Lords Sitting of 12 May 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 Southwark.
The Duke of Rutland—Sat first in Parliament after the death of his father.

The Balkans: Economic and Political Development
Baroness Williams of Crosby Baroness Williams of Crosby asked Her Majesty's Government:
What plans they have for the economic and political development of the Balkans.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, the United Kingdom is urgently pursuing, with partners and allies, a range of ideas to promote economic and political development in the Balkan region. The Kosovo crisis has highlighted the need to stabilise the region; to accelerate our existing strategy; and to make it more inclusive.
The EU presidency has proposed a stability pact for the region, and we are working with it on this. At the same time, we are making specific proposals to give this process greater content and impetus.
Baroness Williams of Crosby: My Lords, I thank the Minister for that reply. I welcome the task force which has just been established between the World Bank and the European Commission with regard to the reconstruction of the Balkans.
Should we not go well beyond that in terms of the reconstruction of democratic institutions in the whole of the Balkans? Should we not involve the non-governmental organisations, and should we not seek to train the refugees now outside Kosovo to be able to help in their own reconstruction? Today we have learned of a new crisis in Russia. The scale of the need is now far beyond anything we envisaged. I remind the Minister of the Prime Minister's remark about a Marshall Plan and the Foreign Secretary of Germany's remarks about a major Balkan stability pact.
Baroness Symons of Vernham Dean: My Lords, the Government too welcome the announcement today about the initiative: begun with the World Bank and the European Commission. That follows a decision at the meeting of high-level representatives of government which took place in Washington on 27th April.
We are going further than that, both economically and politically. As well as supporting the work that is being undertaken with our partners in Europe, the Government are working on a range of possibilities to be taken
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forward with NATO, the OSCE and the international institutions. We recognise the point that the noble Baroness makes. It is not just a question of economics. It is a question of political stability too. We are in the process of working up our ideas. Meetings are taking place today and they will continue to try to put forward our ideas and discuss them with our partners as quickly as possible.
Lord Grenfell: My Lords, does the Minister agree that the co-ordinated and comprehensive response that has been announced today to deal with the post-conflict economic rehabilitation and reconstruction of the Balkan region may be our last chance to bring long-term stability to that historically unstable region? Does my noble friend share my view that it will not just be a last chance but will be a golden opportunity to get it right this time? While the cost will be very high indeed, we must ensure that the member states of NATO, the European Union and the international financial institutions make provision to meet those costs for, if they do not, it is certain that the region will fall back into despair and into renewed conflict.
Baroness Symons of Vernham Dean: My Lords, I agree that today's announcement presents an important opportunity. I hope that my noble friend will agree with me that there are a number of different arenas in which that important work is being pursued. The announcement today is one very important part of that but it is not the only initiative. There is that joint responsibility to co-ordinate the work and to assess the needs and mobilise the support for the Balkan regions. The Commission and the World Bank have already co-chaired meetings in relation to Bulgaria and Macedonia. Further meetings are scheduled as regards Albania and Bosnia-Herzegovina. That is extremely important work and we support that initiative. But there are other initiatives too and I ask my noble friend not to lose sight of the importance of those further initiatives.
Lord Quirk: My Lords, given the obvious importance of education and training in economic development, and recalling the speedy generosity with which our universities helped earlier generations of refugees like the Hungarians in 1956 and the Czechs in 1968, will the Government encourage the funding councils to enable our universities and further education colleges to admit relevant young people from among the refugees currently arriving from Kosovo?
Baroness Symons of Vernham Dean: My Lords, the noble Lord, Lord Quirk, is quite right that the educational future of the young refugees is an important point if we are to ensure that there is a future, not only for those who have left Kosovo and may not see their future there, but those who wish to return. Indeed, we shall encourage them to do so if that is their wish. The work being taken forward in the United Kingdom at present is looking into a

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number of different areas, not only on the economic side. As I stressed to the noble Baroness, Lady Williams, that includes areas on the political side and areas of good governance. All those issues are being considered at present. We hope to be able to share our thinking on this with our partners within the next couple of weeks or so.
Lord Moynihan: My Lords, from these Benches we strongly endorse the points raised by the noble Baroness, Lady Williams of Crosby, and the noble Lord, Lord Grenfell. Does the Minister agree that when fighting a war it is right and proper to ensure that defence forces are fully financed, and it will be absolutely essential on this occasion, in making the peace in Kosovo, that full and generous financial support will be needed? Therefore, to what extent have the Government's plans for the post-fighting status of Kosovo, namely a mandate under a UN Security Council resolution for its interim administration, been agreed with other members of the NATO alliance, the OSCE, the European Union and the United Nations in particular?
Baroness Symons of Vernham Dean: My Lords, as the noble Lord knows, the position after the fighting is over—let us hope that is soon—is one that has to be discussed not only with our allies in NATO but with other members of the contact group. The noble Lord will know that work is going forward on this very urgently, not only with the contact group but also in the United Nations. We very much hope that we will be able to persuade our friends in China that they can come on board over a United Nations Security Council resolution. The future will depend upon how all the interested parties see the position after the fighting. Among those interested parties will also be the Kosovo people. As we have said, as far as we are concerned, we believe it is important that the Rambouillet Accords form part of the thinking for the re-building of Kosovo after the fighting.
Lord Hylton: My Lords, does the Minister accept that the first need of south-east Europe is for free trade and better transport links? Is it not desirable that there should be some kind of Benelux arrangement stretching the whole way from the Ukraine to Albania?
Baroness Symons of Vernham Dean: My Lords, it is sensible for us to look at the situation on the ground when the fighting is over. There is an enormous amount of political and economic uncertainty, not only in Kosovo but, as the noble Baroness, Lady Williams, rightly pointed out, in the whole of the Balkan region. The priorities are to end the violence in the Balkans, to increase prosperity in the region and to have partnership based on core democratic European values. We need to get those things into place and then consider the sort of detail the noble Lord urges us to do.

Written Answers: Publication in Hansard
2.46 p.m.
Lord Chesham Lord Chesham asked Her Majesty's Government:
Whether they consider that it is in the interest of open government to place full Answers to Written Questions in the Library of the House. where they are not readily accessible to the public, rather than to publish them in the Official Report.
The Minister of State, Cabinet Office (Lord Falconer of Thoroton): My Lords, it is usual practice for departments to consult the office of the Official Report for guidance on handling when Answers to Questions from noble Lords are of significant length. In such cases, the decision to place the Answer in the Library of the House, rather than publish it in Hansard, is made for reasons of cost-effectiveness and practicality. The full text of the Answer is, of course, available to noble Lords and other inquirers on request.
Lord Chesham: My Lords, this is an increasing practice. Is it not extraordinary that the Government adopt it at a time when they are promising, again and again, a freedom of information Bill, a manifesto promise which has not yet been delivered?
Lord Falconer of Thoroton: My Lords, we place Answers in the Library rather than publish them in the Official Report only after we have taken the advice of the Editor of the Official Report. It is not a decision for the Government, but for the authorities of this House. It is wrong to criticise the Government rather than others.
Lord Monkswell: My Lords, does my noble and learned friend agree that those of us who ask Questions—here I declare an interest as one who asks a number of Written Questions—have a certain responsibility in judging such Questions so as not to produce such voluminous responses as are required to be placed in the Library?
Lord Falconer of Thoroton: My Lords, I am sure that noble Lords are always responsible in the Questions they ask. When they ask a Question, they know that it is one which deserves an Answer.
Lord Henley: My Lords, can the Minister confirm that some Answers he has given have referred noble Lords to sites on the world wide web and that for some noble Lords who do not have access to computers that can make for difficulty? Will he guarantee that in future all Answers he gives to noble Lords are available through Hansard whether the Editor wishes it or not?
Lord Falconer of Thoroton: My Lords, I am sure that I have only ever referred to a site on the world wide web when it was appropriate and necessary to do so.
Lord Bruce of Donington: My Lords, in the course of his Answer, my noble and learned friend mentioned the

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question of cost. Would it not be wiser to look at the form in which government papers are published? At the moment they comprise a glossy cover—sometimes a double cover—and may also be illustrated in colour. Would it not be better to have a rather more impersonal and cheaper presentation of government documents?
Lord Falconer of Thoroton: My Lords, it is good that attempts are made to make White Papers more interesting to the public. More effort should be made to encourage people to read government documents so that they see what the Government are doing. Therefore I do not agree with my noble friend.
The Countess of Mar: My Lords, continuing the theme of cost, is the Minister aware that in relation to numerous Written Questions I have asked of the Minister of Agriculture, I have had to repeat those Questions because I have not been given a proper Answer? Will the noble and learned Lord contact his colleagues in that office and ask how much it costs to answer my Questions perhaps two or three times before I receive a proper Answer?
Lord Falconer of Thoroton: My Lords, whenever the subject of Written Questions is raised, everyone stands up and complains about specific Questions. I am not in a position to respond to the inquiry about the Minister of Agriculture, Fisheries and Food. Obviously it is better that Questions are answered first time round. If they are not, it will cost more money. However, rather than putting such a question to me, the noble Countess would be better off contacting the Minister of Agriculture, Fisheries and Food.
Lord Chesham: My Lords, will the Minister answer the noble Countess, Lady Mar, and put a copy of his answer in the Library?
Lord Falconer of Thoroton: My Lords, with respect I have answered the question.
Earl Ferrers: My Lords, I was concerned by the noble and learned Lord's original Answer when he said that it was up to Hansard to decide whether a Written Question was published in the Official Report or whether it should go into the Library of the House and that it was not the Government's responsibility. Will the Minister consider the point again? It is surely the Government's responsibility to decide how information is given to the public.
Lord Falconer of Thoroton: My Lords, the Government provide the answer. We take advice, and we comply with the advice.

Scotland: Tuition Fees
2.51 p.m.
Baroness Young Baroness Young asked Her Majesty's Government:
What is now their policy on the imposition of tuition fees in Scotland.
The Parliamentary Under-Secretary of State, Scottish Office (Lord Sewel): My Lords, the policy on tuition fees announced in July 1997 remains throughout the United Kingdom. It was designed to ensure that only those who could afford to do so would contribute. It is estimated that no more than 30 per cent of students will be required to pay the full amount.
The next part of the Answer will not come as a surprise to the noble Baroness. From 1st July education in Scotland will be the responsibility of the Scottish Parliament.
Baroness Young: My Lords, I thank the Minister for the first part of his Answer, which was quite standard and anybody who has followed this matter expected that to be his reply. However, I am sure that the noble Lord values the great fruits that have come from devolution and the second part of his response is more important. It raises a serious issue as to whether or not tuition fees will be introduced at Scottish universities. Will the Minister indicate on behalf of the Government how they view such a situation? Does he recognise that it will have a serious effect on the staff and courses at universities throughout the United Kingdom, quite apart from the effect that it will have on students and their parents? We have a right to expect the Government to have thought through this policy and to tell us who will be paying for it.
Lord Sewel: My Lords, as I indicated in my initial reply, education—including the whole business of higher education expenditure and student finance—is a devolved matter. It is therefore open to the Scottish Parliament and the Scottish Executive to develop policies that they believe suitable in all the circumstances.
Earl Russell: My Lords, perhaps I in turn may thank the Minister for the second part of his initial Answer. Is he aware that after 1st July we will have to consider how far Questions such as this will be in order? Does he know whose responsibility it will be to decide that matter? If not, will he make it his business to find out?
Lord Sewel: My Lords, I have had enough difficulty coming up with an answer to this question, let alone finding an answer to the second supplementary. However, the noble Earl is quite right. There is an issue at hand on how matters relating to Scotland will be addressed in this House. I am sure that other minds are bending to that matter as we speak.
Lord Shore of Stepney: My Lords, will my noble friend pass on to those who will be responsible next year for fees and payments in Scottish universities that on several occasions over the past two years this House has expressed its disgust at the odious act of discrimination which is now the practice under which Scottish and European Union students are exempted from certain fees, whereas English, Welsh and Northern Ireland

