and this is a point which I genuinely believe to be very important in the negotiations and which has not been raised generally—the system which we have in place at present ensures that if the UK were to gain more from changes in financing, for which there may be good reasons, the abatement would automatically be less. The reason for that is that subject to certain rules on calculation, the abatement is broadly equal to 66 per cent. of the UK's unabated contribution to the Community budget, less its receipts. Clearly if our unabated contribution and/or our receipts were to change, we could receive 66 per cent. of a smaller figure. It is thus a method of correcting unfairness in the budget but it is also a self-correcting mechanism.
Those three arguments are strong for the retention of the rebate in its present form at this time. Agenda 2000, which is referred to quite often, is a comprehensive package which deals with negotiations with the applicant countries, agricultural reform, structural funds and the budget up to 2006. In that basic substantial document, there is no proposal to change the UK abatement at this time. Rather to the contrary, the European Commission document, the main basic document for the negotiations, states that over the period to 2006,
"the maintenance of the current financing arrangements and the effects of the reform of the main Community policies are not expected to lead to major changes in the budgetary positions of the Member States".
Consequently, the uncertainty surrounding the relative prosperity of the UK led the Commission to propose postponing a re-examination of the rebate mechanism until after the first enlargement.
That is contained in the basic document which is being discussed in Berlin and elsewhere. On that basis, the UK can rightly argue that the current package of agricultural reforms, structural policies and progress towards enlargement of the Union does not need to include any reconsideration of the UK abatement.
It is correct—and the Select Committee examines this in its report—that in a later document the Commission has suggested three possible courses of action, including a reduction or phasing-out of the abatement which could address the imbalance,
"if there were a political consensus".
But second thoughts are not always best and I do not form part of a political consensus on that point. It is a perfectly defensible negotiating approach to base

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oneself on the elements of Agenda 2000 and not to disturb the balance of that document by introducing the question of the UK abatement which was excluded from Agenda 2000.
Finally, the Select Committee deals extensively—and a number of noble Lords have commented on it—with the question of a broader reform of financing. That is a different and wider point. It is extremely important. But I share the view of the Economic Secretary to the Treasury that it is not for the immediate future because it is not going to be negotiable in the immediate future. However, I believe that the Select Committee is right to concentrate on a GNP per capita approach in the medium term and, as we already have a GNP-based part of the resource system, that would make it easier to negotiate.
The defence of some other current elements of the financing, such as agricultural levies and customs duties, on the grounds that they are the Community's own resources seem to be now to be largely theoretical.
I conclude that this is not the time to abandon my baby, the UK rebate, on the steps of the Berlaymont or on the steps of the Breydel buildings in Brussels as the conditions suggested by the committee are not likely to be met. However, for the longer term, the committee's views on a medium-term objective of moving to a GNP per head basis for financing certainly deserves most serious consideration.
7.27 p.m.
Lord Tomlinson: My Lords, like the noble Baroness, Lady Sharp, perhaps I may say how pleased I am to be a member of Sub-Committee A and how grateful I am to my noble friend Lord Grenfell for his support, advice and guidance during the work of that committee. I apologise for the fact that illness precluded me from playing a full part in the work of that committee. However, because I was not able to participate in its deliberations I can perhaps be more objective about them.
Much of the Select Committee's report is clear and relatively non-controversial. The statement that spending should be stabilised at current prices—about £85 billion—is not only clear but is almost universally accepted. That must be done not only by strict adherence to budget discipline but by a number of other endeavours into which the report does not have an opportunity to go fully.
It is quite clear, for example, that in future, the European Commission must follow the advice given so clearly by Commissioner Liikanen to follow policies of critical mass, policies where there is clear added value in undertaking projects at the European level. That really does mean that if we are to follow the policies of critical mass, there must be equal rigour in weeding out the policies which are no longer appropriate to be undertaken at European level.
Towards the end of his speech my noble friend Lord Grenfell referred to the use of zero-based budgeting. That could be a major contribution both to the process of budgetary discipline and, through that process, to the
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stabilisation of the budget. We must make sure that some recurrent programmes rejustify their utility in terms of European added value.
At present, in a number of relatively small programmes, we see some sort of European game of snakes and ladders but on a board which still has all the ladders there but without too many of the snakes. That creates some inequity as we go forth with new programmes without having the resource necessary to fulfil them.
However, I say to the noble Lord, Lord Howell, in the same way as I would to the noble Lord, Lord Skidelsky, were he in his place, that it is unfair just to castigate the Commission. The Commission merely puts forward the proposals. The policies are agreed by the Council of Ministers either by themselves or jointly with the European Parliament. To that extent, the Council of Ministers must accept its responsibility for demanding of the Commission the execution of policies without necessarily having the resources to go with them. Therefore, the budgetary discipline aspect is extremely important.
The report also commends greater scrutiny of EU spending and states that such scrutiny should be rigorous. Of course, one of the ways in which that could be improved is by the Council of Ministers accepting its responsibilities. Year by year, it gives a recommendation to the European Parliament on whether we should discharge the European Commission for its handling of the spending of the previous year. I have to tell noble Lords that the Council of Ministers has never called into doubt the question of granting the Commission discharge. I pay particular tribute to Mrs Liddell when Economic Secretary to the Treasury, for being the first Minister during a British presidency, or during any presidency, not only to force a political discussion on discharge in the Council of Ministers but also to come to the Parliament's budgetary control committee and to the plenary session of the European Parliament to spell out the shortcomings.
Ministers must accept their responsibilities in the process of control rather than merely looking to an alibi post factum. Therefore, things need to be done in relation to the scrutinising of European expenditure beyond just the rhetoric of blaming somebody else. For example, for far too long there has been a cosy conspiracy between the European Parliament, of which I happen still to be a member, and the Council of Ministers. It has been called "The gentlemen's agreement". I believe that transparency in the budget would be assisted no end by abolishing the pretence that the two institutions are composed entirely of gentlemen. That is "gender wrong" in the first place and factually wrong in the second place. The European Union would be greatly enhanced by each institution accepting a responsibility fully to scrutinise each other's undertakings.
I turn to the question which has obviously been of greatest concern, that of own resources. The committee—I believe quite rightly—did not support, on either political or practical grounds, a directly collected own resource. I welcome that as an important part of its

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recommendations. However, it very much criticised the traditional own resources system. Such a system is one which is of decreasing economic significance. It is the most fraud-prone part of the European budget and, were it to be abolished, would bring the greatest benefit to the three countries which are the largest net contributors to it.
The benefit to Germany would be 3.8 billion euros; to the United Kingdom 3.4 billion euros, and to the Netherlands 1.9 billion euros. That spending would have to be made up elsewhere, but it would be made up on a far more equitable basis of contribution were it related either to the current fourth resource or to some new GDP per capita resource than to the present system. It is extremely important, in terms of the fight against fraud; and in terms of transparency and budgetary equity, that the Select Committee has commended this attack on the traditional own resource.
This brings me to the heart of the report; that is, the whole question of the inequity of contributions and the EU budgetary revenue. It is perhaps to be regretted that it has almost become an argument as to whether the wording of this is right or wrong when it strikes me that almost everybody who has spoken has said the same thing. They are not arguing that the British rebate should be given up. The argument of the committee is very clear in saying that, instead of merely arguing about that, if the European Union—of which 14 member states are attacking the abatement mechanism—concentrated on following the policies that mitigate the necessity for such an abatement mechanism, the argument becomes unnecessary.
The report seems to me to be quite clear. It recognises that the own resources decision is, as the noble Lord, Lord Williams, said, a decision of treaty status requiring unanimity to change it. It recognises that the own resources decision encapsulates this Fontainebleau mechanism. However, any attempt to change the own resources decision cannot, in any circumstances, be imposed upon the United Kingdom. That is not a matter for argument or debate but merely a statement of fact.
We need to see this abatement mechanism, currently worth over £2 billion, coming into an equation, following member states of other European Union countries taking the necessary steps. Those steps contain some terrible words. They contain the Commission proposal for agricultural reform plus the so-called degressivity in direct payments to farmers. They include stabilisation in real terms of the agricultural budget between now and 2006; non-discrimination against large farmers, particularly British and German farmers with more efficient farming systems, and co-financing of agriculture, not as an act of reform in itself but as an aid to correcting budgetary imbalances after reform has taken place.
However, the report speaks not only of the agricultural sector. The report of the Select Committee clearly recognises the need for cohesion fund reform. Countries which have received major financial aid from the cohesion fund, particularly Spain, Portugal and Ireland, which have met the qualification, the convergent standards, for economic and monetary
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union, are, in my opinion, no longer automatically entitled to receive cohesion fund money. That is part of the process of reform for living within the 1.27 per cent. ceiling.
If we follow that agenda, I believe that we would have an agenda fully compatible with the Select Committee report. It would produce sufficient levels of budgetary reform and budgetary equity such that it would largely mitigate the need for an abatement mechanism, especially if reforms were to lead us to a budget financed on a different mechanism, such as that suggested by the Select Committee of per capita GDP-based contributions.
On the basis of the comprehensive nature of the report, I am certainly envious of those who are able to take part in the deliberations. I express my regret at not having been able to do so. However, I say to my noble friend Lord Grenfell that, had I been there, I would have been proud to be associated with the report of the Select Committee which is not only a great aid to this House, but of substantial assistance to the Government in the negotiations they have to undertake.
7.38 p.m.
Baroness Ludford: My Lords, I, too, applaud the committee and its chairman for an excellent report. I also welcome the timeliness of this debate, not only because of the cathartic events of last week but also because of the imminence of the Berlin Summit.
I shall make my remarks more on the politics of the question than the technicalities, but I am comforted by the fact that others, including noble Lords on my own Benches, are expert on the detail. Indeed, few know more on these matters than the noble Lord, Lord Tomlinson.
As I took the milk from my fridge this morning, I noticed a pack of bacon. The label stated, "Cooks and tastes like bacon used to". "What a comment", I thought, on 40 years of the CAP that we need to go forward to the past to try to put right the failings of intensive food production distorted by the wrong kind of European subsidies.
On the same theme, I watched a delightful television programme last night about a Devon farm where birds, wildlife and wild flowers flourished due to traditional farming practices, unchanged for 40 years. However, the land surrounding that farm was a desert of ripped-up hedgerows, of fields ploughed to the edges, eradicating habitats for mice and voles, and sterilised by pesticides and herbicides so that insects and birds could not survive.
Coming back from my rural idyll to politics, the fact is that European taxpayers—and certainly British taxpayers—are starting to rebel at paying what used to be three-quarters—now, thankfully, down to half—of the EU budget on farm payments which have helped to destroy our rural environment.
I suggest that we need to start from the big picture. I very much agree with my noble friend Lady Sharp that we need to look at the huge gains in peace, security and solidarity in Europe since 1957, but our goal now is to meet the further challenges to security, trade and

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globalisation, and to make the EU fit for enlargement both financially and politically, and thus able to call on the support of its citizens.
I suggest that we need to do three things. First, we need to decide strategically what functions the European Union should have and what the EU budget should fund. I follow the noble Lord, Lord Tomlinson, in talking about added value. Secondly, we need to decide how to get value for money. Thirdly—I put this last sequentially only because it flows from the previous two—we need to decide the best and the fairest way to pay.
We cannot really make lasting progress on the issue of EU spending until we settle what it is that we really want the European Union to do. The committee rightly stressed that it is crucial for our citizens to know what their stake in European policies and operations really is, via increased transparency about what we are paying and why. I and my party would go further and say that the time is ripe, even overdue, to write a constitution for Europe to define—and perhaps even in some cases to limit or, in the case of a common foreign and security policy to boost—the powers of the Union, and to define the powers of the national and regional tiers and the rights of citizens to show who is accountable to whom.
The European Union is seeking to decide the budget and the reform of the CAP and the structural funds without looking simultaneously at the necessary constitutional settlement and fundamental institutional reform that should accompany it. The two should at least be twin-track in order to make the European Union and the prospects for enlargement politically as well as financially stable.
We have rather treated our citizens with disdain, failing to justify or to explain the priority areas where EU action is justified. Going back to my bacon and to the farm, we have never had, nor did we ever explicitly seek, the citizens' agreement to pay for food mountains, destruction of wildlife, food from animals fed hormones and antibiotics, and large sums being paid to rich farmers while small and hill farmers go bankrupt. We certainly must not extend that system to the accession countries of eastern and central Europe.
However, we might well get the support of our citizens to an environmental clean-up in the new member states and to pay for the maintenance of the EU's rural environment via a system of direct payments, which meet economic, social and environmental goals benefiting the whole Community.
In the search for ways to placate public opinion about the EU budget, we have in my opinion taken a wrong turning. New little initiatives and pots of gold have been invented on a rather ad hoc basis to give the illusion of a "people's" Europe. That diverted attention from the true priorities of a citizens' Europe; for instance, eliminating the injury and insult of £750 million a year on subsidies for growing tobacco. The injury is that EU citizens are paying for damage to health, which they then pay to put right, but the insult is that the tobacco, being of low quality and unusable in the EU, is dumped on the third world.
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One of the frustrating aspects of the current trade disputes with the United States is that, although many of us feel that the US is being high-handed on bananas, GM foods, and hormones in beef and milk, the atmosphere has been poisoned over the past decades by resentment over the export subsidies to dump foods on world markets.
Also on the issue of political creditability, perhaps I may draw attention to an issue of significance to London with regard to the reform of the structural funds. I tried—misguidedly and rather ineptly, for which I apologise—to raise this matter on what I later realised was a Welsh Question and the House was understandably cross with me. The calculation on GNP per capita made inner London come out as the richest region in the EU. That is because the whole: economic activity of the City of London is attributed to the residents of inner London boroughs, many of whom are the poorest in our land. That means that the £1 million bonus of a City trader living in Surrey becomes the notional income of a resident of a tower block in Islington, Hackney or Tower Hamlets. That does nothing to increase the political credibility, transparency or citizen acceptability of EU budget calculations, at least in London.
I turn now to value for money and follow what the noble Lord, Lord Tomlinson, said. I believe that on the very day last week when the Commission resigned, the Council gave discharge to the Commission for its stewardship of the 1997 budget, without any question or hesitation. So, while the European Parliament was exercising some clout over its insistence on a clean-up, the Council—including the British Government, I presume—preferred to look the other way. That rather gives the lie to the spin-doctored line of recent days about our Government's consistency and conviction on these matters.
That is why some of us are not convinced by the protestations about how good management requires the Commission to report more to the Council. It has cared only intermittently about value for money. The previous Conservative Government refused to accept majority voting for anti-fraud measures and insisted on the appointment of a weak Commission president instead of a strong one. The present Government have come only belatedly to the cause, with their political allies in the Socialist Group widely reported to have done No. 10's bidding in blocking censure of the Commission until last week.
Apparently—this is regrettable—the majority of governments in the European Union (of the centre Left, linking up therefore with the Socialist group as the biggest group in the Parliament) until recently put more store on not rocking the boat than they did on cleaning up EU governance. The report that we are debating cites Commissioner Liikanen's comment that, because member states retain only 10 per cent. of the traditional own resources collected for administration—that is, the agricultural and Customs duties—they do not regard that as sufficient incentive to tackle fraud. The Court of Auditors and the Treasury think that VAT collection by member states falls short by at least between £2 billion and £3 billion a year.

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I think that we ought therefore to hear a little less piety from the member state governments about the role of the Council—not least because most of the money disbursed from the EU budget is handed out by the national administrations and that is where most of the fiddles, especially on the agricultural budget, go on. One of the arguments for the co-financing of the CAP is to concentrate the minds of member states on making agricultural policy not only WTO-compatible and environmentally sustainable, but also free of fraud.
The fact is that, as the sub-committee said, scrutiny of EU expenditure needs to be on a continuous, rather than an occasional, basis. The attention of the European Parliament has been more continuous than that of the Council. Indeed, I am pleased to see that the Economic Secretary to the Treasury is quoted as saying:
"the Parliament for many years has largely espoused the cause of budgetary discipline".
Those are reasons for agreeing with Professor Begg, who is quoted in the report as saying that the European Parliament is the "obvious democratic authority" to which the Commission should be accountable. Of course, the European Parliament must address the mote in its own eye—and I should declare an interest as an aspiring Member—but I am proud at least that my own Liberal group has been leading the charge to tighten control of MEPs' expenses, as it did the scrutiny of the Commission. The other governments could help by persuading France and Luxembourg to accept one site in Brussels for the European Parliament instead of lamely agreeing to a three-city travelling circus. That would save some £100 million a year.
If the Council wishes to do something else that is positive, it should agree to increase the powers of the Court of Auditors to investigate whether EU spending is achieving value for money. That is a body which, because it has been consistent in its scrutiny, has repeatedly refused to give discharges to successive EU budgets.
Finally, as I promised, I have much less to say about the technicalities of the fairest way to pay than about the surrounding politics. I know that, as the report states—I am sure that all noble Lords know this also—it is not politically feasible to ask the British public to give up the current rebate which caps our net contribution while wastefulness and fraud have not demonstrably been rooted out and while the CAP in particular is wrongly orientated.
For political reasons, throughout the European Union it would also be impossible to lift the cap on total EU spending, however relatively small the budget is at the moment, before all the possible avenues of saving and fraud-busting have been followed. We probably must move in the longer term to more citizen-based funding rather than to a system which focuses on the contributions of governments. It is ironic that the EU has slipped back de facto into a system of national contributions which it purported to get away from through the development of "own resources".
I note and accept the committee's opinion that the implications of moving to a system in which the European Parliament should be responsible for both
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raising and spending EU funds would be "profound", by which I believe it means, "too profound for now". In the long term perhaps a tax that met EU environmental objectives such as an energy carbon tax, could be a possible contender. In the shorter term we should at least try to link revenue to GNP per capita with the caveat that I made earlier about the effect of calculating that, particularly with a large Community hinterland.
I again thank the committee for its excellent report and its contribution to this extremely important debate.
7.50 p.m.
Lord Renton of Mount Harry: My Lords, like other members of Sub-Committee A, I join with noble Lords on both sides of the House in congratulating our chairman, the noble Lord, Lord Grenfell, on this, the first report we have produced under his chairmanship and also on the efficiency with which he drove us to produce a relatively complicated report in very quick time.
The report was embargoed for release at 0001 hours on Tuesday 16th March, within minutes of the moment when the European Commission offered its resignation. I wonder how the noble Lord felt when he awoke the following morning and realised that his report had hit the world at precisely the same moment as the disappearance of M. Santer and others. He must have pondered a little as to whether it was a good thing or not. If our report had come out a month later perhaps some of our recommendations might have been stronger. But it has had something of a cathartic effect on our consideration of the key issue of financing the EU; not just how it spends money, but how it raises it at this key moment in its history.
On one point I agree very much with my noble friend Lord Howell of Guildford. We disagree on other matters as regards the European Union. I agree, however, that the Union is, as he put it, at the Y point or junction in its history. It can either go forward, as a result of the events of last week, to greater success—which I hope it will do—or it will slip back and in some measure, in power terms, slowly disintegrate. It is important to consider this report today in the light of those circumstances.
It was consideration of the future that led us to decide very carefully that the present methods of "own resources" in raising money for the EU are simply too complex, too inefficient and too subject to fraud to continue. I am sorry that the noble Lord, Lord Harris, is not in his place. He chided us amiably. He spoke about the "amiable indulgence" with which we treated the EU's "shambolic" finances. Perhaps the noble Lord did not read carefully enough paragraphs 65 and 70 of our report in which we firmly draw attention to the incredible mess—there is no other way to describe it—in relying for own resources on VAT receipts in the individual countries of the EU.
The European Court of Auditors reported on the years 1991–93 that VAT collections from all the countries of the EU could be short by as much as 70 billion ecu a year. That is almost equal to the total spending of the European Union. It comes out clearly in our report that,

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when questioned, the Treasury officials did not have any answers. They did not know the figures and they could not tell us the precise why and wherefore of what the figure meant for Britain. They later sent a written reply, which is in our evidence. I defy some of your Lordships to understand precisely the content of that reply.
I make the point because it is an example of how domestic governments, including our own, have allowed this shambles of resources—the money that goes into the European Union—to continue under successive administrations for far too long. For me, it is the key point of our report. It is one reason why we concentrated so heavily on looking for alternative sources such as a GNP-based resource, possibly with the addition that a proportion of it would be GNP per capita rather than the totality of GNP.
Against that background, I am deeply disappointed by the reply that we received from the Economic Secretary to the Treasury, which the noble Lord, Lord McIntosh, who is to wind up the debate, kindly circulated. Noble Lords who have had time to read it will note that in paragraph 6, "Own Resources Decision", the Economic Secretary writes:
"The Government acknowledges the problems of fraud in respect of own resources".
That is precisely the point we were making.
"It continues to press for improved systems which reduce these. But it agrees with the Commission that 'the shortcomings of the system … do not by themselves provide grounds to justify an urgent modification of the Own Resources Decision'".
Is that not precisely the sort of language and the shoving away of the importance of a matter that caused the commissioners to resign? It seems to me that here we have another example of a government being aware of the problem but simply not being prepared to tackle it.
I hope that the Minister in his reply will dwell on that point because it is a very shallow dismissal by the Government of essentially the most substantial point our report makes—other than that about our own rebate, which has been extensively discussed.
I would like to see the European Union moving to a source of funds which is clearly collected from individual taxpayers via the local tax authorities and clearly marked for European Union purposes. This is not unlike the way in which district councils at the moment collect on behalf of county councils and parish councils. That is stated in the rating Bill. The local tax authorities are being used for that purpose. In my opinion it is the only way in which we are going to solve the problem of the lack of transparency to which our report refers, and the lack of knowledge as to where and how European Union money is being spent.
The noble Lord, Lord Desai, referred to a figure of £155 per head as being the cost to each person in the European Union. If one asked on that lovely programme, "Who Wants to be a Millionaire?", how much the European Union costs and there were four answers to choose from, I am sure that the audience would have absolutely no idea at all whether to elect £10, £50, £5, 000 or £155. But voters should know. That will only happen in the long run through a levy for specific European Union purposes, but using the local
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tax authorities to collect it and with independent national audit offices checking. Their reports would be debated by the European Parliament which would have powers, in my book, to sack individual commissioners, and senior officials as well, if they Were found to be incompetent.
I mentioned the European commissioners. Who exactly are these great men and women? We are told that once again a heavyweight politician is being looked for to run the Commission. Indeed, the Prime Minister used those words in the House of Commons last week. Is not that precisely what Jacques Delors was? Is not that why he was so unpopular? Is not that why my good friend John Major did not want Jean-Luc Dehaene and M. Santer was chosen instead? And M. Santer said, amiably, that he intended to spend a great deal of time "not doing much" for which he was greatly applauded at the time.
Who could expect M. Santer to do any more than that? After all, he had been Prime Minister of Luxembourg and a very successful broadcasting minister there. Because at the time I was the United Kingdom Minister responsible for broadcasting, I met him several times and found him an amiable and competent person within that context; that is, the context of 330, 000 people. Why was there ever any real expectation that he should go from running a country approximately the size of Brighton and Hove to running the European Union with 350 million people? Yet we are looking for another politician like him at the moment.
Names like Romano Prodi—the former Italian Prime Minister—and Wim Kok, the Dutch Prime Minister, have been bandied around. If we step back for a second and consider what is the real role of the Commission, it would be much better to send highly competent businessmen there or highly competent civil servants. Businessmen would concentrate not on the great strategic plans but on how to run Europe and how to obtain efficiency and more value of money for the shareholder—the voter. Someone like my noble friend Lord Sainsbury of Preston Candover or the noble Lord, Lord Butler of Brockwell would be suitable candidates. Certainly, if I look at the Treasury Benches opposite, delightful and witty people though they are, the only one I would recommend to be a commissioner is the noble Lord, Lord Simon of Highbury, in view of his record as a successful chairman of British Petroleum.
That is one of our problems at the moment. It leads me to take up the point raised by my noble friend Lord Howell of Guildford. Where do we want the European Union to go? I do not believe it is moribund at the moment; I am certain that it will recover from this shock. A weak branch has been pruned off and, as is the way with nature, stronger branches come where the weaker one has gone. But where I agree with my noble friend is that this is the time for serious constitutional reform in the European Union. It cannot happen overnight. It will not happen in Berlin. But it has to be in the long-term programme.
Along with that, I agree with the noble Lord, Lord Desai, that this is not the right moment to proceed with haste into welcoming another five or six members into

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the European Union. To me the constitutional change has to happen first. If 15 members cannot devise an effective, popular, comprehensible, non-fraudulent organisation, how on earth are 20 members going to do it? I would therefore like to see the constitutional boundaries clearly examined between the European Council, the Council of Ministers, the European Parliament, the Commission and national parliaments, making quite certain that those boundaries are properly drawn. If not, I accept that the European Union might topple under the very unevenness of its own weight.
The existence of the single currency makes the European Union much more important than it was. The single currency could well become the euro challenge to the dollar. I hope that that will happen. But I believe strongly in a limitation of the executive powers of the Commission, a serious enhancement of the legislative powers of the European Parliament and continuous independent audit by national authorities. I hope that that will be on the long-term agenda.
Lord Stoddart of Swindon: My Lords, as I said last Wednesday, this debate is premature in the sense that Members of the House have had only six days to realise that the report has been published; to read and assimilate the report; and to discuss and consult with others about it. That is a great pity. It is an important report which should have had wide circulation; it should have been widely read, with wide consultation, and lots of people should have been given the opportunity to take part in a debate upon it. I sincerely hope that in future such an important report will not be rushed on to the Order Paper for discussion in your Lordships' House.
Having said that, I congratulate Sub-Committee A on the report. It was indeed a tight timescale, though it was probably self-imposed, and the committee worked hard to publish in time for the March summit. Unfortunately, that lack of time restricted the range of witnesses called. I feel that rather more witnesses with wider interests should have been called.
There is a good deal of interesting material in the report and some of the evidence confirms what many of us have been saying for a long while. For example, Ms Patricia Hewitt, the Economic Secretary to the Treasury, responded to a question by the chairman, the noble Lord, Lord Grenfell, who asked:
"Has the Treasury taken a look at Professor Gretschmann's attempts to quantify the non-monetary advantages of being part of the European Union such as access to markets, free movement of capital and the much broader question of the overall security of the European continent?".
She replied:
"One cannot assume that all increases in our exports to other European Union members derive solely from membership of the European Union. One must take account of movements in world trade generally, and one may need to make some assumptions about what would happen in the absence of the European Union or our membership of it. One would certainly need to take into account, which Professor Gretschmann's model does not, the increase in imports from other European Union countries, even if one accepts his rather narrow methodology".
That is a significant answer because over many years we have been told by Minister after Minister that the trading aspects have been paramount and that in fact all
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the trading increases have been due just to our membership of the European Union. It is useful, therefore, to have that on record. Furthermore, it again confirms what many of us have said; that is, that in many respects the European Union has been a trading disaster; that our adverse balance of trade, since we joined, has been around £130 billion and that has been added to by £4 billion to £5 billion every year.
Again, the Economic Secretary confirmed that for every £1 that we receive from the European Union, we pay back £1.50; and that is not a good bargain. I wish that some of the local authorities who see their financial saviours as being the European Union would reflect that if the £41 per annum net paid by every man, woman and child to the EU budget were distributed instead on a per capita basis to each local authority, they would gain immeasurably. In Reading, where I live, that would amount to £5.3 million and would avoid my rates going up by 8 per cent. next year.
However, where I do not agree with Ms Hewitt is on her evidence at Question 129, repeated in the report of the Select Committee at paragraph 113:
"If one goes back to the motivation for the creation of the European Economic Community one has in mind the end of war … on the Continent of Europe. One can scarcely put a monetary value upon that or suggest that it is worth more to one country than another".
If that were true, her comments might have some relevance, but it is not true. The organisation that has kept the peace in Europe over the past 50 or more years is not the European Union but NATO, which was formed long before the then Common Market came into existence. The greatest threat to Europe came with the Berlin blockade in 1948–49, when the European Union was not in existence. All one needs to keep the peace in Europe is for France and Germany to agree not to go to war. We do not need a European superstate to keep the peace in Europe.
I cannot comment on all the recommendations but agree that a directly collected own resource is not a viable option at present or for the future. The constitutional implications for this and other countries are so involved and important that they cannot be grappled with in the short term. I agree also that there should be greater national scrutiny of the budget. As national parliaments raise the tax—£8, 000 million per annum so far as this country is concerned, or 4p on income tax—they should oversee spending by the European Union, although the European Parliament should also have some input.
It is right that expenditure should be stabilised at £60 billion by 2006, but that is not radical enough. The report considers that the self-financing of agricultural support might be a good idea provided that discretion over spending is not given to member states. If they have no discretion, there is no point in doing it. Most people agree, including the Government and most of your Lordships, that the whole of agricultural support should be repatriated to the nation states. The CAP makes no sense at all. It is wasteful and susceptible to fraud. It helps large and rich farmers but hurts small,

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poor farmers. It also costs the consumer dear as well as hurting the environment through intensive farming, which is also a health risk.
Being able to trade on world food markets would bring down food prices in this country and elsewhere and help world farming generally—especially in third world countries.
I shall be told, as we always are, that is unrealistic. Is it really so unrealistic? In the present circumstances, it would make far more sense to have a subsidised common market in cars, but surely no one would agree to that. No one would agree that we should create such a market. We must be prepared to think the unthinkable. Getting rid of the CAP would virtually solve the finance problem and the fraud crisis in one fell swoop. I hope that the Government will pursue that proposal irrespective of it being a distant prospect.
Following the fraud fiasco and the resignation of the whole Commission, the opportunity exists to question its powers and whether many of them should be returned to member states—as was promised by Prime Minister John Major when he agreed to the Maastricht Treaty. The Commission complained last week that it was asked to do too much and said that was one of the reasons for losing control of the budget. Let us help the Commission by relieving it of some of its burdens.
One-third of our overseas trade—about £700 million—is administered—wrongly in my view—by the EU. My right honourable friend the Secretary of State for International Development, Clare Short, is concerned at how the money raised by our taxpayers is used. That money could be and should be repatriated to this country. I hope that, too, will be followed up.
I disagree with the report's central recommendation that Britain's rebate should be negotiated. I find myself on the side of the Government. I do not always find myself on the side of the Government on this issue, but I do so tonight. I am encouraged by press reports and the Government's response to the report that the Prime Minister intends to stick to his position that the rebate is non-negotiable. The reasons given by the Treasury witnesses and the Economic Secretary for retaining the rebate seem sound. I do not believe that the consequences the committee fears may result from Britain keeping firmly to its position will come about. It would certainly be extremely unwise to enter negotiations on the basis that one's opposite numbers around the negotiating table know before the start that one has compromised over a central issue. I hope that the Government will stick to their guns.
The Select Committee has not helped the Government. I hope that the take note Motion will not be construed as an endorsement of the Select Committee's opinion. I do not believe that it would be the opinion of the House to undermine the Government's negotiating position at the summit later this week.
Bearing in mind the crisis in EU financing and the cataclysmic events over the past week, this might be a good opportunity to review the whole concept of European co-operation, modernise the treaties, reverse
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the trend towards further integration and a country called Europe; and rebuild European co-operation based on nation states, voluntary co-operation and democracy.
8.18 p.m.
Lord Hussey of North Bradley: My Lords, the noble Lord, Lord Grenfell, chaired the committee with all the skills and charm of his predecessor—the noble Lord, Lord Barnett—aided by a most excellent secretary. He explained the speed at which the report was considered and written, hoping that it might contribute to a solution of the problems that are likely to crop up in Berlin this week.
I feel honoured to serve on the committee surrounded by noble Lords of great financial experience. I do not intend to weary your Lordships with my views on complicated problems such as reform of the own resources system, the relationship of a member state's gross contribution to its GNP, the co-financing of the CAP and the vagaries of VAT collection. I want to discuss issues that are important to me. Incidentally, I started writing this speech on Monday. Ely Tuesday morning, the whole picture had changed, rather like a transformation scene in a pantomime.
The Community now comprises 15 states and will shortly be increased. Its aim is to weld this body into a unified whole, at least on the economic side. There are those, of course, who argue that you cannot have a unified economic whole without a unified political whole as well, but I shall not go into that. What is vital is that all the member states should agree on their collective objectives. This inevitably means that some countries will have to sacrifice some national objectives in the interests of the whole. In our inquiry into the European Central Bank, the same point arose. It is the crux of many difficulties. Yet I recall the President of France saying,
"On major issues I represent my nation and will expect others to do the same".
That is not an exquisite expression of the communautaire spirit.
The issues arise again over the financing of the Community. My life in the media was dominated by how to raise the money to match the costs—except, of course, in the BBC where £2 billion a year came in through the window—but in most businesses the nail-biting struggle concerns the relationship of cost to revenue. Financing the European Community is not an income problem. Everyone believes that the proposed ceiling of 1.27 per cent. of the GNP will raise sufficient resources for the Community to work within its budget with some spare for the accessions. The issue is how the money should be raised and then distributed; the division of the spoils, if you like—an issue on which friends, colleagues and competitors frequently fall out, and have done over the years.
Neither the contributions nor the receipts from this co-operative effort appear to be fairly distributed. As we were convinced that they never would be seen to be fair, under the wise guidance of our chairman we proposed that we should not endanger the chances of agreement in Berlin by too obstinately sticking to Britain's