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students have them imposed upon them? Will he ensure that his right honourable friends in the other place have this drawn to their attention?
Lord Sewel: My Lords, it is absolutely right and proper that a Scottish Parliament and a Scottish Executive should deal with the issue of tuition fees for Scottish universities and for Scottish domiciled students. That is rightly a matter for that Parliament and I do not intend to interfere.
Lord Lang of Monkton: My Lords, is it part of the new politics of consensus, compromise and coalition that the least popular party in the new Scottish Parliament should make non-negotiable demands on that Parliament and that the major party in the Scottish Parliament should take its orders from Whitehall? What are the implications for England if the Scottish Parliament decides to use the powers given to it by this Government to ignore the instructions of the Deputy Prime Minister and the Minister for Education and abolishes tuition fees in Scotland? Is it part of the new politics that the Parliament of Scotland and the Assembly in Wales, whether in relation to tuition fees or beef on the bone, should dictate policy to Westminster?
Lord Sewel: My Lords, we still have a little to learn about the nature of devolution.
Noble Lords: Hear, hear!
Lord Sewel: My Lords, perhaps we could organise special needs classes. The point is that, on an issue affecting education and higher education, there is clearly an English and a Scottish interest. When this House was discussing the Scotland Bill there was not a single dissenting voice either in Committee or on Report saying that any aspect of higher education in Scotland should somehow be reserved. We must accept that, having given responsibility for that area of policy to the Scottish Parliament, it will proceed in what it considers to be an appropriate and responsible way. It is not a matter of a Scottish Parliament or a Welsh Assembly dictating to anybody.
Lord Tope: My Lords, I am sure the whole House will join me in my pleasure in the news we have just received that my noble friend Lord Steel of Aikwood has just been elected as Presiding Officer in the Scottish Parliament.
The Minister confirmed rightly that the question of who pays the students' tuition fees in Scotland is entirely a matter for the Scottish Parliament and I hope he will confirm that his colleagues, like my colleagues, are free to make their own decisions in that Parliament. Does he agree with me that the unfairness that might result from that could be much more easily resolved if this Parliament were to abolish tuition fees in the rest of the United Kingdom?
Lord Sewel: My Lords, no. I ask those who have an interest in tuition fees in Scotland to pay attention to some of the voices that have been heard more recently, particularly from representatives from the Association of
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University Teachers in Scotland. Indeed, one of its spokesmen, a former prominent Liberal Democrat, argued against a "quick fix" type of decision in this area.
Similarly, we should all recognise the contribution of Mr. Ian Graham-Bryce, convenor of the Committee of Scottish Higher Education Principals, who made clear that the concern of the principals was not with the future of tuition fees as such but with the bigger cause of widening access and ending social exclusion. Those are noble and proper objectives.
Lord Mackay of Ardbrecknish: My Lords, does the Minister hear, as I do, the sound of chickens coming home to roost here? Further, does he accept that over 60 per cent of the electorate in Scotland, in addition to those who voted for Dennis Canavan (whose overwhelming majority showed the lack of judgment in the Labour Party) voted for parties and people who have pledged to abolish tuition fees in Scotland? Unless a deal has been done to allow the noble Lord, Lord Steel, to become the Speaker of the Scottish Parliament in exchange for the Liberal Democrats backing down on the issue, tuition fees will not be paid in Scotland after 1st July. Can the Minister guarantee that his right honourable friend in Downing Street is not attempting to interfere with what has been devolved to the Scottish people?
Lord Sewel: My Lords, it is about time that the noble Lord, Lord Mackay or Ardbrecknish, took a deep breath, counted very slowly to 10 and then decided whether or not he is in favour of devolution; and, indeed, whether he is in favour of proportional representation. Only yesterday I heard members of his party denouncing proportional representation. Of course, that would have meant that there would have been no Conservative present in the Scottish Parliament—perhaps an outcome devoutly to be wished. The decision on tuition fees in Scotland will be made by the Scottish Parliament and the Scottish Executive. We all know that there are quite understandable discussions taking place between the parties. That would be a feature of the new politics in Scotland.
Noble Lords: Next Question!
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, there is obviously great interest in this Question. However, we shall return to Questions on Scotland on many occasions in the future. We have now spent 24 minutes on three Questions, and it is time for the noble Lord, Lord Skelmersdale, to ask his Question.

UK Gold Reserves
3.2 p.m.
Lord Skelmersdale Lord Skelmersdale asked Her Majesty's Government:
Why they now intend to sell a substantial part of the United Kingdom's gold reserves and what resources they will hold in their place.
Lord McIntosh of Haringey: My Lords, the sale of gold announced last week is part of a prudent

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restructuring of the reserves to increase the share in foreign currencies and to reduce the share of gold. This will provide a better balance in the portfolio for the UK's net reserves. The increase in currencies will be a mix of dollars, euro and yen, which is how the net currency reserves are presently held.
Lord Skelmersdale: My Lords, If am grateful to the Minister for that Answer. Is he aware that I make no complaint about the restructuring of the reserves? However, given the immediate result of the gold price dropping by five-and-a-half dollars an ounce on Friday afternoon and by a further four-and-a-half dollars since, without a single grain being sold, can the Minister say why on earth this policy was announced in advance?
Lord McIntosh of Haringey: My Lords, rather than pleading our own cause, I should refer the noble Lord to the very authoritative leader in the Financial Times, which argued, first, that it made sense, as the noble Lord acknowledged, to restructure our net reserves; and, secondly, that the timing and the method chosen were correct. We are proposing five auctions during the course of this year of as small an amount as 25 tonnes. My understanding is that the gold price has stabilised during the course of today.
Lord Barnett: My Lords, although I agree with my noble friend on the Government's position in the matter, can he tell us what is the case for keeping the remainder of the reserves in gold?
Lord McIntosh of Haringey: My Lords, my noble friend may be recalling Keynes in the 1930s who described gold as a "barbarous relic". That may indeed be a proper position for the next millennium, but at present what we propose is a very modest change in the balance of our net reserves.
Lord Lawson of Blaby: My Lords, is the Minister aware that the reason he has given—if it is a reason at all—is totally unconvincing? Is he further aware that the only genuine reason, the only thing that makes sense, for the action that has been taken is that the Government are looking forward to the time when there will no longer be a pound sterling, only a euro? Therefore, in those circumstances, there will be no need to have reserves at all. I see the noble Lord, Lord Peston, who is sitting behind the Minister, nodding his head. However, on reflection, does the Minister not feel that it is perhaps a trifle rash, not to say contemptuous of the British people, to pre-judge the result of a forthcoming referendum on the euro in this way?
Lord McIntosh of Haringey: My Lords, I was grateful to have advance notice of the noble Lord's views in the press statements that he made earlier this week. I am aware that he is not convinced—but I do not believe that anyone else is not convinced—that this restructuring is entirely a technical matter made, by order, to the Bank of England, after having taken
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the advice of the Bank of England. The amount of money involved is not affected by and does not affect any preparations for joining the single currency; indeed, it is done entirely for its own purpose.
Lord Peston: My Lords, I was aware that I was nodding my head. I did so simply because I regard gold as an entirely sterile asset, except for a tiny amount used in jewellery. Its value depends entirely on human irrationality, which Keynes. in particular, fully appreciated. Would not the correct next step be to find any mug in the world who is willing to buy it at the world market price and then sell it, using the remainder to hold interest-earning assets or to reduce the national debt? Both would be excellent moves whether or not we enter EMU, although of course I would favour the latter. That is not the essence of the matter; the essence is the complete irrationality of the world which feels that gold is a worthwhile asset.
Lord McIntosh of Haringey: My Lords, as my noble friend said, one of the reasons, although not the only one, for the proposed sale of gold is the fact that currency reserves held in the form of government bonds do attract interest. The level of interest that they attract depends on interest rates in the United States, Japan and in euroland. However, for the sake of completeness, I have to say that we do receive some proceeds from gold by lending it in the London gold market.
Lord Mackay or Ardbrecknish: My Lords, has the Minister had an opportunity to read the speech of the Chancellor of the Exchequer to the General Assembly of the Church of Scotland, in which he advocated a determination to continue the policy of Mr. Kenneth Clarke to persuade the IMF to sell at least some of its gold reserves in order to help fund the debt of the third world? In the light of that perfectly reasonable policy, is it not a bit odd that the UK Government should decide to sell their gold thus depressing the gold market? Surely that means that the IMF will receive a lot less money for its gold when it comes to sell it and that the third world will also receive less in debt relief.
Lord McIntosh of Haringey: My Lords, the noble Lord should pay some attention to the different orders of magnitude involved. We are talking about selling 125 tonnes of gold during the course of this year from total net reserves of £9 million (15 billion dollars) in a situation where the production of gold is approximately 4,000 tonnes a year. The use of gold for fabrication, jewellery, and so on, is approximately 4,000 tonnes a year. The effect on any country's balance of payments on its reserves will be minimal. Moreover, the effect on debt relief, on which this country has an exceptionally good record, will not be significant.

Imperial College Bill
3.8 p.m.
Read a second time, and committed to an Unopposed Bill Committee.

Business of the House: Debates this Day
Baroness Jay of Paddington: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Hayhoe set down for today shall be limited to two hours and that in the name of the Lord Vinson to three hours. —(Baroness Jay of Paddington.)
On Question, Motion agreed to.

Referendums
3.10 p.m.
Lord Hayhoe Lord Hayhoe rose to call attention to the case for establishing an independent statutory commission responsible for the conduct of referendums, their organisation and administration; and to move for Papers.
The noble Lord said: My Lords, I am grateful to my colleagues for this opportunity to raise matters concerning referendums. Some 30 years ago—I was first elected a Member of Parliament in June 1970—about the one proposition that commanded universal support from all three party leaders was their clear opposition to the holding of a referendum on British membership of the Common Market, or the European Community as it was properly called then. That is not to say that the parties—Conservative, Labour and Liberal—were not deeply suspicious that their opponents would try to pull a fast one by endorsing such a referendum to gain electoral advantage at a late stage in the campaign. But, in the event, principled opposition was maintained.
Indeed, at that time there was greater confidence in parliamentary democracy as such. For example, Edward Heath, when asked by Robin Day on Election Forum about a referendum on the Common Market, replied:
"We have got the oldest parliamentary system in the world. It is still the envy of every other country in the world and my view is that it is right to depend on that parliamentary system".
Harold Wilson's answer, again to Robin Day, was much the same:
"I think it is right that it is parliament which should take the decision with a full sense of responsibility, with a sense that reflects national views and national interests".
And the Liberal leader, Jeremy Thorpe, in similar terms, also rejected any idea of a referendum.
How times have changed. Referendums—or "referenda", as some like to say—are now more generally acceptable, if not positively welcomed.
Professor Bognador, in evidence to the Neill Committee, said that they were used,
"to secure legitimacy for decisions when parliament alone could not secure that legitimacy".
He went on to say,
"for that legitimacy to be secured the losers have to feel that the fight was fairly conducted".
I was delighted to see that the noble and learned Lord the Lord Chancellor endorsed that sentiment in his annual Constitutional Unit lecture last December.
But Robert Hodge and his colleagues in the "Just Say No" campaign in Wales certainly did not feel that the fight had been fairly conducted. Neither did the Neill Committee. I remind your Lordships of paragraph 12.32 of its report:
"We were disturbed, in particular, by the evidence we heard in Cardiff to the effect that the referendum campaign in Wales in 1997 was very one-sided with the last minute No organisation seriously under-funded and having to rely for financial support essentially on a single wealthy donor. The outcome of the Welsh referendum was extremely close, and a fairer campaign might well have resulted in a different outcome".
Perhaps the result of the Welsh Assembly elections last week provided some fitting retribution, with the loss of Labour strongholds like Rhondda Valley, not just for the Labour Party's control freak tendency and internal wrangling but also for the very dubious popular support squeezed out by that flawed and biased referendum campaign. Nothing like that should ever be allowed to happen again.
Referendums about the single currency and about our voting system at general elections, if they are to be held, must be transparently fair and even handed. There is plenty of advice about how that can be achieved. We have the authoritative report from the Patrick Nairne Commission on the conduct of referendums. I am delighted that two distinguished members of that commission, the noble Baroness, Lady Gould of Potternewton, and the noble Lord, Lord Holme of Cheltenham, will be speaking today. Sir Patrick's report spells out 20 guidelines which, while not exclusive and definitive, nevertheless cover essential elements of the arrangements and procedures which, once established and accepted by the main political parties, will ensure consistency and fairness and maximum confidence in the results of any future referendums. Like Sir Patrick and his colleagues, I favour the establishment of an independent statutory commission. But more of that later.
Ground rules are essential to cover the wording of the question in any future referendum that is held. They are absolutely crucial to achieve fairness, as anyone familiar with public opinion polling will testify. Reasonable thresholds must be set. A bare majority on a low turn-out—as, for example, in the Welsh referendum where, of the 25.1 per cent of the electorate who turned out, just over 50 per cent voted in favour of the Assembly—is no way to determine major questions of national importance.
Other issues requiring attention and perhaps prescription in legislation or by the independent commission would include the duration of the campaign and the provision of public information. In that respect,

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the exchange at Question Time on Monday between my noble friend Lord Peyton of Yeovil and the Minister on the Front Bench opposite was pretty gloomy to listen to. Issues such as campaign expenditure and core funding; access to broadcasting; and the role of the Civil Service during a campaign are also relevant and need to be taken into account.
I referred earlier to the Neill Committee on Standards in Public Life. Its fifth report is highly relevant to our debate today. It deals in detail with funding issues which go much wider than those concerned only with referendums. It deals also with the dissemination of information, with broadcasting, with umbrella campaigning organisations, and much else besides. There was, however, a lack of clarity in its proposals concerning the role of Ministers and the Civil Service during referendum campaigns. Those who have followed the debates in another place will have noted that my right honourable friend John MacGregor, a member of the Neill Committee, made a statement on 9th November last which, I believe, clarified matters in an acceptable fashion.
The election commission recommended by the Neill Committee would naturally and properly subsume the independent statutory commission, the subject of my Motion today. Pressures for the establishment of an election commission have been mounting over the years. When I was chairman of the Hansard Society, almost 10 years ago, it set up a commission on election campaigns, chaired by Christopher Chataway, which recommended such an election commission with a wide-ranging remit covering the conduct of general elections. Interestingly enough, there was not a single mention of referendums in its report. But, as I indicated, times have moved on, and the proper conduct of any future referendum is of crucial importance.
I should note that in another place my honourable friend the Member for Blaby, with all-party support, has introduced and obtained a Second Reading for a referendum Bill which is now being considered in Committee.
Perhaps I may quote from the report of the Independent Commission on the Voting System, the Jenkins Commission. In paragraph 168 it states:
"we strongly support the practical guidelines set down in the Report of the Commission on the Conduct of Referendums, chaired by Sir Patrick Nairne".
It goes on to say:
"In particular we urge the Government to accept the recommendation, echoed by the Neill Committee, for an independent body to oversee the conduct of referendums, although we think that the Government should be entitled firmly to express its own view in any such referendum. It seems to us that an Electoral Commission would be best placed to discharge this role in relation to the referendum on the voting system. But if this is not in place we recommend that an independent Referendum Commission should be established to oversee the conduct of the referendum".
I believe that the arguments in favour of an independent statutory commission, whether more generally for elections or more specifically for referendums, are now overwhelming.
As I understand the Government's position, they are firmly committed to publishing a draft Bill on the Neill
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Committee's wide-ranging proposals before the Summer Recess. Very good so far as it goes. But I hope the Minister will give more details when he replies to the debate today.
If a draft Bill is published this summer, followed by wide consultation and perhaps consideration by a pre-legislative Select Committee, it should be possible to enact legislation during the 1999–2000 Session of Parliament, or at least in the Session following it; in fact, in good time to cover possible referendums on the single currency and the voting system, although it seems less and less likely to me that the Government will stick to their plans to hold such a referendum. as they promised, during the lifetime of this Parliament.
I understand fully how easy it is to enunciate general principles about fairness in the conduct of referendums. Detailed legislative provision is quite another matter. As has been rightly said, "The devil is in the detail". But an enormous volume of work has been done by the Nairne Commission and the Neill Committee and there is much expertise available to the Government, to the political parties and to other interested and concerned institutions.
I suspect we shall see more referendums in the future. Two are already promised, and there is, and will continue to be, mounting pressure for one on the stage two reform of this House, as my noble friend Lord Cranborne cogently argued yesterday. There is talk of further referendums on regional governments in England, although quite where those would lead I very much wonder. Who knows what may be proposed by the Scottish Parliament and the Welsh Assembly?
I must confess that my own view about the desirability and efficacy of referendums has moved from outright hostility, when first I entered Parliament, through scepticism to acquiescence. But I am still well short of being an enthusiast. As Hugo Young wrote last October in the Guardian:
"A referendum is a kind of surrender. It transfers the power of direct decision from the politicians to the people. It's also a kind of retreat, an escape-route for the political class. As far as the voters are concerned, it is both a gift and a burden. It says some things are too big to be left to the professionals. But it could also be saying this decision is one they don't have the nerve to take themselves".
I want to see respect for politicians and Parliament improve; I do not want to see it diminished by ever increasing recourse to referendums. But if there are to be more, they must be fair and properly conducted, following reasoned and informed debate. I hope today's debate will assist in that process. I beg to move for Papers.
3.23 p.m.
Baroness Gould of Potternewton: My Lords, I thank the noble Lord, Lord Hayhoe, for initiating this debate, which is timely, not least—as he said—because it is likely to surface again during the discussions on the House of Lords Bill.
As a practitioner rather than a theoretician, I have long advocated the case for a radical examination of our electoral processes, and within that I would include the conduct of referendums. Before going further, I should declare an interest as a member of the Patrick Nairne

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Commission on the Conduct of Referendums, along with the noble Lord, Lord Holme of Cheltenham, and as a member of the independent commission on the voting system.
Listening to some of the debates on the subject, one might believe that it is a new concept. It is therefore of interest to note that the debate has raged for over 100 years. That is from 1890, when A. V. Dicey, the constitutional lawyer, advocated its use, until 1975 with the first and only national referendum being held on the membership of the European Community—an experiment it was expected at that time would never be repeated.
However, times have changed. The mid-1990s saw the manifestos of the three main political parties committing themselves to holding referendums if returned to government. Throughout that time, since 1890, there have been many academic theses written on the principle and the merits and demerits of referendums. But until the work undertaken by the Commission on Referendums in 1996, little consideration had been given to the mechanics, which is what we are discussing today, rather than the theory.
It is undeniable that referendums are now accepted as part of our political process. That no doubt influenced the Neill Committee to include aspects of the procedure in its report on the funding of political parties. I wish to focus on aspects of both reports and on the future. It was fundamental to both reports that whenever the electorate are asked to express a view, be it on the choice of an elected representative or on a specific constitutional issue, there must be fairness, transparency, understanding of the process and neutrality. Only then can there be confidence in the result.
As the noble Lord, Lord Hayhoe, so explicitly outlined, this can be achieved if the procedures are conducted and overseen by an independent commission working to laid down ground rules—a view which I fully support. The commission of which the noble Lord, Lord Holme, and I were members advocated, as a compromise to one particular view, that there should be a special referendum commission. My own view then, as it is now, is that they should form part of the overall work and function of an election commission.
The role of the election commission should, in this context, include the production and distribution of balanced information, the distribution of core funding and a check on expenditure, the conduct of the referendum proper and acting as an ombudsman to deal with complaints; and, importantly, to advise on the question to be put. Key and crucial to the legitimacy of the referendum has to be the wording of the question which can, if it is biased or badly worded, affect the result. It should be short, easily understood, objective and fair and be designed so that there can be only two possible answers: "yes" or "no".
The commission report illustrates this with the example of a referendum in California on the question of nuclear power. The reverse wording of the question
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caused confusion as to whether a "yes" vote meant limiting future development or continuing its use. I am sure no one ever knew what the real outcome was.
Also to be avoided, in my view, is the multi-option question, from which no clear winner might emerge and which almost inevitably will lead to a second referendum.
During the course of the Referendums (Scotland and Wales) Bill, there was considerable debate on who the electorate should be. I am pleased that the noble Lord. Lord Mackay of Ardbrecknish, will respond to the debate. He cited the view of the commission that the electorate should be as for a general election, plus Members of your Lordships' House. I do not believe that Members of the House were given the right to vote just because there were two Peers sitting on the commission. The reason they were given that right was because they can vote in local elections and it was felt that that was the right course to take.
Of course, the make-up of an electorate is important, but of equal concern to the commission was the state of the electoral register and the number of people debarred from voting. This has been another concern of mine over the years, so I am delighted that the Government are seriously considering how to overcome the problem which I regret the previous government failed to do, even though concern was expressed by all the main political parties, including the Conservative Party.
Doubts about the accuracy of the register raise particular problems if there is a requirement for a qualified majority. The commission was clear that the question of thresholds was a political decision, but it said that a simple majority of those who cast their votes carries natural authority.
I feel that if we are going to encourage greater participation in our democratic process, we should never allow those who stay at home to have more influence than those who go to the trouble to vote. There is no basis for assuming that everyone who says "don't know" means "no". I am sure I shall be corrected if I am wrong, but I believe it was Winston Churchill who said that a majority of one is a majority. If that can apply to determine a government, it can surely apply to a view on a specific issue.
To quote the Neill Committee Report on funding,
"Neither side should be prevented from expressing a view merely as a consequence of relative poverty".
The report is right to recommend that there should be core funding for both sides and that the election commission should be responsible for its allocation. It is right to request audited accounts from those in receipt of such core funding and to say that there should be a declaration of donations over £5,000. I appreciate the difficulties, but I would have liked to see a cap on overall expenditure and greater control on the spending by outside bodies.
But, as the noble Lord, Lord Hayhoe, said, the main area of controversy arising from the report is that of the role of government. In paragraph 12.21(2) the Neill Committee uses the very good analogy of the Government's being expected to play the role simultaneously of umpire and active player, but

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somewhat contradicts that view later in the report when it says that referendums should be treated for these purposes as though they were a general election campaign.
In the latter statement there is no recognition that a referendum campaign will be conducted during the active life of a parliament and that, dependent on the subject in question, might on a day-to-day basis have to deal with allied matters. The noble Lord referred to this lack of clarity, which means that much greater consideration needs to be given to the role and influence of government, government departments and the Civil Service, factors which need to be taken alongside the decisions that the Government themselves must take, including matters such as whether there should be collective Cabinet responsibility, whether the referendum should be advisory or mandatory and its timing.
All those factors raise questions for the election commission in its work, not least in the publishing and circulating of information giving both sides of the argument. This specific role is absolutely crucial to government, in that it forestalls any criticism of the Government for protecting their own position.
This is a huge subject, and for "election freaks" like me it is an interesting one. There is only a very short time available to try to do it justice today; many more points could be discussed. For instance, there is the question of the introduction of a generic Act, which might not be an issue after we have seen the Bill arising from the Neill Committee Report. There is also the important and hotly disputed question whether referendums should be pre-legislative or post-legislative, seeking support for legislation already passed by Parliament.
Referendums in the United Kingdom also need to be considered in the context of parliamentary sovereignty. It is perhaps worth quoting the best formulation of the constitutional position, which was made by my noble friend Lord Glenamara, then Edward Short, as Lord President of the Council and Leader of the House of Commons, before the 1975 referendum. He declared that the Government "will be bound" by its result, but Parliament, of course, "cannot be bound".
I am sure that this dialogue will continue, and I look forward to seeing what the Bill arising from the Neill Committee Report has to say. But, whatever the outcome of these deliberations, what is crucial is that the integrity of the referendum process be maintained. It is a process that I believe absolutely will be improved by the establishment of an independent election commission which takes responsibility for its conduct.
3.34 p.m.
Baroness Young: My Lords, I, too, start by thanking my noble friend Lord Hayhoe for introducing this short debate. Like the noble Baroness, Lady Gould of Potternewton, I welcome it and find it very timely. I should say at the outset that I support the general thesis that my noble friend set out. I am delighted that both the noble Baroness and the noble Lord, Lord Holme of Cheltenham, are taking part in the debate.
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As my noble friend said, referendums are a relatively new constitutional device for us, and it seems clear that they will be used increasingly. As we know, at the present time constitutional issues are well up on the political agenda, if not at the top, and referendums are frequently used as part of the testing of public opinion over new arrangements.
Like others, I have been concerned that there is a danger that as we move to more referendums the public at large will no longer believe in representative democracy as we have always known it, which most of us would think has served the country well for hundreds of years. Frequent referendums could well have the effect of weakening Parliament and weakening government. But, as the Government themselves have said, people want a more direct say in matters of the day.
Perhaps there is a certain irony in this debate. We are discussing referendums just at the moment when we are also debating the future of your Lordships' House, when the Royal Commission is deliberating on stage two, and when the Scottish Parliament and the Welsh Assembly are just starting. So there are considerable new democratic institutions concurrent with the whole question of referendums.
I was interested to read the Question, already referred to, of my noble friend Lord Mackay of Ardbrecknish to which the noble Lord, Lord Williams of Nlostyn, replied quite recently. The noble Lord said that the Government were to publish a draft Bill on referendums before the House rose for the Summer Recess with a view to having controls in place before the next general election. It would be immensely helpful to the House today if the noble Lord could tell us more of the Government's thinking on this very important issue.
One specific point immediately comes to mind. If it is the intention to have referendums before the next election—for instance, on possible English regions or to do with local government—does that mean that there will be no proposals in place governing the way in which those referendums are run? This is very important.
There is, as my noble friend said, an enormous amount of evidence to guide the Government and all of us. The report of the constitutional commission under Sir Patrick Nairne has been referred to, as well as the reports of the noble Lord, Lord Neill and the noble Lord, Lord Jenkins. So the debate is timely and there is much information.
We have had the experience of four referendums since 1997, and more are in prospect. The most important will undoubtedly be that on the single currency. This has already given rise to many questions, not least in your Lordships' House, and, knowing my noble friend Lord Peyton, I am sure he will be assiduous in pursuing the matter.
There is also a great deal of public disquiet, if the newspaper correspondence columns and comment by political commentators are a guide. I profoundly believe that the public—all of us—have a right to know how such an immensely important referendum is to be conducted. After all, there can be no more important issue facing the country into the 21st century.