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self-interest with regard to the abatement. Instead, we raised the issue of whether it should be considered in the negotiations. We believe that the abatement was a classic case where we might accept a reduction on condition that—and only when—the loss can be made up (as your Lordships have heard) on a permanent basis through the savings of a reformed CAP, a stabilisation of expenditure and possibly through increased expenditure in the United Kingdom. All these provisos were directly in line with the Government's negotiating stance. We did not expect that this recommendation would pass without criticism, and nor has it. But I was surprised that the word "undermine" appeared in several newspapers which are not normally bedfellows. A touch of spin there, I thought.
We did not undermine the Government's negotiating position; we preserved it carefully by the conditions that I have just mentioned and, in so doing, we believed that we were demonstrating a practical way in which this country could negotiate in the spirit of the Community and, it is to be hoped, set an example. We matched the loss of a cherished national objective with gains elsewhere in the interests of the Community. This is a proposal that I unhesitatingly support. As our report declares, the Community is a concept, an ideal, of great significance. The original objective was to replace successive centuries of devastating wars with a system that could secure lasting peace. Economic—let alone political—integration came later.
A basic weakness in the constitution is the fault line between the Commission and the European Parliament. The responsibilities of the two have never been clearly defined, but what is relevant is that the Members of the European Parliament are elected, whereas the members of the European Commission are appointed. The Community cannot survive without compromises. There is nothing new about this. The last ditch settlements—usually achieved at the latest hour of the morning—are evidence of hard-fought victories for compromise. But the issues are now more complex. The accession of five new states will present a major financial on-cost. The application by the European Central Bank of "one cap fits all" for interest rates increases the strain. Severe charges of financial mismanagement and neglect are well made. Fraud over VAT is alleged to cost 8 billion euros a year. For too long the CAP has consumed 50 per cent. of the budget. Several countries, not least our own, wish that cost to be substantially reduced.
In all this there is the dual responsibility of the Commission and Parliament. Neither body has survived the past six months without serious criticism of its financial control, and the good life incidentally that many of its members enjoy. To quote the evidence of the Economic Secretary, the role of Parliament in setting the budget is significant. It is part of the inter-institutional agreement which forms the framework with which Agenda 2000 and the financial perspective must be settled. Finally, once the Council has decided on a common position it becomes a matter for discussion with the Parliament.
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There are further issues for the Parliament and the Commission; for instance, the transparency of the Community's activities. The people are entitled to know what they each pay for the Community's costs and what they get back from it, and how the finances are collected, distributed and spent. We are talking of hundreds of millions of people; this is no minor constituency. They must be assured of democratic accountability. This is a prime duty of elected representatives who have long been too far distant from the lives of the people whose livelihoods they influence. In my opinion, it is inevitable that the responsibilities of the elected but, I trust, much reformed Parliament should be extended and those of the unelected Commission should be reduced.
The Council is composed of commissioners allocated posts by the president on the basis of nomination by their member states. That is not a democratic process. The damning revelations of the recent report on the Commission, followed by its mass resignation, have elevated into stark public prominence issues of which many people have been well aware and kept silent, although there are some who conspicuously did not.
I am not a stalwart defender of everything that is printed in our newspapers—indeed, that would be a difficult position to substantiate with any confidence—but at least from the tabloids to the broadsheets there have been strong criticisms. There is an opportunity now to put this right, but it will be extremely difficult and take a long time. A comfortable ticket on the gravy train rapidly becomes a way of life, but root and branch reform there must be.
We hope that we have helped to clarify these issues. Stabilisation of expenditure is critical. The cost of the CAP must be reduced. Misuse of public funds must be ended. Confidence in the government of the Community must be restored and transparent accountability introduced, leaving no doubts in the minds of the people of Europe about the fairness of the proceedings and the manner in which they have been conducted. I hope that this report will be seen to be courageous and fair. I commend it to your Lordships.
8.28 p.m.
Lord Shore of Stepney: My Lords, I am well aware of the work that went into the compilation of this report as I attended at least one of the committee meetings and I could see it for myself. I certainly congratulate my noble friend Lord Grenfell on his presentation of a large and discursive report. However, I believe that it has suffered from a serious defect. The defect is not really the fault of those who participated in the work of the Select Committee, but of whoever set for them the timetable which is referred to in the introduction to the report. January and February were available for the compilation of this report; the period ending on 21st February. All the events which happened after that inevitably could not form part of the report.
Much has happened since 21st February. I wish to comment a little more about what, on reflection, was an impossible task. What were my noble friends on the Select Committee able to do in two months? Yes, they

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were diligent and they managed to hear four witnesses give oral evidence: one from the Commission; a rapporteur on budgetary matters from the European Parliament; a junior Minister very fresh from the Treasury; and a professor, an academic. Frankly, that is not enough. If one has seriously to write a report on the financing of the European Community, with all its complexity—not only on the revenue side but also on the expenditure side—one cannot do it in so short a time span and with so little evidence.
I make that comment at the start with genuine regret because the subject is important. Given the time span available, I wish that the committee had decided to be minimalist in its approach rather than to take on what is really an impossible task. By being minimalist, I would have hoped the committee would have concentrated on what needed to be done to make possible the cost of the new entrants into the European Union. That is the practical problem. The long-term financing, quite frankly, can and will take its time and, within that particular remit, make it possible for new members to join. Surely concentration should have been placed heavily on the CAP.
The remarks of my noble friend Lord Stoddart about the CAP are justified. I do not think that anyone will seriously dispute that. It is a system which not only imposes unnecessary costs for food on virtually every family in the whole of the European Union, but it discriminates against other food producers in a very unfair way, particularly those in developing countries who are denied a market which might otherwise be theirs. Helping us to make an assault on the CAP, we have of course not only the support of large numbers of countries outside but increasingly the influence of the World Trade Organisation which is seeking also to bring about rationality into the food policy of the EU.
Lord Desai: My Lords, given the structure of the committee system, the noble Lord should perhaps note that the CAP is outside the remit of Sub-Committee A.
Lord Shore of Stepney: My Lords, I accept what the noble Lord says, but that may be a problem for those who draw the limits, as it were, in the terms of reference of the committees. Clearly if one is going to study the budget one has to cover the CAP—certainly if one is going to deal with the expenditure side—and to say that that is not within one's terms of reference is not adequate.
Putting that aside, there are plenty of reasons why we should have concentrated on the CAP. There is an additional reason. I share the anxieties that I think many members of the committee feel about whether the financing within the 1.27 per cent. GDP ceiling of Community expenditures, let alone preparation for enlargement, will be sufficient given the rate of growth of GDP in the Community. Every forecast brings a lower expectation of growth in the years ahead. In Italy the latest growth rate is reduced to 1.7 per cent. GDP this year, with a pretty ghastly outlook next year, and Germany is in very serious shape. It is now very dubious that they will be able to stick to the present levels of expenditure consistent with an overall ceiling of
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1.27 per cent. That is an additional reason why we should add, as it were, all the weight that we can to reforming the CAP and securing a year-by-year reduction of a substantial kind until something very different from the present CAP is left at the end.
The second point I wish to make concerns the complex subject of Community financing. I think a list of 10 potential taxes is to be found somewhere in the text, but, if one turns one s mind seriously to the subject of Community financing, there is much more than that. With a slightly longer historical perspective, my noble friend would have been able to recall that the present mix of own resources has developed quite considerably. Indeed, up until the very year that we decided to negotiate for entry into the Common Market, as it then was, a GDP system of financing was in place and the own resources system was brought in to welcome the new British intake. How well designed it was to make Britain pay the maximum penalty! There were levies on imported agriculture produce. Who compared with the UK in terms of imported agriculture from the Commonwealth and elsewhere? Of course they knew it. Who other than the United Kingdom traded so heavily with the world outside of Europe and therefore would have to pay the very special brunt and burden of the tariffs and excise duties which are the second of the own resources components? It was no accident that the system was introduced in 1971. They knew perfectly well that we would be making a quite disproportionate contribution to the overall Community budget.
Against that background, I must say that I find some of the things that have been said today quite extraordinary. The report of the committee was careful, but a little uncertain about the justification for our rebate. I was very glad to hear the remarks of the noble Lord, Lord Hussey, which so strongly emphasised that there is no question of changing it until some equivalent benefit is available, and even then the onus of proof will be on the advocates of change.
Having said that, some of the speeches today have been quite extraordinary. The noble Baroness, Lady Sharp of Guildford, was quite unhelpful in what she said about the UK's position and the retention of the rebate. The most culpable of all was my noble friend Lord Barnett, whose remarks were really quite absurd and quite wrong. He described the British rebate or contribution as being peanuts. No, he went further than that. He said that we had to get it into perspective first; it was petty cash. I know a little about this and the whole balance of my noble friend's thinking about Europe was probably reflected in those remarks.
We did an estimate, based on information from the House of Commons Library—I think the Government did so, too—of how much money we had paid net (after the rebate) at 1995 prices in the years since we joined the European Community. In 1995, the figure was £30 billion. I do not know what it has been since, but I would suggest around an extra £8 billion or £9 billion. Perhaps my noble friend, when he comes to reply, can give us the up-to-date figure.
To suggest at any time that that is petty cash is preposterous. To say it on the eve of the Berlin heads of government meeting is irresponsible. My noble friend

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should know, if he does not know, that what he has had to say and what others have had to say will undoubtedly be used and quoted against us by those in the Community who clearly have a vested interest in our giving up the rebate. As I said earlier, the rebate has to be set against the very fact that we were always doomed to pay more under the own resource formula at the moment of its design.
I conclude by saying that the debate is badly timed. The report has, frankly, been far too hastily put together. But I do rather agree with the noble Lord, Lord Howell, that we are approaching, as it were, a fork in the road. A centralist Europe as against a constitutional Europe, as he put it, is developing. Between those alternatives, I have no doubt at all which one I would prefer. Following the events of the past week or so and the revelations, which have now been made public, about abuse and corruption, it is quite extraordinary that anyone should even contemplate giving more power and resources to be administered, decided and used by the European Commission. Surely our thoughts and self-interest should point to the repatriation of a great deal of the power it already has, including expenditure on projects and policies which should properly be run by the governments of the nation states that form the European Union.
8.42 p.m.
Lord Boardman: My Lords, I begin by adding to the tributes that have already been paid to the noble Lord, Lord Grenfell, for his admirable chairmanship of the committee and for producing in albeit a short time—that was not his fault—a unanimous report. I must take issue with the noble Lord, Lord Shore of Stepney, who said that the report should have covered the vast amount of ground to which he referred. However, he will see that the report concerns "who pays and how?". It does not concern how the money is spent. As was pointed out by the noble Lord, Lord Desai, it has nothing to do with the CAP. Although expenditure, of necessity, crept into the report from time to time, the inquiry was not into expenditure. So I congratulate the noble Lord, Lord Grenfell, on preparing the report and thank too, as he did, the Clerk to the committee, Dr. Elizabeth Hopkins, who was of considerable help to all of us.
While I am in the thanking mood, perhaps I may thank the Government for responding to the report so rapidly. They did so very well indeed. I thank the noble Lord the Minister for sending the response round to all of us so that we had an opportunity of seeing it over the weekend. That was very courteous and was much appreciated.
Perhaps I may turn to the abatement, which has been discussed at length during the debate but does not seem to have been understood. Perhaps it is the fault of the committee that we did not make it clear. It was my view, and I believe it was the view of all members of the committee, that there should be no question of surrendering the abatement. That was never in our thoughts. It was suggested that if no progress could be made because of the abatement—if proposals were put to the Government to provide something at least as
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permanent and valuable—they should be prepared to negotiate. I share that view. In their response, the Government said that no proposition was likely to come forward and that in those circumstances they would stand firm on the abatement. I entirely agree with them on that point.
Perhaps I may move from the abatement to the funding system. It has been said by a number of noble Lords that traditional own resources represent a dwindling amount and produce a far smaller amount for the European economy than was previously the case. The VAT resource, although it is capped, produces about 35 per cent. of the total but the main resource comes from GNP. I was surprised—I share the view of the noble Lord, Lord Renton of Mount Harry—that the Government agreed with the Commission that the shortcomings of the present system do not provide grounds to justify an urgent modification of the own resources decision. Yet there is unlimited evidence of maladministration, fraud and massive bureaucracy arising within the common market, primarily with regard to traditional own resources. Indeed, the former Commissioner for the budget, Mr. Liikanen, said in reply to Question 104 on page 50 of the report:
"we should replace all the different own resources by the GNP resource. It is simply the most objective criterion for national capacity to contribute. We would do away with a major part of bureaucracy in member countries and Brussels and, thirdly, there would be no fraud on the revenue side".
He continued at some length to justify the decision to do away with traditional own resources and to rely on GNP.
I believe that GNP per capita or GDP should be considered. However, that would require unanimous agreement. It would also mean, as far as one can calculate, that some countries—France, Italy and Belgium—would be worse off. It is generally recognised that they should pay considerably more. That change would also benefit those which we consider are paying well over the odds—Germany and the Netherlands. To achieve unanimous agreement on that might be somewhat difficult. But it is logical to do so and to do so now and not to put off doing it, as the Government seem minded to do. They should try to get it done now.
VAT produces some 35 per cent. of Community revenue. But the amount produced is falling. A tremendous amount of fraud and bureaucracy goes with VAT. If a country fails to meet the threshold for VAT forecast for it and is short of a few hundred million pounds, instead of it having to make up the amount out of its GNP contribution, the deficiency is spread among all the members of the Community. A country which has fallen well below the threshold does rather well out of it, which is perhaps an encouragement for less than accurate reporting on that system. I suggest that GDP or GNP per capita would provide a fairer and more equitable basis for membership.
I agree with the Government that, in so far as that would create discrepancies between the prosperity of individual countries, the remedy should not be by jigging about with the contributions they make but should be dealt with on the expenditure side. We should not fiddle with contributions but increase the grants to

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countries such as Greece where need may be greater. We should keep a uniform contribution from them all, based on whatever is the correct percentage of GNP.
The matter of transparency has been raised a number of times during this debate. Far too little is said about what actually happens. Neither the Government nor the Commission seem anxious to promote any figures that make it clear to the general public who pay, how much they are paying to the Community and how the money is spent. I searched through the Red Book—no doubt the Minister will tell me where I should have looked—in an attempt to find a nice table containing all the information. But such information was not apparent to me. It is a great pity. There should be a summary, clear to all, of items of revenue and expenditure between the United Kingdom and the Community. It could and should be done.
Some noble Lords, including the noble Lord, Lord Barnett, said that it was not a large sum. I believe the noble Lord described it as "peanuts". It is I per cent. of the GNP of the European Community as a whole. The noble Lord shakes his head. Perhaps I misunderstood him. One per cent. of GNP represents more than the total budget of certain countries—Ireland, for example. It represents more than the total expenditure of this country on welfare. So it cannot be written off as peanuts.
Turning to the expenditure side—
Lord Barnett: My Lords, I do not expect the noble Lord to be quite so violent as my noble friend Lord Shore, but I was putting in perspective the cost, at £1 billion, out of £925 billion GDP. That is all I was doing.
Lord Boardman: My Lords, I appreciate the noble Lord's point. It is still a substantial sum of money. The unfortunate point is that it is never openly presented to the public.
The expenditure side was not the object of our inquiry; however, it arose in various forms. First, manifest inefficiency and fraud, which is topical, was one of the first points. As I am a farmer and therefore have an interest to declare, I shall not comment on the CAP. I agree with the point in the committee's report that those who qualify for EMU should not be allowed in on the Cohesion Fund. In relation to the Structural Fund, many noble Lords who have visited parts of Europe where some of that money has been spent—for example, the island of Madeira—must wonder about such lavish expenditure at public expense. The report touched on co-financing. Co-financing has advantages, provided that the savings made are not applied by the Community in other ways so that the total bill by the Community is as large as it was before the Community passed part of that burden on to the nation states. I believe also that member states must be bound to make up the deficiency received from the Community to whatever grant was co-financed. It will mean that those states which make a large CAP contribution, such as France and Ireland, will inevitably suffer severely from
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any co-financing. On that basis, I assume that obtaining the support of such countries for this method is somewhat remote.
I hope that the report, which has been prepared over a short period, is of some help to the Government in their forthcoming negotiations in Berlin.
8.54 p.m.
Lord Bruce of Donington: My Lords, it is normally easy for me to find common ground with the noble Lord, Lord Boardman. I was therefore surprised to hear him complain today that there had been so much argument about expenditure on the European Union when the title of the report referred to future financing. On reflection, I believe the noble Lord will agree that in the latter part of his excellent address to your Lordships he himself ventured onto the expenditure side.
It is immediately clear, if one is to bring the question of fairness and justice into the financing of the European Community, that one must have regard to how the sums are expended to the benefit of the various states that contribute. Therefore I must repudiate that whole approach, and emphasise that it is vital that we concentrate on the expenditure of the European Union, particularly under circumstances where regularly, year after year, a sum of 3 billion ecus (£2 billion) disappears into thin air. I should have thought that the expenditure did merit some consideration. Indeed, the whole question arose from the Commission's own proposals in that regard, which followed the plan for the year 2000. I refer, for the purposes of greater accuracy, to the communication published by the European Commission on 7th October last year. In that document the whole case for the revision of the scheme for financing the European Union was set out, together with a considerable endeavour to show how the benefits were distributed and how, therefore, the whole matter could be made clearer.
On the question of budgetary balance, the Commission states at page 17 of its report:
"Budgetary balances (also called net balances), measured by the simple difference between contributions to and receipts from the EU budget, represent only a narrow view of, and fail to fully account for, the benefits accruing to Member States from participating in the EU".
It is precisely because the Commission, with all the skills available, either indigenously or as a result of the lush hiring of consultants, has been unable to specify in any monetary terms the benefit, for example, that the United Kingdom might have received in return for the contributions it has made--always, of course, agreeing immediately that every member state has to pay for the cost of administration. That cost should be shared roughly proportionately among member states.
At page 21 of the report, the Commission elaborates. It states:
"Graph 7 shows that the mechanism has been effective in reducing substantially the negative balance [the British abatement] of the United Kingdom. However, even after the rebate the United Kingdom remains a larger net contributor to the EU budget than Member States with a higher capacity to pay".

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So the case for something reasonably approaching—I am careful not to say absolutely equal monetary terms— a juste retour is clearly envisaged.
I congratulate my noble friend on the report. It has been a matter of infinite ingenuity to secure the result that was achieved. The difficulty is that it is a unanimous report, and in that it differs substantially from the reports produced by Select Committees in another place. There, differences of opinion on the Select Committees are permitted, indeed encouraged, because they make for sharper thinking and greater articulation of arguments, and they provoke discussion. I doubt whether noble Lords are surprised to learn that that does not apply to the Select Committees of your Lordships' House. A tradition has grown up which is not in the Companion to the Standing Orders, nor in the Standing Orders themselves.
Lord Grenfell: My Lords, will my noble friend give way? I am grateful. Perhaps I should inform the House that at the beginning of the inquiry I told the committee that I did not regard unanimity as an end in itself and that if necessary I should be quite happy to see differences of opinion and minority views expressed in print. So although I may have been transgressing what might be an old tradition in these committees, I changed it in my committee.
Lord Bruce of Donington: My Lords, I immediately accept that and congratulate my noble friend on having taken that attitude. Perhaps I was harking back to when another report emanated from Sub-Committee A. It was dealt with by the full European Committee, drafts were presented and, in my innocence, I submitted 129 amendments to the draft. Some 20 were accepted, but thereafter, immediately Parliament resumed and even though the statutory year had passed, I was eliminated from all Select Committees on European legislation. It is not a matter of great gravity. At a later, more convenient stage I shall present the House with the facts in a like manner. But that is what happened.
I congratulate my noble friend on having advised the committee accordingly. Nevertheless, the report was unanimous. Whether it was due to the personal magnetism of the noble Lord or his close colleague, my noble friend Lord Barnett, we shall never know. On looking down the list of members of the committee, and having the honour of knowing most of them personally and liking all of them, I was surprised to see them arrive at an agreed opinion. However, that is the way it is, and the report suffers a little because of it.
That is nowhere better illustrated than by the events that followed immediately after the draft report was closed and the various documents became available. At page 23 of the report the committee unanimously came to the view which was referred to by the noble Lord, Lord Howell:
"we have virtually no knowledge of what we are paying—or what we are paying for".
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That seems an extremely frank admission by the committee, speaking unanimously. It was supplemented by the report of the wise men, which states in its concluding paragraph on page 144:
"It is becoming difficult to find anyone who has even the slightest sense of responsibility. However, that sense of responsibility is essential. It must be demonstrated, first and foremost"—
I emphasise the words "first and foremost"—
"by the Commissioners individually and the Commission as a body".
Did they ever pause to wonder what an extraordinary statement that is? It was a virtual admission. In any negotiated settlement, with whom are we going to negotiate? If we are to negotiate a different formula for determining the abatement negotiated by a previous Conservative Prime Minister, with whom shall we negotiate? People who have no sense of responsibility? We have reached a point where we ourselves as a committee and as a House do not know what the money is being spent on. I leave your Lordships to contemplate that possibility. What confidence can we have?
It is clear, on reading the report, that considerable changes must take place, both in the type and composition of the Commission. And there must be a complete clean-out of those who have no sense of responsibility and of those who so conducted the Commission's affairs that the committee of this House could not be certain what the money was spent on or how much it was. I suggest that that is an inferior position in which to place your Lordships' House.
I would have hoped that that proposition would have been received with acclamation. We must have people who are not of necessity politicians. The Government have already demonstrated a certain scepticism about politicians by ensuring that the interest rate is controlled independently by a bank and not politicians. There is therefore an instinctive disgust of politicians. What we want at commissioner level is not another series of politicians but skilled administrators, managers and those on whose integrity we can rely; in a word, people we can trust. If we follow that precept we may find that we do rather better in Europe than before.
My noble friend Lord Barnett referred to peanuts and all the rest of it.
Lord Barnett: My Lords, I never did.
Lord Bruce of Donington: My Lords, my noble friend did not but he may have referred in somewhat minimalist terms to the significance of the monetary contribution of the United Kingdom. I believe that my noble friend will accept that. I am content to let the matter he on the record. I have a good memory, too. We have to do something very different. We cannot rely on promises and prospects of reform of the common agricultural policy as any substitute for the rebate that has been negotiated. I applaud the decision of the Government to insist on the retention of the rebate. If one considers this year's expenditure, the net payment out of the pockets of United Kingdom taxpayers after the rebate will be £3, 457 million. That is not small beer. When one considers expenditure on kidney machines, for example, suddenly it is discovered that they are far

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too expensive; one cannot possibly contemplate 10 new kidney machines each costing £20, 000. Hard choices have to be made. Single mothers must make sacrifices. Yet we do not seem to be too much troubled about £3, 457 million. I am very glad that my noble friend has indicated on behalf of the Government that something firm and definite is far better than some myth projected into the future by those politicians who control the Commission and the Council.
9.11 p.m.
Lord St. John of Bletso: My Lords, it is always a pleasure to follow the noble Lord, Lord Bruce of Donington. Noble Lords will be pleased to learn that, given the hour, I shall keep my comments this evening quite brief. I endorse the point made by our chairman, the noble Lord, Lord Grenfell. At the beginning of the inquiry and on several occasions during the evidence he made it emphatically clear that he wished to promote open debate. I am grateful to the noble Lord, Lord Grenfell, for having steered the sub-committee in such a masterly way that it has completed its report in time for the summit in Berlin later this week. Like the noble Lord, Lord Boardman, and other members of the sub-committee, I am also grateful for the invaluable assistance of our Clerk, Dr. Elizabeth Hopkins.
It is inevitable that the forthcoming Council meeting will be a bruising battle over finances as each of the member states jockeys to keep as much of the Union's largesse as possible while making substantial financial provisions for the new accession members who will be joining between 2000 and 2006. Clearly, the significance of Agenda 2000 and the entry of several eastern European neighbours is likely to be obscured by horse-trading over CAP reform, members' net contributions and the abatements. While compromises and concessions will have to be made, it should be noted that Germany stands to profit most from the almost 64 million additional consumers when the first tranche of six new applicant countries joins the European Union.
I entirely agree with the noble Lord, Lord Skidelsky, that it is difficult to devise a formula for the European budget which is fair to all member states. What is critical however—it is a point made clearly by the noble Lord, Lord Tomlinson—is that there is an essential need for strict budgetary discipline with greater scrutiny of EU expenditure. There have been many calls for European Union money to be used more effectively. Commissioner Erkki Liikanen has been given the responsibility to knock some rigour into the Commission's financial planning and financial controls.
A common theme throughout most of the inquiries of Sub-Committee A, of which I have been privileged to be part, has been the need for greater accountability of funds spent by the EU. I was encouraged to note in the Government's response to our report that the Government invest significant resources in scrutinising EU spending through the processes of the Council and official committees in co-operation with like-minded states. However, I also believe—it is a point made by the noble Lord, Lord Howell—that it is vital that UK taxpayers should have a clearer understanding as to their stake in EU policies and operations. I was pleased that
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the Government agreed that such transparency is important, especially in the lead up to the referendum when the British electorate will decide whether or not to join the single currency.
Although the Government have made their position clear that they wish to maintain the UK abatement, I hope that they can agree to some form of future compromise such as a quid pro quo on CAP reform, or possibly through increased EU expenditure in the United Kingdom. It would reflect badly on Britain if the main reason for the Berlin Summit not reaching an agreement on the financial framework was as a result of the refusal of the British Government to contemplate any change in the present system.
Despite the strong arguments of my noble friend Lord Williamson for a retention of the UK rebate, we cannot ignore the point made by Commissioner Liikanen that a lot has changed in Europe since 1984 and it is therefore difficult to defend the UK abatement on its own without considering abatements for the other major net contributors. I entirely agree with paragraph 18 of the report which states that,
"the rebate should be negotiable as part of an overall settlement delivering the result of fairer net contributions".
A point that several noble Lords have made is that if every net contributor were to seek a similar rebate to the UK, this would result in a collapse of the EU budget.
As regards the level of funding needed in the period of the next financial perspective, when we interviewed Commissioner Liikanen and Mr. Naval, they were both confident of the Commission's proposal that maintaining the own resources ceiling at 1.27 per cent. for the next seven years would be sufficient to finance the necessary priority measures of Agenda 2000. However, that proposal was based on the assumption of annual growth of 2.5 per cent. per year for the existing member states, and 4 per cent. for the applicant countries. While I agree that the headroom provided by the 1.27 per cent. own resources ceiling is sufficient at present, I have my reservations with the onset of enlargement as to whether that will be sufficient in the future, particularly if GNP growth forecasts fall short of expectations, and if the reforms of the present spending programmes are not achieved. Clearly it is essential that stabilisation of expenditure and reform of the: CAP are achieved soon.
Time and again those Eurosceptic speakers such as my noble friend Lord Harris—he is not present at the moment—refer to the constant problem of fraud and (I think in his words) the "Brussels pantomime". Even though our report did not recommend in the short term a renegotiation of the own resources system, I agree that if in the medium term traditional own resources and the VAT-based resource are abolished leaving only the GNP-based resource, this would considerably reduce both bureaucracy and the constant problem of fraud.
In conclusion, unlike the noble Lord, Lord Desai, I support enlargement of the European Union. Enlargement is now the European Union's major challenge. If the financial hurdles are not overcome in Berlin, it is likely that the timetable for enlargement will be delayed. I refer back to paragraph 18 which states:

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"Equipping the European Union to handle enlargement is a very big prize: we urge the Government not to throw it away".
I commend the report to your Lordships.
9.20 p.m.
Lord Randall of St. Budeaux: My Lords, I start by saying what a pleasure it was to be on the committee which produced the report that we are debating. As this is a high quality report, which is what is expected of the House of Lords.
Also, I add that our new chairman, my noble friend Lord Grenfell, played a superb role in the production of that report in such a short time, and it was a unanimous report. In particular, he created a good working atmosphere which made being on the committee so enjoyable. I add my thanks also to Dr. Elizabeth Hopkins, our Clerk, for the effective contribution she made.
This report is about funding the European Union in the period between 2000 and 2006. However, I believe that we need to put the whole matter of funding into perspective. We are funding an institution which is vitally important to the security of Britain and the rest of the European Union. Thank goodness the European Union is stable and the possibility of having war within it is negligible.
That contrasts with our recent history in which we had two world wars within a 25-year period with indescribable death and destruction—about 60 million lives being lost. In your Lordships' House, we have noble friends on all sides who have lost their sight and have damaged or lost their limbs. They gave all that for us and we should never forget it. At the same time, we should never again allow conditions to prevail in Europe where others would have to forfeit so much in the same way.
The threat to our security goes beyond the boundaries of the European Union. The current death and destruction in the former Yugoslavia is right on our doorstep. The European Union has a leading role to play, in conjunction with the United Nations and NATO, in order to stifle conflict there. We could be on the edge of war again, according to the news to which I listened at lunchtime today.
The key question which arises is: what can the European Union do to reduce possible threats from countries just beyond its boundaries? In my view, the answer is the enlargement of the European Union. There is now a group of 10 countries, called the CEEC 10—the central and eastern European countries—which can be expected to join the European Union in the not too distant future. Five countries, including Cyprus, will be likely to join in the next phase.
The institutional bonding of the CEEC 10 into the European Union will have the effect, over a period of time, of diminishing the threat of conflict and war. However, in addition to all this, the economic advantages of increasing the size of the European Union to perhaps 25 countries will be enormous. Enlargement, both in terms of security and economic benefit, is a prize we must not lose.
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When one considers Agenda 2000, which presents the EU budget for the period 2000 to 2006, one big item is missing; that is, radical reform. The budget appears to be out of balance because of the disproportionate level of spending on the agricultural policy. That has to change if we are to have sufficient funding for enlargement and if we are to introduce greater fairness in the way that member states contribute to the EU budget.
Since the Select Committee report was published, the whole of the European Commission has resigned and there are uncertainties about the future. However, I believe that the crisis we are in can result in advantage to the European Union. Certainly, there now appears to be a greater chance of radical reform in the European Commission, but we will have to wait and see.
To use the words of the Prime Minister, we must make the European Union more of a "people's Europe". Presently there is—we must admit it—a considerable sense of detachment of the British people from the European Union. They contribute their money to it but, as the report states, they have no idea on what that money is spent. I say that as somebody who is very pro European Union. Certainly, the people are not aware of whether or not the money is spent wisely. That situation cannot be allowed to continue. The Select Committee report advocated greater transparency in the EU budget. Will the Minister tell the House the Government's position regarding the conclusion of the select committee on transparency, as laid down in paragraph 15 of the report? I look forward to my noble friend's reply on that point.
If the Commission is to be seen as a servant of the people, which is what I believe it should be, there has to be greater accountability of the European Union on budgetary matters. Whether we like it or not, there is, unquestionably, a perception that Brussels is too isolated, too distant and not approachable. Again, I believe we have to face up to this. Our MEPs who, on the whole, do an excellent job, do not have the powers or means to make the EU more accountable. There are several ways in which financial accountability could be achieved, but there appears to be no agreed strategy on how that should be done. Can my noble friend the Minister tell the House the Government's position on the question of financial accountability and what they intend to do about it? I look forward to my noble friend's reply on that.
The third question that I should like to ask my noble friend is whether the Government believe that the two Houses that make up the British Parliament should have greater powers of scrutiny of the EU finances, which would lead to greater accountability of the EU both at national state level as well as at the European Union level.
I should like to say a few words about the contributions made by member states to the EU budget as well as about Britain's abatement. The first thing that should happen is for all member states to feel contented with their net contributions. At the moment, that situation does not prevail and it must therefore be dealt with. Reference has already been made to the countries

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which are not content. I shall not go into the details, but they include Germany, Austria, Holland and Sweden. I do not believe that it is particularly difficult to determine the fair gross contributions to be made by member states to the EU budget. We can draw up a list. What is difficult—or seemingly impossible—is to draw up a simple list of net contributions which is seen to be fair to all member states. I think that the fundamental reason for that is that member states receive different benefits from the EU budget.
To be specific, Britain receives the abatement partly—I think, probably mainly—because we are in receipt of relatively small benefits from the common agricultural policy because of the nature of British farming, which is efficient and very advanced. There is, in my view, a case for Britain to negotiate its abatement if, for example, there were radical reforms to the CAP, stabilisation of expenditure, and possibly if more EU money was given to Britain.
If—and I stress the word "if"—those conditions were met, I see no reason why Britain could not be made content with its net contribution while the current abatement changes or even disappears. As I have already stressed, this is all a matter for negotiation, as well as for EU reform. My noble friend Lord Shore of Stepney, who is no longer in his place, suggested that there was surrender here, but it is not a question of surrender; the report proposes a negotiating stance or a way forward, which would have to be negotiated.
In that context, it is worth pointing out that the system of "own resources", together with VAT, forms the basis for funding the European Union. In my view, that system acts as an impediment (because of its complexity) in determining the fair, net contributions to be made by member states.
Finally, I support the comments made on this in the Select Committee's report which suggested that a system based on GNP per capita might be better than the current own resources and VAT arrangement. One additional advantage of that approach is that it would help to reduce fraud in certain member states.
9.35 p.m.
Lord Shaw of Northstead: My Lords, I should like to follow others who have already expressed their thanks to our new chairman for the way in which he has led us in the discussion of this report. The noble Lord has already shown that he is equal to the standard of his distinguished predecessors. We all look forward to a considerable number of reports as a result of his leadership.
This report arises from the need of the EU to look ahead at its future financial needs. I say that because if one is to raise money, it is always good to know what one is to raise it for. The other aspect is that we have to discuss the means by which the monies are to be raised.
Since I first took part in European parliamentary budgetary discussions not only has membership of the European Union greatly increased, but also the size of the EU budget. It has increased enormously. At the same time the diversity of need between the large number of member states has also increased. It will continue to
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increase as and when further enlargement takes place. One of the troubles is that the systems do not seem to have changed much or certainly have lacked a great deal of control.
While our review is primarily concerned with the limited period covering the years 2000 to 2006, it must be helpful for thought to be given to the longer financial perspective. In planning for the short-term it would not be helpful to pursue policies that would make things more difficult for the fulfilment of longer-term policies. The need for such a longer view of our finances and expenditure methods has been greatly increased by the resignation of the Commission and the report of the independent committee.
The report seems to have come as a surprise to many people. Frankly, to me it has come as a tremendous relief. Those of us who have been concerned with these matters have long known what is going on. Neither our words of warning, nor even the warnings of the Court of Auditors seemed, for too long, to have had any effect. Incidentally, I believe that the work of the Court of Auditors has been greatly undervalued in this affair. The strengthening of its status at Maastricht and its subsequent qualified report are the background to the present independent report and the more active role that is now being taken by the European Parliament.
The Berlin European Council meets this week to try to complete the Agenda 2000 negotiations. I am not clear as to where the need for reforms brought out in the independent committee report comes in the council's agenda. Will that committee's report be discussed and what effect will it have on the original agenda? I firmly believe that no further progress can be made on enlarging the EU until those reforms that result from the inquiry have been put in place and prove to be effective. The overwhelming feeling that has come out of this report is that there has to be a deep-seated review of the composition of the Commission and its responsibilities and that it must come quickly.
As regards the raising of revenue, that makes paragraph 64 of our report all the more relevant. It quotes the Court of Auditors as saying,
"In order to eliminate repeated irregularities, the Commission should … improve collaboration between itself and the Member States as regards the management and control of traditional own resources".
It goes on to say,
"The persistence of irregularities in the collection of traditional own resources despite constant pressure for improvement suggests that the problems are inherent in the system".
That makes it all the more urgent that the own resources decision should be renegotiated a soon as possible with a view to funding being based entirely on a GNP-based resource.
Incidentally, I feel that there should be no question of any form of direct EU taxation. Filling in one UK tax return is quite enough and the bureaucracy and complications involved in filling in a European one makes the mind boggle.
The independent committee report must have a direct bearing on the subject of our report and, in my view, on what goes on in Berlin this week. It is essential that the

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opportunity is now taken to look in depth at the manning and scope of the Commission's activities. How many commissioners do we need? How are they and their staff to be appointed? To whom will they be accountable? What are to be their future responsibilities? Until those questions are quickly addressed, slowly but surely we shall slip back into the same old ways, and the answers that have to come in the end will be disastrously delayed.
I have always regarded the Commission as the executive Civil Service of the EU. That it has taken on a greater role is because it has been allowed to do so. A redefinition of the Commission's responsibilities is required. I believe that there are a number of areas where EU activities should be returned to the responsibility of the member states themselves. In broad terms, I would wish to see the Council of Ministers playing more of a Cabinet role; the Commission more of a purely executive role; and the European Parliament, among its other duties, a greater scrutinising role.
In relation to revenue raising and expenditure, it must be remembered that much of the work is carried out by the member states themselves. That being so, the degree of bureaucracy and fraud depends on how simple the systems are made, the clear way in which responsibility is placed on those member states, and the clear and effective audit arrangements that are put in place. That is why Commissioner Liikanen, as my noble friend Lord Boardman said, argued solely for the GNP-based resource as a means of improving the fairness of the system. He said that moving to such a resource would,
"do away with a major part of bureaucracy in member countries and Brussels … and there would be no fraud on the revenue side"—
or nearly no fraud.
In relation to expenditure, much of the administration is carried out either by the member states or by independent agencies of one sort or another. Here again, the objectives and stages of fulfilment must be clearly defined and reported on. The programmes must be open to continuous scrutiny. When we set up the Budget Control Committee in the European Parliament in 1977, I had hoped that it would act as effectively as our own PAC. In those early days I am afraid that those hopes were not immediately fulfilled. I hope that now the strictures of the Court of Auditors are being followed up both by that committee and by Parliament itself. I hope that the changes which must come about will be brought about with great urgency. I hope that priority is given to them even over the priorities already given to the Agenda 2000 programme in Berlin this week.
One of the difficulties of the present system is that the presidencies last for six months at a time and it has always been necessary that the presiding presidency should have some success story at the end of that six months. Frankly, if a way could be found for the fundamental reform that is now so urgently needed, that would be a much greater success for the German presidency than the success of Agenda 2000. Perhaps they have a priority. I do not know. My personal feeling is that the priority should be deep-seated reform.
I hope that the report is a preface to other reports based on what will come out of proposals for reform from the Berlin Summit later this week. I fully support the work of
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the committee and the report that it has achieved. I hope that it will not be long before we produce another report, further along the line of reform.
9.45 p.m.
Lord Taverne: My Lords, I do not have a great deal to say by way of comment on the report, which was excellently summarised and elucidated in the introductory speech of the noble Lord, Lord Grenfell. The report is excellent and I have few comments because I do not want to repeat what others have said. My only comment is on the rebate.
I listened to the remarks of the noble Lord, Lord Skidelsky, about the need to veto an end to such a rebate unless we secure certain concessions. I listened to the noble Lord, Lord Barnett. I agree much more with his approach than that of the noble Lord, Lord Skidelsky. Then I listened to the noble Lord, Lord Williamson, who made me think again because he has unrivalled experience. On reflection, it does not seem that there is a profound difference between their comments. No one is suggesting that we should give away the rebate without concessions. No one is suggesting that we should fight to the last ditch for the rebate, whatever concessions may be offered. It is a question of tactics. I prefer the approach advocated by the noble Lord, Lord Barnett, and many others.
It does not do much good to brandish a veto. Too often our deliberations in Brussels are represented as a tennis championship—game, set and match to Britain. It is a sort of macho contest. We win or we surrender. That is not the way to negotiate. A much more sensible approach is advocated by the committee, and I strongly endorse it.
The proper way is shown by the BSE experience. The last government threatened and exercised a veto, using the doctrine of the empty chair, and got nowhere. The present Government have been much more emollient. One person who paid tribute to the better results of that stance was the noble Lord, Lord Plumb, who said that the ban on British beef would not have been lifted if we had continued to negotiate in the way that the last government did.
My main question concerns the total size of the budget. The committee reached the reasonable conclusion that it would be possible up to 2006 to stay within the ceiling of 1.27 per cent., which could even accommodate enlargement. That may be true but a bigger question arises. Will the budget be sufficient for European monetary union? It is likely that within the next two years two new member states will join EMU. Personally, I regard it as more likely than not that by 2004 Britain will be a member of EMU. So all 15 present member states will be members.
Is the budget large enough for EMU? I remember reading the MacDougall report, which demanded strong central resources, at the time of the Werner plan. I actually wrote a pamphlet about it in 1972. I have not re-read my pamphlet because I am not sure that it was particularly good. However, the question arises of the need for central resources. It is extremely significant that there is no push for increasing the EU's central resources. The noble Lord, Lord Shore of Stepney, is not in his place, and it seems to me that debates could be shortened if noble Lords who are

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not present for the wind-up speeches would refrain from speaking. That would certainly make our debates end somewhat earlier.
The noble Lord, Lord Shore, always frightens us—as indeed do many of the anti-Europeans—with the thought of a terrible federal superstate that the Germans are advocating. It is perfectly true that many Germans talk about the need for political union and Mr. Tietmeyer talks about the need for an economic government. But you cannot have an economic government and a federal state without much bigger central resources. You cannot have a federal government with central resources of 1.27 per cent. of GDP of the federal state. This is why I sometimes think it is necessary to draw a distinction between the rhetoric and the reality. The German politicians are not advocating that they should contribute more. They want to contribute less. They are the keenest to limit the total resource to 1.27 per cent. of GDP.
It rather knocks on the head the idea that what we are about to face is a federal superstate when every country is agreed that we shall not increase the central resource of the EU. The next question is: is that right? Is it possible to limit the central resources of monetary union to such a small central budget? Was MacDougall right to say that you needed a much bigger budget? People draw a parallel with the United States because of the stabilising effects on depressed regions of a strong federal budget. If, for example, Texas is in depression, Texans pay less tax and receive more benefits, and therefore the recession is mitigated. Some people have calculated that US federal taxes and transfers offset variations from the national average by as much as 40 per cent. Others put it much lower at 10 per cent.
I have changed my mind about this matter. I used to support MacDougall but I think it is possible that monetary union can function perfectly well without a large central budget. I have been much reinforced in this by an excellent study which I commend to the House. It was done in 1996 for the OECD by three authors, Hoeller, Loeppe and Vergriete. I found that study convincing. They say that the comparison with the United States is not valid as Europe is a completely different animal. The states of the United States do not have the resources for stabilisation. In the European Union there are not the central resources, and they will not exist. However, the resources of the member states are infinitely greater, and the responsibility for dealing with unemployment or regional variations in employment lies primarily with the nation state and will continue to do so.
Lord Skidelsky: My Lords, I thank the noble Lord for giving way. How does he address the issue that unemployment may be a regional phenomenon which does not conform to the jurisdiction of national budgets?
Lord Taverne: My Lords, if it is a regional phenomenon, it will correspond to the question of national budgets.
Lord Skidelsky: Across frontiers?
Lord Taverne: My Lords, in national terms it will be a matter for national governments. The other aspect of the
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matter which is pointed out in the study is that if one looks at the experience of the countries which tied themselves to the deutschmark—particularly Austria and the Netherlands—one sees that there were times when they suffered from differential economic growth and when they needed differential fiscal policies which they managed to carry out perfectly well while tying themselves to the single currency, in their case the deutschmark. I do not want to discuss this study in detail but I believe it makes an extremely convincing case for saying that there is no need for a strong central budget. It seems to me therefore that although this was not a matter for the committee's consideration, it is something that one ought to bear in mind when looking at the total budget. There is no reason to suppose that in EMU the central budget must be greatly increased.
9.55 p.m.
Viscount Bridgeman: My Lords, many noble Lords have spoken with expertise about the report of the committee, as one would expect, and in view of the lateness of the hour I will be brief. I, too, wish to add my congratulations to the noble Lord, Lord Grenfell, on the excellence of the report. As noble Lords have reminded us, it was produced in a very short time. Through no fault of the committee, its timing is unfortunate, coming as it does on the eve of the Berlin Summit, a subject to which I shall return.
The report emphasises one or two points—for instance, that reform of the CAP must not be used as an excuse by certain member countries to frustrate the enlargement of the Union under Agenda 2000. Intrinsic to the budget reform is the reassessment of the cohesive and the structural funds. It must be a matter of no disagreement—certainly in this House and throughout the Union—that it is quite inequitable, even grotesque, that countries having achieved convergence should continue to receive cohesive funds. Structural funding is more politically sensitive and the report was right to confine itself to the observation that any adjustments here must be seen as equitable.
Several noble Lords have referred to the question of co-financing the CAP. The committee had two reservations with which we agree. First, the level of support given by each member state must be centrally agreed. Giving discretion on the make-up of any shortfall to individual states could open all sorts of soft subsidies, which is protection by another name. Any co-financing must be accompanied by degression, though the Treasury's misgivings on any substantial net benefit to this country must be noted. We also agree that there are very pertinent concerns that co-financing must not be used to mask the real basic root and branch reform that the CAP needs.
My noble friend Lord Skidelsky and several other noble Lords—Lord Tomlinson, Lord Howell, Lord Renton and Lord Randall—referred to the need for accountability in the Commission. We were interested to hear the suggestion of my noble friend Lord Renton of Mount Harry of a hypothecated tax for the Union to be collected by member governments. Transparent, yes, but who is to fix it? Surely there is no alternative to the Commission centrally? Is it uniform; are there not shades

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of the community charge here? The fixing of this charge would need to be transparent and, crucially, understood by the average citizen. However, it could have the important, possibly political, effect of surprising the average citizen in the Union by informing him or her, in practical terms, of just how small his or her contribution is, a point referred to by the noble Lord, Lord Desai, and, from a different perspective, by the noble Lord, Lord Taverne.
Accountability is a thread running through the report. My noble friend Lord Shaw in particular, has drawn attention to the significance of the coincidence of the resignation of the Commission and the issue of this report. We look forward to hearing from the Minister whether Her Majesty's Government intend to take advantage of the unique opportunity presented by the report of the Court of Auditors, and the subsequent resignation of the Commission, to institute accounting and reporting controls, so ably flagged by my noble friend.
I return to the central point of the debate, the treatment of our budgetary rebate. Many different contributions have been made today and I wish to quote an emphatically non-exclusive example of two opposite views: those of the noble Lords, Lord Barnett and Lord Williamson. The coming conference in Berlin will rightly be regarded by Germany, as President, as a unique chance to air its understandable grievance at the level of its contribution, though it is worth bearing in mind the words of the noble Lord, Lord St. John of Bletso, that the coming accession of the CEEC countries will present a unique preferential market to Germany. That point should be made at the conference. Germany will not want to be distracted by the events of the past week.
In many ways this report has come with unfortunate timing. Quite understandably, in the time available, the committee was not able to come up with alternatives to the present system. I would draw your Lordships' attention to the rider in paragraph 18 of the report that it would be regrettable if an inviolate stance were taken on the level of contribution which would prejudice the reform of the CAP or the enlargement of the community.
Therefore, from these Benches—I echo the sentiments of my noble friend Lord Skidelsky—we should like to give the Prime Minister and his right honourable friend the Foreign Secretary our support in holding basically to the present structure at this time. That is important. In this connection, it was interesting to hear the surmise of the noble Lord, Lord Grenfell, that the rebate would probably be continued, though perhaps attenuated. I was certainly interested to hear his accompanying remarks on Spain and Italy. There will certainly be the usual panoply of special pleading and horse-trading at the conference.
If the report is read, as I know Select Committee reports are read in Brussels and throughout the Union with great respect, as a deeply thought-through discussion paper, it will have done a great service to this country and to the Union in addressing the problems of the Union in the next century.
Once again, I thank the noble Lord, Lord Grenfell, and his colleagues. From personal experience on a sister committee, how right he was to include the Clerk in his thanks. They all deserve the gratitude of the House.
10 p.m.
Lord McIntosh of Haringey: My Lords, I welcome the opportunity to respond to what has been a most interesting and varied debate. I welcome the fact that many elements of the report, which was produced so ably by my noble friend Lord Grenfell and his colleagues, echo the views of the Government. There are obviously matters on which we disagree but, like the noble Lord, Lord Taverne, I believe that many of those differences are on tactics rather than on principles.
The noble Lord, Lord Renton of Mount Harry, referred to the precise timing of the report. I do not know whether he was suggesting that the Commissioners resigned because the report came out at 01.00 hours on Tuesday morning. One has to be careful about causality in these matters. The timing of the debate is significant because later this week, as is well known, the heads of government of the 15 members of the European Union are meeting in Berlin to seek agreement on the financing of EU policy reform over the next financial perspective, covering the years 2000 to 2006. Obviously, this negotiation is of great importance. I agree with my noble friend Lord Grenfell that the report is still relevant. It is certainly the case, as the Government said in their response to the report, that it will be taken seriously into account in our preparations for Berlin. On that point, I disagree with the noble Viscount, Lord Bridgeman.
The issues that will be discussed in Berlin are broader than the remit that the committee set itself in the report. The committee has been concerned with the revenue side of the budget, but the debate in Berlin—and it has been the case quite properly in the debate today—will also be about the expenditure side of the budget—the noble Lord, Lord Hussey, referred to that point—and how Europe spends our money.
Other issues have forced themselves onto the agenda: the appointment of a new Commission, whether temporary or permanent; the improvement of financial management under the control of the Commission; and discussion of the broader economic reform agenda. I was challenged on those points by my noble friend Lord Randall, the noble Baroness, Lady Ludford, and other noble Lords. I do not think that it can be my responsibility to broaden out the debate, which is supposed to be about the financing of the European Union, into the wider issues. But it is the case that in preparing our stand in Berlin, we plan as always to work constructively with our partners while remaining committed to defending British interests.
Before I leave that point, perhaps I may say a word or two on accountability and transparency. Those matters were raised by a number of noble Lords. They were mentioned by the noble Lord, Lord Randall; and the noble Lord, Lord Boardman, seemed to think that there was nothing about these matters in the Red Book. In our response to the committee's report, we agree that transparency is important. We publish an annual White Paper on European Community finances; we publish in the Red Book estimates of net contributions; and of course we welcome the scrutiny which both Houses of the UK Parliament provide. Improving financial management

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and strengthening the fight against fraud were the priorities of the UK's presidency of the European Union last year, and they remain the priorities.
I now turn to the UK abatement. Perhaps I may set out our position, which does not differ from that of the committee by as much as some noble Lords make out, although there was some fairly strong disagreement among noble Lords on this point. The UK wants to see a fair financing system for the European Union. We recognise the broad principle that wealthier member states should contribute more to the EU budget and poorer states should be net recipients. But the structure of EU financing means that that is not the case. The UK remains, after the abatement, the fourth or fifth largest net per capita contributor to the EC budget, despite being only the ninth, tenth or eleventh most prosperous, depending on the measure used. For example, we pay three times more per capita than France, yet France is wealthier than we are. So the UK abatement is in place because of the inequity which is present in the system of contributions.
The root cause of the injustice is the low level of Community spending in the UK. In 1995–97 per capita spending in the UK was 55 per cent. of the EU average. The UK receives an even lower share of per capita common agricultural policy spending—just 47 per cent. of the average over the same period. It is that divergence on spending levels which means that the abatement remains fully justified.
The committee recognises that fact. I quote:
"We accept that, without the abatement … some way of remedying the situation would need to be found".
The noble Lord, Lord Williamson, whose baby this is and who is glad to have its paternity acknowledged after this period of time, confirmed that point. The problem of the UK's large contributions will remain for as long as the fundamental problem of inequity of spending continues to exist.
With the majority of other member states, the Government have actively supported a number of ways of controlling EU spending, including stabilisation of the budget and reform of the expensive and economically inefficient common agricultural policy. I shall say more on both those matters in a moment.
The fact remains that, after stabilisation, CAP reform and enlargement, the UK will continue to contribute more to the EC budget than a number of member states with a higher capacity to pay. So there is no justification in the claim that the UK Government should negotiate the UK abatement as part of an overall settlement.
I now turn to the issue of whether the abatement should be on the negotiating table. This is the area of the debate where there is wider disagreement between the committee and the Government. The committee's report suggests that the abatement should be on the negotiating table.
Last week, I was able to send noble Lords taking part in this debate the Government's response to the inquiry. In it, we explain clearly why we disagree with the report on the subject of putting the abatement on the negotiating table at Berlin, on the basis that, savings of a reformed CAP, stabilisation of the budget, and increased receipts would make up the value of the abatement.
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Perhaps I may explain why in our view that cannot be the case. As the Government's response: spelt out, CAP reform will reduce the amount spent on intervention prices, but the amount spent on direct aids to farmers will rise. The Government cannot therefore predict with any confidence that CAP reform will have a significant effect on the UK's net contribution.
Stabilisation of the budget, the second proposal, is vital to large net contributors. However, the UK does not receive the full benefit of stabilisation because the abatement works as a corrector mechanism. The UK receives only one-third of the benefit it would otherwise receive from stabilisation. This illustrates the purpose and reasoning behind the abatement. It is not a set amount paid to the United Kingdom regardless; it is a self-correcting mechanism. Here again, we were grateful for the definitive contribution of the noble Lord, Lord Williamson. It is a self-correcting mechanism which corrects an inequity to the UK which arises from the EU financing system. If that inequity did not exist, there would be no reason for the abatement. So long as that inequity remains—and stabilisation would not correct it—the UK abatement will remain justified.
The committee also suggested increasing EU expenditure in the UK as a possible solution to our contributions imbalance. But a massive redistribution would be required of an order which could not be contemplated in the Agenda 2000 negotiations. If we put aside the CAP and the structural funds, we would have to receive virtually all the rest of the available funds if we were going to go any way towards sorting out the imbalance.
So let me be clear. There is no possible outcome to the Agenda 2000 negotiations which could compensate the UK for forgoing the abatement. Even if I find myself on the same side as my noble friends Lord Stoddart, Lord Bruce and Lord Shore of Stepney—a most unusual situation for me—I am afraid that they are right and those noble Lords who are serious about putting the abatement into the negotiating procedure are wrong. So the Government will resolutely defend the abatement. I am grateful not only for the support of my Eurosceptic friends, but for support from a number of noble Lords from all sides.
My noble friend Lord Tomlinson probably knows as much as the noble Lord, Lord Williamson, and more than any of the rest of us about it. He is right to say that we must continue to reform the policies of the European Union. He mentioned CAP reform, co-financing and degressivity. I might add the better targeting of structural funds, which was referred to by my noble friend Lord Grenfell. The Government are among the strongest advocates of European Union policy reform.
Perhaps I may say something briefly about the own resources decision. Paragraph 58 of the report suggests that the financing of the European Union on the present basis could continue only if all member states were content. I cannot accept that; it is an incorrect assumption from which to begin. The correct assumption would be that changes to the financing of the European Union could happen only if all member states agreed. So long as not all member states agreed, the current financing basis would continue.

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In her answer to Question 122, the Economic Secretary to the Treasury was quite clear on the point. One would see a small improvement in equity, but to achieve it one would have to go through a rather large and painful process of negotiation. One would have to get a new "own resources" decision which would have to be unanimous. In turn, it would have to be ratified through the appropriate procedures in each member state. In our case, that would mean a fresh Act of Parliament. It is for that reason that we agree with the Commission's assessment in its paper last year. Despite the many valuable contributions which have been made on new possible alternative sources of revenue—the problems with the traditional own resources element, the need for the Cohesion Fund money to be thought out again, since many of the Cohesion Fund recipients meet EMU criteria, the better targeting of structural funds, to which I referred—they do not overcome the profound difficulty of achieving a reform of the own resources decision and the rather limited results which would be available to them.
Lord Renton of Mount Harry: My Lords, I thank the Minister for giving way. Surely, he realises that to say it will be a painful procedure is not an adequate answer to the fact referred to constantly in our report that own resources, particularly the collection of the resource based on VAT, is riddled with fraud. Everyone says that. Commissioner Liikanen agreed with that and the European Court of Auditors said it. Therefore, simply to say, as the Economic Secretary said in her answers to us, that the Government agree with the Commission that the shortcomings are there but they do not themselves provide grounds to justify a modification, that it is all too difficult and so the Government will not try, is simply not good enough for those who genuinely want to reform the European Union for its own good.
Lord McIntosh of Haringey: My Lords, I have two problems with that. First, we would be prepared to embark on a difficult and painful process if the quantum were sufficient to justify it, but now agricultural levies account for only 2 per cent. and customs duties 13 per cent. of revenue. Already we are returning to a GNP-based revenue system, even though no formal decision has been taken to do so. The second reason is that in order to start this painful process, unanimity is required and we do not have it.
I am very conscious of the time and the fact that many noble Lords, including myself, have more work to do tonight when this debate is concluded. If your Lordships will forgive me, I shall pass over the issue of stabilisation. However, stabilisation is essential in helping to solve the contribution imbalances of member states. I shall also pass over the common agricultural policy. The position of the Government on both issues is well known. However, they relate to expenditure rather than revenue and therefore, strictly speaking, they fall outside the subject of the debate.
In conclusion, there is no doubt that the Council later this week presents an opportunity for the heads of government of the 15 member states to set a path of
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stability for the finances of the Union over the next seven years. I welcome tonight's debate as an opportunity to air our views on these important issues. There is hard negotiation ahead, but the potential benefits are clear to all. The Government will go to Berlin to demand an outcome that is fair to all member states and to taxpayers and consumers.
10.17 p.m.
Lord Grenfell: My Lords, the hour is very late. I have no intention of adding to the long and excellent debate that we have had. I shall make one substantive point. I suppose that the sub-committee and the Government will continue to disagree on the subject of the abatement. I believe that it is more a matter of interpretation than anything else. We stated what we believed would be a realistic negotiating result for the United Kingdom and said that it was highly conditional. We made no apology for the fact that when we talked about what would be a realistic negotiating result we did not necessarily mean that it had to be on the table right now but that it was something that the Government should consider over the course of time. What disappointed me about the response of the Government and also the very authoritative speech of the noble Lord, Lord Williamson, was that in their very spirited defence of the British abatement no reference was made to the fact that there were others in the same position. That problem will not go away.
This has been a very good debate. I am glad that it has provoked such a lively discussion. Some noble Lords have been very severe in their condemnation of the time frame in which the inquiry took place. I can assure noble Lords that I did not set the date of the Berlin Council, but I take full responsibility, and make no apology, for my decision to seek the agreement of the sub-committee to take on this inquiry. We were tempted to go straight to what might have been considered the rather sexier subject of tax harmonisation, but I and my colleagues believed that we would be derelict in our duty if we did not examine the budget issues in the framework of Agenda 2000 expected to be settled during the German presidency, and in particular at the Berlin Council. That is why we decided to go ahead within this brief time frame.
Much as I long to comment on the many authoritative and interesting speeches made in the course of the debate, I must refrain from doing so because of the lateness of the hour. I warmly thank all who took part in the debate for their contributions. I am particularly grateful to those who wound up from the Front Benches for their interesting summations and comments.
To the credit of all noble Lords, I believe that their interest through these long hours demonstrated that there was no noticeable suffering from degressivity. I thank all noble Lords for the attention they have paid to the report. It only remains for me to thank again all noble Lords for their contributions to the debate, for making it such a lively debate, and for giving a good response to the report. I commend the report to your Lordships' House.
On Question, Motion agreed to.