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Leaving aside that immensely important referendum, we have possible referendums over the English regions; possible referendums, I understand, in local government on local issues; and, of course, a possible referendum on proportional representation. Underlying the concern is very much a political concern. It would be a problem for any government of any political complexion. It is this. If the Government, on going into a referendum, are seeking a particular outcome, those who do not agree with the issue will feel very aggrieved unless the whole system for having the referendum is seen to be transparently fair to all the parties.
That is the fundamental issue that concerns us all. Our experience of recent referendums is not entirely happy. In the referendums in Scotland and Wales a strong case was made at the time that they should have been post-legislative, so that the electors would have had a far clearer idea of exactly what they were being invited to vote upon. Others, including the Neill Committee, feel that there should be a threshold of votes to be cast, particularly in a situation such as that in Wales where the results were exceptionally close or, as in the case of London local government elections, where there is a very low turn-out of only 34 per cent of the population entitled to vote.
Turning to the sort of difficulties which could arise in relation to referendums for the proposed English regions, I foresee two big problems. What if each region votes and some regions want a devolved assembly but some do not? What would be the result? I am not at all clear, except that there would be total confusion. What about asking the people of the whole of England whether they want regions at all? Will that be considered? It is a serious point—and, if I may say so, it will become increasingly serious as we see the operation of the Parliament in Scotland. We had a foretaste of some of those difficulties at Question Time today. It is not a case of scoring party political points. Serious constitutional issues will arise and they need to be addressed. Those are only two obvious points; I have left aside all the other more difficult issues.
It is important that the public should be confident about the conduct of such matters. As your Lordships will know, I have recently been involved in the great debate about what I call, in shorthand, the "age of consent". A public opinion poll was published which gave completely inaccurate and misleading information. The truth became clear only if one read the whole poll and the actual questions asked. That casts doubt on polls and on other matters. When we are considering big issues such as a referendum on the single currency or on English regions—those huge and important issues will affect, in the first case, the entire population and, in the second case, the bulk of the population of the United Kingdom—we need to have a fundamental and impartial assurance about the way in which such matters are conducted.
As the noble Baroness, Lady Gould, properly said, one could discuss this matter for a very long time, given the number of important issues involved. However, some of the big issues which come to mind relate to the duration of the campaign; the public information which
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is to be available so that people can find out what is really involved; the campaigning organisations outside the political parties and whether or not they should receive public funding; the scope of government activity and participation and of party political activity; access to the media; and whether referendums should be held separately from general elections or, where possible, on the same day. As well as the great political and constitutional issues, many important practical points arise.
I hope very much that the noble Lord, Lord Williams, will be able to give some information about the Government's thinking on this important matter—not only because of the questions raised today, but also because I am concerned, like many others, that people are becoming disaffected with the democratic process. It is very important, where possible, to establish something which is seen to be fair between all parties and the electorate.
3.43 p.m.
Lord Hohne of Cheltenham: My Lords, in following the noble Baroness, Lady Young, I should like to join her and the noble Baroness, Lady Gould of Potternewton, in thanking the noble Lord, Lord Hayhoe, most warmly for giving us the opportunity to debate this issue. I had the pleasure of serving under the noble Lord's chairmanship of the Hansard Society and I know of his deep and genuine concern about these matters of public interest. Let us make no mistake: this is a matter of public interest and is therefore particularly well suited to this short debate in your Lordships' House.
I sometimes think—this is not the digression that it sounds—that of all the contributions that the British have made to the world, the one that will be most remembered in a thousand years' time is our ability to write the rules which have made sports and games seen to be fair, enjoyable, understandable and capable of reproduction. We have a wonderful gift for writing the rules of sport. Noble Lords may choose their own sport—tennis, rugby, football or polo—and they will find that it is likely that the British codified the rules of the games which the whole world now plays.
However, when it comes to the constitutional sphere, swathed as we are in this country in complacency, the rules of public life in Britain often seem to owe more to Alice in Wonderland than to the Lawn Tennis Association or the Rugby Football Union. The rules of the political game, which after all is the most important—in Britain, that is saying a great deal because if it is a "game" it must be extremely important!—often seem to depend ultimately on the Government telling us that the rules mean exactly what the Government want them to mean. That really will not do because the rules of the political game decide the level of confidence which our fellow citizens have in their ownership of the political system.
Like other noble Lords who have spoken, I think that we probably have to accept that referendums are here to stay. Indeed, I would probably go further than the noble Lord, Lord Hayhoe, on this. Referendums are now a feature of the British political system. The

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1975 referendum on the European Community, which at the time seemed to be a one-off but which was followed by the referendum on Scottish devolution, has now been followed in the space of this Parliament by the four referendums introduced by the Government. Therefore, it is now clear that that 1975 referendum was not a one-off and that we are now ready to use referendums.
I agree with Professor Bogdanor, who was quoted by the noble Lord, Lord Hayhoe, that the utility of referendums is particularly high in the constitutional area. They secure a higher level of consent, and therefore of legitimacy, than is necessarily possible through a parliamentary majority, particularly when that parliamentary majority may have been achieved in an electoral system in which the Government's majority represents only a minority of the people. Therefore, as far as the rules are concerned, I believe that referendums are helpful when deciding major constitutional changes. If I understood correctly the noble and learned Lord the Lord Chancellor the other day, I think that I probably go further than him because his support for constitutional referendums seemed more qualified.
As both the noble Lord. Lord Hayhoe, and the noble Baroness, Lady Gould, said, I too was a member of the Commission on the Conduct of Referendums, which was established by the Constitution Unit and the Electoral Reform Society under the chairmanship of Sir Patrick Nairne. It is worth dwelling on that for a moment because in an earlier incarnation as a senior Whitehall official, Sir Patrick was responsible for—and should take much of the credit for—the well understood and relatively efficient administration of the rules of the 1975 referendum on membership of the EC. Under his leadership, our commission was particularly well informed on that one example.
Noble Lords who have read that report will know that we recommended an independent referendum commission. I believe that that is the gist of what the noble Lord, Lord Hayhoe, is seeking. Now that the Government have come out in favour of an independent election commission and propose to introduce legislation on that, I am fairly persuaded that the independent referendum commission should be a sub-set of that independent election commission. That is its most obvious locus. The noble Lord, Lord Williams, has been asked to respond generally to what may be in that legislation, and I should be interested to know whether he agrees that the election commission would be the natural home of a body overseeing referendums as well as elections.
I believe that there has been some misunderstanding on this aspect of the Neill Cornmittee"s report. Your Lordships will recall that the Government and the Home Secretary substantially agreed with that report. The one tremor was over the: slue of referendums. I do not know whether that was what one might call wilful misunderstanding or confused drafting in the report. It could be either. When the Minister replies can he confirm my understanding of the position, which is that the governing party will normally have a view on the question on the referendum? The Government must hope that Cabinet members will support that view. The governing party will have a view and will put it forward.
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But, equally obviously, the Whitehall machine must not and should not be deployed behind the Government's view as the governing party. I should be grateful if the Minister could confirm that understanding when he replies to the debate.
The key difficulty in the Nairne Commission report and in thinking about how to achieve above-board, well-argued referendums concerns the formation of what one might call umbrella campaigns. That is the encouraging point about the European referendum campaign. There were clear umbrella campaigns and therefore it was easier to see it as a straightforward binary choice with organising centres which could be assisted in various ways. That was not the case in the recent Northern Ireland referendum. There was no umbrella campaign for the Good Friday agreement. One does not have to look far to understand the reasons. It would have to unite extreme militant republicanism with Dr. Paisley. We can see why there was not an umbrella campaign for a "no" vote.
If it is possible to have clear protagonists for and against and the organisation which is necessary for umbrella campaigns, then I believe that the Nairne Commission conclusions would flow from that. As that report said, it is appropriate that some core funding should be available to both sides of the argument so that, financially, the minimal argument is capably put. Incidentally, I do not agree with the noble Baroness, Lady Gould, about a ceiling on expenditure. We discussed that matter in the commission. It would be very difficult to enforce. I would agree with her more if core funding was available to, say, the poorer of the two protagonists.
There is also the issue of TV broadcasts. I make it plain that I am not speaking as deputy chairman of the ITC, but for myself. If there were two umbrella groups, it would be very difficult to resist the conclusion that they should both receive a certain amount of free broadcasting time.
The potential referendum on the euro has been mentioned several times this afternoon. On such an important issue of public interest, and about which there is a great deal of ignorance and misunderstanding—and I speak as someone in favour—it would be inconceivable and I would be horrified if television broadcasting was not available to both sides in that debate in order to advance the arguments and public understanding of the issues.
Finally, I hope that the Government will take the advice of the Nairne Commission and that given by the various speakers so far in this debate about taking the rules of the referendum game very seriously. If we are to have them—and the Government seem to be committed to referendums—we must ensure that they are seen to be fair by our fellow citizens. If we do not do that, I believe that the democratic price to be paid will be very high. I shall be particularly interested in the noble Lord's response at the end of the debate.
3.53 p.m.
Lord Norton of Louth: My Lords, I too welcome this debate. I congratulate my noble friend Lord Hayhoe