Scottish Enterprise Bill
10.20 p.m.
The Minister of State, Scottish Office (Lord Macdonald of Tradeston): My Lords, I beg to move that this Bill be now read a second time.
Section 25(2) of the Enterprise and New Towns (Scotland) Act 1990 places a financial limit upon Scottish Enterprise. The purpose of this Bill is to increase this financial limit from the present level of …3, 000 million to …4, 000 million. In addition it removes the provision enabling the Secretary of State to increase the limit further by statutory instrument.
The …2, 000 million limit in the 1990 Act was increased to …3, 000 million by The Scottish Enterprise (Aggregate Amount Outstanding) Order 1996 and was expected to take it into the millennium. This has proved not to be the case. It is now estimated that this level will be reached around June 1999.
A number of items count towards the financial limit placed on Scottish Enterprise: first, Scottish Enterprise's and its subsidiaries' general borrowings; secondly, sums issued by the Secretary of State or the Treasury in fulfilment of guarantees; and thirdly, loans guaranteed by Scottish Enterprise or their subsidiaries. Finally, the largest item comprises payment from the Secretary of State consisting of grant-in-aid less administrative expenses, plus voted loans payments.
The increase to …4, 000 million will allow Scottish Enterprise to continue to operate until approximately March 2001. Thereafter the Scottish Parliament will have an opportunity to consider the future funding arrangements.
Expenditure for 1997–98 alone has achieved some significant things: the creation of 30, 000 job opportunities; 17, 700 projects undertaken with Scottish businesses; 5, 300 new businesses started up generating …33 million of additional sales; employment opportunities for 13, 500 people; and 87 inward investment projects.
My right honourable friend the Secretary of State recently provided Scottish Enterprise with strategic guidance that will ensure Scottish Enterprise is aligned to the Government's aims and objectives. But we are not resting on past achievements. We have ambitious plans for Scottish Enterprise activities. They are: to help create 100, 000 new businesses in the next 10 years; to improve their survival rates; to broaden the knowledge base of the Scottish economy and address Scotland's underperformance in the growth areas of creative industries and marketable services; to promote productivity; to prioritise and promote the clustering of companies in sectors most likely to benefit from a strategy of collaboration to compete; to engage the strength of large companies in partnerships across the economy; to initiate activity to raise the level of investment in research and development to competitive levels; to sustain Scotland's attraction to inward investment and reposition where possible to knowledge-intensive industries and promote the
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potential of indigenous suppliers; and to help Scottish Trade International to create new exporters and expand new markets for Scottish goods.
Through the effort to refocus Scottish Enterprise activities, we consider that it is achievable within the current level of funding. It is a programme that goes beyond June 1999 when the current aggregate amount outstanding will be reached. The purpose of this Bill is to raise that level to enable Scottish Enterprise to continue to work to meet those objectives until the Scottish Parliament can consider afresh the funding arrangements for Scottish Enterprise.
The Bill was accepted in principle by all parties in the other place and passed without amendment. I commend the Bill to your Lordships.
Moved, That the Bill be now read a second time. — (Lord Macdonald of Tradeston.)
10.25 p.m.
Lord Nickson: My Lords, I welcome the first opportunity I have had to speak from these Benches on such a bipartisan subject. I welcome the Bill; I welcome the need for it; and I welcome very much the vote of confidence and the agenda which the Minister set out.
As the last chairman of the Scottish Development Agency and the first chairman of Scottish Enterprise, it is appropriate for me to say briefly why I believe that Scottish Enterprise is set on such a course of success.
It is too late to rehearse the background to the start of Scottish Enterprise. However, I pay tribute, with which I am sure the Minister will agree, to all who have worked for it and who have risen to the challenge over the past eight years; to all those who have served on the boards of Scottish Enterprise, the local enterprise companies, Highlands and Islands Enterprise and the local enterprise companies; and to the very dedicated, imaginative and enterprising staff who have worked for Scottish Enterprise and who are delivering that great success which Scotland has.
I am happy to be able to pay that tribute. When Scottish Enterprise was established, there were many sceptics and many who mourned the departure of the old Scottish Development Agency, as the noble Lord, Lord Gordon of Strathblane, who was on that board with me, will know. The Scottish press was extremely hostile to the demise of the Scottish Development Agency. I was cast in the role of undertaker and also in the role of midwife and eventually wet nurse to the infant Scottish Enterprise.
Achieving the right balance between Scottish Enterprise at the centre with the co-operation of all the local enterprise companies was not an easy task. But I do not believe that the past eight years have proved that we got it wrong.
The other great addition was the responsibility for training and skills which TECs in England and Wales did not have. It does not surprise me in the least that regional development agencies in England and Wales have been somewhat jealous perhaps of the success of Scottish Enterprise and are now seeking, through regional development authorities, to replicate that to some extent.

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The only other point I wish to make is that I hope that when the Scottish Parliament comes to consider future funding arrangements and refocusing—I use the Minister's words—it will endorse the great advantage which Scotland has had and will support the partnership arrangement which has been so successful in Scottish economic development. On the whole, it has been an extremely cohesive partnership involving government in the form of the Scottish Office, of whatever party, local authorities—I supported the retention of economic responsibility in the local authorities—and the private sector. I hope that the partnership and the concept of it will continue when the Scottish Parliament comes into being. I hope that Scottish Enterprise, which has flourished and which continues to deliver the benefits which have been enunciated, will have the opportunity to continue and to build on its success into the new millennium.
10.30 p.m.
Lord Monro of Langholm: My Lords, it is a great privilege to follow the noble Lord, Lord Nickson—who did so much to set the Scottish Development Agency and Scottish Enterprise on the right path—and to acknowledge what he has done for Scottish industry, banking and aspects of life in Scotland over so many years. We are lucky to have his advice in this Chamber.
The Bill represents a very large increase in the funding of Scottish Enterprise and it is somewhat disappointing that so important a measure, wherein we can discuss industry and employment in Scotland, is being debated late at night, particularly as this is probably the last occasion on which we will be able to debate those topics.
It is only right that we should ask the Government: is the money being well spent and is it producing the results we would expect from Scottish Enterprise? Its work can only succeed in parallel with good government economic policies to ensure business confidence and a willingness to invest in new industry, new enterprises and new small businesses. At present, one can hardly say that there is a good scenario for developing industry. Are the Government giving the right support to enterprise at present?
One's views tend to be coloured by what is happening in areas one knows best. I obviously know the south west of Scotland. Ministers come and Ministers go. They meet representatives of enterprise and the local authorities. They make all sorts of promises; yet, at the end of the day, the results are singularly depressing. From a random selection of local press cuttings we read, "Minister's crisis visit", "Axe hanging over tourist board jobs", "Emergency jobs meeting", "Jobs hit list". The depressing headlines go on and on: "Jobs cuts crisis alarm", "Timber firm puts back opening of new plant", "More jobs loss misery", and so on. That hardly seems to me a climate in which one would expect enterprise to have the dramatic impact which is needed and where jobs are disappearing fast.
In September last year, Mrs. Walker, the director of enterprise in Dumfries and Galloway, reported the loss of 1, 000 jobs in 12 months. That was before we ran into
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the major problems of the textile industry, the developing problems of agriculture and of industry generally. The Minister may well say, "Yes, we have lots of new jobs; part-time jobs in service industries. "However, that is no good to those who want full-time skilled jobs, whether men or women.
As I said, Ministers visit frequently. They include the Secretary of State; Brian Wilson when he was Minister responsible for industry; the noble Lord, Lord Macdonald; Mr. Calum MacDonald; and Mrs. Liddell. The Member of Parliament was acting a year ago as if there was light at the end of the tunnel. The tunnel has not yet been reached, far less any daylight being seen at the end of it. The situation is steadily deteriorating.
Dumfries and Galloway Council has produced many competent reports, both on rural and industrial aspects. It has explained to Ministers just how serious the situation is. We have had major problems, such as ICI selling its very modern plant to Dupont and then to UCB with a substantial loss of jobs. The Government seem incapable of resolving what would seem to be the relatively simple problem of Crichton Royal. I refer to the money that was paid to the university trust in error by the council. The trustees cannot pay it back without authority. Ministers do not seem able to resolve the matter.
A major disappointment in recent months has been the decision by the timber industry over Kronospan. That was the great hope that was supposed to bring many hundreds of jobs to a major site north of Lockerbie. To what extent does the Minister check with Scottish Enterprise and with the local enterprise companies? I know that they must be independent, that individual directors must use their own judgment and that there must be an element of entrepreneurship. But what happens when such a company takes on a greenfield site well north of Lockerbie, for which planning permission would never have been given for anything other than jobs, and apparently spends £2 million preparing the site, and the timber industry then says that because of the economic situation it is not going to use that site, and the enterprise company is left with that £2 million bill without having had a formal contract before beginning work on the site? Surely that is a dubious use of enterprise money. I repeat that there was not a strong legal contract before the work started.
I turn finally to something on which the Minister could and should be spending more money. Part of the money going to enterprise could be used on the infrastructure. From his visits to Dumfries and Galloway, the Minister knows that the road situation is very serious. However, all the current major construction work on the A. 75 at the Glen, on the M. 6 from Beattock up to Paddy Rickle Bridge and north of Beattock, together with the improvements to the A. 7 were approved and begun under the last Conservative government. Since then, the present Government have done nothing to make any major improvements to the roads anywhere in south-west Scotland. If ever anything is crying out for action and if ever the Government could do something to help with jobs, road safety and transportation, that is it. We must create the motorway link between Carlisle and Gretna Green where there are

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between seven and eight miles of dual carriageway, the only stretch between London and almost the outskirts of Glasgow.
It is incredible that the Government have put their heads in the sand and will do nothing about developing roads in the south of Scotland—and, indeed, throughout Scotland. In view of my severe criticism, I hope that the Minister will think seriously about the developing unemployment in the south of Scotland, to which I am sure the noble Lord, Lord Steel, will refer in a moment. We do not want merely talk; we are anxious to see action and good, permanent, skilled jobs coming to an area that needs them desperately. I know that this is not easy, but I should like to see a very much more successful application of employment creation. Of course, we support the increase in the money available to Scottish Enterprise, but I want to see it better, and more effectively, spent.
10.37 p.m.
The Earl of Stair: My Lords, I welcome the opportunity to speak in this Second Reading debate on the Scottish Enterprise Bill.
I support this Bill, and believe that the best description of the purpose of the Bill is to be found on the front cover of the Scottish Enterprise Network booklet, entitled The Network Strategy, which states:
"our purpose is to help the people of Scotland create, and sustain, jobs, prosperity and a high quality of life".
It is very easy to say that a technical Bill such as this is not a priority, when there is already a very full legislative programme, and the funding is not necessarily required at the present time. However, this should not be a Bill that will instigate great political argument and disruption. It should pass with the minimum of delay to enable Scottish Enterprise to prepare to operate under the new Parliament for the improvement of business development in Scotland.
However, I should like to bring to your Lordships' notice that Scotland's circumstances are now considerably different from nine years ago when the Enterprise and New Towns (Scotland) Act 1990 was passed. As I see it, the availability of this extra £1, 000 million will boost the opportunity for Scottish Enterprise to implement national strategies, and to dispense funds to the local enterprise companies which in turn can implement the Government's policy of sustainable rural business development. This is already in process with the personal enterprise shows being run by Scottish Enterprise, in partnership with the Royal Bank of Scotland with the aim of increasing the new business birth rate. These shows are providing advice and guidance to potential small business operators all over Scotland.
This Bill will also introduce a degree of much-needed flexibility for Scottish Enterprise to be able to call on extra funds should an industrial or employment crisis develop in one of the regions of Scotland. I would like to provide an example, but first I should declare an interest in that I am a board member of Dumfries and Galloway Enterprise, one of the 13 LECs in Scotland. My example occurred last year when Dumfries and
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Galloway suffered several unconnected large job losses in the region. Scottish Enterprise was able to provide contingency funding which enabled Dumfries and Galloway Enterprise and the council to develop a 10-year plan for the economic regeneration of the region. This was launched by the noble Lord, Lord Macdonald of Tradeston, on 3rd March, in Dumfries. This joint economic strategy will provide a shared approach to the future economic development of Dumfries and Galloway.
The local enterprise companies have a major role to play in the development of business opportunity. The most often published stories concern inward investment, and the announcement of new employment. However, the local enterprise companies operate throughout the community and through the network of business shops assist in training, and advising new businesses, as well as assisting in Government schemes such as skillseekers and training for work, and to attain industry standards such as Investors in People. Through a joint arrangement with some local councils there is the administration of leader 2, European supported incentives for small business development. Other joint efforts involve, for example, office unit developments in Newton Stewart, a town in the Dumfries and Galloway region, which enable embryonic businesses to move into a small office which is equipped not only with desks and the normal furniture but also the latest in information technology. Existing industry is also helped both with expansion, diversification, innovation and the creation of jobs.
Finally, there is a community involvement with the provision and co-ordination of funding for schemes such as the small towns initiative, intended to regenerate particular identified communities.
Next year's gross expenditure allocation to Scottish Enterprise from the block grant to the Scottish Parliament has been reduced. This is to take account of some major rephasing of projects. Commitments have been made, subject to review by the Scottish Parliament, to increase the allocation for the following two years.
I trust that this Bill will pass as quickly through the stages in this House as it did in the other place to enable Scottish Enterprise to plan, particularly in the light of the expected reduction in European structural funds.
I disagree with the noble Lord, Lord Monro. The site to which he alluded cost nearer £3 million. Already there are three active interests in that site. It has been a worthwhile investment.
10.41 p.m.
Lord Steel of Aikwood: My Lords, one might not suspect it at this late hour and with such a thin attendance, but I imagine that this is quite an historic occasion. I suspect that it is the last time that this House will consider a Scottish Bill. We are looking forward to the advent of the Scottish Parliament. The 300 years during which this House has had to look after Scottish legislation is coming to an end. That is one reason for giving this Bill three cheers. The other is that, like other speakers, I welcome the increased funding which Scottish Enterprise will have.

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However, in my capacity as a candidate for the Scottish Parliament I received the other day a very glossy folder from Scottish Enterprise full of very fine and unexceptional phrases about what it hoped to do. I could not help looking at the expensive production and thinking that I would rather have had one page saying how the money had been spent and what had been achieved. I commend that approach not only to Scottish Enterprise but to other organisations as well.
When the Scottish Parliament comes to look at the work of Scottish Enterprise and all the other agencies, it will want to have a much more hands-on approach than has been possible under the existing parliamentary scrutiny. For example, the Scottish Enterprise remit does not include the need to establish or to draw up any kind of national infrastructure strategy. It does not deal with the question of having any kind of blueprint for a road network, rail or airports.
I suspect that the Scottish Parliament in its first couple of years and probably by the time the budget provision that we are making today runs out, will want to look at all the agencies that operate in the economic field, try to streamline them and make them more efficient, cost-effective and answerable to the parliament itself.
I share some of the views expressed by the noble Lord, Lord Monro. We in the south of Scotland have had a series of unfortunate disasters, totally unrelated to any expectation and to each other. I know that the Minister has been to see the effect of the closure of Viasystems. It was a successful company, built up by small local entrepreneurs and eventually taken over by larger concerns which grew from a handful of people in Galashiels and Selkirk. It became the largest single employer in Selkirk. The fact that the new American owners decided to close it down—not for any local reasons—has been a major economic disaster in the area. That, coupled with the new quarrel between the Americans and the European Union on the banana question, and the totally unjustified sanctions on what I prefer to call the "cashmere" industry, led to a serious economic situation in the Scottish Borders.
I make one plea to Ministers. I have heard him and other Ministers repeat the old truth—for it is a truth— that unemployment in the Borders even at the present time is less than in some other parts of Scotland. We had this argument 30 years ago and I am sorry to see it reappearing. I believe the noble Lord, Lord Monro, will agree that it is a tradition in the Borders that if one is unemployed, one does not hang about; one does not go into the unemployment statistics; one leaves and finds employment in central Scotland, down South or indeed overseas. That has always been the tradition. In an area like the Borders depopulation is our enemy, not unemployment. We won that argument in the late 1960s. Eventually the government recognised that they would have to consider industrial support on criteria other than unemployment. I hope therefore that we are not going to have to go back and rehearse those arguments all over again.
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I raise that matter because the SDA, to which the noble Lord, Lord Nickson, made reference and in which he was involved, was extremely active in the Borders and very effective in many ways in both large and small schemes, in helping to revive the economy. The Minister was recently in Selkirk, and one of the curious things he may have noticed there is that along the road from Viasystems is the old Ettrick mill. I remember it as a spinning mill when I was a new Member of Parliament. It had been closed for years and the local enterprise company, using partly Scottish Enterprise funds and partly European funds, refurbished the building four or five years ago. A lot of money was spent on it, yet it stands empty to this day.
I do not understand why we have not been able to attract into the south of Scotland not industrial jobs—I realise the difficulties in that area—but office employment. We are told that in the computer age offices do not have to be in city centres, yet one only needs look at Glasgow and Edinburgh to find millions of pounds being spent on great new offices by insurance companies and other agencies. That mill is a building on which substantial sums have already been spent, and nothing has been successfully achieved in having it occupied. Those are the kinds of question which in future the Scottish Parliament will want to address. It will want to look at the present rather inadequate structures—I include Scottish Enterprise in that—for making sure that economic development is balanced and tailored to the specific needs of specific parts of Scotland.
10.48 p.m.
Lord Mackay of Ardbrecknish: My Lords, I join other noble Lords in welcoming this Bill, although, if I understand it rightly, it does not provide more funds to Scottish Enterprise; it just gives them cover for the continuing funds coming from the Scottish Office as the aggregate amount is about to run out. So it is not entirely the good news story that some people might like to imagine.
However, it is important for all that because it would not be right to find Scottish Enterprise running out of legislative cover and not being able to take and use the money coming from the Scottish Office. I entirely understand the point of the Bill. It is interesting that the Bill says that the total will not exceed £4, 000 million, then takes out the provision in the Enterprise and New Towns (Scotland) Act 1990 for further increases, which will be necessary after 2001, to be by secondary legislation. I presume that early in the new millennium, the Scottish Parliament will have to consider similar primary legislation, to up the amount to £5, 000 million or whatever. Will the Minister confirm that that is so?
If I understand the amendment to the 1990 Act, I am intrigued by the removal of the words
"with the consent of the Treasury".
Was that cosmetic or will future increases not require the consent of the Treasury? At this time of night, I will not go into some of the great debates about whether or not the words "with the consent of the Treasury" were necessary. Some of us take the view that not a penny is

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spent, not a hair falls from anybody's head, without the consent of the Treasury. Are there any serious reasons for omitting those words, which are found in all sorts of legislation, from the Bill?
I wonder also about Highlands and Islands Enterprise. I suspect that its cover is of a different nature, but is its position secure or will it require similar legislation shortly?
The noble Lord, Lord Steel of Aikwood, is not keeping a careful eye on the Order Paper. This is not by any means the only piece of Scottish legislation before your Lordships. I suspect that this Bill will make its way onto the statute book a good deal quicker than the other two. Buried in two United Kingdom or basically English measures are major items of Scottish legislation. One of them reforms the Scottish health service, runs to a number of clauses and is an important piece of Scottish legislation. The other is less bulky and is to do with the Water Industry Bill that is before the House. I do not mean a pounds, shillings and pence water bill but legislation. There are still some pieces of Scottish legislation wending their way through the House.
As to the health service legislation, I would have preferred a separate Scottish measure, rather than have something buried in an English Bill.
Lord Steel of Aikwood: My Lords, I did say that this was the last Scottish Bill. I accept that there is other Scottish legislation.
Lord Mackay of Ardbrecknish: My Lords, I understand the noble Lord's meaning but I could not resist the temptation to point out that two pieces of Scottish legislation are going through the House in a rather unsatisfactory manner—an amazing manner, given that the Scottish Parliament will shortly have responsibility for such matters.
Scottish Enterprise and Highlands and Islands Enterprise have been successful in many ways over the past nine years but on 1 st June, the situation will change out of all recognition with the coming of a Scottish Parliament. I wonder whether that Parliament should not consider early on the way those bodies operate.
The case for local enterprise companies was that it was a good idea to involve local business and commerce—in the jargon of these days, to give them ownership of the economic development and training in their area. I know it is late at night but this is important. Would the Minister like to share the Government's thoughts as to the future of the current framework?
Sometimes there are real problems with LECs because if the business men who join those boards are thrusting, developing and increasing employment, they will often be the very people who are applying for aid to the body on which they sit, Scottish Enterprise or HIE. Political opportunists often exploit the position of those people in such a way that, if I were such a thrusting person, I would not want to join any of those bodies.
If I did apply to them for anything, opportunist politicians would start to attack me. The current Government, Members of Parliament and so on have not
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been immune from opportunist attacks on such business men. Sometimes it seems to me they would almost prefer the unsuccessful to be on these bodies rather than the successful. I should have thought that it is the successful we all want. I hope that the Conservative Party Opposition will not join in such attacks on the kind of people I mention who are the very people we need on those bodies.
It seems to me that the Scottish Parliament will want—as the noble Lord, Lord Steel of Aikwood, rightly said—a much more hands-on approach in this matter. I do not think it will take the same rather arm's length approach to Scottish Enterprise and HIE as we have taken at Westminster. I was never an industry Minister but I have sat in the same room as them. One of the problems was that it seemed to Ministers that all the good news was dished out by Scottish Enterprise or the Scottish Development Agency and all the bad news had to be dealt with by government Ministers. I think there is a certain amount of truth in that and I believe it still happens. The noble Lord, Lord Macdonald of Tradeston, has to deal with some of the problems of closures in Scotland which I shall deal with in a minute. However, I wager that if it is a matter of great success stories, Scottish Enterprise and Highlands and Islands Enterprise will boast of that.
I do not think that that process will be sustainable in the Scottish Parliament. I suspect there will be major changes in the way these bodies work and the relationship they have with government. I believe that Edinburgh and even Glasgow will be rather small towns—if I can call them that—for such big players to remain in isolation from each other, and it would not be for one to start interfering to a far greater extent than has been the case at Westminster. I believe that we shall see some major changes and I believe they will come about sooner if the Scottish economy continues the economic decline that we have seen in the past 18 months, with unemployment rising inexorably after many years of continuing decline in the unemployment figures month after month. We now see them increasing and we now see a litany of closures.
My noble friend Lord Monro and the noble Lord, Lord Steel of Aikwood, have drawn particular attention to the problems in the Borders. Undoubtedly if the banana war is not settled soon the cashmere and woollen industry across the south of Scotland will be even more damaged than it has been in the past year. I see that the banana war has stretched as far as Tunnoch's caramel wafers. At least there is some logic in equating bananas with caramel wafers in that they are both foods. I have never been able to see the logic of equating bananas with cashmere. However, joking aside, this is an extremely serious business of which I know that the Government are well aware. I am sure we wish them well in their efforts to try to make sure that this business does not deteriorate any further. We have problems with Bishopton Royal Ordinance Factory and Volvo. As the noble Lord, Lord Macdonald, knows better than most, we have problems at Kvaerner which, like all shipyards, is dependent on the next order.

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As regards the money that Scottish Enterprise will receive for the future, it is important that it considers ways to help indigenous industry. It has always been a complaint that Scottish Enterprise and HIE have been too quick to help incoming industry and not quick enough to help indigenous industry to grow. That is something it ought to consider. I do not want to go on any longer. I think we all wish Scottish Enterprise well. While it certainly provides meat to table good questions to the Government to see Scottish unemployment rising, it certainly does not give any joy to those of us who raise the matter because we know from our term in government how difficult it is when one is faced with the closure of enterprises, especially in small communities where that enterprise forms a major source of employment, and how difficult it often is to replace it. The Government have our sympathy and support in these matters, as does Scottish Enterprise.
10.59 p.m.
Lord Macdonald of Tradeston: My Lords, I am grateful to all noble Lords who have participated in the debate. As noble Lords will be aware, this Bill has a narrow compass. Its purpose is to increase the aggregate amount that Scottish Enterprise may receive under the terms of the Enterprise New Towns (Scotland) Act 1990. It does not influence the level of grant in aid that Scottish Enterprise will receive. That remains a matter for the Secretary of State in his allocation of the Scottish block as determined by the Barnett formula. Funding over the £4, 000 million limit will be a matter for the Scottish Parliament in due course. I can confirm that when the money runs out in 2001, or whenever, it will be for the Scottish Parliament to decide.
It is of course vital that Scottish Enterprise continues to receive funding. As I indicated earlier, the Secretary of State has issued Scottish Enterprise with detailed strategic guidance. He has asked Scottish Enterprise to develop a strategy which will encourage innovation, promote enterprise and lifelong learning and secure a modern and inclusive economy. That will help us to achieve a competitive drive which will enhance the knowledge base of Scottish businesses on which their commercial successes will increasingly depend in the coming century. Scottish Enterprise clearly has a central role to play in this development.
Perhaps I may now turn to some of the specific issues that have been raised. I join the noble Lord, Lord Nickson, in congratulating the very many people who have given of their talents and very freely of their time over the years, from SDA days, through the troubled birth of Scottish Enterprise and its LEC network. I remember the hostility of which the noble Lord speaks. With his leadership, Scottish Enterprise managed to survive and grow and prosper. It is only right that I, too, join the noble Lord, Lord Monro, in congratulating the noble Lord, Lord Nickson, on the crucial part that he played in those early days.
The noble Lord raised a point worth noting. There will soon be eight regional development agencies in England and we will perhaps face the kind of
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competition of which we have had forewarning through the activity of the Welsh and Irish development agencies. I am sure that if we are faced with eight muscular regional development agencies in England, Scottish Enterprise and Highlands and Islands Enterprise will have to be on their mettle. All of us in Scottish public life should try to make sure that Scottish Enterprise is able to compete as strongly as possible in the years ahead, particularly to protect our splendid record of inward investment which has led to 80, 000 people being employed by foreign-owned companies in the manufacturing sector alone.
Questions were asked about the leadership of Scottish Enterprise. It has been said that it was good at the start, but it should be business led. The noble Lord, Lord Mackay, expressed concerns about the leadership and how it would develop in the years ahead. Perhaps I may say very firmly that whatever reservations some might have had in the early years, the Government are committed not only to the idea of partnership—yes, we have brought people into local companies from local authority and trade union backgrounds—but have made it quite clear that that partnership should be led by business interests. Therefore, I was dismayed to note that there were some in Scotland who felt that the best course forward was to abolish the board of Scottish Enterprise and to replace a lot of the local interests, again by political interests. That would be taking out of the enterprise networks the very people with experience of enterprise.
The noble Lord, Lord Monro, asked if we felt that the money was well spent. I will not rehearse again the achievements of Scottish Enterprise, but our belief is that it is the best way forward and, if we can keep the business leadership there, we can begin to build on some of the policies contained in the latest strategy. I believe those policies point Scotland towards a future in a very different century which will be based on a knowledge-driven economy. If one looks at the DTI White Paper on competitiveness, it is interesting how many of the ideas about industry clusters or knowledge-driven economies have been worked upon for some years now in Scotland. Because of the efforts of Scottish Enterprise, Scotland is well ahead in fashioning the theories and shaping the direction which will take us into that next century.
During that transition, there will be difficult periods. I sympathise deeply with the problems of the Dumfries and Galloway economy, which were described by the noble Lord, Lord Monro, and I am grateful to the noble Earl, Lord Stair, with his close involvement through his membership of Dumfries and Galloway Enterprise, for recognising the positive things that have been going on. He mentioned the personal enterprise shows we have set up to try to encourage people to start their own companies. He is aware of the extra money that has been given to Dumfries and Galloway—£2.4 million for the delivery of the local action plan in 1999–2000. I, too, am aware of the positive prospects for the Kronospan-Lockerbie site.
It is also worth remembering that the new technologies will favour the rural areas of Scotland— rural areas where employment has increased quite

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markedly in the past decade—and we believe that in setting up our rural inward investment unit we will be able to recreate in the south of Scotland the success that we have already had in the Highlands. Some of those successes were predicated on the new technologies—the ISDN lines being brought into the Highlands—but one can see in towns like Dingwall, Nairn and Alness call centres being developed along them. There is also a good deal of optimism that call centres can be brought into the Border towns and to the towns of Dumfries and Galloway. So I would not be quite as pessimistic as the noble Lord, Lord Monro, on these matters.
In areas such as tourism, which the noble Lord mentioned in passing, we gave an extra £1 million to the Scottish Tourist Board. Its chairman, the noble Lord, Lord Gordon, is aware that that money was used to help tourist boards in the shakier areas to survive long enough so that they could be properly funded through the Scottish Parliament, which would give the core funding through the Scottish Tourist Board.
Other areas are important in looking at the budget as we go forward. While the £425 million looks as though it is a reduction, we have allowed another £25 million to be rolled over so that there is a real increase next year in terms of its funding. In addition, we should be aware that a great deal of money is going into programmes that are closely involved in the training activities in which Scottish Enterprise has such an interest. For instance, £300 million has been committed to the New Deal over the next five years and the local enterprise companies will have an important role in that.
The noble Lord, Lord Steel, said that he believed that there would be a more hands-on approach from the Scottish Parliament. In anticipation of the debates that might lie ahead, we tried to ensure that government, the Scottish Office and Scottish Enterprise were as closely aligned as possible. That has been a useful and positive exercise over the past year. We have also tried to involve business much more in the deliberations of government and Scottish Enterprise than has been the case in the past. We have started the Scottish Business Forum which will allow the bigger companies in Scotland to inform government thinking. That has been judged to be a successful exercise.
At the moment, I am on the point of producing a pathfinder document with the 13 major sectors of business and industry in Scotland which will lay down their priorities for the MSPs who gather in Edinburgh. Politicians will become more involved in the activities of the enterprise networks, and properly so. That is one of the reasons for having a devolved parliament. A strong committee structure will help in that involvement. The related point is that we shall see much more involvement on the part of business as well. I hope that what we have done in the past year in trying to encourage more business activity in Scottish affairs will be continued.
In response to a point made by the noble Lord, Lord Mackay of Arbrecknish, yes, I believe that the LECs work. We are fully in support of the current framework. As I said, we believe that they should be business-led. I recommend the continuance of that structure to the Scottish Parliament.
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The noble Lord mentioned Glasgow and Edinburgh and rightly mentioned the economic difficulties in some areas. It is worth remembering that last Friday Edinburgh announced that it would be creating 40, 000 new jobs. Companies that I visit in Edinburgh are already working in a very tight labour market. Unemployment there is 3.5 per cent. on the claimant count. Even in Glasgow, where unemployment has fallen, 20, 000 new jobs are being looked for in call centres, retail and so on.
I repeat that the claimant count is not the perfect measure. But at 5.5 per cent. in Scotland, it has remained steady in the six months since August. It is the lowest it has been since 1977. Youth unemployment, which was such a scourge under previous administrations, is at its lowest for a generation. So, while there are difficulties, we continue to create jobs. The statistics that we have from Scottish employers indicate that 34, 000 extra jobs were created in the Scottish economy during the past year. So the situation is not entirely bleak. We must be careful that we do not talk Scotland down. If we hit business and consumer confidence, we shall hit jobs.
The noble Lord, Lord Mackay, referred to Treasury consent. All ministerial functions under the 1990 Act are exercised by the Secretary of State. Section 55 of the Scotland Act provides that devolved functions, whether previously exercised only with the consent of another Minister of the Crown, will in future be exercised solely by Scottish Ministers. Section 126, dealing with interpretation, clarifies that the term "Minister of the Crown" includes the Treasury. The end result will be that references to Treasury consent to the exercise of functions by the Scottish Secretary under the Enterprise and New Towns (Scotland) Act will fall.
I commend the Bill to the House and ask your Lordships to give it a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Scottish Parliamentary Constituencies Bill [H.L.]
11.13 p.m.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that this Bill be now read a second time.
The Bill does two things. First, it brings forward in time Section 86 of the Scotland Act, which reduces the number of Scottish MPs at Westminster to 58. Secondly, it uncouples the number of Members of the new Scottish Parliament from the number of Scottish MPs at Westminster.
As the Scotland Act stands, the Boundary Commission in the next Parliament will reduce the number of Scottish MPs at Westminster. It will do so by raising the electoral quota in Scottish seats from the current 54, 000 to the English level of 65, 000. That will reduce the number of Scottish MPs—I think—to 58. I say "I think" because the number rather depends on how

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it is calculated. It might be one less, it might be one more, but most commentators reckon that 58 will be the number.
That reduction acknowledges the existence of the Scottish Parliament; it acknowledges the reduction in the responsibility of Scottish MPs at Westminster; it also acknowledges the existence—although it does not provide the entire solution—to the famous West Lothian question. I believe it is true to say that every party, in both Houses, agrees both with the reduction and with the reasons for the reduction. That was clear during the passing of the Scotland Act.
Where many of us have a quarrel with the Government is on the timescale. In three-and-a-half months the new Parliament will take on all its responsibilities. It seems to me that there is no case for the reduction in Scottish Members not being made before the next election. Why do we have to wait for two elections before doing what everyone, including the Government, agrees should be done? I have no doubt that the Minister will tell me that the Boundary Commission cannot produce a report in time for changes to be made for the next election. I do not accept that for a moment. I do not believe that it would take the Boundary Commission more than the next two or three months to come forward with its proposals. They could be dealt with over the next year, in plenty of time to be put in place for the next election. Given modern technology, all the computer-based demographic information is available. It is no longer the day of the pen and pencil. There is no longer a need to send out an army of people to find out how many people live here and there. That day has long since gone. It is much easier now; there are demographic computer models and all kinds of things that can be used in order to do what is necessary. I have little doubt that a small team would take a short time to come forward with reasonable proposals. Then we could have the appeals, and the reduction could be made for the next election.
If this Parliament goes its full length, the Scottish Parliament will have been running for more than two years by the time of the next election and will be well into its stride. I can see no reason not to proceed with the issue.
The second problem is that when the reduction comes into effect, quite the silliest provision in the Scotland Act will be triggered. Frankly, "triggered" is an appropriate word because, as the Act stands, when the number of Scottish Members of Parliament is reduced by 14, so also will the number of first-past-the-post Members of the Scottish Parliament, plus another seven from the top-up list. That makes a total of 21 Members of the Scottish Parliament who will be invited to pull the trigger on themselves.
It is remarkable that when we go to the polls in 45 days' time, if I am counting correctly, we will elect 129 Members of the Scottish Parliament. I presume that is what the Government think we need to be able to run a reasonable parliament. Yet in a few years' time we shall dispense with 21, having in the meantime built a parliament with offices for all 129. It seems a little illogical.
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This coupling of the number of MPs at Westminster and the number of Members of the Scottish Parliament is totally illogical. I understand the convenience for the first time, but I cannot believe that it makes sense in the long term. I can think of nothing more designed to create bad blood between Holyrood and Westminster than the Government's current proposals. In a few years' time they will say to the Scottish Parliament— and more importantly to 21 of the 129 Members— "Sorry, we can dispense with you; we don't need you. The only reason we don't need you is that we've reduced the number of Members of Parliament at Westminster".
This small Bill of mine is an appeal for common sense before the Parliament starts work. When it opens, the 129 Members will be looking at each other, scratching their heads and wondering how they can manoeuvre so that they will not be one of the 21, but one of the 108. Equally, they will manoeuvre some of their friends, as they will then be, into a position where they will be among the 21. I do not believe that will get our Parliament off to a good start, with the sword of Damocles hanging over the heads of one-sixth of the Members.
We know from press reports last year that Scottish Office Ministers wanted to change the Bill but Tony Blair would not let them. The Scotsman summed it up with this headline:
"Blair snub for Dewar on seals at Holyrood".
The Liberal Democrats thought they had a deal with the Labour Party, and I hope that the noble Lord, Lord Steel of Aikwood, will spell it out. They thought they had a deal that there would be an uncoupling. They were surprised when the uncoupling did not happen. If the Prime Minister wonders why he has a problem each time he visits Scotland I must tell him that, if this proposal is allowed to come about, whenever it appears that there will be a reduction in Members he will have a much more uncomfortable time, assuming we are still unfortunate enough to have him as Prime Minister when that day dawns.
Your Lordships' House passed amendments to the Scotland Bill along similar lines to the provisions of this Bill. The House of Commons—foolishly in my view— simply did what Downing Street told it to do and voted down the amendment. I was under pressure from the Liberal Democrat Benches to send it back to the House of Commons again, but at that stage it was so near the end of the Session that I thought it would be ill-advised of me to do that. Although the Liberal Democrats might have moved the amendment, my troops, or muscle, would have sent it back. I suspected that my party's opponents would have fastened on to it as a way of proving that the Scottish Conservative Party sought to frustrate the will of the Scottish public at the referendum. As nothing was further from the truth I decided that discretion was the better part of valour. If we had been a few weeks away from the end of the Session discretion might not have played such a big part and I would have been tempted to send the amendment back to the Commons a second time. But that did not happen and we are where we are.

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We can get this Bill through your Lordships' House since this House is kind to Private Members' Bills. The Government could easily give this Bill a fair wind and help it through the House of Commons so that the role and numbers of Scottish Members of Parliament at Westminster can be resolved in this Parliament instead of waiting for the next. Much more important, the number of Members of the Scottish Parliament can be uncoupled from the number at Westminster, and the Scottish Parliament can get on with its work with at least 129 Members of that Parliament without the thought that, based on an entirely Westminster-driven agenda, their numbers would be reduced to 108. I beg to move.
Moved, That the Bill be now read a second time. — (Lord Mackay of Ardbrecknish.)
11.22 p.m.
Lord Monro of Langholm: My Lords, my noble friend Lord Mackay has spelt out very clearly the two main reasons for the Bill. There is little more to be said about the details. I give him my full support on two counts. First, as a Member of Parliament for many years I was always highly critical of the West Lothian situation. This Bill goes some way towards resolving that problem not only by reducing the number of Members of Parliament to a figure more consistent with the rest of England and Wales but also by substantially reducing expenditure on the salaries and expenses of Members of Parliament who do not need to be in Westminster, bearing in mind that there will be very much less work for Scottish Members of Parliament at Westminster. It will also get rid as soon as possible of the ridiculous pocket boroughs and constituencies in the west of Scotland that are far too small compared with the present larger ones of 65, 000-plus.
My second reason for supporting my noble friend is the very difficult question that will arise almost immediately after the establishment of the parliament in Edinburgh; namely, those who will lose their seats in the subsequent Scottish general election. It will not be fair or friendly. It is most inappropriate that Members of the new Scottish Parliament should be put in that position. That is entirely a Westminster decision which will make Scottish Members of Parliament even more furious. I am concerned that the Government have taken such a negative attitude towards this matter. I remember the devious way in which the government in 1977 or 1978 brought forward the recommendation of the Boundary Commission, as they were bound to do, and then voted it down by their parliamentary majority. That was no way to treat the Boundary Commission. It shows that the present Government are rather light-handed when it comes to dealing with parliamentary matters that may affect their majority in the future.
I believe, as my noble friend Lord Mackay indicated, that if the Boundary Commission had been told a few months ago, or was asked even now, to produce new constituencies in 12 months' time it could be done. If the Government expect a Royal Commission to provide for a new House of Lords and its procedures in about eight months' time, I believe that the Boundary Commission could well produce new constituencies in Scotland in 12 months or less. I do not think that lack
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of time is any excuse. If there is a will to do it, it will be done. The Government do not want it to be done because they will lose many Members of Parliament at the next election if new boundaries are brought in. That is the real reason. The Government should be honest and admit it, and not blame the boundary commissioners for not having the time to do the work.
The Bill brought forward by my noble friend is a way out for the Government and provides for a constructive democracy in Scotland in the future.
11.25 p.m.
Lord Rowallan: My Lords, I support my noble friend Lord Mackay of Ardbrecknish. It is our last chance to right a terrible wrong. As has been pointed out, the Scotland Bill was allowed through because of the rush at the end of the Session. We wanted to make certain that it went through. My party is determined—as am I— to make certain that the Scottish Parliament will work. It could not do so unless the Scotland Bill had been sent in full strength from this House.
Because of the West Lothian question, while the number of Members of Parliament to the Scottish Parliament and to the Westminster Parliament are linked together, there is the real possibility that we shall see a serious reduction in both parliaments. We have a new Parliament with 129 Members. They are campaigning like fury as we speak and will shortly be deciding issues of great importance. Almost every day in your Lordships' House we hear of another subject matter with which the Scottish Parliament will have to deal.
It is not fair or right that 20 or so of those Members of Parliament will disappear shortly. It is not fair or right that the Scottish voting community will lose MPs for whom they have just voted to represent them. Thanks to my noble friend, we have a chance to stop that travesty. We must grasp the opportunity with both hands.
As I am sure the Minister will remember, I moved an amendment at either Committee or Report stage providing that the Boundary Commission should report. I was informed that that was totally impossible in the time allowed. I agree with both noble friends who have spoken that that is a load of codswallop. The poll tax has now gone. We now have individuals on the electoral register who have not been on it previously. Individuals who were on the register at an earlier stage of their lives are again on it. With the aid of computers, and so on, there is no reason why the matter cannot be dealt with more speedily.
I know that the Minister will state—he has already told me—that it takes a long time to get this matter sorted out; and that it cannot be done just like that. However, I agree with my noble friend Lord Munro that if there were a will, a way would be found.
The last and most important point—I have referred to it previously in the Scotland Bill—is that we must be very wary of taking away from the Scottish people something we have given them. That is the worst mistake Westminster could make. It will not be at the behest of the Scottish people, but at the behest of Westminster.

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I wish the Bill well and trust that the Government will consider it seriously. The Bill contains much sense; and sense must be seen to prevail.
11.30 p.m.
Lord Steel of Aikwood: My Lords, I too rise to give full support to the Second Reading of the Bill in both its parts, although I am conscious that the longer I speak, the longer I delay a very important debate to come later introduced by the noble Lord, Lord Steel, of Aikwood, so I shall be very brief.
On the first part, the noble Lord, Lord Mackay, is quite correct—in my view at any rate—to say that there is no reason why the Boundary Commission could not have achieved the reduction to 57, or whatever the number may be, in time for the next general election. In fact, it could have already been working on it for three months now if this argument had been accepted during the passage of the Scotland Bill. We should not find ourselves in this position.
The truth is that the Labour Party came quite late to the acceptance that there should be a reduction in numbers—just before the election. But it is a pity that that has not been thought through. As we reach the next general election, there will be astonishment in Scotland. People have not followed the detailed debates on the Scotland Bill as we have had to do. At the next general election, the Scottish people will be astonished that they are still voting for the same number of MPs in Scotland when they thought there would be a reduction. The Government will find it very difficult to explain away that. Therefore, I stand full square behind the noble Lord, Lord Mackay of Ardbrecknish, on that point.
The noble Lord has come late to the argument of delinking the number in the Scottish Parliament from the numbers at Westminster. Johnny is doing well but Johnny has come lately. That issue has been debated thoroughly. He said that we had a deal with the Labour Party. We did not have anything so squalid as a deal. But that issue was discussed fully in the Constitutional Convention. This was long before the White Paper or the general election. The Constitutional Convention's report stated:
"The electoral system for Scotland's Parliament must have stability but it will be dependent on boundaries established for the Westminster and European Parliaments. These may be subject to alteration outwith the control of Scotland's Parliament and it will therefore be necessary to ensure that separate boundary reviews for the Parliament can be carried through with the purpose of maintaining the size of the Parliament".
So that is not a new issue. It was debated two or three years ago and the Constitutional Convention reached a clear conclusion. I am sorry to say that by rejecting that, the Government depart from the agreement which they made when in opposition to which I do not react well.
The second occasion when this was fully debated was in the other place when my honourable friend, the Member for Orkney and Shetland, tabled an amendment to the Scotland Bill. Mr Henry McLeish, the Minister who was replying on behalf of the Government, said:
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"Currently, the Government cannot accept Amendments Nos. 61 to 65 which would seek to break the link between constituencies for the UK Parliament and constituencies for the Scottish Parliament".
He then went on to say that,
"there are clearly good arguments on both sides of the issue … We are still considering the matter, and we hope to reach a conclusion by the time that the Bill goes to another place".
He concluded his speech by saying:
"If we establish a Parliament of 129 Members, there is an expectation that they might want to continue. That is why addressing the realpolitik of the Parliament is part of the wider consideration. With those few remarks, I hope that the hon. and learned Member for Orkney and Shetland will withdraw his amendment, and allow us to complete that consideration". —[Official Report, Commons, 12/5/98; cols. 223/4.]
We all know the procedures of Parliament. When a Minister winds up a debate by asking for an amendment to be withdrawn because it is going to be considered in another place, there is a reasonable expectation that the force of the argument has been met and the Government will do something about it.
That did not happen and once again, I am sorry to say, we did not receive any support from the Conservative Party. Indeed, I hope that the noble Lord, Lord Mackay, will have a word with his honourable friend, the Member for South Holland and the Deepings, who said in that debate that the notion of different-sized constituencies for elections to Westminster and the Scottish Parliament is nonsense. The noble Lord, Lord Mackay, and I would dissent from that.
The Bill came here and we debated the issue again in this House on 17th November last. The noble Lord, Lord Mackay, has tried to explain that he did not put his troops into the Lobby then in support of our amendment because he wanted to ensure that the Bill was passed. There was no way that the Government would lose the Scotland Bill at that late stage. Had he put his troops into the Lobby, we would have carried the amendment. We could have had a reconsideration of this matter, with the words that I have just quoted to this House repeated in the other place, and there might just have been a chance of it succeeding.
I do not know whether the noble Lord, Lord Mackay, is correct in suggesting that pressure from Downing Street prevented that happening. I have no knowledge of what goes on inside government. However, I am told that the Prime Minister is extremely thin-skinned about criticisms from Scottish politicians or the Scottish press, and that he is always complaining about it. He has only himself to blame when we get into a mess like this. I hope, even at this late hour, that this Bill might be given a fair wind and we might see an improvement to what is at present a nonsense in the Scotland Act.
The Parliamentary Under-Secretary of State, Scottish Office (Lord Sewel): My Lords, as I rise to respond to the noble Lord, Lord Mackay of Ardbrecknish, my mind and indeed my body go back to those days of almost high summer when we debated these issues. I believe that we discussed this issue initially in terms of the Referendums Bill (Scotland and Wales) and subsequently in the White Paper debate, at Second Reading, in Committee, on Report and on our consideration of the view that the Commons took of our

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amendments. Therefore it is not a matter that we come to anew or in any way strange to the main issues of the debate.
We have spent a considerable amount of time on this issue, and rightly so. I recognise that it is important but it has already had a thorough debate, not just in this House, but by the totality of Parliament. I do not wish, for a moment, to cast any doubt on the propriety of the noble Lord, Lord Mackay, in bringing forward the Bill at this stage. However, I must point out that we are faced with what is the settled will of Parliament. Parliament has had many opportunities to consider the points raised in the Bill. It has decided them decisively and, I believe, conclusively. There is no new argument, no new evidence, that the noble Lord has brought to support his case that he has not, in essence, used previously. We are revisiting old arguments that have been re-presented in terms of a Second Reading debate.
Perhaps I may deal with a number of issues. The Bill is clearly about the size of the parliament. Quite simply, the noble Lord's overall aim and the principle behind the Bill is, as he freely acknowledges, to break the link between Westminster and Scottish parliamentary constituencies and so fix the size of the Scottish Parliament at 127 members at least. The Government cannot, and do not, support such an aim.
I shall not labour the Government's opposition to this idea. As Your Lordships know, we are committed to maintaining the linkage between the constituencies in the two parliaments. That has been an explicit and long-standing commitment. If noble Lords go back to the White Paper, Scotland's Parliament, they will see that we considered that the integrity of the United Kingdom would be strengthened by common UK and Scottish parliamentary boundaries. We also said that any changes in Westminster constituencies would result in changes to Scottish parliamentary constituencies and might also lead to consequential adjustments to the size of the Scottish Parliament.
The provisions that we have made in the Scotland Act give effect to the provisions outlined in the White Paper. I recognise that that was a departure from the view taken by the Scottish Constitutional Convention, but it was in the White Paper, which was endorsed not only by the Scottish people, but also after a campaign in which the noble Lord, Lord Steel, and his friends felt able to campaign in favour of a yes, yes vote. So, this has been subject to debate and discussion both by the electorate of Scotland and here in both Houses of Parliament.
Given what has gone before, your Lordships will not be surprised to hear that we have not changed our minds over the past four months since the Scotland Act became law because essentially nothing new has occurred; there has been no new evidence and no new arguments. We remain committed to the arrangements that we laid out then. We believe that there are considerable benefits for constituents. We spelt them out previously. Common boundaries will make for representation which is easier to access and will help to ensure that MPs and MSPs are well placed to co-ordinate their constituency work. That should make sure that local interests are properly represented in both places.
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As we said in the White Paper and as I have said many times previously, we believe that these arrangements will help to maintain the integrity of the Union. We have embedded the electoral framework of the Scottish Parliament into the electoral framework of the UK Parliament. We want the constituency building blocks to be the same.
After all, that is how we arrived at the current figure of 129 MSPs. It was not a calculation made on the basis of, "How many MSPs do you need to make the Parliament work?" That was not the primary, driving consideration. If it had been, I do not think that the magic number of 129 would have been arrived at— because there is no such magic number of 129; the figure of 129 is derived from the building block of the number of Westminster Scottish constituencies and adding to that the number of regional Members. Indeed, throughout the deliberations of the Scottish Constitutional Convention and elsewhere, good and reasonable schemes produced parliaments ranging from 110 to about 140 or 145 Members, if my memory serves me correctly, and all were developed on a different basis. I do not claim that 129 is the precise number needed. As I have said, that number is the result of using the number of Westminster Scottish constituencies as the building block for the whole scheme.
I am quite interested by the idea adduced by the noble Lords, Lord Mackay and Lord Steel, that somehow it will be absolutely dreadful for those MSPs in their first or, indeed, second Session, who are looking over their shoulders, fearing that they will be booted out. That is what elections are all about. Given the likely representation of the party opposite and that of the party diagonally opposite, I should have thought that those noble Lords would welcome the idea of change and of turnover in the composition of the Scottish Parliament. The fact that there will be people in one parliament who will not be in the second or third parliament does not seem to be a sound reason for opposing any form of electoral change.
11.45 p.m.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the noble Lord for giving way. I believe that he is puzzling us all with his argument. None of us argues with the fact that at elections some people lose. They may not like it but it is the simple fact of the matter. I would not quarrel with what boundary commissions occasionally have to do. But what we have here is 28 people who are not going to lose because of the electorate or even because the Boundary Commission has changed something directly concerned with the Scottish Parliament. They will lose because of the tie-up with another parliament. That is the point and it has nothing to do with the electorate.
Lord Steel of Aikwood: My Lords, before the noble Lord stands up, can he say what the Government will do when the new parliament has been built and there are, as the noble Lord said, 129 officers, with a committee structure which is running; and it is found that 129 is a reasonable number, as everyone has anticipated, and parliament itself decides that it does not

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want to lose 28 members and petitions this place to retain the parliament in its present state? What are the Government going to do then?
Lord Sewel: My Lords, I shall deal with the point made by the noble Lord, Lord Steel, directly. I have already dealt with it on a number of occasions. I have made the point that, notwithstanding the argument and merit of the linkage between the Westminster constituencies and the Scottish parliamentary constituencies, if, in the light of actual experience—I believe that the noble Lord, Lord Steel of Aikwood, will recognise my words—the Scottish Parliament has a committee structure and a system of operating which requires a larger number of officers than would be allowed as a result of the changes following the reduction in the number of Scottish Members at Westminster, it would clearly be open to the Scottish Parliament to make representations.
I have enough confidence in and recognition of the good faith of any government of the day to indulge in serious and constructive discussion with the Scottish Parliament on that basis, because it is in the interests of both parliaments to ensure that a Scottish Parliament works and is effective. We are not at that stage yet. The government of the day could only reach that judgment in the light of the experience of the parliament and could then properly weigh the merits of maintaining a common constituency system for both Westminster and the Scottish Parliament against an argument about the optimum size of the Scottish Parliament which had been established on the basis of experience.
On that basis I am sure that one could have a constructive discussion between the two parliaments and the two executives. At this stage I cannot make any commitment about the outcome, but it is something which is clearly sensible and can be considered.
It seems to me that we come to two issues. First is the size of the parliament which requires breaking the linkage. Our argument has always been that there is a good and strong case to be made for maintaining the linkage between the Westminster constituencies and the Scottish parliamentary constituencies. That reinforces a sense of identity. It helps to maintain the shared institutions of the Union, which is what we are concerned with in this House.
Secondly, I deal with the timetable for the review. The next Boundary Commission will take place between December 2002 and December 2006. Despite what noble Lords say, reviews take time. Any of those involved in any way in Boundary Commission reviews know the interest that they quite rightly generate locally, not just among political parties but among ordinary citizens. It is not just a matter of using a democratic model, plugging in statistics, punching the right buttons and coming out with lines on a map giving equal size constituencies throughout Scotland without having proper regard to the views and interests of local communities, particularly as this boundary review could well result in a significant reduction in the number of Scottish constituencies. This must be handled with a
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degree of care and sensitivity which will rightly take time. It is not appropriate therefore to disturb the timetable that is already set in place.
We have been here before. We have heard both sets of arguments before. In a longer debate I would have drawn attention to other minor points in the Bill of the noble Lord, Lord Mackay, as not being acceptable. But we concentrated on the two broad issues; the size of the Parliament, setting it in stone forever more, and the timing of the review. I have made it clear that the Government are not disposed to accept this Bill as the right to way to deal with the concerns expressed by the noble Lord in his usual eloquent but familiar terms; but following the conventions of this House we will not oppose a Second Reading.
Lord Mackay of Ardbrecknish: My Lords, I share a sense of disappointment with my two noble friends and the noble Lord, Lord Steel of Aikwood. I had rather hoped that, with the end in sight for the ministerial job of Under-Secretary of State for the Scottish Office in the House of Lords, the noble Lord might have shown himself to be freer of the ties that bind him to Downing Street and would have been prepared to see the problem we put forward.
As my noble friend Lord Monro said, it is hard to believe that it can take longer to create 58 new Westminster constituencies in Scotland—or rather, to keep 72, because that is what we are talking about— than it will take to come up with Royal Commission proposals to reform your Lordships' House. I cannot think why one is expected to last eight months, yet the other for two or three years. My noble friend Lord Rowallan said that it was a huge error for Westminster to appear on the one hand to be giving something to Scotland, but in a year or two's time to be seen to take it away, at least in part. The noble Lord, Lord Steel of Aikwood, made clear points, going over the previous position in which the Government had clearly signed up to the proposals in the constitutional convention. My party was not a part of that, but recognised that they signed up to them. Then, all of a sudden, when we come to look at the legislation the Government back away from them.
The Minister said that I had adduced no new evidence and no new argument; but once again he has failed to persuade me, or anybody in Scotland listening to this debate, of the Government's case. One of the reasons for coming up with a tightly drawn Bill is to get away from the other issues in the Scotland Act and just try to concentrate on this one matter. The idea that if we break this link, we will be breaking a bigger link between Westminster and the Scottish Parliament is a nonsense. If I thought for a minute that breaking the link between the number of MSPs and the number of MPs at Westminster would endanger the Union, I would not be bringing forward my Bill.
If I may speak on behalf of the noble Lord, Lord Steel, I thought that the worst argument the Minister adduced was that because the noble Lord campaigned for a yes, yes vote he must have been happy with the White Paper—as though the noble Lord would have campaigned for a no vote on the basis that he did not

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like a small part of it. That really was disingenuous. Mind you, I should not be surprised because currently the Labour Party, having campaigned to give the Scottish Parliament the power to charge another 3p in the pound on Scottish taxpayers, is not campaigning vigorously against the idea that it should ever be implemented because of the damage even 1p more tax would do to the Scottish Parliament. If the Government throw stones at people for the way they campaigned in the referendum, they ought to be careful lest serious bricks be thrown at them.
I do believe that we ought to break the link, which could easily be one of the catalysts that might damage the Union. Let us assume for a moment that the Scottish Parliament does as the noble Lord, Steel of Aikwood, said. Anybody who lives in the real world knows that it will. When it comes to the day when the Boundary Commission is set up, and this seems to be coming over the horizon, the Scottish Parliament will pass a Motion, which it will send here, saying, "We want 129 constituencies". It will do that after lots of campaigning, when the Scottish National Party will make hay in a big way. So will the other Opposition parties, if Labour is still in government. The Government have stored up real trouble for themselves. This little issue will be magnified by the Scottish National Party and the Scottish press. The people who think that they are the short list of 21 will, regardless of where they sit in the Scottish Parliament, stir up as much trouble as they can.
That issue will be brought here, and we would do better dealing with it now—rather than let a head of steam build up and have the Westminster Parliament forced to back down.
I do not believe in common boundaries. The Government have proposed a method for the election of European Members of Parliament when in Scottish terms—and the same is true all over the UK—eight MEPs will be in the one constituency, without any boundaries. They are not so sacrosanct as the Minister seems to make out. We will all be puzzling which of the eight represents us. If we have a bit of a problem, we will write to all eight. That situation is much worse than a bit of double representation. It is not even double. I will know that my MSP and Westminster MP are A and B. A neighbour may share A but not B, because he will have a different MP at the Westminster Parliament. I do not think that will be a problem. The Scottish electorate are quite well educated enough to work that one out.
I am disappointed. The Government's failure to act on those two issues will lead to problems in two different places. The Minister did not address why, if it is right to go to 58 constituencies the election after next, is it not right to go to 58 at this election. He did not lock horns in that argument. I am not surprised because he has no possible justification for the Government's action. The result is that once the Scottish Parliament is up and running, the number of MSPs will begin to become an issue in England. In two or three years, when we come near to the reduction in the next Parliament and therefore in the number of MSPs, that will become an issue and a problem in Scotland. On those two issues,
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there will be problems in England to begin with, then problems in Scotland. The Government are being very "head in the sand", in not seeing that my little Bill is one way of resolving those two problems. I hope that your Lordships will give the Bill a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

International Mobile Satellite Organisation (Immunities and Privileges) Order 1999
11.59 p.m.
Baroness Ramsay of Cartvale Baroness Ramsay of Cartvale rose to move, That the draft order laid before the House on 25th February be approved [12th Report from the Joint Committee].
The noble Baroness said: My Lords, the order is required to give effect in UK law to the new headquarters agreement which has been negotiated as the result of the organisation's restructuring. An affirmative resolution in both Houses of Parliament is necessary before the order can be referred to the Privy Council. The order revokes and replaces a previous order made in 1980 to confer privileges and immunities on the organisation's predecessor.
The decision to restructure, which is basically privatisation, was taken to ensure the organisation's survival in a rapidly changing and commercially competitive environment. This is due to take place on 15th April 1999 when most of the organisation's staff, assets and liabilities will be transferred to a limited liability company to be known as Inmarsat. A small secretariat, which will retain its intergovernmental character and will continue as a treaty-based entity, will remain. This will be known as the International Mobile Satellite Organisation. Its sole purpose will be the oversight of the new company's public service obligations, that is, the operation of the Global Maritime Distress and Safety Service (GMDSS)—in other words, the "999" for ships.
The organisation was previously known as the International Maritime Satellite Organisation. This was established in 1979 and located in the UK under the aegis of a headquarters agreement signed on 25th February 1980. It was given effect in UK law by the INMARSAT (Immunities and Privileges) Order 1980. The organisation subsequently changed its name to the International Mobile Satellite Organisation.
The original purpose of the organisation was to improve maritime communications, as well as aeronautical communications, as practicable. These activities were designed to assist in improving communications for distress and safety of life and for communications for air traffic services. They were also designed to improve the efficiency and management of transportation by sea, by air and on land, as well as maritime, aeronautical and other public correspondence services, plus radio-determination capabilities.
The Government strongly support the restructuring, which is designed to ensure the new private sector company's attractiveness to investors and its ability to

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take advantage of rapidly advancing technology. The incorporation of new developments quickly, the reduction of operational costs and improvements in the speed of decision-making are also key objectives. An important point to note is that the residual intergovernmental organisation will be entirely funded by the new Inmarsat company, with no cost burden falling to member countries. The net result is private sector funding of an international public service and the more efficient and competitive use of a public sector organisation's staff and assets.
The number of staff accorded privileges and immunities will be much reduced from 472 at present to about six when the restructuring becomes effective in April. The Order in Council will give the residual intergovernmental organisation, which will be based in London, the same kind of privileges and immunities as its predecessor. The new headquarters agreement,
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necessary on account of the restructuring, is modelled on and closely follows the wording of the 1980 agreement with the organisation's forerunner, which it terminates.
It is essential and important to the 86 member states of the International Mobile Satellite Organisation for the order to be made by the Privy Council at its next monthly meeting on 13th April. This is so that the necessary implementing legislation is in place in order to enable the headquarters agreement between Her Majesty's Government and the organisation to be signed on 15th April which is the effective date for IMSO's restructuring. In the circumstances, I very much hope that your Lordships will approve the draft order.
Moved, That the draft order laid before the House on 25th February be approved [12th Report from the Joint Committee]. —(Baroness Ramsay of Cartvale.)
On Question, Motion agreed to.