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on introducing it. As has already been mentioned, it is a timely and topical issue. We have heard that there are already three reports in the public domain; namely, those of the Nairne Commission, the Neill Committee and the Jenkins Commission, which recommended that there should be an independent body to oversee the conduct of referendums. As my noble friend also mentioned, there is the Referendums Bill in the other place, introduced in March as a Private Member's Bill with cross-party sponsorship, to create an independent commission.
Referendums are rather strange and controversial phenomena. They come in different shapes with different purposes and rules. In their book Referendums Around the World David Butler and Austin Ranney show that over the past 200 years there have been a little over 800 referendums held at national level. Just over 400 of them were held in Switzerland. A number of countries hold them on a regular basis, but they are few in number. However, the occasional use of referendums is common and increasingly so in democratic states. There has been a marked increase in their use in recent decades. As has been said, we have seen that in our own recent history.
As the noble Baroness, Lady Gould, mentioned, referendums have been variously proposed throughout the past century in this country. There is nothing new in their advocacy, but what is new is their use at national level. That, of course, is confined to the past 25 years. However, we have now experienced them and it is likely that we shall experience more of them in the future, as my noble friend and others have said. All three party manifestos for the last election were committed to holding referendums in certain circumstances.
My noble friend Lord Hayhoe said that there are powerful and principled arguments against using referendums. They are quite persuasive. Unlike my noble friend, I have not shifted my position over the years. But the principle that my noble friend touched on is not central to the debate this afternoon but rather the practice. If referendums are to be held—in certain circumstances that will happen—it is vital that they are subject to rules that are both clear and, equally important, consistent.
As a matter of equity there have to be rules which are generic. There has to be consistency and hence predictability across referendums. If Parliament prescribes one set of rules for one referendum and a different set for another, then the legitimacy of the exercise is undermined. There has to be some guidance and framework which determines as well the issues on which referendums can be held. The subject matter of referendums elsewhere tends to be constitutional, territorial and moral issues. On occasions there are other disparate topics such as whether or not one should drive on the left-hand side of the road.
The referendums held within the United Kingdom have been on constitutional and territorial issues although we have experience, primarily in Wales, of local referendums on moral issues. Do we wish to hold national referendums on moral issues? Do we wish to make all changes to our constitutional arrangements
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subject to referendums? Precisely where do we draw the line? Drawing a line is important. If we do not do so, then there is the danger of impugning the legitimacy of those measures which are not subject to a referendum. It is thus in Parliament's own interest to define what may or may not qualify to be placed before the electors in a referendum.
There is, of course, an overwhelming case for fairness within each referendum. As has already been touched on, there has to be fairness in the conduct of the campaign. There has to be some equity in terms of campaign funding and access to the broadcast media. We are familiar with the imbalance in terms of the resources poured into the campaign in the 1975 referendum when those supporting a "yes" vote outspent those campaigning for a "no" vote by a margin of about 10 to one. We are familiar with the problems of funding in the campaign in Wales in 1997. There has to be equity within each referendum as well as consistency from one referendum to another in terms of what is permitted.
The need for equity in funding has been covered authoritatively and clearly by the Neill Committee and I do not propose to repeat the proposals, not least since they have already been touched on. Clearly, as the committee recognises, there is a need for an independent body, a commission, to administer the regime that it proposes.
In the time available to me I would like to comment on two of the features which, to my mind, put beyond question the case for an independent statutory commission, which has already been touched on by the noble Baroness, Lady Gould. Both relate to the question that is to be put in a referendum. Clearly, there is a need for the question to be fair. In the context of this debate, to ensure that the question is as fair as possible is quite a demanding task. It is not something that can be easily achieved by the two sides of either House agreeing on a particular question.
One study carried out at the time of the 1975 referendum found that a variation in the wording of the question could substantially affect the outcome. Therefore, to get the wording right is vital and is a time-consuming exercise; it is not something that can be easily done within a parliamentary forum.
The Commission on the Conduct of Referendums recommended that the wording of the question should be short and simple and also unambiguous. That has nothing to do with the fairness of the question; it is concerned solely with understanding. To ensure that a question is not open to alternative meanings is not easy to do in a debate on the Floor of the House. A question may need to be subject to a number of pilot surveys to determine that the meaning is understood.
Studies of state referendums in the United States have found the phenomenon of the mistaken vote, one example of which was given by the noble Baroness, Lady Gould. Voters can misunderstand the question, especially when to oppose a policy entails voting "yes". In such cases it was found that the proportion of voters casting mistaken votes could be between 10 and 20 per cent of those voting. Any claim of bias or

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ambiguity in a question can mean that in a close contest the result is open to challenge. That serves to undermine the whole process of the exercise.
In most of the 800-plus referendums to which I refer the results are not close, but there are some exceptions in western Europe and in our own experience, for example in Scotland in 1979 and Wales in 1997. The Home Secretary has accepted the recommendation of the Neill Committee that an electoral commission should be created and a draft Bill is promised for the summer. However, the Government have not been altogether forthcoming as to the role of the commission in respect of referendums. I appreciate that the Government are consulting on the role of the commission. However, in the other place the Home Office junior Minister, George Howarth, was largely non-committal in responding to the Referendums Bill. He failed to answer the question, which was posed more than once, whether the Government would give a commitment not to introduce proposals for another referendum until rules governing the conduct of referendums were in place. I believe the noble Lord, Lord Williams, will accept that that is a fair and largely unambiguous question that deserves an answer.
For the Government surely there is obvious appeal in the establishment of rules and a commission to advise upon and police them. Rules and an independent commission confer legitimacy on the holding and conduct of a referendum. The outcome is more likely to be accepted as legitimate than would be the case if the referendum was the product of a particular Act introduced by the Government and subject to provisions that did not apply to earlier referendums; in other words, it would be more acceptable than the present situation. In short, it is in the Government's own interests to accept the proposal.
4.3 p.m.
Lord Campbell, of Croy: My Lords, I am also very grateful to my noble friend Lord Hayhoe. I thank him for raising a subject that I believe needs very urgent examination. The case has already been made for an independent commission to supervise. We have advice from at least two reports. First, the report of the Commission on the Conduct of Referendums established by the Constitution Unit and the Electoral Reform Society—both separate from central government—contains many useful recommendations and 20 guidelines. As already mentioned, that was chaired by Sir Patrick Nairne who, as a senior member of the Cabinet Office, was in charge of the arrangements for the 1975 referendum on Europe. We also have the more recent fifth report of the Committee on Standards in Public Life chaired by the noble and learned Lord, Lord Neill. Both reports recommend a commission to keep the situation under review and to make recommendations on referendums.
My noble friend Lord Hayhoe referred to several matters in the two reports. In his report the noble and learned Lord, Lord Neill, recommended an election commission with a wider field—because the committee had a wider remit than referendums—to cover ordinary
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elections as well. There are striking comments in the report of the Neill Committee that the first referendum in 1975 was better organised and fairer than the later ones.
I agree with the noble Lord, Lord Holme, that Sir Patrick Nairne deserves much credit for his part, but I should like to add the name of the noble Lord, Lord Allen of Abbeydale, who had just retired as Permanent Secretary at the Home Office and who was described as the chief counting officer in that first referendum in 1975. As the noble Baroness, Lady Gould, reminded us, the position was concisely described before that referendum by the noble Lord, Lord Glenamara, then Leader of the House in another place; namely, that the Government would be bound by the result of the referendum but that Parliament would not be. That was correct in the case of the 1975 referendum.
When the referendum Bills on Scotland and Wales passed through this House noble Lords may recall that I moved an amendment, which provoked considerable debate, to insert the word "advisory". As I made clear, it was not my intention that that word should necessarily be inserted into the Bill, but it was possible for the Government to confirm that in that case both they and Parliament would consider the matter as advisory and that the Government in that case were not bound. Because of the very close result in Wales the Government could have acted differently from the way that they did. Perhaps the Minister when he comes to reply will confirm my understanding that in any referendum the position is likely to be that it is advisory to Parliament but it may or may not be advisory to the government of the day; they may regard it as obligatory.
There are several referendums now in prospect. Whether they are necessary or desirable is not for me to discuss today. However, I see distinct possibilities of even more referendums in Scotland and Wales. Owing to the methods of proportional representation by which the Scottish Parliament and Welsh Assembly have been elected, coalitions or executive councils without overall majorities are likely to be normal, certainly in Scotland. If in Scotland controversial matters arise, such as tuition fees and beef on the bone, decisions will be difficult and this is likely to be demonstrated in the next few days and weeks as such. More issues of that kind will arise.
In Scotland another election cannot take place for four years. Under Section 2 of the Scotland Act 1998 another election cannot be called before four years have passed. These elections are for a fixed term.
It is important for referendums in different parts of the United Kingdom that a commission should supervise them. In the recent election for the Scottish Parliament, many objections were raised about Scots who were not eligible to take part. In the recent referendums in Scotland, electoral registers were used but it was impossible for Scots temporarily resident outside Scotland for a year or more to register their vote. Similar complaints were raised after the March 1979 referendum in Scotland. I referred to them in a debate which I initiated in this House two days after that polling day.
The point is best illustrated by the case of the captain of Scotland's football team, Gary McAllister, who was resident at the time in England because he was playing for

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an English football club. He was unable to take part in the Scottish referendum, but the player who scored the vital goal for England in the key match against Scotland at Wembley, Paul Gascoigne, was resident in Scotland and eligible to vote because he was playing for Rangers for three or four years at that time.
Many Scots are resident outside Scotland for a year or more because of their jobs or other valid reasons. Furthermore, registers for recent referendums have been nearly one year out of date. During the passage of legislation over the past two years, Members of the Government have spoken of the will of the Scottish people, but at least half those who would describe themselves as Scottish people were living outside Scotland. The noble Lord, Lord Sewel, changed his wording as the legislation proceeded and used the term "people in Scotland". I congratulated him because that is an accurate description of the electorate in Scotland, which includes many residents who are not Scottish who were able to take part in the referendum.
I draw particular attention to recommendations of the Neill Committee, although I do not have time to expand on them. First, the question must be clear. In the Scottish referendum it was not called a question but there were two "propositions". A reasonable interval should be arranged between the announcement of a referendum and polling day. A code should be agreed for methods of core funding for both sides. There should be rules for the media and, in particular, fairness in broadcasting opportunities. The Government should not contribute in kind to one side or the other—for example, the services of civil servants in producing leaflets or other documents; cars; or information offices. Audited accounts for core funding should be produced within three months of polling day.
I commend those particular recommendations of the Neill Committee. Even if the Minister is not in a position to say much today, I hope that the Government will take those recommendations extremely seriously and that we will before long have a commission with responsibilities for carrying out referendums, which can then be regarded as completely fair.
4.13 p.m.
The Earl of Northesk: My Lords, I congratulate my noble friend Lord Hayhoe for bringing this matter to our attention and for the eloquence of his introduction to our debate. I make my position clear at the outset. I do not like referendums although, as my support for the amendment of my noble friend Lord Campbell of Alloway to the House of Lords Bill attests, I can accept that referendums may be justified where major constitutional change is being considered.
It is rare that I find myself claiming common cause with Mr. Tony Benn but in this matter I have no hesitation. On "Newsnight" a little over a year ago, the right honourable gentleman said:
"Plebiscites were actually the instruments of dictators. I am not drawing a parallel. You've got to give people a choice. You've got to be able to amend things, and this direct democracy has got a rather unpleasant 1930s flavour about it".
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Jeremy Black, Professor of History at Exeter University, endorsed that sentiment on the same programme:
"I think the historical precedents are in some ways rather alarming. Plebiscites, reaching out to the people, directly circumventing representative assemblies in some way or other, is often what totalitarian regimes do".
I do not dissent one iota from either of those views.
I find myself tempted into one of the threads mentioned by the noble Baroness, Lady Gould of Potternewton. In our debates on the House of Lords Bill, much emphasis has been placed by members of the Government Front Bench on the concept of parliamentary sovereignty. On the surface, I do not doubt its efficiency or its effect, albeit that I would qualify that concept with this thought:
"Ministers talk as if the House of Commons were a sovereign body—a sovereign body under His Majesty, the King; but, in fact, the House of Commons is not a sovereign body at all. It never has been. There is only one sovereign under His Majesty the King, so far as I know, and that is the broad mass of the British people"—[Official Report, 27/1/48; cols.644–647.]
Perhaps, ironically, that comment is from the grandfather of my noble friend Lord Cranborne when he spoke on Second Reading of the Parliament Act 1949. I cannot help feeling that it has some relevance to our debate. It suggests inescapable tension between the concept of parliamentary sovereignty as currently espoused and the use of referendums. Viewed logically—and I pick up on some of the points made by my noble friend Lord Campbell of Croy—if it is not to challenge the concept of parliamentary sovereignty, a referendum can only ever be advisory. But, equally, any referendum that is not mandatory challenges the sovereignty of the people.
It is possible to square that circle provided that the dilemma is confined to the legislature—to Parliament. But the current fad for referendums includes a shameful partiality for the pre-legislative version. Those are the toy of the executive. Not only do they rob the public of the opportunity to make an informed decision; they severely curtail Parliament's ability to scrutinise legislation properly and effectively. The referendums on Scottish and Welsh devolution and on a London mayor, particularly in light of the low turn-outs for the latter two, demonstrate the point.
For all parties, politics and its presentation to the electorate have by and large been reduced to the status of product. Public meetings have been replaced by the glitz of the television studio. The hustings have been squeezed out by the sound bite. Politics has by definition always been reliant upon the vagaries of public perception. There is nothing new in that. Relatively new to British tradition is the huge emphasis on the image of politics as opposed to its substance. It is as though—and here I owe a debt to my noble friend Lord Birdwood—the eyes of politics have met those of marketing across a crowded room. The ardour of that infatuation shows no sign of cooling. My noble friend Lord Chadlington revealed in a debate a month ago:
"New Labour has spent £22 million on focus groups—three times what the former Tory Government spent—including £500,000 to run the People's Panel".