Northern Ireland (Sentences) Act 1998 (Specified Organisations) Order 1999

  Northern Ireland (Emergency Provisions) Act 1996 (Amendment) Order 1999
  12.5 a. m.
  The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs)The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs) rose to move, That the draft order and the order (S. I. 525/99) laid before the House on 3rd March be approved [12th Report from the Joint Committee].
  The noble Lord said: My Lords, I am grateful that it has been agreed that we should consider these two orders together since their effect is similar. The emergency provisions Act amendment order adds the Orange Volunteers and the Red Hand Defenders to the list of proscribed organisations in Schedule 2 to the Emergency Provisions Act 1996.
  The specified organisations order has the effect of adding the Orange Volunteers and the Red Hand Defenders to the list of organisations who are ineligible for the benefit of the Northern Ireland Sentences Act 1998. That benefit is the early release of prisoners convicted of scheduled, that is to say, terrorist-type, offences. If an organisation is specified, supporters of that organisation do not qualify for early release. Neither of these organisations currently has any members or supporters in prison but I am sure your Lordships would agree that it is entirely right that they should be listed as specified organisations. The order also removes the Irish National Liberation Army from the list and thus entitles its supporters to benefit from early release.
  Before I go into more detail on the provisions of the orders and the need for them, I should like to set them in context. Northern Ireland has in recent weeks attracted much news coverage as the parties and the governments have been urgently seeking to secure the full implementation of the Belfast agreement. However, the past week has, tragically, seen the focus of attention shift back to the dark days of murder on the streets. There have been two more murders, including that of Rosemary Nelson, a well-respected and courageous solicitor, a wife and mother of three, which appalled everyone who has been working so long for peace. That murder was claimed by the Red Hand Defenders.
  The Government very much welcome the swift action taken by the Chief Constable in involving David Phillips, Chief Constable of Kent, and the FBI in investigating this horrendous murder. As the Chief Constable, Mr. Flanagan, said,
  "not only will this investigation be meticulous but it will be transparently obvious to (the family of Mrs Nelson) and to the watching world. I am determined that those concerns will be addressed".
  The Chief Constable has further emphasised that no constraints and no limit whatever will be placed upon Chief Constable Phillips and the FBI.
  Set against these recent despicable acts, and with the memory of Omagh very much in our minds, is the fact that Northern Ireland has seen over the past year a transformation in the political climate. The Good Friday agreement has provided, for the first time in Northern Ireland's history, an opportunity to secure long-term peace and political stability based on an agreed accommodation between the two communities. There has already been a great deal of progress in implementing that agreement. The new Assembly has been set up; treaties have been signed to establish agreed cross-border bodies; the Human Rights Commission has been established; and reviews of policing and criminal justice are well underway. Only a year ago, all this would have been unthinkable.
  There is still hard work to be done but the prize is within our reach. That is what those organisations not on ceasefire want to destroy. They want to bring to an end the hard-won progress which has been made. They must not be allowed to succeed.
  Because the order proscribing the Orange Volunteers and the Red Hand Defenders was made under the urgency procedure provided for by Section 60(3) of the Emergency Provisions Act, they were proscribed with effect from 4th March 1999 and we are now seeking to have that proscription endorsed by Parliament. The main effect of proscription is that membership of the organisation in question becomes a criminal offence. Apart from making membership of the named organisation an offence, proscription creates offences in relation to soliciting or inviting financial or other material support; helping to arrange, manage or address a meeting; and dressing or carrying articles in a way which is likely to arouse reasonable apprehension that the person is a member or a supporter of the organisation. I should add that the Orange Volunteers are described within both orders as:
  "The organisation using the name 'The Orange Volunteers' and being the organisation in whose name a statement described as a press release was published on 14th October 1998".
  A copy of the press release has been deposited in the Library for the convenience of Members. This rather tortured piece of wording was deemed necessary in order to differentiate between the present-day Orange Volunteers and an organisation of the same name, but unrelated, which was formed in the 1970s. Although the 1970s organisation has apparently been inactive for some years, we consider that it does still exist. It is not, however, an organisation which we consider should be specified, nor does it meet the criteria for specification.
  Similarly, the other order specifies both the Orange Volunteers and the Red Hand Defenders as organisations ineligible for benefit from the prisoner early release scheme. But it does have the effect of despecifying the Irish National Liberation Army and thus brings it within the early release scheme. This is in recognition of the fact that the Secretary of State now believes that it is observing a complete and unequivocal ceasefire.
  The two orders should be seen as evidence of the flexible approach we take, responding to the ever-changing nature of the terrorist threat in Northern Ireland. I commend them to the House. I beg to move.
  Moved, That the draft order and the order (S. I. 525/99) laid before the House on 3rd March be approved [12th Report from the Joint Committee]. — (Lord Dubs.)
  Earl Attlee: My Lords, I am grateful to the Minister for his explanation of the orders, which we fully support. The orders were made before the murder of Mrs. Nelson, on which I shall say more later. It is also a sad fact that the splinter groups that we see appearing are, in general, anti-agreement. One difficulty is that we are aiming at a moving target, and no doubt further splinter groups will appear, but I am sure that the Secretary of State will take similar firm and prompt action as required.
  The objective of the extremist paramilitaries is to ruin the agreement and stop the peace process because peace is not in their interests. The last thing they want to see is normalisation in Northern Ireland. These extremists are becoming increasingly desperate as they see the efforts of all the parties to the Belfast agreement getting tantalisingly close to achieving full implementation. However, I also believe that they are attempting to take advantage of their window of opportunity arising from the current difficulties over decommissioning.
  Last week I said that I would elaborate on my views of the foul murder of Mrs. Nelson. She was a member of the legal profession who handled many high-profile cases involving republicans. Her work was important as there would be something wrong in terms of human rights if, yes, even alleged terrorists did not have access to legal advice that they could be confident in. Furthermore, it is in no one's interest for a person, whatever his background, to be convicted of a crime that he did not commit.
  Mrs. Nelson was part of our criminal justice system, but it is worth pointing out that so, too, are judges, the RUC, prison officers and, indeed, witnesses. It is well known that members of these groups have been killed and they remain vulnerable to terrorist attack.
  I accept that I am relatively inexperienced in these matters, and no doubt I will see further disappointments and set-backs for us to overcome. Last week I said that I was bitter about Mrs. Nelson's murder, but I do not shed crocodile tears. I am sincere. I have described the important role that she undertook, but she was attacked despite the fact that she was also the mother of three young children, one of whom was at school very near to where the attack was planned to take place. To target a woman in that way was quite despicable even in terms of international terrorism. I join with the Minister in supporting the prompt action of the Chief Constable of the RUC in setting up the investigation into the murder.
  What will concern many, both inside and outside this House, is whether the brutal attack by the so-called loyalists, who will be caught by the orders, will have the effect that they desire. That is in the hands of the republicans. They could do nothing; they could just ignore the attack and pretend that it did not happen. Or they could do exactly what the loyalist extremists want.
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  They could follow the extremists' own agenda, jeopardise the Belfast agreement and, in the process, throw away all the advantages of the agreement that they signed. Incidentally, as that approach would make the extremists' attack a successful one, it would put other soft targets at risk. In making that point, I wish to make it clear that I see no silver lining in Mrs. Nelson's murder. It is all entirely negative.
  On the other hand, the republicans could salvage something. They could do precisely what the extremists do not want. They could defeat them by carrying on with the peace process, however difficult that might be. All the parties have met their obligations, with one major exception—decommissioning. Decommissioning has to happen. I was disappointed that the Prime Minister did not take a firmer stand in the US. But I recognise that last week we were unlikely to see the breakthrough for which we had hoped.
  It is disappointing that the need for this order has arisen at all. However, we fully support the timely action taken by the Secretary of State in making the order, and we are content.
  12.15 a. m.
  Lord Redesdale: My Lords, we on these Benches also support these orders, which are specific in their aims.
  "Ordinary Catholics have nothing to fear from us".
  That claim was made by the Orange Volunteers during a display of strength for journalists shortly after the group's formation late last year. Since then, the organisation has claimed responsibility for a spate of attacks on Catholic families and bars which can only be described as senseless and indiscriminate. At Magherafelt's O'Donovan Rossa GAA club, a bricklayer who was working there was injured in a bomb attack. Patrick Shields was injured in an explosion at his home in Loughinisland in January. And it was sheer luck that a bomb left outside a bar near Toome Bridge did not kill the customers inside, or anyone else using the main Belfast to Derry road. It is clear that the ordinary people of Northern Ireland have much to fear from the Orange Volunteers.
  I welcome the decision by the Secretary of State to add the Orange Volunteers to the list of proscribed organisations under the Northern Ireland (Sentences) Act and the Northern Ireland (Emergency Provisions) Act. I also welcome the decision to proscribe the Red Hand Defenders in the same way. Like the Orange Volunteers, that organisation has shown nothing but savage brutality towards the Northern Ireland community. As well as admitting that they have been behind a number of gun, bomb and arson attacks in the past year, the Red Hand Defenders have been responsible for the loss of three lives in the past six months or so. Constable Frankie O'Reilly died after blast bombs were lobbed at the police during Drumcree protests in Portadown. Last November Brian Service was shot and killed in North Belfast. Their latest attack claimed the life of Rosemary Nelson last Monday when

  1099
  a bomb exploded under her car in Lurgan. This was a particularly deliberate and barbarous incident which robbed Northern Ireland of a gifted lawyer and robbed three young children of their mother. Such foul deeds must be condemned in the strongest political terms.
  Those in the Orange Volunteers and the Red Hand Defenders who planned and carried out these attacks in recent months have no place in today's society. There is absolutely no justification for such blatant sectarian aggression. It is clear that at such a critical point in the peace process, these organisations are intent not only on destroying life but also on destroying the prospects of peace and political stability in Northern Ireland.
  I am in full support of the Secretary of State's decision to add these groups to the list of proscribed organisations. We also welcome the recognition of the INLA's six-month cease-fire and the decision to remove this group from the proscribed list. We support the orders.
  Lord Dunleath: My Lords, I would like to thank the Minister for the clarity with which he has explained the purposes of the first two orders before us tonight. I was not present last week when the prevention of terrorism Act (continuance) order was debated, but would agree with those who say that the Act is often mistakenly seen as a Northern Ireland measure when it is not.
  In that connection, I welcome Her Majesty's Government's proposals to introduce permanent United Kingdom-wide counter-terrorism legislation. The measures before us this evening are, of course, specifically Northern Ireland matters and the dreadful events of last week only served to emphasise how necessary these are. The cowardly and brutal murder of Rosemary Nelson has been claimed by the Red Hand Defenders, whose proscription, which we are asked to approve tonight, appears to have been almost uncannily foretold when it was announced, along with that of the Orange Volunteers on 3rd March. Two days after the murder of Mrs. Nelson, Mr. Frankie Curry, an alleged member of the first of the two organisations, the Red Hand Defenders, was slain. That, it was alleged, was carried out by other Loyalist paramilitaries.
  The Province is currently awash with rumour and counter-rumour about his death and also the circumstances surrounding that of Mrs. Nelson in that it is claimed that the Red Hand Defenders did not have the expertise to manufacture and plant the lethal device in Mrs. Nelson's car. Ipso facto, it is claimed that they may have been assisted by the UVF, the UFF or the UDA.
  The question then is whether Mr. Curry's death is the result of an internal feud or a demonstration by some of the mainstream Loyalist paramilitaries to their opposite numbers in the IRA that Mrs Nelson's murder was not approved by them. Out of these dreadful events it is perhaps—and I say this diffidently—slightly encouraging and I earnestly hope not premature to note that there has not been any knee-jerk tit-for-tat killing by the IRA. Would that this were the case and that they might now start to decommission.
  1100
  Inevitably there have been claims from the usual quarters that Mrs. Nelson's murder was carried out with the collusion of the security forces and in particular that of the RUC. This kind of claim, I am sure, is totally without foundation and is inevitably yet a further attempt to discredit the RUC, no more and no less. I too applaud the chief constable of the RUC in his decision to bring in the chief constable of the Kent Constabulary and also the FBI to assist in the investigations into Mrs. Nelson's murder.
  In view of the events that have occurred, there is no alternative but wholeheartedly to support these two orders. I have but one question for the Minister tonight. The sentences Act and the emergency provisions Act are both security related. Would I be right in thinking that they and the associated orders will remain as Westminster matters if and when power is devolved to the Northern Ireland Assembly? If that is correct, I look forward to the day when your Lordships' House no longer needs to debate such matters and, indeed, to when these two uncomfortable Acts may be repealed.
  The Minister highlighted the comparatively buoyant state of the Northern Ireland economy and employment prospects when introducing the appropriation orders at the beginning of this month. I congratulate the Government on this. It highlights the benefits of a peace dividend. How cruel if all this progress is now dashed. Therefore, I wish the Secretary of State good fortune in the difficult days that lie ahead, especially those leading up to Good Friday next week.
  Lord Glentoran: My Lords, I wish to make a few brief points but before doing so I wish to do two things. First, I associate myself with the words of my noble friend Lord Attlee concerning Mrs. Nelson's death. Secondly, I wish to make it quite clear that, whatever I may say tonight or may have said in previous debates, I still strongly support the bipartisan approach within Parliament.
  It is worth reflecting—perhaps in my rather cynical way—that the Government face serious difficulty in the fragmentation of these various bodies. For 50 years or more it has been the objective of the Republican movement to maintain a united front. Mr. Adams and Mr. McGuiness say that they are unable to deliver disarmament and so on, but they will put that before losing a united Republican front.
  I believe that what is happening as we speak is that individuals move between one organisation and another. It has been more difficult for the RUC without military support to have on-the-street cover and close surveillance of the various terrorist areas. Organised crime involving drugs and other forms of smuggling has increased. The difficulty that approaches, and probably exists now, is how to be sure that objectively one is assessing where terrorism drifts down the horrible murky line and gets lost in what we may know in this country as ordinary organised crime. As we know can happen here and elsewhere in the world, organised crime is capable of moving further so that the funds from that activity go into registered public companies and show a totally clean front. That has been the situation in Northern Ireland for many years. The road

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  that we are taking by prisoner releases and the orders before the House tonight will make it more and more difficult to determine whether a particular individual is not a terrorist or was a terrorist and whether a particular act was not organised crime and straightforward murder but something different.
  Since the murder of Mrs. Nelson I have had in mind—I know for certain that this occurred in the 1970s—the question of collusion between the bottom of the republican IRA terrorist movement and those in the loyalist movements who have the same objectives and are equally determined to destroy anything that looks as if it may restore a civilised and peaceful community and government. It is quite possible that through the murkiness that I have just outlined the idea arose, perhaps after a drink or drug or two, and perhaps the device was given or sold to a loyalist. It is also possible that somewhere down that murky line the republican movement engineered and organised that devious and horrible crime. That is the real world with which we are dealing in Northern Ireland. I support the orders before us tonight. I also support and admire the Ministers who are working in Northern Ireland.
  12.30 a. m.
  Lord Molyneaux of Killead: My Lords, I join with other noble Lords who have condemned recent atrocities. I equally condemn the activities of these groups. I hesitate to call them "splinter groups". As the noble Lord, Lord Glentoran, has just said, there seems to be no end to the fragmentation, some of which is very carefully orchestrated. As to the very valid point he makes about the possibility of collusion, to my certain knowledge that existed even in the 1970s when the same firearm was used by a so-called loyalist terrorist group to commit murder and within a week was used by an equivalent IRA group for the same purpose. We should not discount entirely the possibility that that still goes on and, unfortunately, may continue to mushroom as splintering continues.
  Your Lordships will be aware of the importance of sensitivity in Northern Ireland during the remaining crucial 10 days of the month of March. It is distinctly unhelpful to have the sentencing order on the agenda—the most obscene item of legislation imaginable. I understand that it has to go through the fast track system. I am glad that we have the fast track system of adding organisations, given the freedom with which they splinter, regroup and come back wearing a different colour.
  The concession required of law-abiding citizens was in a sense horrific in the concept of the release of prisoners. But as the release of convicted triumphalist murderers proceeds, unfortunately so the support of the Belfast agreement diminishes in like proportion. But what support remained, I am afraid, has been seriously eroded following the conviction last week of the deadly sniper gang of four which included Bernard McGinn who made the bombs used at Canary Wharf, the Baltic Exchange, and Hammersmith Bridge.
  1102
  The murderer himself admitted without qualification or reluctance that he specialised in making bombs north and south of the Irish border on a daily basis. To use his own words, he said that it was like a day's work. He received three life sentences for the callous murder at different times of three soldiers during a 20-year reign of terror in County Armagh. The other three terrorists were each given 20-year sentences; and as they were all leaving the dock the four murderers laughed and shouted, "See you next year". That is not too difficult to work out. Sixteen months in prison and then they, too, will be released. That boast was not directed at their IRA sympathisers in the court. It was a threat against the law abiding citizens in the United Kingdom. In 16 months they will be retrained and re-equipped, and back at the work they have claimed they know best and which the said gentleman stated was just like a day's work.
  For that revolting situation the two governments have only themselves to blame. It would be interesting to supervise and scrutinise the activities of the Irish Government in carrying out their equivalent legislation. I believe that they are displaying a little more toughness in the criteria that they establish as to who will be released and who will be kept inside. I know that Her Majesty's Government will say that the release of prisoners is the price we have to pay for peace. But unfortunately terrorists have not yet given peace, only a scaling down of their campaign in which a balance of terror had been achieved by the time they were forced to have their first ceasefire. If they intend to grant a permanent peace, why do they feel the need to insist on retention of the weapons of war?
  It is against that background of anger and frustration that crucial questions will now confront those in positions of responsibility in Northern Ireland. During the past 10 days the most dangerous contributors to destabilisation and further confrontation and anger will come from the unthinking demands of those who are sometimes termed the great and the good. Some of them, even in the past 48 hours, have already demanded compromise between the leaders mistakenly regarded as equals. But there has been no question of equality of sacrifice on the part of those leaders.
  Over the past three years, Mr. Trimble, the leader of my party, has been forced, of necessity, to make concessions to keep the show on the road, and many other concessions to violence have been made by the British and Irish Governments, concessions, I am afraid, made always at the expense of the Unionist population which has, in addition to all that, been subjected to a mind-boggling campaign of distortion and deception.
  In the other corner stands one Mr. Adams who has conceded absolutely nothing but pocketed all the concessions made by others and then always comes back for more. So well-meaning but naive people must understand mat there is no equation between Mr. Trimble and Mr. Adams.

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  Those noble Lords who were present on 9th March this year will have heard the noble and learned Lord, Lord Mayhew of Twysden, describe the reality of Mr. Trimble's position. He said:
  "There is no more movement—and, my goodness, there has been plenty—to be had from those representing Unionists in Northern Ireland. Nor, I judge, is there any movement from the two governments". —[Official Report, 9/3/99; col. 197.]
  So my final words and my plea to the great and the good is a word of polite caution, asking them please to recognise that Mr. Trimble has nothing left to give while Mr. Adams has not even started to give.
  Lord Dubs: My Lords, I am grateful for the widespread support for the Government's policy in putting forward these two orders. I agree with what the noble Earl, Lord Attlee, said about being tantalisingly close to agreement. Indeed, I hope that the next two weeks will see some success in reaching that agreement.
  Yes, I agree with the words used by the noble Earl and the noble Lord, Lord Redesdale, about the murder of Rosemary Nelson as being a despicable act intended to undermine the whole peace process.
  I believe that the noble Lord, Lord Dunleath, said that he was grateful that there were no tit-for-tat killings. That is something for which we should be grateful, for a wave of such killings would certainly undermine the political progress that we have made over the past year.
  The noble Lord asked a specific question about whether certain powers will remain with Westminster. The position is that security matters will remain at Westminster because they are excepted matters. Criminal justice, the police and policing are reserved matters which stay at Westminster, but there is a possibility that at a certain point in the future, they could become transferred matters. But security stays as a Westminster responsibility. I hope that that gives the noble Lord the assurance that he sought.
  While being generally supportive of a bipartisan approach, for which I am grateful, the noble Lord, Lord Glentoran, spoke about areas on which I should prefer not to speculate as regards who has been responsible for any particular act. That would not be helpful. It is better to leave that to the present police investigation and inquiry to see who can be brought to justice for that and other murders.
  I appreciate that the noble Lord, Lord Molyneaux, has been consistently unhappy about the policy of releasing prisoners. He is right to say—and I repeat it again—that it is a price for peace and without an agreement on the release of prisoners, there would have been no Good Friday agreement.
  When we introduced the original legislation permitting the release of prisoners, we said that that was a particularly difficult matter. I am extremely conscious of the real difficulty facing victims, relatives or friends of victims of terrorism when they find that the terrorist who murdered or maimed is being released. I appreciate how difficult that is. However, without that particular approach, we would simply not have got the Good Friday agreement. Given the length of time the troubles
  1104
  have lasted, even before we had the early release scheme, there were many murderers and others who had been released in the normal course of events, having served 15 or 20 years. It is a difficult issue and I am sensitive to the distress it has caused over the period of the releases.
  The noble Lord, Lord Molyneaux, also suggested that concessions had been made entirely at the expense of the Unionist population. He will not expect me to agree with that. We feel that all sectors of the community have been required to make concessions. That has been part and parcel of the Good Friday agreement. It is absolutely right that we go on demanding that all people who are party to the agreement should accept their responsibilities and obligations under it. That is the basis of the Government's pressure for movement so that the new Assembly can, I hope, assume full powers in the very near future. I commend the orders to the House.
  On Question, Motion agreed to.

  Northern Ireland (Emergency Provisions) Act 1996 (Code of Practice) Order 1999
  12.40 a. m.
  Lord Dubs Lord Dubs rose to move, That the draft order laid before the House on 8th March be approved [12th Report from the Joint Committee].
  The noble Lord said: My Lords, the Northern Ireland (Emergency Provisions) Act 1998, which received Royal Assent on 8th April 1998, amended the Northern Ireland (Emergency Provisions) Act 1996 to make provision for police interviews to be audio-recorded and for the audio-recording arrangements to be governed by a code of practice.
  Audio-recording will add to a range of safeguards; for example, there is a statutory code of practice already in place governing the detention, treatment, questioning and identification of terrorist suspects in police custody. It requires, among other things, continued detention to be reviewed at 12-hourly intervals, the maintenance of detailed custody records and breaks for all normal meal times. It provides for regular visits and examinations by a medical practitioner and a right for the detained person to have a continuous period of eight hours in any period of 24 hours free from questioning, travel or interruption.
  Audio-recording will run alongside the existing system of silent video recording. This, too, is governed by a statutory code of practice and has been mandatory since 10th March last year. The posts of independent commissioner and deputy commissioner for the holding centres provide valuable assurances that the range of safeguards is being fully and properly applied. These safeguards demonstrate that the Government continue to attach the greatest importance to the protection of the rights of those held in police custody.
  Today I am asking your Lordships' House to approve a draft order which will bring into operation a code of practice governing audio recording. The code of practice was laid in draft before this House on 23rd February this

  1105
  year. It was drawn up to mirror as closely as possible the equivalent Police and Criminal Evidence (Northern Ireland) Order 1989 code of practice on tape-recording of interviews with suspects.
  The draft code sets out a range of requirements which must apply when interviews with terrorist suspects are audio-recorded. It also gives guidance to police officers and others on the application and interpretation of the code. Section 1 describes to whom the code applies, defines some of the terms which appear in it and requires that it be readily available at all police offices which are designated for the detention of terrorist suspects.
  Section 2 is concerned with the integrity of the system and requires that a twin-deck tape-recorder be used with one tape, chosen by the detained person, serving as the master tape. Section 3 specifies when audio-recording shall apply. Section 4 deals with the interview prior to commencement; the loading of the tape-recorder through to cautioning; objections or complaints; changing tapes; breaks in the interviewing process; and the conclusion of the interview, including the removal of the tape from the recorder. Section 5 describes what happens after interview in terms of the preparation of written records of the interview. Sections 6 and 7 deal respectively with tape security and the destruction of tapes.
  The laying of the draft code of practice followed a public consultation exercise last autumn when all interested parties were invited to comment. In the interest of maintaining parity with the equivalent PACE provisions, only minor amendments were made to the code in the light of comments received. Once the present draft order has been approved by both Houses of Parliament and is made, the Secretary of State will make a further order. That order, which will be subject to the negative resolution procedure, will make it a requirement that police interviews with persons detained under the provisions of Section 14(l)(a) or (b) of the Prevention of Terrorism (Temporary Provisions) Act 1989 will be audio-recorded.
  The second order will also specify additional circumstances in which police interviews are audio-recorded in accordance with the code. I shall explain the reference that I have just made to "additional circumstances". Occasionally when a person is brought before a magistrates' court after he is charged with an offence, the police will need to interview him further at a holding centre about other offences. In such circumstances, the police are not required to make a PTA arrest, or a further PTA arrest, as the case may be. Instead, they will apply under Article 47(4)(b) of the Magistrates' Courts (Northern Ireland) Order 1981 to have the accused person remanded into the custody of a police officer for the purposes of further inquiries into other terrorist-related offences. It is proposed that interviews that take place in those circumstances will be required to be conducted in accordance with the code. I am delighted that we are taking this step today to bring the draft code of practice into operation on 24th May.
  Keeping the draft code closely aligned with the PACE provisions is consistent with the Government's declared aim to align the holding centre procedures with those applicable under ordinary criminal law. The Government have consistently taken the view that the many benefits of audio-recording make it a worth while step. Audio-recordings will provide best available evidence in any court proceedings. Their disclosure to the courts should reduce the length of contested trials emerging from confessions and the tape recording will provide best available evidence to prove or disprove allegations of psychological abuse. I am happy to say that the Chief Constable of the RUC fully supports the move. On his authority, the audio-recording system has been operating in the holding centres since midnight on 10th January this year. This has provided a useful opportunity to test the system. Your Lordships' House will wish to note that the police have experienced no procedural difficulties conducting the numerous audio-recorded interviews which have taken place since then. I beg to move.
  Moved, That the draft order laid before the House on 8th March be approved [12th Report from the Joint Committee]. —(Lord Dubs.)
  Lord Redesdale: My Lords, given that there is still a certain level of violence and intimidation in Northern Ireland, I believe that the moves being made to introduce full audio-taping of persons held under the Prevention of Terrorism (Temporary Provisions) Act to be a useful step forward. Not only will that help to ensure that the rights of those being detained are not violated, but it will no doubt help the RUC on similar matters. Such a move is constructive at this time, not only as a confidence-building measure, but also in terms of aiding the RUC in the effective prosecution of those who have committed the horrendous attacks that we have seen in recent months.
  We support the provisions because they support transparency within the police force and will build on the credibility of the police force in Northern Ireland in the future. However, I have one question for the Minister. To what extent are these facilities, which involve considerable expenditure and hardware, available throughout the Province?
  Lord Dubs: My Lords, I am grateful for the noble Lord's support. I am not certain about where the facilities are available elsewhere. My understanding is that the intention is that they will be available in the holding centres which exist specifically for the questioning of people suspected of terrorist offences. Audio-recording will be available in all three holding centres in the Province. I commend the orders to the House.
  On Question, Motion agreed to.

  Limit in Relation to Licences to Provide Radio Multiplex Services Order 1999
  12.49 a. m
  Lord McIntosh of Haringey Lord McIntosh of Haringey rose to move, That the draft order laid before the House on 8th March be approved [12th Report from the Joint Committee].
  The noble Lord said: My Lords, the order revises the limits in relation to licences to provide radio multiplex services set out paragraph 11.4 of Part III of Schedule 2 to the Broadcasting Act 1990, as amended. Multiplexing—the management of a frequency block on which a range of digital programmes can, using compression techniques, be transmitted—is an essential function in digital radio. It is the expensive part of digital radio and the capital investment necessary before individual programmes can exist.
  The Government are committed to the success of digital radio. We agree with the industry and the Radio Authority that the current restrictions on ownership may harm its development. Apart from the national multiplex licence already awarded, there will be 26 local licences starting in Birmingham and staged over two years.
  The current restrictions are as follows. No one company may at any time hold more than one licence to provide a national radio multiplex service. A company which is a participant with more than a 20 per cent. interest in a company which holds a licence to provide a radio multiplex service but does not control that company shall be treated as holding the licence held by that company.
  No one company may hold a licence to provide a radio multiplex service and be a participant with more than 10 per cent. interest in more than one company which holds any other such licence. No one company may be a participant with more than a 10 per cent. interest in each of three or more companies which hold such licences. So a company may directly apply for as many local multiplex licences as it wishes, but it cannot hide its interest by controlling a range of consortia applying for multiplex licences. In theory, a single company or consortium could hold most or even all of the local multiplex licences, but that should not happen as the Radio Authority has a duty to ensure fair competition in awarding licences.
  The ownership restrictions included in paragraph 11 prevent companies from trying to circumvent the licensing process by acquiring a controlling interest in companies or in consortia after the licences have been awarded by the Radio Authority. The control of ownership in this way was one means of achieving the objective of plurality of ownership without making digital radio unattractive to potential participants and investors.
  The amended limits correct certain assumptions made in 1996 about the shape of investment in digital radio. We now know more about the extent of interest in local multiplex licences and the scale of the necessary investment. It is now clear that in the early stages of digital radio companies will have to form consortia in order to run multiplexes. The present restrictions will severely constrain the formation of such partnerships.
  Without some amendment we might see one or two powerful consortia bidding for local licences across the country. It could be argued that the current limits would have the effect of forcing the big players into a very small number of bidding consortia. We believe that smaller, more locally based radio companies might be excluded from participation. If even the larger groups find themselves obliged to form consortia the smaller companies can be expected to find it almost impossible to fund and run a local multiplex alone. We believe that that is the opposite of the original intention of the legislation, which was the encouragement of plurality of ownership and diversity of content. It is therefore sensible to revise the limits now. There is a greater likelihood of local interests and tastes being adequately served if regional radio groups and local stations are given encouragement to join consortia bidding for multiplex licences. But there is still a need for some restriction on shareholdings in consortia holding licences. It would not be desirable to have a very small number of companies controlling most or all of the local multiplexes through networks of consortia.
  Following extensive consultation, we therefore propose a cautious measure of relaxation. The order revises the limit so that no company may hold a licence to provide a radio multiplex service and have a shareholding with more than a 20 per cent. interest in more than four companies which hold any such licences. No company may be a participant with a more than 20 per cent. interest in each of six or more companies which hold such licences.
  Raising the number of consortia in which companies may have controlling investments would give all parts of the industry the opportunity to get involved in partnerships to bid for local licences. Raising the maximum investment allowed in companies or consortia should allow smaller radio groups the opportunity to make a number of meaningful investments in several local multiplexes.
  We are confident that digital radio will become an important communications medium in years to come. We want to see a financially healthy digital radio industry with a diverse output which reflects local tastes and interests. The Radio Authority shares our belief that multiplex consortia between large radio groups and local firms should work for the benefit of the digital radio listener. Such partnerships are not guaranteed, but the new limits allow the opportunity for their formation while continuing to guard against undue concentration of ownership. I commend the order to the House. I beg to move.
  Moved, That the draft order laid before the House on 8th March be approved [12th Report from the Joint Committee]. —(Lord McIntosh of Haringey.)
  Baroness Anelay of St. Johns: My Lords, I am more than usually grateful to the Minister for his explanation. When I was appointed to this brief three-and-a-half months ago, one of the first things I did was try to get to grips with some of the vocabulary surrounding broadcasting orders. I have to say that I have struggled ever since, despite the assistance of the vocabulary guide in the fourth report of the Select Committee of another place.

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  We on these Benches agree that digital must be a success for the future of communications business in this country and that, if it is to be a success, then large groups must be allowed more freedom to invest across the country. On the other hand, it is important to make sure that local companies have the opportunity to be involved and I appreciate the explanation the Minister gave as to how the Government weighed up the pros and cons of how that is to be achieved.
  I understand that the Radio Authority is supportive of this measure. Although others have said that they would like it to go further, the order tonight represents a reasonable way forward and we on these Benches support it.
  Viscount Falkland: My Lords, we on these Benches welcome this order. We also agree with the remarks both of the Minister and the noble Baroness, Lady Anelay of St. Johns, in relation to the desirability of the success of digital. It is one of the great technical advances in broadcasting of recent times. It is expensive, and it is curious how this is one area in which technology has leapt ahead of public demand. I congratulate the Government on seeing that the situation is different from that which existed when they made their original arrangements and so relaxed the constraints on corporate bodies in the way that they have.
  I do not know what timescale the Government envisage for acceptance generally of digital broadcasting. At this moment in time even buying a receiver is an expensive business. But one hopes that by these relaxations and the activity that that will generate, the economies of scale will be created which will accelerate acceptance into the domestic market and bring all the benefits to which he alluded; that is, the plurality of ownership and diversity of content. We agree with that. Having said that, I congratulate the Government and hope that this works. I am sure that it is going in the right direction.
  Lord McIntosh of Haringey: My Lords, I am grateful to both noble Lords for their reception of this order. It is fiendishly complicated and took me through several official drafts before I was satisfied that I understood them, let alone was capable of putting forward any coherent explanation to your Lordships.
  The noble Baroness is right that the Radio Authority supports the amendments. It would have gone a bit further but accepts that this is a realistic compromise. In relation to the response to the question of the noble Viscount, the timescale it will be slower than original anticipated. The equipment is still quite expensive. I have never heard digital radio so I have no idea about the improved quality which it is supposed to offer. It will be a considerable time before digital radio is widespread, but we hope the order will at least remove some possible obstacles to that process.
  On Question, Motion agreed to.

  New Opportunities Fund (Specification of Initiatives) Order 1999
  1 a. m.
  Lord McIntosh of Haringey Lord McIntosh of Haringey rose to move, That the draft order laid before the House on 11th March be approved [12th Report from the Joint Committee].
  The noble Lord said: The purpose of the order is to specify the three initiatives that will be funded by the National Lottery though the New Opportunities Fund. We published our proposals last November in the consultation document New Links for the Lottery and we received 328 responses. I am grateful to all who responded, the vast majority of whom welcomed our ideas.
  Not knowing who else was to take part in this debate, I sent the draft directions to the noble Baroness, Lady Anelay of St. Johns, and the noble Viscount, Lord Falkland, last Thursday. They set out the framework for the new initiatives, which have been developed with the benefit of the many useful comments made. I included a summary of the responses to consultation.
  We listened to the many respondents who were keen that we should not try to do too much with too little. I am pleased to inform the House that we have been able to increase the funding available to NOF for the initiatives from £400 million to £500 million. The extra money anticipates income that will accrue to NOF after the end of the current licence period.
  The cancer prevention, detection, treatment and care programme will build on local fundraising to address local needs. That initiative will help to support the Government's aim of providing high-quality cancer services for all. It will strengthen health promotion by developing innovative techniques for giving information about cancer prevention and detection, and it will develop partnerships to promote healthy living. The initiative will improve access and awareness in communities of the benefits of screening and ensure that all programmes have modern screening and diagnostic equipment. It will reduce waiting times for the diagnosis and treatment of cancer by investment in replacement or additional high tech equipment that would not have been made otherwise.
  That new lottery spending will be in addition to the settlement for health services agreed within the comprehensive spending review—additional to, not substituting for, Exchequer funding. The initiative demonstrates our commitment to seeing that the benefits of the lottery are more widely spread. The lottery's long-term success depends on retaining and reinforcing public confidence in its power to address issues that most concern people. That is what this and the other initiatives will do.
  Some £150 million will be available to fund the initiative, which will build on the tradition of voluntary support and the £140 million a year already provided by charitable and voluntary groups.
  The green spaces and sustainable communities initiative will help urban and rural communities across the UK to understand, improve and care for their natural

  1111
  living environment and improve the overall quality of their surroundings. The initiative will have two main strands: first, creating, preserving, improving and promoting access to green spaces of educational, recreational or environmental value to the community— including by the acquisition of land; secondly, encouraging small, community-based projects that engage local people in improving and caring for their environment and promoting sustainable development. The sum of £125 million will be available for that initiative, with 75 per cent. of that directed at the green spaces strand.
  A theme throughout the initiative is meeting community needs. Communities attach high priority to the quality of their environment but that will mean different things to different communities. In a rural community, for example, access to open land may be an issue. For urban communities, providing safe routes to schools might be a higher priority. The initiative will address the dearth of playing fields that resulted from the policy to sell them off. It will help communities such as the Isle of Eigg in Scotland to acquire and care for land. It will help reclaim derelict parts of our country and to knit communities together as part of our agenda to bring about social inclusion. It is NOF's first environmental initiative and shows our determination to ensure that lottery funds make a real difference to everyone wherever they live in the UK.
  The aims of the community access to lifelong learning initiative are to engage more adults in learning at community level and increase community access to information and communications technology. It will do that by supporting the development of a nationwide network of learning centres with ICT access to information and learning. Some £200 million will be available to support the development of community grids for learning and the equipping and networking of public libraries to provide learning centres for everyone wherever they live. Funding for community grids for learning will provide central ICT websites for "joining up" services—education, libraries, leisure, health, transport and the environment—at local level. The grids will provide community information for local people.
  Community grids will link into the national grid for learning, the public library network and the university for industry so that local good practice and information can be shared nationally and in a variety of learning contexts. The public library network is a programme for equipping and networking public libraries to join them to the national grid for learning and the university for industry. This support for libraries will complement the equipping of schools under the national grid for learning. This initiative will unlock the potential of public libraries which are ideally placed to bring the learning age to every community. It builds on NOF's existing initiative to train teachers and librarians and digitise content to support lifelong learning and it will complement the learning centre programme launched by Gordon Brown and David Blunkett providing an extra £470 million of taxpayers' money to raise standards and increase learning opportunities.
  In our consultation paper we also proposed an expansion to the existing NOF out-of-school hours initiative to fund 250, 000 new summer school places. Some £25 million will be set aside to achieve this as an expansion of NOF's existing out-of-school hours activities initiative. Summer schools include study support programmes run by individual schools and groups of schools and children's universities run by local education authorities and others. Activities may be subject-related or aimed at enhancing pupils' motivation and self-confidence to raise their levels of expectation and attainment. The long summer break can hinder pupils' progress, particularly for pupils from lower socio-economic groups whose reading ability can decline over the summer. Lottery funding will enable many more schools and others to offer exciting and effective learning opportunities to complement other summer provision. The Department for Education and Employment is to launch a summer school pilot this summer. The pilot will inform NOF's summer school initiative.
  The order gives effect to policies announced last September. The National Lottery has been more successful than anyone imagined. We want the lottery to provide something for everyone and make sure that the extra money goes where people most want it and where it is most needed. We have created NOF to ensure that lottery money benefits even more people. The health, education and environment projects which will be eligible for grants under these new plans could not happen without lottery money. These initiatives will be additional to government spending and not a substitute for it. NOF will be able to start inviting applications under the new initiatives before the end of this year. I commend the order to the House. I beg to move.
  Moved, That the draft order laid before the House on 11th March be approved [12th Report from the Joint Committee]. —(Lord McIntosh of Haringey.)
  Baroness Anelay of St. Johns: My Lords, again I thank the Minister for explaining the order to us tonight, and also on this occasion for sending copies of the directions to me. They were most helpful and I made efforts to ensure that some other of my colleagues were able to see them before the debate tonight.
  We had the opportunity to examine the arguments surrounding the additionality principle on Thursday 4th February when the Minister laid a National Lottery order, and I do not propose to revisit the argument of principle in detail tonight, or rather this morning as it now is. This order diverts moneys which otherwise would have gone to the arts, sports and good causes, as originally agreed in Parliament. However, I confirm my hope that all the projects which will benefit from these diverted moneys will be of value to society in some way, and confirm my belief that some of them will indeed be invaluable to us all. I have merely argued in the past—and do now—that we should take care that we do not fund projects, services or the provision of equipment from lottery money which the public may have a right to expect to be funded on a permanent, reliable basis from taxation.

  1113
  Section 3(1) refers to the allocation of NO funds to cancer care. I prefer to refer to this as NO rather than NOF, which, as the Minister will remember from the previous debate, sounds somewhat akin to a rude direction. Noble Lords had an opportunity for debate when a Statement was made to this House last Monday. I listened then with interest to the points made from around the House on the issue of providing lottery funding for the prevention, detection and treatment of cancer. The Minister, repeating the Statement made in another place, posed the rhetorical question:
  "What better use could there be for lottery money". —[Official Report, 15/3/99; col. 534.]
  I was saddened by that use of rhetoric. It challenged us to dare to make invidious comparisons between the sufferers of different conditions and different diseases. I certainly would not contemplate making such comparisons tonight.
  Responding to the Statement my noble friend Lord Howe gave a warm welcome to the prospect of more spending on cancer care but rightly sought assurances from the Government on the basis that he was always worried by the appearance of lottery money in this context. He sought reassurances that none of the proposed expenditure would represent what would normally be regarded as core NHS spending. All of us will have friends, family or colleagues who have been touched by cancer. We would not deny them help. We would do all we can to prevent others being touched by it. At the same time we recognise that the medical profession has to make difficult decisions day by day about who receives treatment and what treatment, and who does not.
  The order imposes a responsibility on the managers of the NO Fund to make decisions about the disbursement of funds for cancer care. They will have to determine which organisations receive the funds and how they will be geographically distributed within the general guidelines of the legislation of 77.5 per cent. for England, 11.5 per cent. for Scotland, 6.5 per cent. for Wales and 4.5 per cent. for Northern Ireland. They have an extraordinarily difficult task. I note that the noble Baroness, Lady Pitkeathley, chairs the NO Fund—she is in her place—and I wish her and her colleagues well in the decisions they make. As I am aware that the written record cannot take account of inflexions of voice, perhaps I may say that there is no irony in that statement. I recognise the difficult task they face and I appreciate very much the efforts they will put into those decisions.
  I have read both the order and the directions very carefully. Article 3(2) appears to take us into new territory. It grants powers to the NO Fund to allocate moneys for,
  "the promotion and management of access to the countryside or to other land which is (or is to be) open to the public".
  This suggests that the order gives the NO Fund the power to allocate moneys to help to pay for some of the consequences of the statutory right to roam which the Government announced in a Statement on 8th March. The noble Lord, Lord Murray of Epping Forest,
  1114
  tried to obtain some enlightenment on that occasion about how lottery funds might be used to provide more access for disabled people and more facilities for them at points of access. The noble Lord, Lord Whitty—who is in his place tonight—pointed out that,
  "the terms of National Lottery grants are, I fear, beyond the scope of this Statement". —[Official Report, 8/3/99; col. 49.]
  That is the precisely the problem. How can we scrutinise such proposals effectively and at what stage in the parliamentary process?
  I intended that the main question I asked the Minister would refer to the Government's intention behind the order. I gave advance notice to the Minister's office that I would seek an assurance that the Government do not intend by this order to seek powers to use lottery funds in conjunction with the consequences of the statutory right to roam. I felt that if the Government were to seek to use the moneys allocated under this order in such a way before they had even presented a Bill to Parliament and given Parliament a chance to scrutinise the matter, then that would be a clear contempt of parliamentary scrutiny, a clear case of putting the cart before the horse.
  I was prepared to give the Government the benefit of the doubt on this matter. I was reassured when I read an article in this week's Sunday Telegraph. The department was quoted as denying that the order would influence any future legislation. The quote in the newspaper was from an unidentified spokesman on behalf of the department. It read:
  "The idea that this is helping to fund any right-to-roam activities … is wrong".
  The new scheme, said a spokesman, would allow lottery funding for schemes designed to help communities,
  "understand, improve and care for their environment".
  That is what the department said yesterday. Today is a very different story. Today I attended the debate on this order in another place. Today I heard my honourable friend James Gray ask the Secretary of State whether the order would be used to fund some of the right-to-roam provisions. Today I heard the Secretary of State say that it would and say that he was proud of this prospective legislation. The official record printed tomorrow will show just that.
  So my question has already been answered by the Secretary of State. The Government have already disregarded the value of parliamentary scrutiny in this one respect. What else do we face in the future? I still do hold that scrutiny in high regard and I will continue to put some questions to the noble Lord the Minister. I note that the DETR's paper, The Government's Framework for Action, refers in paragraph 26 to lottery funding in the most general and speculative manner. It states that,
  "the Government is keen to see Lottery funds being made more widely available to complement the statutory responsibilities set out in legislation".
  What legislation? Is this referring in particular to rights of way, or the right-to-roam, or what? Paragraph 26 goes on to state:
  "The Department for Culture, Media and Sport will be asking Lottery distributors to see how their funding can contribute further in helping people from all walks of life to take advantage of the new opportunities for open air recreation in the countryside".

  1115
  How and what kind of recreation?
  The order refers to the use of lottery moneys for the acquisition of land. That is an interesting aspect of the order. On what basis—as car parking or land to link areas which will be subject to the right-to-roam? What kind of land are we really talking about? Will it be for playing fields or will it be more directly linked to access matters under the right-to-roam? The order also refers to using money to promote access to the countryside. Is this a reference to advertising how to get access or signposting or way marking? What is involved? Which organisations will benefit from such moneys: the Ramblers' Association, the CLA, the National Trust, the RSPB or the Countryside Agency? What do the Government anticipate?
  The final section of the order refers to the diversion of lottery moneys to the use of IT in education for those aged 16 and over and also to the out-of-school matters to which the Minister referred. Naturally, I support the promotion of initiatives that encourage more adults to take part in learning at a community level and increase community access to information and communication technology. That is a most welcome move. But hardware is notoriously short-lived in the IT world. After the Government have used up the lottery funds to set up new services, how do they expect those services to continue when the original hardware is obsolete? In addition, as software develops, the training that is provided has to be changed as well. It is notorious that people who provide IT training have to be continually subject to retraining themselves. Who will pay for that?
  Overall, the order tacks together several important initiatives, some parts of which might well be expected to form part of core government funding and not be subject to the vagaries—the lottery—of lottery funding. It is the convention in this House that the Opposition Front Bench does not oppose the making of orders. On that basis alone, I would not oppose the making of the order. In addition, however, there is another imperative. I would not consider opposing this order because I would not oppose the grant of funds to such causes as cancer care. However, I remain deeply concerned about the manner in which this order is presented to the House and the statements made today by the Secretary of State in another place.
  Viscount Falkland: My Lords, we on these Benches congratulate the noble Baroness on an excellent speech at this late hour. She raised many points that are also of concern to us. I do not intend to re-rehearse the arguments against the use of lottery funds for things which we believe should be funded from central taxation (Treasury funding).
  Every time one criticises the actions of the Government in securing funding from the lottery in this way, one is sometimes accused of taking lightly the excellent areas to which these funds are directed. I can understand the importance of everything in the first part of the order, which has to do with the treatment of cancer, the delivery of modern screening in local areas and so on. But I take the noble Baroness's point that the choice of beneficiaries is a complex and worrying area. I find the part of the order dealing with the acquisition
  1116
  of land and the promotion of management of access to the countryside very difficult to follow. I have read it several times, and in conjunction with the excellent notes which are supposed to make matters clearer, but nothing is clearer. I do not like the brackets in the phrase,
  "(or is to be)open to the public",
  and I do not like the connection with the statutory right to roam. It was excellently described by the noble Baroness.
  The Minister, with his customary skill, makes the whole provision seem extremely attractive. He even refers to public libraries, which, thinking in an art sense, are a wonderful thing. My heart leapt for a moment. This is a time when, for some curious reason, funding for public libraries is being reduced. They are a fundamental need of our society. It is encouraging to think that public libraries will benefit in some way from this provision. But the way in which it is being done gives rise to great anxieties. The hour is late and I do not wish to repeat what has already been said in an excellent way.
  Baroness Pitkeathley: My Lords, I must declare an interest. I am chair of the New Opportunities Fund. I merely wish to place on record my board's welcome for these initiatives and for the order that is before the House.
  In carrying out the difficult task that is before us, we shall be working in partnership with other organisations, including other lottery distributors. It is important to emphasise that. We shall be supporting sustainable projects in the United Kingdom which improve the quality of life for individuals and communities, promote social inclusion, encourage community involvement and complement and enhance—but not substitute for— relevant national, regional and local strategies and programmes. We at the fund feel privileged to be playing our part in setting up this new organisation distributing lottery moneys to help education and environment projects. The programme is certainly a challenging one, not only for us but for all the other organisations with which we shall be working.
  I wish to convey to your Lordships something of the public support and enthusiasm for this initiative that are fed back to me as I go through an extensive consultation process with the public throughout the United Kingdom. These initiatives were originally announced in September and we have already started consultation with many of the organisations to which the noble Baroness referred in the environment field and the cancer field, and in terms of learning.
  In our original three initiatives we managed to consult directly with more than 5, 000 people. There is a huge amount of enthusiasm and support for the initiatives. Of course, everyone recognises that there are concerns about additionality, sustainability and how partnerships might work. My board is extremely concerned about that and particularly about ensuring that our provision does not in any way undermine the existing provision.

  1117
  I reiterate that my board is determined to take advantage of the exciting new opportunity in a way which reaches out to the most disadvantaged people in our society. I am confident that we can meet the challenges presented to us and do exactly that.
  Lord Rotherwick: My Lords, I shall not keep your Lordships long at this hour in the morning. I support my noble friend Lady Anelay on the Front Bench and am grateful that she covered nearly everything I wished to say, especially about the right to roam. That means that I do not have to repeat the points, although I have an interest as a landowner.
  The point of my question is about the New Opportunities Funds. The Secretary of State described them best when he admitted that they had raided the National Lottery to fund the opportunities. Most of them are worthy causes and one must welcome the Government taking the initiative to identify such worthy causes, especially playing fields. I am pleased that that is happening.
  My question is whether the money will be used to fund the mapping by the new countryside agency and the countryside council for Wales.
  1.30 a. m.
  Lord Rowallan: My Lords, I thank the noble Lord, Lord McIntosh of Haringey, and the noble Baroness, Lady Pitkeathley, for telling us more about the specification of initiatives. Perhaps I am slightly cynical in thinking that the orders seem to be discussed late at night or early in the morning.
  The lottery will only ever work properly and be appreciated by the people of this country if it has a few clear purposes and its image can be fully promoted to the public, with constant improvement in sales which will benefit everyone in all the causes. The order is so diffuse as to open the door to substitution, without creating recognisable improvements on any national scale. The presence this month of £3.7 billion unspent in the National Lottery Distribution Fund, of which £1.7 billion has not been committed to anything, shows the current mechanisms to be on the whole totally inadequate. No other lottery in the world has failed to use its money on that scale. Only 48 per cent. has been spent over the four-and-a-quarter years of its existence.
  The most positive aspect of the order is its role in the prevention of cancer. But why just cancer? What about multiple sclerosis, schizophrenia and Hodgkin's disease, to name but three debilitating conditions. They need just as much sorting out to ascertain what causes them.
  The aspect that is vital is the business of trying to sort out what is the cause of cancer. I hope that we can guarantee at least 50 per cent of the available funds to be fixed and dedicated to that purpose. To that end, the use of the word "facilities" is not enough. We need research and instruction in order to touch the lottery-playing public. Prevention is better than cure. We must look at the research done by, among others, the Gawler Foundation in Australia, which has achieved
  1118
  many remarkable results in finding cures for cancer. We must find out whether what it is doing is right or just an Australian aspect. We must find out and examine in detail the extent to which toxins found in foodstuffs, the environment, viruses and other negative influences reduce the efficiency of our immune system to fight off cancer and other diseases.
  Money raised by the lottery comes from the people and must be used to fund activities in which the NHS is not already engaged and which are new, innovative and useful.
  Part II deals with the purchase of land. Provided the purchase is restricted to such land as is useful for playing fields, I totally support the order. On the same principle, preventive medicine should dominate the part dealing with cancer. It is right to have a right-to-roam Bill in your Lordships' House. I applaud it and have no reason to disagree with it. If we can persuade land owners to let people roam across their land so be it, but it should not be done with lottery funding for the purchase of land. It would be cheaper, surely, to pay landowners to have footpaths along and across their land.
  The third problem is education. We are all very keen on education. I wish that I had learnt how to work my computer many years ago. If so, I would be a lot more efficient than I am today. Surely, this is a government problem and should be funded by taxpayers, not the lottery. Only if lottery money is applied where other sources have failed can it be recognised as a force for good in the land. At the moment, it has become a convenience for Treasury to offload problems. The lottery needs to concentrate again on the original five good causes. Many sporting organisations and arts bodies thought that they would find their salvation in the lottery but came up against blank walls at the end of the day. But others have succeeded in raising a lot of money and a marvellous job has been done by the lottery. Long may it continue.
  This order will almost certainly be passed this morning, but I and many others are very concerned about the use of the people's lottery for government purposes. It is simply not good enough for the Minister to say—he has said it before and I am sure that he means it because he has always been extremely courteous, polite and truthful—that the original five causes have received their quota of money. They should be enjoying extra finance thanks to the success of the lottery, not the Government. That is why the good people of this country play the lottery. They do it to make money, always hoping that they will win the jackpot; they do not do it to boost government funds. We must always remember that this is the people's lottery, not the Treasury's.
  Lord Annaly: My Lords, at this late stage I shall not detain the House for long. Cancer is a very worthy cause. My noble friend Lord Rowallan mentioned a number of other causes that would be equally worthy of support. I shall focus my few remarks on the acquisition of land for the public good.

  1119
  This matter raises a few questions. Perhaps the Minister can throw light on the kind of land that is being considered. I cannot see a mention of games fields. Certainly, in my part of the world, which I believe is typical of the rest of the country, schools have been selling land on which to build houses. In Bicester half the rugger pitch has been built on in the past two years. I am aware that the same has happened round the country. Surely, it is up to local authorities to decide.
  We need more games fields but I question whether they should be funded by the National Lottery. Is the compulsory purchase of land being considered? If so, who will identify the land to be compulsorily purchased? Will it be the county council? Are the Government thinking of using organisations such as the National Trust, which are supported by a number of people? I declare an interest as a member of the National Trust. Some suggest that they would be admirable people to run the land acquired. The National Trust opens houses and, with its land agents, would be well geared to manage land in the countryside and towns for the benefit of the public. Are the Government looking at organisations like the Woodland Trust, or the Badminton Conservation Trust which is geared up for conservation? What are we referring to? If someone wants to sell a grouse moor and wishes to put it on the open market, would the funds be used to buy that grouse moor? I am curious to know exactly what is being considered here.
  Baroness Byford: My Lords, I thank the Minister for presenting and explaining the order to us tonight. I, too, an extremely concerned about the way in which the order is being used, as my noble friend Lady Anelay stated, with regard to prospective legislation. Other noble Lords share my concern that yet again parliamentary approval is being sought and moneys put aside even before legislation has come before either House.
  Those of us who have taken part in debates on Bills recently have already expressed our misgivings about inadequately drafted legislation, or being without the necessary information in order properly to debate matters before us. Such disregard for parliamentary procedure is regrettable; and today we have yet another instance of disregard.
  I have some questions on the order. Will the Minister inform the House what proportion of moneys currently held against the allocation for health, education and the environment will be used up by today's statement? Can the Minister assure the House that by paying the moneys to the New Opportunities Fund, under the provision made in Section 6(2) of the 1998 Act, he will not be depriving NESTA of its initial endowment provided for under Section 19(1) of the Act?
  Is the Minister yet in a position to tell the House how much money he intends to pay across to NESTA, first, in the period from 1st July 1999 under Section 19(1); and, secondly, in the period between 2nd July 1999 to 31st December 1999 under Section 19(2)?
  1120
  Does the Minister envisage, in the period 2nd July 1999 to 31st December 1999, under Section 19(2) of the 1998 Act, drawing on moneys originally intended for charities, the arts, sport or national heritage; and, if so, does he intend to do so evenly across the board?
  The order includes the acquisition of land. Several noble Lords have spoken about that. In what geographical area will this be, and will the land be purchased freehold? How much does the Minister envisage spending on,
  "helping communities acquire, control and develop land which is important to them"?
  Will that acquisition involve compulsory purchase?
  Can the Minister also reassure us that all land acquired under the new opportunities initiatives will be subject to enduring covenants preventing its use, for example, for industrial or commercial development or for housing? Is part of that land to include land which would fall into the remit of the Government's proposals for access, an issue referred to by other noble Lords and my noble friend Lady Anelay. In a presentation last week in this House, the Countryside Commission put forward two papers: one on rights of way and the other on access. Perhaps I may refer to access first. I have a question I wish to ask. The order refers to the promotion of the use of land for the benefit of the community. In its presentation briefing, the Countryside Commission referred to developing,
  "a bid to the New Opportunity Fund for the creation and improving of 'community greenspace' near people's homes".
  Have moneys already been allocated; and, if so, how much? Are the Government considering including allotments in the possible use of community green spaces? Many noble Lords will know that I keep raising in this House the question of allotments as they are being closed down and built on rather than preserved as an amenity for local communities.
  In its presentation on rights of way, the Countryside Commission called for national targets to be set for the rights of way campaign in which local authorities update their statutory duties. Will any money from the New Opportunities Fund be spent on that?
  I find it interesting that, on the one hand, money has been made available to promote the management of access to the countryside and that money has been made available for the acquisition of land under this order. But in the proposals for greater access to the countryside and the right to roam, it has been made clear that landowners are to receive no compensation and must carry third party liability. Perhaps the Minister will comment on those two different approaches.
  I understand that £125 million has been set aside for the environment section. Will the Minister confirm that none of the green spaces covered by the 75 per cent. of allocation includes mountain, heathland or moorland, covered in the Statement on access debated in this House on 8th March? Lastly, will the Minister tell the House how the money allocated will be distributed geographically; whether it will be regarded as pump-priming or, as the noble Baroness said, it must be

  1121
  for sustainable development? If not, how will the Government ensure that those projects will be financially viable in the future?
  Finally, I return to the underlying concern which my noble friend expressed so well; namely, that money is being put aside for projects which have not been submitted to Parliament and certainly have not been approved by Parliament—the Bill on the right to roam.
  Lord McIntosh of Haringey: My Lords, I am grateful for some of the comments made. That is as far as I can go in the circumstances. I say immediately to the noble Baroness, Lady Anelay, and the noble Lord, Lord Rowallan, that there is no question of diverting moneys from the previous existing good causes. As has been made clear from the very beginning, the original good causes under the preceding Act will all receive more than the amount of money that they expected when the original allocation was set up.
  The funding of the New Opportunities Fund and the National Endowment for Science, Technology and the Arts is from additional money arising from the fact that, fortunately, the lottery has been much more successful than originally expected.
  The noble Baroness, Lady Anelay, said that she thought it right that some of the causes now being proposed would be of value to society. She thought the public had the right to expect that items would not be included that could be funded from taxation. She is entirely correct. I confirm that our position has not changed.
  I shall try to deal with the issues across the range of speakers rather than go back between green spaces and cancer funding. I start with cancer. Two things must be said in response to the noble Lord, Lord Rowallan, and the noble Baroness, Lady Anelay. They asked why we have chosen cancer and not, for example, MS or schizophrenia. Cancer affects one in three people in this country and one in four deaths is from cancer. It is very different in scope from the other diseases mentioned.
  I am delighted that, as a long-term project, over the next 10, 20 or 30 years it may be possible to tackle other diseases. However, cancer is the major killer in our society and is an area in which a great deal of research and care needs to be provided.
  Secondly, historically, it is a mixed economy, so to speak, in the sense that a great deal of the most valuable work in cancer research and cancer provision is carried out by the charitable and voluntary sectors. About £140 million of charitable money goes to cancer every year. Those who are involved in such charitable activities for cancer have clearly welcomed the proposals for the extensions to be provided from the New Opportunities Fund. Nicholas Young, Chief Executive of Macmillan Cancer Relief stated:
  "This is a golden opportunity. We must make sure that this financial boost … is used effectively".
  Dr. McArmstrong of the BMA stated that the equipment and services are precisely the areas currently paid for through local fundraising or major cancer charities.
  1122
  These are items of expenditure which it is impossible for the National Health Service to provide to the satisfaction of, and to meet the needs of, the people in this country who suffer from cancer. Those who know about it are determined that this is the right way to proceed.
  I turn to the subject of green spaces and sustainable communities. I have been asked for assurances, to quote a spokesperson in yesterday's Sunday Telegraph, that the suggestion that this is funding right-to-roam activities by the backdoor is wrong. That was true yesterday and is true today. There is no departure from that. The New Opportunities Fund moneys will not be used to pay for the new statutory right to roam. They will be used for purposes which are additional and complementary to the statutory functions. Perhaps I may say to the noble Baroness, Lady Byford, that there is no question of any disregard for parliamentary procedure and no question of money being put aside before legislation. In due course, when legislation is put before Parliament on the right to roam, those matters which will cost money will have to be funded. However, they will not be funded by money from the New Opportunities Fund which is being approved today. They cannot be funded in that way. There is no legal power, for example, for the compulsory acquisition of land in pursuit of the right-to-roam objective.
  There is a whole range of things which the New Opportunities Fund can do. I can cite many examples: the creation of new powers; the upgrading of existing powers; the provision of facilities for those with disabilities; information about existing or new access opportunities; better way-marking and provision of local maps. The NOF can do all of those things. However, the noble Baroness, Lady Byford, asked me a whole series of precise questions about what has been committed now. The answer can and must be, in accordance with the arm's length principle, that these are not matters for government but for the New Opportunities Fund. It is in accordance with the general guidelines laid down in the orders that the New Opportunities Fund will be operating.
  Indeed, if we were to seek to give very detailed answers to the questions which she asked—I understand her sincerity in asking them—we would be accused immediately by her Front Bench of breaching the arm's length principle and of going way beyond the legitimate separation of the responsibilities of the funds from the responsibilities of government.
  I agree with noble Lords, and with the noble Baroness, Lady Anelay, that the problem before the New Opportunities Fund is a difficult one. Only general guidelines and powers are being given to the New Opportunities Fund. They are not precise and a great deal of responsibility will be required.
  Before I leave this point, perhaps I may assure the noble Baroness, Lady Anelay, that this will have no effect whatever on the funding of NESTA. The funding of NESTA was set up under the National Lottery Act 1998. There is no diminution of that funding, which has already been established. At the same time, there are no plans at the moment to make any further endowments

  1123
  to NESTA under Section 19(2) of the Act; the £200 million is already there; it is one of the top grant-making trusts in the country and will receive up to £10 million a year under the guidelines.
  The noble Lord, Lord Rotherwick, asked me a very precise question about whether the funds could be used for mapping by the Countryside Agency. The answer is no; there is no power to do that.
  The noble Lord, Lord Rowallan, made a number of wider points. He thought that these are diffuse powers. Indeed, they are guidelines, not detailed instructions. I can assure the noble Lord that, as my noble friend Lady Pitkeathley said, there is close collaboration between the NOF and the five original good causes. Where there is overlap between them, they are making sure that it is beneficial rather than damaging.
  On the issue of unspent money, to which the noble Lord refers at what seem to be regular intervals. I can assure him that it is not the case that unspent money is greater for this lottery than for any other. The money in the fund is allocated to each good cause. It is committed to projects over the next few years but is not paid over until actually needed. Where it is kept in the National Lottery Development Fund—in other words, before it is paid over—it gains interest and all that interest goes to the good causes, not to the Treasury.
  The noble Lord, Lord Annaly, asked about playing fields, which, if I may make a party political point, was unwise. Under the previous government, over 5, 000 fields were sold off and a further 2, 600 were under threat. We are determined to stop and reverse that. We are requiring the Secretary of State's approval for every proposal to build on a playing field. We believe that all young people should have access to quality facilities. The Football Association and the England and Wales Cricket Board have welcomed the proposals. The question of who gets the money, schools or local authorities, depends entirely on local circumstances, on who owns the fields and on who needs the money.
  On community access to lifelong learning, the noble Baroness, Lady Anelay, said—and I think that she is right—that the life of hardware can be short and that it needs to be updated. All lottery funding is finite; it does not go on for ever. If it did, after a few years there would be nothing left for new projects. However, I can assure the noble Baroness that the provisions for the learning centres will include not only the hardware but also the very expensive software, such as interactive learning materials, which have to be built up at the beginning, and can include provision for initial staffing.
  I think that I have covered adequately the major points raised by noble Lords and I hope that I have given the assurance that our adherence to the arm's length principle and to the principle of additionality means that a very large number of the legitimate worries that have been expressed are the responsibility of the New Opportunities Fund, which is why we are moving the order in this form. I commend it to the House.
  On Question, Motion agreed to.