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Later he said:
"The Government are now set to outspend Coca-Cola on TV with a budget of over £80 million for public service advertising. In the past 12 months, there have been 28 separate government campaigns on TV and 106 different campaigns in the national press—a 35 per cent increase in advertising expenditure at the COP'. —[Official Report, 17/3/99, col.763.)
However sensible and reasonable this may be in our media age, the difficulty is that it cart take, and may well be taking, the governing out of government. The fact is that government is not, or should not be, a crude exposition of quasi-managerial skills. More often than not "good government"—if it can be so crassly quantified—is about "doing the right thing for the right reasons" irrespective of populist considerations. It has about it an essential moral dimension which can never be satisfied by vulgar supplication to the gods of market share. And yet, both it and the politics which gives it its being are becomingly increasingly managerial in scope and character. Disturbingly, they are becoming ever more commercial, ever more oriented towards market research. At their simplest, referendums are no more than the big sister; of focus groups which, as Janet Daley has correctly identified, are,
"a way for individuals in authority to avoid responsibility for any Judgement at all".
That is the great risk of their inexorable rise and rise: that government and politics become no more than items on an administration's profit and loss account of populist standing.
Whatever our misgivings about the use of referendums, we have to accept that they are very much in vogue at the moment, both at national and local level. It may even be, as suggested by the noble Lord, Lord Holme, that they are here to stay. A number of hugely significant issues--not least electoral reform and EMU—loom on the horizon. It is crucial that these issues should be dam-mined as fairly and on as informed a basis as possible.
As Mark Henderson observed in The Times only yesterday,
"As both Napoleons understood, the referendum is a powerful but blunt political weapon that is easy to manipulate. With proper safeguards—a simple, balanced question and even-handed campaigning—it can be a valuable democratic tool. But leading questions and one-sided propaganda can manufacture consent. And leading questions with cne-sided propaganda is what we have got".
My noble friend's Motion promotes,
"the case for establishing an independent statutory commission responsible for the conduct of referendums, their organisation and administration".
Against the background I have defined, that case is not only overwhelming; it is imperative as a matter of urgency.
4.22 p.m.
Lord Goodhart: My Lords, like the other speakers in the debate, I welcome the decision of the noble Lord, Lord Hayhoe, to put this important subject forward for debate. I am a member of the Neill Committee, and was a member of that committee when we prepared our fifth report on party political funding which has been widely quoted in this debate. The Neill Committee regarded
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referendums originally as peripheral to our remit but, as a result of the evidence we received, in particular from places outside England, we came to regard them as more central than we had at first thought.
The first major referendum in the United Kingdom was the Northern Ireland referendum in 1973 on the future of Northern Ireland as part of the United Kingdom. In 1975, as we all know, we had the first and so far the only United Kingdom-wide referendum on whether or not to remain in the EEC (as it then was). Since then we have had the devolution referendums in Scotland and Wales in 1979, and again in September 1997. We had referendums in May 1998 for the approval of the Good Friday agreement in Northern Ireland; and on a new system of government for London.
However, the holding of those referendums has been unregulated by law. For referendums there is nothing comparable to the Representation of the People Act for parliamentary elections. Mr. Peter Riddell, the highly respected political editor of The Times described the procedure for referendums in his evidence to the Neil Committee as, "chaotic and unfair". That is undoubtedly an accurate description. If referendums are to be a permanent part of our political system—and they probably will be—then there must be appropriate rules to govern them.
As the noble Lord, Lord Campbell of Croy, pointed out, the 1975 referendum was to a considerable extent a model of how referendums should be conducted. It involved a number of key elements including, first, the delivery to every household at public expense of a statement of the case for and against remaining in the EEC; secondly, the granting of free broadcasting time on an equal basis to the "Yes" and "No" campaigns; thirdly, core funding to each campaign of an amount which updated in real terms would now be about £600,000; and, fourthly, disclosure of all donations over the sum of £100.
That model, sadly, has not been followed in subsequent referendums. In none of them has there been the provision of core funding or a free mailshot. In none of them have the rules about disclosure been applied. In 1979 in Scotland the television companies were prepared to give referendum broadcasting time to each political party. That was blocked by the courts when the Labour Vote No Committee objected that this would mean there would be three "Yes" broadcasts and one "No" broadcast. In that context, that decision seems to me plainly correct. with great respect, but the result has been that since then there have been no referendum broadcasts.
One of the differences between the 1975 campaign and later referendums was that in 1975 it was a more cross-party campaign. Both the Conservative and Labour parties were split; and both supporters and opponents were willing to work with like minded people in the other parties. As a result identifiable umbrella groups were formed, and these were able to receive core funding, produce leaflets for a mailshot and programmes for referendum broadcasts.

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Subsequent referendums have been held more on party lines. In 1997, in Scotland and Wales the Labour Party, the Liberal Democrats, the trade unions and the nationalist parties ran parallel but separate yes campaigns. The Conservatives, having lost all their MPs in Scotland and Wales, were, frankly, punch drunk and took little, if any, part in the campaigns. The result was that there were no effective "No" campaigns. In Scotland, as is shown by the size of the majority in favour of devolution, it would clearly have made no difference. In Wales it might have done.
When the Neill Committee sat in Cardiff we discovered the extraordinary situation which the noble Lord, Lord Hayhoe, mentioned. There would not have been a "No" campaign but for the efforts of two individuals unknown to the general public: Mrs. Carys Pugh and Mr. Robert Hodge. Mrs. Pugh is a local Labour activist who was opposed to devolution. In the absence of anyone else doing so, she decided to start up a "No" campaign herself. In order to do so, she borrowed £5,000 from her bank. She wrote to the late Lord Tonypandy who sent her £100 and put her in touch with Mr Hodge, son of Sir Julian Hodge the well known financier. Robert Hodge put up £90,000 of his own money; and that amounted to almost the whole of the no campaign funds. On that sum they were unable to create a proper organisation or to distribute at their own expense literature across 40 parliamentary constituencies. There were, of course, no referendum broadcasts, although the "No" campaign said that it was fairly treated by the broadcasters who gave them equal time in news broadcasts.
Despite that inequality of arms, the "No" campaign came within a whisker of winning. If it had had core funding, a free mail shot, and referendum broadcast, it could well have won. The Neill Committee felt that that was seriously unfair. Referendums must be fair. Fairness requires that the voice on both sides must be heard. That voice need not perhaps be equally loud. The committee rejected limits on campaign spending although that recommendation is controversial. But public core funding and a free mailshot must be provided.
Of course, as my noble friend Lord Holme of Cheltenham, has pointed out, the key to that is the formation and recognition of umbrella groups on each side. That may not always be possible. As my noble friend said, in the Northern Ireland referendum on the Good Friday agreement, we cannot imagine Sinn Fein and the Ulster Unionist Party joining in the common "Yes" campaign, still less the Democratic Unionists and the republican splinter groups joining in a "No" campaign. But it will usually be possible to form umbrella groups in a referendum on joining the euro or in changing the voting system for the House of Commons. I do not see why it should not be possible to form umbrella groups, but the Government should not be responsible for identifying the umbrella groups if there is uncertainty as to which to choose, and especially where the Government themselves have strong views on the issues.
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This is one place where an independent commission comes in. A commission can identify in cases of doubt which umbrella group qualifies for core funding. A commission can audit the spending of core funding. A commission can make arrangements for a free post. A commission can negotiate with the broadcasting authority for referendum broadcasts. A commission, if there is a dispute over the form of the referendum question—and this is a very important issue indeed—can decide. The commission can monitor the conduct of the campaign. If spending limits are imposed the commission can enforce them. Even if there are no spending limits the umbrella groups should be subject to the same rules of disclosure and bans on foreign contributions as are political parties. That again will be much easier to enforce if a commission exists. Organisations which spend money on a referendum campaign outside the umbrella groups—and clearly there will be organisations which wish to do so—should be required to register with the commission and to provide the commission with accounts of their spending.
It is clear in my view that the commission responsible for referendums should not be a free-standing body; it should be an election commission with responsibilities going beyond referendums. Referendums happen at irregular and sometimes lengthy intervals. For example, we had no fewer than four in different parts of the United Kingdom in the eight months between September 1997 and May 1998. There may well be no more referendums in the life of this Parliament. A free-standing commission would involve short bursts of hectic activity and long periods of the twiddling of thumbs.
One of the central recommendations of the Neill Committee was for the creation of an election commission to oversee rules on donations and limits on campaign spending. That recommendation has been widely accepted and indeed the Newark case has made the need for an election commission even more obvious than it was before. The election commission clearly, in my view, is the right body to oversee the conduct of referendums. I welcome this debate and hope to see the recommendation of the Neill Committee on referendums incorporated into the draft Bill which the Government have promised for circulation later this year. I hope that those recommendations will be in effect when in this country we next come to have a referendum.
4.33 p.m.
Lord Mackay of Ardbrecknish: My Lords, I am particularly grateful to my noble friend Lord Hayhoe for giving us the opportunity to have this debate. There are two reasons for my gratitude. One is that it is nice to find oneself entirely on the winning side. Not a single speaker has cast any doubt on the proposition, and I hope that will continue for the next 30 minutes so that we can embrace the Minister in this unanimity as well. The second reason for gratitude is that it allowed me to go to my files and brush down the speeches I made during the passage of the Referendums (Scotland and Wales) Bill in the summer of 1997. I am really impressed that today my noble friend has managed to bring into the debate the noble Baroness, Lady Gould

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of Potternewton, and the noble Lord, Lord Holme of Cheltenham. I cannot honestly remember that I was ever able to draw them out very much in the course of the referendum debate in the summer of 1997.
One thing about the debate on that Bill is that during its passage I raised a number of amendments: the general issue of the conduct of referendums and why we should legislate for referendums in exactly the same way as we legislate for general elections. Much of the detail of the running of the two referendums in Scotland and Wales was contained in two schedules to that Bill. which were actually placed there at my suggestion rather than being treated as pieces of secondary legislation.
The schedules were amendments to the Representation of the People Act and were frankly unintelligible unless read together with that Act. At the time I expressed my concern about this method of laying out the detail, and expressed the hope that if the Government intended to hold any more referendums they would bring forward a general referendums Act which would be self-standing and not, as happened in the 1997 Act, very much a cut-and-paste job.
I may say that exactly the same problems arose earlier this year on the legislation setting up the Scottish Parliament and the Welsh Assembly, where the electoral procedures were very much stitched on to the Representation of the People Act. It did not matter too much for the first-cast-the-post elections, but it mattered hugely for the top-up; and again it was a cut-and-paste job which was hugely unsatisfactory and, I may say, led last Friday in Lothian to a shambolic procedure that occurred in the count for the list vote, and to some of the very problems warned the Government about.
Regarding those two referendums in Scotland and Wales, I am not going to quibble over the results, but I will simply say—and it very much supports what every speaker has said this afternoon—that the campaign, frankly, was far from being seen as fair. The "No-No" campaign in Scotland and the "Wales says No" campaign were placed at every disadvantage. To put it very bluntly, they were shafted. They were shafted by a combination of lack of money, lack of proper access to the airwaves, with the Government and the whole machinery of Government totally on one side of the argument. In fact the "Yes" campaigns in Scotland and Wales had the Gaffing gun in a very big way. In addition, the Government decided that the Welsh referendum should be held a week later, on absolutely no ground at all other than they felt that they might lose in Wales on the same day as Scotland—which undoubtedly they would have done—and if they put the Welsh referendum a week later the Welsh would feel some obligation to sort of go in behind their Celtic brethren and vote for it.
That simply was not fair. It is that kind of unfairness that can bring a referendum result into serious disrepute. We have heard about the series of committees which have all discussed referendums on wider things and have all come to the same conclusion. We have heard in particular about the Commission on the Conduct of Referendums, which I referred to very heavily during the passage of the 1997 Act. We know that the noble
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Baroness, Lady Gould of Potternewton, and the noble Lord, Lord Holme of Cheltenham, were on that committee.
I could use the rest of my speech to quote from the findings of the committee but I will not, other than just to quote from paragraph 47:
"There is now a strong case for giving responsibility for the conduct of referendums to an independent body … The functions of such an independent body might include all, or some, of the following:

advising on the wording of the question,

allocating funding to campaign groups,

liaising with and acting as moderator between any campaign groups,

acting in an ombudsman role to deal with any complaints,

monitoring balanced access to the broadcast media,

providing public information, including a balance statement of the opposing arguments,

supervising the organisations for each polling station,

counting and declaration arrangements."