  Gas Fuel for Motor Vehicles
  1.54 a. m.
  Lord Steel of Aikwood Lord Steel of Aikwood rose to ask Her Majesty's Government what steps they will take, in the interests of the urban environment, to encourage the growth in use of gas fuel for motor vehicles.
  The noble Lord said: My Lords, when I tabled this Question I was assured by the powers that be in my own Whips' Office and elsewhere that it would probably come on before half-past six. In my naivety I thought that meant half-past six last night, not half past six in the morning. But here we are discussing this rather important issue at two o'clock in the morning. That is partly because we had a Statement earlier and partly because of the very important debate we had on European matters. Bearing in mind the agreement reached by the House recently on the report of the Procedure Committee that Members taking part in a set debate should at least stay for the winding up speeches, I have noticed that at least two Members—there may have been others—who made lengthy speeches indicated that they had no intention of staying. It seems to me that the alternative on these occasions is to withdraw one's name from the List of Speakers in the interest of the proceedings of the House, but there we are. I feel particularly sorry for the Minister who is to reply, the noble Lord, Lord Whitty, who must be feeling very uncomfortable with his recent injury and at being kept up at this late hour. I apologise on behalf of others for that inconvenience.
  A little noticed part of the Chancellor's Budget was a tax reduction of 29 per cent. on road fuel gas while, as everybody knows—particularly those who were in central London today—other fuels suffered a whacking increase. There was an increase of 4.25 pence a litre on leaded petrol; 3.79 pence on unleaded petrol; ordinary diesel went up 6.14 pence; and ultra low sulphur diesel by 2.79 pence. In answer to my Question, I suppose the Government would argue that the Budget is itself encouragement for the use of road fuel gases in motor vehicles.
  I must admit that my interest in this topic is very recent. Like most noble Lords, I have been concerned at the unhealthy pollution of the air in our cities. One has only to cross the road in Parliament Square from the building which I used to inhabit, which is the Commons' external office building to the main Chamber, to get a very high dose of poisonous fumes. Apart from the unhealthy nature of that pollution we are also increasingly aware of the cumulative effect of global warming.
  It was only when I went with the all-party motor industry group on a recent visit to Buckingham Palace where the Royal fleet of motor cars have been pioneers in gas conversion, that I discovered how far behind the United Kingdom is compared with other countries. For example, Italy heads the league table with 1.4 million gas-fired vehicles on its roads. Australia has nearly half a million, North America 440, 000; Argentina has 400, 000 and the Netherlands 360, 000. Even little New Zealand has 25, 000 gas-fuelled vehicles on its

  1125
  roads. Unless the Minister has a new figure, Britain lags well behind any of these with only 3, 500 vehicles. So it cannot be said that, whatever steps successive governments have taken so far, they have had any major effect.
  There are problems in advocating the use of gas-fuelled vehicles. The main one is the present costs. It takes over £3, 000 to convert the average private car or van to use gas as well as ordinary fuel. I commend three manufacturers and in particular Vauxhall Motors and close behind, Ford and Volvo who offer dual fuel installations from new at a rather lower cost of under £2, 000. The Government offer environmental grants towards these extra costs and they are used mainly by fleet owners. The cost for each individual vehicle is still substantial and the money which the Government offer in the way of environmental grants is cash limited. The two measures which the Government are taking are the tax on the fuel itself plus the grants. As I say, from the comparative figures internationally it is quite clear that the combination of tax incentive and grants is not enough.
  A second problem in the use of gas is the amount of storage space taken up by the extra gas tanks. Most vehicles on the roads of Britain today are equipped to run on gas, petrol or diesel at the flick of a switch. On huge machines such as refuse collectors that does not matter, but the average private car can lose up to half its boot space—not everybody has Rolls Royces the size of Her Majesty's. The solution of course is to have vehicles running solely on gas with storage replacing the space occupied by the fuel tanks. I noticed that the Duke of Edinburgh has just taken delivery of a new taxi cab fuelled solely by gas for use in London to replace his dual-fuel one.
  That brings me to the third and main problem and the reason why I tabled this debate; namely, the lack of filling stations. It is a chicken and egg dilemma. Owners will not buy gas-fuelled vehicles until there are enough retail outlets for refuelling them; and manufacturers will not provide outlets for refuelling until there are enough vehicles to use them. That is why it is up to the Government to break that difficult cycle.
  I urge the Government to introduce legislation, or at any rate to encourage local authorities and other public operators to require buses and taxis in our major cities, to replace existing vehicles with gas-fuelled ones. That would automatically result in far more refuelling sites and a great reduction in city pollution. London has nearly 20, 000 taxi cabs, plus all the belching buses. Those taxi cabs, I understand, are replaced at the rate of roughly 20 per cent. each year so that, if such a measure were undertaken, they would be replaced in around five years' time entirely by gas-fuelled taxi cabs. All our major cities would benefit. For example, Edinburgh has some 1, 200 taxies. That is not pie in the sky. In Japan almost all taxis in the entire country are gas-fuelled and the city of Vienna has been using gas-fuelled buses for three decades without a single mishap, and now its entire fleet of 400 buses runs on gas.
  My noble friend Lady Thomas of Walliswood will outline some of the steps taken by the Liberal Democrat-controlled council in Sutton. The fact is that some local authorities have pushed forward by using gas-fuelled vehicles themselves. Much more could be done, not just with buses and taxis but with those agencies which are directly controlled by the Government; for example, the Post Office and the police authorities. And what about the Government car pool? I know that a start has been made, but it would be interesting to hear the latest figures from the Minister.
  I have not mentioned in this debate and deliberately have not dealt with the question of electric vehicles; their technology is still uncertain. But the technology for the use of gas is already proven and widely used internationally. However, one problem on which I should like to hear the Minister concerns the choice between the two different gases. LPG is currently the most viable alternative fuel for everyday vehicles because CNG requires the storage of gas at higher pressures and current tank technology requires the use of heavily pressurised tanks for CNG. The range in that is more limited in comparison to LPG. On the other hand, it may be that the CNG available resources are stronger and it would be helpful if the Government could give some kind of policy guidance or direction on that issue.
  On 23rd December last the Government issued their response to the Royal Commission on Environmental Pollution's 20th report, and agreed with the commission about the benefits of gas as a road fuel. But the question is: what are they constructively going to do about it to change these appallingly low figures? It would be in the interests of the nation's health if they were to make further moves. Gas produces 48 per cent. less carbon monoxide than petrol; 78 per cent. less oxides of nitrogen than diesel; 87 per cent. less particulate matter than diesel; and 20 per cent. less carbon dioxide than petrol. The use of gas could cut global warming overall by 9 per cent. compared with diesel and by 17 per cent. compared with petrol. For the sake of the health of us all, the Government need to take more urgent measures to encourage its use.
  2.6 a. m.
  Baroness Thomas of Walliswood: My Lords, I am grateful to my noble friend Lord Steel of Aikwood for raising a subject not often discussed in your Lordships' House, even in the context of frequent general transport debates. I spent last Friday and Saturday in Liverpool and Manchester, studying their traffic control plans and actions.
  In Manchester, a large light railway system has been introduced and the hope is that it will be extended. Liverpool is moving into the contracting process for a rather less expensive method of rapid transit-guided buses. Both systems are designed to tackle pollution or congestion by transferring journeys from cars to another mode and have proved quite successful—certainly in the case of Manchester.
  Gas-fuelled or electric-powered cars are a totally different way of tackling not just air pollution but noise pollution. My noble friend referred to the efforts made

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  in Sutton to promote zero-emission vehicles. That borough has used its own purchasing power to create a market for gas-fuelled vehicles. Sixty vehicles are either in use or soon will be, ranging from small vans to refuse collection vehicles and welfare buses.
  The success of that borough and of other boroughs and cities in Europe that are contributing to the Zeus project is evidenced by the reducing price of some vehicles for conversion to gas power. The proportion of the Sutton fleet that is fuelled by natural gas is about 37 per cent. When more replacements have been made, that will rise to 40 per cent. next year and to 47 per cent. in 2002. The borough is making itself into an exemplar of how to change a fleet from one type of fuel to another.
  The cost to the local authority has been rendered acceptable by the grants it has received. The programme supports the council's policy aim of reducing the environmental impact of local traffic and is supplemented by the installation of a gas refuelling station that is said to be the largest in the country. My noble friend referred to the necessity of introducing vehicles and refuelling stations at the same time. That project and the financial support for it has been made possible by the Zeus project, which has secured funding from DG7 and contributions from the Energy Saving Trust in this country. Zeus involves cities and towns throughout Europe. Margareta Olofsson, the vice-mayor of Stockholm, described the project at a conference in Brussels last June. She said:
  "Zeus is a demonstration project comprising the activities of eight European cities in buying, using and evaluating zero and low-emission, low-energy vehicles … Zeus focuses on the role that cities can play in facilitating a shift from private, fossil-fuel based transportation to cleaner, more energy-efficient transport … Zeus includes a number of different fuels and vehicle types, from buses to small cars, to pedal power to passenger vehicles, to waste and other specialty vehicles. We have natural gas, both CNG and LPG, electric vehicles, ethanol and RME".
  The city of Bremen is, interestingly, comparing the various national policy frameworks for achieving environmentally friendly transport, including such matters as fiscal regimes, clean air policies and traffic regulations.
  Clearly the Chancellor's reduction of tax on vehicle gas in the Budget is part of a national policy stance. I should be interested to hear—as I think would many others who will be able to read it tomorrow—if the Minister could tell us more about the specifics of the policy approach which lies behind this initiative. For example, what estimates has the DETR made of the relative contribution of a wider use of low or zero emission vehicles to reducing pollution from vehicles compared with other policy options such as the ones in Liverpool and Manchester? What goals and targets do the Government have in relation to the wider use of such vehicles? What additional mechanisms might encourage their wider adoption?
  It is clear that the local authorities involved with the Zeus project see themselves as major players in creating a market in low emission vehicles. Do the Government also accept such a role for national government? On the
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  lines of questions asked by my noble friend, how far have the Government taken their own programme of vehicle replacement by zero and low emission vehicles?
  I have on a number of occasions expressed my conviction that it is not enough to rely just on local authorities to take all the initiatives and the risks and to initiate the new programmes that will lead eventually to a more environmentally friendly transport system. It is for government to lead. The Government indicated their general willingness to do so in their White Paper. I hope that tonight, in respect of gas-fired vehicles, the Minister will be able to enlighten us as to how the Government see themselves pursuing this lead in practice.
  2.12 a. m.
  The Earl of Winchilsea and Nottingham: My Lords, I, too, am grateful to my noble friend for introducing this topic, which seems to be often and strangely overlooked in the UK, in sharp contrast to many other countries around the world.
  The use of natural gas, either LPG or CNG already in use in this country as a fuel for vehicles, is lamentably and laughably low. There are some highly commendable exceptions such as Royal Mail and the Gas Board, and indeed some government cars are being run on it. I am delighted to hear about the London Borough of Sutton. However, public service vehicles lag way behind.
  Some noble Lords will know of my longstanding connection with the licensed taxi trade. Both the manufacturers of dedicated taxis in the UK—London Taxi International in Coventry, and Metrocab in Tamworth—have undertaken extensive research into this important subject. This has resulted in considerable engineering developments being made by both of them, and this continues. I spoke to the person at Metrocab who has been working on this project since its inception, Stephen Ferris, and he told me that Metrocab has been working closely with the Ford Motor Company on a two-litre petrol/LPG engine for some time, and it is available now for installation in its taxis on the production line. As my noble friend said recently, it delivered a gas-powered taxi to Buckingham Palace for use by Prince Philip as his regular car.
  London Taxi International has looked at both the natural gas possibilities, LPG and CNG, and has had one of its taxis plying for hire on the streets of London for years running on LPG with the tank stored in the boot. It delivered me to your Lordships' House one day. But it is the only one. It would seem from what I have been told by Metrocab that it makes much more sense for cars, vans and taxis to run on LPG rather than CNG because of the time it takes to fill the tank, always supposing you can find a garage that has this facility. Apparently it takes less time to fill a tank with LPG than it does to fill a taxi tank with diesel, but it takes far, far longer to fill the same size tank with CNG. I was also told that the achievable mileage on a tankful of either gas is not quite what it would be with diesel or petrol because the tank can only be filled to 80 per cent of its capacity due to gas expansion.
  However, this should not be a major worry to potential operators providing the many advantages of natural gas are encouraged and advanced. Steps could

  1129
  be taken now to achieve this. First, we need to create the market place for the encouragement of natural gas as a viable alternative fuel. Surely every garage forecourt should have an LPG filling point; surely LPG should carry no tax whatsoever and not just marginally less than diesel, as I believe is the present case. That is a negative approach instead of a positive one; a stick to beat rather than a carrot to wave.
  Perhaps it could be said that vehicles of all types running on natural gas can do so better and more economically in metropolitan areas rather than in rural districts because of the much longer distances involved. But, wherever they run, surely they must be given the very highest of incentives by the Government. Surely if the Government are serious about doing something about our damaged environment—I believe they are— what could be a better way of showing it than giving their support to this as a matter of urgency.
  For many years I have been receiving in my post publications from London Transport called London Lines and On The Move. I am sure other noble Lords are familiar with them. Never have I seen in any of them even a passing reference to natural gas as a possible fuel for any of its buses. I wonder why this is so. The publications are full of articles entitled "Into the Millennium; The Future of London's Buses", which talk about the grand plans it has, but there is not a mention anywhere about natural gas. Not only do I think this astonishing, but very alarming.
  I can understand the difficulty of using natural gas on double-decked buses because where does one put the large fuel storage tanks required? They certainly could not go on the roof as they do elsewhere in the world where they are used on single deckers. But they certainly could be used to great effect on the large numbers of single-deck buses operating in London and elsewhere at present.
  This brings me to the city of Atlanta in the USA. I go there two or three times a year and I have noticed that it runs considerable numbers of its buses on natural gas. I spoke to its bus procurement officer on Friday to find out what I could. He told me that it has a total of 750 buses in its fleet; 118 run on CNG and it has a further 82 on order with the manufacturers, Nu-Flyer of Winnipeg, Manitoba, which has another factory in the USA at Minnesota. So heavy is the demand for these buses, and so successful are they, that there is a two-year waiting list for them. MARTA—which stands for Metropolitan Atlanta Rapid Transit Authority—is so delighted with them that it is seriously thinking whether instead of splitting its order for 206 new buses between 82 gas-powered and 124 diesel-powered it should not go for all 206 being gas-powered. As all its buses are single-deckers, the fuel tanks are on the roof and are filled when the vehicle returns to the depot at the end of its shift. The operating costs for CNG and diesel buses are about the same but gas-powered buses cost 40, 000 to 50, 000 dollars more than the conventional ones. However, this is reduced by a massive 80 per cent., the amount which is covered by the Federal Government in Washington, which leaves MARTA only liable to cover 20 per cent. of the total
  1130
  outlay, not just 20 per cent. of the additional costs. So for each bus powered by CNG which it orders, it has to find only 65, 000 dollars, or roughly £40, 000, in total itself. Surely this is the yellow brick road that we should be travelling down as well.
  If we are to continue to enjoy the luxury of having our own individual transportation tin box at our instant disposal, we must be prepared to pay the environmental price. We have not begun to do that. By this I do not mean charging the motorist more in taxes than he already pays. I mean the lead being taken by the Government in aggressively encouraging the use of natural gas as a vehicle fuel. Whatever we do needs to be done quickly. Otherwise it will simply be too late to save our tottering environment.
  2.20 a. m.
  Lord McNair: My Lords, like my two noble friends who have just spoken, I am grateful to my noble friend Lord Steel for raising this important matter. I should also like to draw attention to the stellar performance on these Benches on this matter.
  My personal experience of LPG goes back to the 1970s when I had a Ford Popular engine running a three-phase generator which I attached to a propane cylinder. It was a simple conversion and it worked very well. So I have my personal recommendation to add to the words of my noble friends.
  When I decided to speak in the debate, I contacted Shell because I wanted to find out whether a massive conversion of buses to LPG would unbalance the production and supply of LPG and other petroleum products. It appears that that is unlikely. Sixty-two per cent. of our LPG comes direct from the gasfield where it is found in conjunction with methane, which itself requires enormous compression to liquify and thus is not so suitable for the application we are discussing tonight. But 3 to 4 million tonnes of LPG are exported from the United Kingdom annually and would be available for use in buses in this country. The balance of 38 per cent of the UK's production of LPG is produced in refineries where it represents about 5 per cent. of the total contents of the barrel. There is in fact huge scope for increasing the production and consumption of LPG. That certainly has the support of Shell, but I have not spoken to other oil companies.
  The Budget was good for LPG in general, but apparently not so good for bus operators in particular. The reason for this, which I think I understand, is that, although the rebate on the duty on LPG is 100 per cent., the problem is that in terms of volume per calorific value it is a much lighter fuel than even low sulphur diesel and so operators of LPG-powered buses find themselves still at a disadvantage vis-à-vis diesel buses. In Germany, the government have recently introduced an adjustment of fuel duty that slants the figures favourably in the direction of LPG.
  I am told that there are between 400 and 500 LPG-powered buses in the European Union, but at present only two in the United Kingdom. We are lagging behind, but not for long I hope. At Watford, Arriva has

  1131
  ordered seven LPG-powered buses and London and General has ordered three. Several have been ordered for Scotland.
  What is needed by the bus operators from government is rather more enthusiastic capital support for changing over from diesel to LPG. Daf has produced an 8.6 litre spark ignition engine which is a modification of an existing diesel engine. Since diesel engines operate at a much higher compression ratio than petrol engines, a spark ignition engine using a diesel engine block should prove to be very reliable and long lasting.
  I shall be interested to hear what the Minister has to say and to see what the Government will do in answer to my noble friend's Question.
  2.25 p.m.
  Lord Redesdale: My Lords, I begin by thanking my noble friend for initiating this debate, even at this late hour. It is one of the few debates in which I have taken part in which I can be so friendly with all those who have spoken before me. Most of those concerned about this issue are speaking from these Benches.
  My interest in natural gas vehicles was sparked as a result of my membership of the Science and Technology Committee and the report that we produced on low emission vehicles. It seemed that the only realistic solution for low emission vehicles in the short term had to be natural gas. The recent reduction in tax on gas fuels in the Budget is most welcome. It indicates that the Government have recognised the merits of gas fuels in reducing vehicle pollution.
  It is important to define gas fuels natural gas as the gas that we receive through the mains into our home. Liquid petroleum gas (LPG) comes as a by-product from the petrol refining process. Natural gas in vehicles can take two forms: compressed natural gas and liquefied natural gas (LNG). I should declare an interest as I am currently president of the Natural Gas Vehicle Association. However, I assure the Minister that it is a non-pecuniary position.
  I distinguish between LPG and natural gas because there are different levels of emissions, performance, availability and costs. LPG is mainly used in the conversion of petrol engines, and can show improvements in emissions over petrol. The fuel in natural gas vehicles, on the other hand, has a high octane rating—100 to 125—and is low in volatile organic compounds, making it ideal for reciprocating engines and thus an appropriate fuel for vehicle and engine manufacturers to optimise reductions in emissions.
  It is appropriate to consider natural gas as the third global fuel, alongside petrol and diesel for worldwide usage. It is the most realistic and practical solution to reducing vehicle pollution, as was pointed out by my noble friend Lady Thomas, and is available worldwide.
  Before turning to the environmental benefits, perhaps I may explain the other benefits of a strong home market for natural gas vehicles. With some 1, 200, 000 natural gas vehicles now in operation, the worldwide growth in such vehicles is expected to exceed 25 million over the next 15 years. Will British industry be in a position to compete—I put that question to the Minister—
  1132
  considering the difficulties that the British motor manufacturing industry is facing? I refer, for example, to the present position of Rover.
  UK manufacturers and development centres have more than demonstrated the advanced technology that is present here in the UK. Yet by comparison with countries such as Germany, Sweden, Italy, the United States and Japan, the number of natural gas vehicles on the road is very small. For British technology and industry to compete in this new and expanding global market, there need to be economies of scale resulting from greater uptake at home.
  The development work in this industry has continued to produce significant improvements. The cost of vehicle and refuelling infrastructure is high. That is due in part to the sophistication of the technologies and to diseconomies of scale.
  An evaluation undertaken in January this year by an independent test house on manufacturers' warranted vehicles compared diesel, LPG and natural gas. The results again demonstrated the very significant reductions in emissions and the contributions that NGVs make to improving air quality and to a reduction in global warming.
  Such is the level of reduction in emissions from passenger cars to heavy goods vehicles and buses that NGVs are capable of achieving considerably lower emissions than any other fuels and are well within those proposed in the Euro 4 standards for 2005. It means that we can have that level of improved air quality now. It is interesting to consider what would be the reduction in NOX and particulates in London's atmosphere if all the taxis and buses were converted today.
  I mentioned earlier the high cost of entry for natural gas vehicles and refuelling stations which I believe must be addressed in the way the Government provide incentives to encourage greater take-up of NGVs. The economics are not yet right for the natural gas vehicle; therefore attention needs to be given to establishing the cost benefit of NGVs based on emissions., business opportunities and reduced balance of payments, for example. An appropriate differential over other fuels is needed and, sustainable over a period of time, will help to encourage investment in their use and for the vehicle manufacturers to do likewise.
  Setting the fuel duty for natural gas at the EU minimum for a sustained period of five years would be a significant recognition of the major contribution NGVs will make to improving air quality. One of the problems I foresee is that in the future we will be using a lot more natural gas vehicles, but unfortunately due to the hesitancy of the Treasury in producing the economic incentives for taking up the technology, the UK will lag behind. That will have a detrimental effect on the people who live in London, in urban areas, especially those who suffer from asthma.
  2.30 a. m.
  Earl Attlee: My Lords, I am grateful to the noble Lord, Lord Steel of Aikwood, for asking this fascinating Unstarred Question. I am glad that he widened it to include CNG and LNG. I am only sorry that we are not

  1133
  joined tonight, or rather this morning, by his noble friend Lord Ezra who has in the past been active in promoting this technology. Indeed, it was the noble Lord who encouraged me to attend a conference organised by the Natural Gas Vehicles Association. It is an organisation now being graced by the presidency of the noble Lord, Lord Redesdale.
  The noble Lord, Lord Steel, raised the problem of the lack of gas filling stations. While I am extremely sympathetic and attracted to gas vehicles, I am not sure that I would like to follow the noble Lord's route of compulsion to run certain vehicles on gas. I believe that it would be far more preferable to lay down exactly what pollution limits, including noise limits, would apply to certain vehicles. The limits may become tighter and tighter as technology improves. The Euro 1, 2 and 3 are good examples of this process and the noble Lord, Lord Redesdale, referred to Euro 4.
  I am not convinced that it is wise for the Government to differentiate between the three main gas fuels, other than to set emission limits applicable to all gas-powered vehicles.
  As many noble Lords have rightly observed, the taxation environment in which gas-powered vehicles operate is as important as their benefit to the environment in which they operate. The Chancellor, in his recent Budget Statement, reduced the duty on gas for CNG, LNG and LPG and we welcome it. The signals that the Government send out and their reception by operators are important. I share the view of the noble Baroness, Lady Thomas, regarding the need to encourage private operators and not just the public sector. But can the Minister say whether the rate of duty is now at the EU minimum and if not, how much duty would the Chancellor be forgoing if it were?
  Another important component of the signal to operators is the differential between fuel costs when taking into account fuel duty, VAT and fuel consumption. Operators of vehicles and filling facilities need to be sure that this differential will be maintained for the whole life cycle of the vehicle or filling station equipment. That point was made by the noble Lord, Lord Redesdale, and others.
  One of the major advantages of gas-powered vehicles is their much lower emissions of particulates, CO2 emissions and, most importantly, noise. I think that particularly for urban operations, it is important to remember that the emissions, including noise from diesel engines on start up from cold, are nowhere near as good as for gas engines.
  Many noble Lords have concentrated on cars or car-derived vans, but I have been speaking to manufacturers and operators of larger vehicles. Enthusiasm and experiences appear to be mixed. What is clear is that vehicles built to run on gas by an original equipment manufacturer (OEM) are much more reliable than a conversion. OEMs will make a judgment as to whether to offer a gas-engined option if they are certain about the lifecycle costs to which I have already referred. The noble Earl, Lord Winchilsea, referred to an OEM (Ford Motor Company) offering an original fit.
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  The maximum benefits of gas will be obtained from use in urban and return-to-base operations, which obviously obviates the need for a petrol tank as well. Unfortunately, the economic benefits arising from lower duty rates may not be compelling because of the low mileages that these vehicles cover. Thus, the lower running costs may not repay the extra investment required for gas. Therefore, encouragement needs to be given by the vehicle excise duty regime. That point was covered in the consultation document, Reform of Vehicle Excise Duty to Ensure a Cleaner Environment. The noble Lord, Lord Redesdale, explained why government policy is important to exporters in our manufacturing industry. I support his comments in that regard.
  What is the view of the Minister as to the appropriate balance between the encouragement of gas-powered vehicles through VED, fuel duty and VAT? Does he agree that the arrangements overall should be tax-neutral? Alternatively, does he have available some other mechanism to offset the higher capital costs of a gas-powered vehicle?
  The Unstarred Question of the noble Lord, Lord Steel, is important. It is unfortunate that it could not be taken at a more convenient time, as he had hoped. I look forward to the Minister's reply to the noble Lord's suggestion about compulsion to choose gas for certain vehicles.
  2.37 a. m.
  The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, like the noble Earl, Lord Attlee, and the noble Lord, Lord Steel, all of us hoped that this debate could have taken place earlier. The first line of my speech refers to this as a timely debate. In a macro sense that may be true but in a micro sense it does not really feel like it. Nevertheless, I thank the noble Lord, Lord Steel, for introducing this interesting debate and pay tribute to the level of expertise and commitment demonstrated by noble Lords who have contributed to it. We are all very much aware that air pollution and how we deal with it is today a central issue of public concern. This Government are heavily committed to improving the quality of the air we breathe. As soon as we were elected we endorsed the national air quality strategy but on the basis that it would be reviewed at the earliest opportunity with a view to delivering it more quickly.
  It is true that road transport is responsible for a significant proportion of air pollution, especially in urban areas. Over 90 per cent. of all London's carbon monoxide emissions and three-quarters of benzene emissions come from road transport. Road transport, in particular diesel vehicles, are also responsible for a significant proportion of pollutants for which objectives will be most difficult to meet, in particular nitrogen dioxide and particulate matter. Even the significant emission reductions arising from the introduction of tighter emission standards will not be sufficient to meet the objectives for these pollutants at all levels. That is why the Government are very keen to encourage the early introduction of cleaner vehicles. We envisage road fuel gases such as LPG and CNG having an important

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  role to play in reducing emissions. Those fuels clearly offer significant environmental benefits. Gas-powered vehicles can also considerably reduce particulate emissions and, to a lesser extent, emissions of nitrogen oxides. In addition, as the noble Baroness, Lady Thomas, indicated, they are quieter than diesel and petrol vehicles.
  It was for all these reasons that the Chancellor introduced in the Budget a 29 per cent. reduction in the duty on road fuel gases, it having been frozen in his previous two Budgets. This cut, coupled with the real increase in diesel duty also announced in the Budget, means that the differential in favour of gas vehicles has never been greater. Indeed, that differential is now the biggest in Europe. As the noble Earl, Lord Winchilsea, indicated, it is not a marginal difference.
  Earl Attlee: My Lords, the reason that the differential is the greatest in Europe is simply because our diesel fuel is at a very high rate. But that is a minor point. Can the Minister confirm whether we are at the EU minimum for duty on gas fuels?
  Lord Whitty: My Lords, the position at present is that we are at 15p. The minimum is 6.8p in sterling, so we are not at the minimum. But that is not the point. The point is indeed the differential. The noble Earl is correct. As we heard today, we are committed to increasing the price of diesel and seek to achieve a greater efficiency in road transport. That is part of a total strategy. It is true, therefore, that fuel prices in this country at present are somewhat higher than elsewhere because we are perhaps more committed than other governments to using fiscal measures to ensure reduction of pollution. The differential between diesel and gas fuel is an important feature. The differential is important. It is not possible, as the noble Earl, Lord Winchilsea, suggested to put it at a nil rate because of the European directive. But the differential matters.
  These measures should send a clear signal to fleet operators, oil companies and retailers and motor manufacturers about the Government's belief in the viability of a sustainable road fuel gas market in this country.
  Nevertheless, despite all the advantages of gas fuelled vehicles referred to by the noble Lord, Lord Redesdale, and others, LPG and CNG are not the only show in town. There are other fuels and new vehicle technologies which potentially offer significant environmental benefits, especially in the longer term. The emerging hybrid electric and fuel cell vehicle technologies are one example. Technological development in this area recently has been rapid, with hybrid electric production models already entering the market in some parts of the world. These vehicles offer not just air quality and noise benefits, but crucially they have substantially lower CO2 emissions than conventionally powered vehicles, a factor which is becoming increasingly important in relation to achieving Kyoto targets.
  It is also true that there have been further advances in conventional fuel and vehicle technologies—they will come on stream in the not too distant future—so that we
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  have cleaner, more efficient vehicles, using conventional fuels in the market place. For example, we are already seeing the considerably cleaner ultra low sulphur diesel becoming the more standard fuel and being sold at forecourts across the country as a result in part of the introduction of duty differential in its favour. And the environmental performance of conventionally powered vehicles is likely to be improved with even tighter emission standards for new vehicles introduced at European level beyond 2005.
  That is why the Government's objective is not to prescribe particular fuels or vehicle technologies. As the noble Earl, Lord Attlee, indicated, the aim is to set stringent environmental goals and then support all those technologies which can meet those goals in a cost effective way. There is not one solution to all our environmental problems. One fuel or vehicle technology may be appropriate for one situation; another may be appropriate for a different situation.
  The key to creating a sustainable market for cleaner fuels and better vehicle technology involves our supporting moves in a wide range of different situations. That is why my department has been funding Powershift, a programme designed to establish sustainable markets for alternative fuelled vehicles across Britain. That programme helps private and public sector fleets with the additional purchasing costs of gas powered vehicles among others. Over 1, 000 alternative fuelled vehicles have now been purchased with the assistance of Powershift grants. My colleague, John Reid, the Minister of Transport, announced last October that the programme will go forward. The focus of the programme will remain on supporting gas powered vehicles. But as this market becomes more sustainable, it is anticipated that in future there will be a shift towards sustainable markets also for electric: vehicles, hybrid electric, and, eventually, fuel cell vehicles.
  A number of questions were asked about how far we can go in converting fleets and how rapidly the public sector in particular should move. Questions were asked also about the relative benefits of CNG and LPG in the gas fuel area. The general position is that CNG is better for larger vehicles, and LPG vehicles can be refuelled more quickly and therefore are better suited, as the tax example indicated, to light duty vehicles such as cars and vans.
  It is true, as the noble Lord, Lord Steel, made clear at the beginning, that our market has developed more slowly in that area than it has in many other countries. That is partly because the beneficial tax regime has been in place for a shorter period of time. As the Chancellor indicated, it requires a sustained period of fiscal signals for that to be built up.
  However, on the latest DVLA estimate, there are 9, 000 gas-powered vehicles in the UK, although the noble Lord indicated that the figure was 3, 500. There are a significant number of electric vehicles, although they are still mostly milk floats. That is not exactly the cutting edge of technology, but nevertheless we are getting there.

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  In terms of the public sector, several noble Lords referred to the London Borough of Sutton, even in the absence of the noble Lord, Lord Tope. The London Borough of Sutton is one of a number of councils which have committed themselves to alternative fuels. That includes the London Borough of Southwark, which has electric and gas-powered vehicles and vans. In the City of Coventry I recently drove an electric car which is being acquired for the city's fleet. Just to make the matter completely trans-party, Westminster City Council is also involved with those projects. So there is quite a commitment on the part of local authorities. Although this was slow getting off the ground, it is now moving quite rapidly.
  As regards central Government, 33 cars have already been purchased and there are another 22 on order. It is not a viable option to convert existing cars, but as they are being replaced the balance is being shifted increasingly onto gas-fuelled cars. The largest departmental fleet—the Department of Social Security—announced just last week that it would be purchasing more than 200 new LPG vehicles this year. All departments are looking at those options.
  The noble Lord, Lord Steel, mentioned police authorities. Humberside Police is planning to convert 450 police cars to LPG and there are also moves in Hampshire and some other police authorities.
  As regards London buses and taxis, the situation is not so clear-cut. It is true that gas vehicles offer environmental benefits but there are benefits also in improving the technology in relation to conventional fuels. For example, taxis running on ultra low sulphur diesel and fitted with oxidation catalysts may also offer similar environmental benefits at a lower cost than conversion to LPG. All London buses now use ultra low sulphur diesel and many older buses are being re-engineered to improved emission standards.
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  Nevertheless, we understand that London Transport is having trials of gas-powered buses in some areas of London. No doubt the balance of technologies will achieve a substantially cleaner fleet for London Transport very soon.
  Therefore, we have a range of commitments in the public sector and elsewhere and a range of technologies in relation to which we wish to use fiscal and other measures to develop. Noble Lords are correct to say that the infrastructure does not exist at present and there are serious problems as regards developing that infrastructure. We are looking at that aspect as well as the vehicle aspect of introducing those new technologies.
  We have established a cleaner vehicles taskforce which is considering what further measures are needed. We are expecting the first report of that taskforce later this spring. It is sure to make some key recommendations in that area.
  The Government have already indicated commitment to road fuel gases by cutting the duty on them in the Budget and by giving greater certainty to the market through initiatives such as power shift.
  By committing ourselves to reducing pollution across the board and supporting the various different fuel and vehicle technologies which achieve that, we have indicated our intention to pursue this as a high priority as part of our transport policy. However, it is not just a matter for government, nor just for the public sector. It is also important that government locally and nationally, the manufacturing industry and the operating industry, continue to work together to ensure that we take full advantage of all the new technologies to achieve the environmental benefits we all desire.
  I thank noble Lords for their contributions to the debate. If there are any points I have not covered I shall attempt to do so in writing. I think it is probably about time that we packed up for today. Nevertheless, once again I thank the noble Lord, Lord Steel, for initiating the debate.
  House adjourned at eleven minutes before three o'clock.