In the report by the Committee on Standards in Public Life, chaired by the noble and learned Lord, Lord Neill of Bladen, exactly the same issues were studied and similar, if not exactly the same, conclusions were arrived at, as has already been mentioned by the noble Lord, Lord Goodhart. Specifically, the Neill Committee recommended an electoral commission rather than just a referendums commission. Frankly, I have no problem with that, especially if we are to have different electoral arrangements for different elections to Europe. Westminster, the Scottish Parliament, the Welsh Assembly, the Northern Ireland Assembly. local government and referendums. Again, without reading it out, chapter 12 of the report of the Neill Committee specifically deals with referendums and argues a powerful and unanswerable case.
So we have two powerful and well-argued reports which reach the same conclusion; namely, that we need a commission to oversee referendums in this country. Moreover, there is a third report, mentioned by my noble friend Lord Hayhoe—the report of the Commission on Electoral Reform chaired by the noble Lord, Lord Jenkins of Hillhead, who refers to referendums in paragraphs 165 to 168 in exactly the terms which my noble friend quoted—which reaches exactly the same conclusion.
I mention one matter of detail which has been raised; that is, the question of majorities. Australia requires a majority of the voters nationally and in at least four of the six member states to vote for a proposition before it passes. In the past, New Zealand has acquired a 60 per cent "yes" vote. Italy requires a turn-out greater than 50 per cent. Indeed, a referendum in Italy just a few weeks ago, interestingly to move Italy from proportional representation to first-past-the-post, failed not because the proposition to go to first-past-the-post did not win—it did, by about nine to one—but because the referendum turn-out did not exceed 50 per cent.
I am sorry for the Italians but it is important to have some kind of fence over which one must jump. I know that the noble Baroness, Lady Gould of Potternewton, does not agree. I shall not go into the complicated

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arrangement which I suggested during the passage of the referendums Bill but it is important to have a balance of turn-out and majority.
The 1975 White Paper on the European referendum said:
"The Government are concerned that the size of the Poll should be adequate, and they are confident it will be so. They also consider it to be of great importance that the verdict of the poll should be clear and conclusive".
Those are important qualifications: the size of the poll should be adequate; and the verdict should be clear and conclusive. In Scotland, the size of the poll was adequate and the result was undoubtedly clear and conclusive. I submit that in Wales, neither of those conditions was met. The verdict was so close, it was not clear and not conclusive and the turn-out was pathetic.
I appreciated that in the summer of 1997, we could not have a referendums commission. But we should jolly well have one now. My noble friends Lady Young and Lord Norton of Louth both mentioned a Question which I tabled for the noble Lord, Lord Williams of Mostyn. It was whether the Government proposed to legislate for recommendations made by the committee chaired by the noble and learned Lord, Lord Nolan in the conduct of referendums before any further referendums are held.
The noble Lord said that the Government welcomed the main findings and so on and said that they intend to publish a draft Bill before this year's Summer Recess with a view to having controls in place by the time of the next general election. I found that a deeply unsatisfactory answer. It made me very suspicious. I did not ask whether the legislation would be in place before the next general election but whether it would be in place before another referendum is held. So, as the examiner might say to the student, will the Minister please answer the question? I asked whether the controls would be in place before another referendum is held.
We could make progress. Even as we speak, a Bill is in Committee in another place, introduced by Mr. Andrew Robathan, which is a Private Member's Bill. It is perfectly satisfactory. It is simply being hindered by the Government, but they could take it on board and help it on its way. The Bill could be with us in two or three weeks' time. Given the unanimity that there has been this afternoon, I am sure that there would he no problem getting the Bill through in this Session. We should then have a referendums commission in place, with all the necessary legislation, before another referendum took place.
I invite the Minister to answer those two questions: first, whether the controls will be in place before another referendum or before the general election; and secondly, why the Government do not take over my honourable friend's Private Member's Bill and satisfy all noble Lords who have spoken this afternoon.
4.43 p.m.
The Minister of State, Home Office (Lord Williams of Mostyn): My Lords, I am grateful, as always, to the noble Lord, Lord Hayhoe, for the
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moderate and careful way in which he introduced this matter, which is plainly of topical and important interest. Having listened carefully to all the contributions, I believe that there is benefit in every contribution which has been made, even though some noble Lords approached the issue on a much more general basis than the specific purpose of the debate this afternoon.
I believe that I correctly represent what the noble Lord, Lord Hayhoe, wanted. His basic proposition is that there should be an independent commission established with responsibilities in relation to referendums. Every contribution, from all sides, even including the noble Earl, Lord Northesk, who has difficulty with the whole concept of referendums, demonstrates widespread support for that proposition which I have reduced to its simplest.
I am happy to add my own and the Government's broad support. That does not mean that we shall agree on every point, but I affirm our belief that it is desirable and possible to achieve some consensus across all parties on the issue.
The noble Baroness, Lady Young, rightly said that we are at a time of great constitutional change. The thousand-year review of modern British history to which the noble Lord, Lord Holme of Cheltenham, referred will demonstrate something rather better than the ability to provide rules for real tennis, snooker or darts. What it demonstrates is infinitely grander. It demonstrates the continuing ability of our nations to develop our constitutional arrangements on an organic basis. It is easy to overlook that.
The noble Baroness, Lady Young. spoke of our democratic arrangements over the centuries. But that is not really the case. Universal suffrage on the basis of equality is barely 80 years old. The opportunity for intimidation because there was no secret ballot was taken away as recently as about 1870. So I repeat what I have said on earlier occasions. If one looks at the three great Reform Acts and slots in the Secret Ballot Act between the second and third, and then one bears in mind that women did not have equal suffrage until after the First World War, that is a testament to the text which I put forward earlier. We do have what may be a genius—to put it in its old-fashioned way—for constitutional change and reform. That is what keeps us alive as a functioning, vibrant democracy.
I do not share the gloomy view of the noble Earl, Lord Northesk, that referendums are only the tools of dictators. Hitler did not come to power as a result of a referendum. There are many very democratic states in the United States—for example, California—which use referendums regularly to produce the view of the populace about particular topics. Therefore, there is nothing wrong in principle with referendums, but they must be properly organised, as I said a few moments ago.
A number of specific questions were raised with which I shall try to deal. I reiterate that we want and intend to have our response, as a government, to the Neill Report in the draft Bill to be published before the Summer Recess. We are committed to early legislation, given the co-operation of your Lordships' House, on the main recommendations so that they are in force at the

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time of the next general election. At this stage I cannot say what will be in the Bill. As your Lordships have observed, the Neill Committee made 100 detailed recommendations. We are considering and consulting. That is the proper way forward. It will certainly contain provisions on the conduct of referendums. I hope that is of assistance to the noble Lord, Lord Hayhoe, not least with my additional comment that the basic requirement is as he contended: a fair deal for both sides in a referendum campaign.
The noble Lord, Lord Mackay of Ardbrecknish, asked whether we would support the Private Member's Bill in another place. Thai, is not the vehicle which we want to use. We want single comprehensive reform. When the noble Lords, Lord Goodhart and Lord Holme, spoke about that they were right. This is not a time to tinker piecemeal with the issue.
The noble Lord, Lord Mackay of Ardbrecknish, asked me to give an absolute undertaking that there will be no referendums before the new commission is established. Of course, I cannot give that undertaking in the nature of things. But I repeat that the draft Bill will be published before the Summer Recess. We want to legislate as soon as possible thereafter. But if a referendum were to be held in the circumstances posited by the noble Lord Lord Mackay of Ardbrecknish—in other words, before the electoral commission had been established—we should give careful consideration to how the Neill recommendations might be applied to that referendum, even though there was no extant, subsisting legislation.
Other questions have been put. The noble Lord, Lord Holme, asked a number of questions to which I hope to give answers. In particular he mentioned the fact that the Neill Committee recommended that the Government must remain neutral during a referendum. I reiterate the comments of my right honourable friend Jack Straw in another place. This is an important recommendation. It needs careful attention. I remind your Lordships that the Neill Committee stated that it was entirely appropriate for the government of the day to make their position clear on any given referendum question. That was echoed, entirely realistically, if I may say, by the Jenkins Commission.
The business of government cannot be suspended for the duration of a referendum campaign as it is for a general election, so the two are not entirely comparable. However, I repeat the important overarch that referendums must be conducted fairly as between the two sides.
The question of core funding and capping was also raised. Neill recommended, in our present day terms, core funding of about £600,000. There was reference to difficulties in the context of Northern Ireland. There are difficulties in getting Dr Paisley and other "No" protagonists in the same room, let alone agreeing to divide up the same postal order. That, I believe, would be beyond the wit and ingenuity of any of us in your Lordships' House.
There is also the question of the Neill Committee recommendation that only one campaign organisation on each side of a referendum should have the core
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funding. That is difficult, not only in the context of Northern Ireland. It was rightly said that Mrs. Pugh was a doughty "No" campaigner. Mr. Hodge, possibly funded by his father, Sir James Hodge. came from a different political background, as has already been identified. There are difficulties but I do not think they are necessarily incapable of being overcome. Neill, of course, did not recommend placing a cap on expenditure in referendum campaigns. It is difficult to think how that might be properly established.
I turn to a very important point in answer specifically to the noble Lord, Lord Holme of Cheltenham. I repeat the words stated by the Home Secretary: the Government favour a body independent of government and free of party political interference. The Neill Committee recommended that the body be set up along similar lines to the National Audit Office, accountable directly to Parliament, not funded from a departmental vote.
The noble Lord, Lord Campbell of Croy, raised the interesting question about the nature. advisory or binding, of a referendum. I believe the true answer is as he implied; namely, this is a political question for the government of the day. In the nature of our constitutional arrangements it seems to me that conceptually a referendum could never be binding on Parliament. It would be open to the ruling, governing party of the day to consent to be bound by the result of a referendum. The portents are not entirely favourable. I recollect recently that in a not dissimilar situation the leader of the then Norwegian Government said that if he did not secure more votes at the general election than he had at the previous general election, he would feel obliged to resign. The electorate responded in the expected way by giving him about 0.2 less and he therefore had to resign.
However, it seems to me that if a government wish to adopt a policy plank central to their continuance they are perfectly entitled to adopt that stance, I would say, on the basis that they put it unequivocally to the electorate before the referendum began.
Lord Campbell of Croy: My Lords, I thank the Minister for giving way. He has replied completely to my first point, which is that any referendum would be advisory to Parliament. On the second point, I am not sure whether his view is that the government of the day would decide beforehand and announce whether it would be advisory or obligatory for them when the results came out.
Lord Williams of Mostyn: My Lords, that is the political question to which I referred. It seems to me that it is constitutionally open and proper for a government to say, "This is the question in the referendum. We intend to be bound by it", and accept the consequences of failure or success as they fell. I believe that is a legitimate constitutional device. Governments' views might significantly vary in the context of the question. It seems to me that there is a difference in importance and quality between, for instance, having the devolution question for the

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Parliament in Edinburgh and—admittedly a subject of passionate interest when I lived in West Wales—whether public houses are open on Sundays.
Lord Goodhart: My Lords, the power to bind a government to accept a referendum goes a little further than the Minister said. I seem to recall in the 1979 referendum that the terms of the Scotland Act prevented the government from introducing a commencement order unless the Act had been approved by a qualified majority.
Lord Williams of Mostyn: My Lords, the noble Lord is quite right in his recollection. However, I do not believe that differs from the answer I gave in response to the proposition put by the noble Lord, Lord Campbell of Croy.
I was about to develop that modest theme. There are differences of importance. That is why one has, on occasions, local referendums. I certainly remember irritating such friends as I had in Swansea by telling them that I would vote "No" for the opening of public houses in Swansea on Sundays. I was able to do that safely and confidently because I imagined that most of the residents of Swansea would vote "Yes" as, indeed, it turned out they did. I therefore had the benefit of moral satisfaction as well as being able to have a drink in the public house on Sunday.
I think I have answered the detailed questions that have been put. The important point here is bound up in the general question raised by the noble Lord, Lord Holme, and the noble Baroness, Lady Young; namely, could I confirm that we as a government would pay careful attention to what has been said this afternoon? I hope that by my response, and my detailed response to the questions, I have been able to give that reassurance. This is much more important than party political advantage. If we get it right it has to stand for a long period of time. The reminder given by the noble Lord, Lord Goodhart, is important. This has to be a construction which may not be regularly used, though for my part I agree with those of your Lordships who have said that this, as a constitutional implement, is likely to be used more often in future.
I repeat that all the contributions, not least for their tone as well as their content, will be given careful attention. I very much look forward to being able to introduce the Bill in due course in your Lordships' House.
4.57 p.m.
Lord Hayhoe: My Lords, this has been an excellent short debate, particularly in view of the widespread unanimity and consensus achieved in all the speeches. Perhaps I may say in a personal fashion that it is the sort of politics I prefer to the "yabooing" which goes on rather more in another place.
I am extremely grateful to all who have taken part in the debate, and in particular to the Minister for the positive comments he has made. I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Small Firms
4.58 p.m.
Lord Vinson Lord Vinson rose to call attention to the regulations that affect the job creating potential of small firms; and to move for Papers.
The noble Lord said: My Lords, I am grateful for the opportunity to introduce this debate. Its underlying purpose is to help the process of job creation.
Earlier in the year, the Prime Minister, Tony Blair, met up with his fellow socialists in Vienna to make the reduction of unemployment a top priority. I do not doubt his sentiments but, alas, the road to the dole queue is paved with such good intentions. His words say one thing; his deeds do the opposite.
Since January this year an avalanche of new regulations has hit the business sector, and hit the small business sector particularly hard. The overwhelming evidence is that caring Euro-socialism has been a disaster for workers, creating unemployment in France, Germany and Spain at levels not seen since the Great Depression. Minimum wages, welfare cultures and protection against unfair dismissal have been the caring themes in these countries and have been shown in practice to be destructive of jobs.
By contrast, in one month alone this year, the United States created more jobs than France and Germany have done in 10 years. But the Government load on yet more illusory protection. Small businesses suffer most from this. They do not have large personnel and legal departments to absorb the deluge of extra information and bureaucracy.
We cannot dismiss small businesses as though they did not matter. Every statistic clearly shows that it is to small businesses we have to look for the creation of jobs. It is large firms that are downsizing, and all large firms originally started as small businesses. It is worth repeating that the vast majority of businesses are, by any definition, small. Firms employing fewer than nine people make up 94 per cent of all businesses in this country. Such small firms—and farms—employ over 10 million people, well over half the total of non-government employees, and the figure is rising. That is why their welfare is so desperately important.
There are two primary causes of unemployment in the United Kingdom today; first, over-regulation; secondly, the excessive taxation of labour thereby raising its cost. If we raise the price of anything, people use less of it. The unemployment remedies mostly emanating from Europe exacerbate both maladies. Unemployment, to some degree, is a national self-inflicted wound. Here society is increasingly making more formal what should essentially be less formal; that is, the process of buying and selling one's labour. In so doing we have frustrated the natural workings of the exchange of labour and thereby destroyed the opportunity for the unemployed to re-enter the labour market by the part-time route.
The Government are well aware that employment growth in continental Europe in the past decade has been only in the public sector; there has been virtually no overall new employment created in the private sector at

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all. They have destroyed the flexibility of their labour market. Unwittingly, that is what many on the Benches opposite seek to achieve. I am sure that they do not do so deliberately, but they should remember the cautionary tale of Gulliver's Travels: no one single thread held him down; but a thousand made him immobile.
The price of excessive job protection is job destruction. Perhaps I can illustrate that by a typical, but true, example. Mr. Evans and his wife ran a small health shop in Braintree last year. She found the work heavy and the business was not paying well so they decided that she would find an alternative job and he would advertise for a part-time assistant.
A Ms. Hill, aged 22, was one of the five applicants who filled in the questionnaire giving details of their previous sales experience and family situation. Mr. Evans shortlisted three of them, including Ms Hill, and telephoned her. The conversation was going quite well until she told him that there was something she had not said on the form; namely, that she was six months' pregnant. To which, perfectly understandably, Mr. Evans said that there was no way he could take her on because he had to have somebody who could look after the shop while he was out on deliveries, apart from which she would have to move heavy boxes as well as take down and put up the shop's metal shutters.
Under the circumstances, there is not a soul in this House who would not have reacted in the same way as Mr. Barry Evans did. He did not want somebody who would be here today and gone tomorrow and who was not capable of doing the job in the first place. Why should he take her on if she was unsuitable? At this level the law must recognise intrapersonal human relationships. However, a week later he received a registered letter asking him to appear before an industrial tribunal. He was subsequently fined by that tribunal, under the chairmanship of Mr. Robjant, the sum of £2,000 to compensate Ms Victoria Hill for the upset and loss of confidence she felt when she was rejected.
That was an excessive and quite unnecessary application of the law and a denial of commonsense and natural justice. The very nature of the system encourages employees to exploit it. That case is not unique. I hold in front of me a cutting from the Daily Mail 1998, the banner headline of which reads,
"Insanity of sex bias laws".
It says it all. In the case of Mr. Evans the fine nearly bankrupted him. It was only through the generosity of well-wishers, many of them women, that he was able to meet it and continue in business. What we shall never know after reading about such a case is how many potential small business people were put off and, as a consequence. how many jobs were not created. That type of case could be repeated a thousandfold.
Sadly, most career politicians have arrived in power with no more business experience than a smattering of professional work. They have had no contact with the exhausting realities of running a small business, or they would not introduce such crazy legislation. But at least two senior Ministers have come close to the realities and farcicalities of excessively one-sided job protection legislation and I hope they learnt from it. Mr. Jack Straw
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had to battle for months over a sex discrimination case in his own electoral office; and the noble and learned Lord. Lord Irvine, was found guilty of sex bias in the employment of his adviser.
With a toss of his wig the noble and learned Lord dismissed the case brought against him by Miss Coker as "mischievous". He did not deign to attend the tribunal, to which he sent one of his own officers. An easy way out. but one not possible for the small businessman. He has to suffer all the anxieties, costs and time-wasting by himself. Now, apart from the sex discrimination Act. unfair dismissal and the new 48-hour working time directive, he has even more regulations to look forward to. Incidentally, the 48-hour working time directive was described by the noble Lord, Lord Haskins—Mr. Blair' s better regulation adviser—as "a dog's breakfast". I warmly welcome the presence in this Chamber of the noble Lord, Lord Haskins, who will bring with him much useful and valuable experience. I look forward to his maiden speech today. I am sure that giving it will make a pleasant change from improving dogs' diets!
I started up a small business by myself; I know what it feels like. One day I was self-employed and the next I became an employer. At that point we have the whole rule book thrown at us. It is a lonely and tough experience running a business without help with the threat of swingeing penalties hanging over our head if we fail to comply with complex laws.
The macro economy is in practice the micro economy writ large. It is at that lowly level that we need to uncover some of the constraints to job creation. I suggest noble Lords opposite talk to small businessmen like plumbers and electricians, perhaps instead of talking to themselves. I make a point of asking such people why they do not take on an assistant or an apprentice as they used to. Invariably the reply is that it is not worth the hassle. The cost of dismissing staff; the threat of prosecution over unfair dismissal often because the employer has technically failed to give statutory written warning when he should have done—something that in practice is extremely difficult to do on a one-to-one basis in a small firm—all make it so unpleasant that they cannot face doing it again. They would rather soldier on alone.
As a consequence, hundreds of thousands of potential jobs remain undeveloped in this country today. Unemployment may have fallen, but if we want it to stay down, we must not make it expensive and difficult to employ people. Germany has done so and there we can see that their small firm sector is in decline. Governments need to recognise that one of the primary sources of new employment is self-employed people turning themselves into small businesses; small businesses taking on staff. So every effort should be made to assist and not to hinder that process.
My first essential message in this debate therefore is to ask the Minister to consider introducing regulatory exemptions for small firms employing fewer than 10 people where such exemptions do not currently apply and to follow the American practice of wide exemption, which has immensely helped their small-firm sector to create jobs by removing the threat of prosecution. I recognise, of course, that much of the impetus for

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regulatory overload derives from the EU. But it is no good Ministers saying that there is nothing we can do about it because it comes from Brussels. We must stop the whole regulatory engine going off the rails and taking employment with it.
When I took up the case of Mr. Evans with the noble Lord, Lord Simon, I asked whether the Government were content with a situation where a self-employed person can be obliged to employ a pregnant woman and so incur some of the costs associated with her condition even though there was no biological relationship between them. To that he replied,
"We recognise some individual employers may incur costs in holding a job open for a woman who is having a baby and we aim to ensure that these costs are minimised but we consider that they are outweighed by the benefit".
Government Ministers may consider that they are outweighed by the benefits, but, if the small employer does not, he will not hire in the first place. Another job is not created. Such crazy laws are counter-productive. One million small businessmen will not be in a hurry to risk employing pregnant women after reading about cases like the one I have just illustrated. The job market will get harder for women, not easier, whatever the law may proscribe. The sheer complexity of running a business today is a nightmare when one is virtually on one's own. It is very sad to hear the report from The Samaritans that there is a rapidly rising suicide rate in this whole sector.
Everyone has rights, except the employer. He can be taken to court at the drop of a hat if he dismisses anyone, yet the same employee can walk out of the job at the end of the week. Increasingly, there is a distinct lack of justice in the present arrangements. So my second key point is that an employer should be able to claim costs when any tribunal finds in his favour. This would go a long way to preventing frivolous and exploitative litigation. This, plus exemption for very small firms from regulatory overload, would do much to improve the situation and thus create jobs.
Small firms have rights, too, but no one champions them. Perhaps it is time that we had a small firms disability rights Bill. They, too, are an oppressed minority, the only difference being that, if they fail, all the other minority groups, which depend on the economic wealth that they produce, will go down with them. Our once flexible labour market is beginning to take on the rigidities of its continental counterpart. I hope that the Government will listen to the advice of the better regulations board, and the sound advice of its Minister, and not let the dog's dinner of increasing regulation destroy the wellsprings of job creation through small firms.
There is a clear need for a comprehensive agenda to tackle over-complex regulations at source. This is where Mr. Blair should be putting his energies. I hope that this debate will direct his endeavours accordingly. My Lords, I beg to move for Papers.
5.12 p.m.
Lord Haskins: My Lords, it is a great privilege to make my maiden speech and to participate in a debate so
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dear to my heart. I am very grateful to the noble Lord, Lord Vinson, for his kind comments of welcome and for his shared interest in the digestion of canines. I am chairman of two companies—namely, Northern Foods and Express Dairies—which, until recently, were one. The dairy company is the largest in the country and the food company supplies all of us with some of the most delicious foods that man has ever tasted, supplied through Britain's wonderful retailers. Together, the two companies made £150 million last year.
However, the success of that company is entirely to the credit of my father-in-law who started those businesses from scratch 50 years ago. When I am asked the reason for the success of the company, I always say, "The first £10,000 that Alec Horsley made, from nothing, out of that business 50 years ago". I remind people in the business of that every time; namely, that we, too, were a small business at some time.
I am also chairman of the Government's Better Regulation Task Force. It is an independent task force, I am glad to say, and showing its independence with due verve. I can say that chairing such a task force is the most entrepreneurial task I have ever taken on in my life. As regards any suggestion that the "Yes Minister" series and poor old Hacker were overstating the situation, I can assure noble Lords with great passion that that was a minute understatement of what was really going on.
The task of carrying out this work is such that it is bound to give offence. That is because all of us take a very schizophrenic approach towards regulation. Because regulations are a restraint or a burden, all of us dislike them when they are personally addressed to ourselves. But, at the same time, as individuals we want a safer environment, safer food, safer public transport and more secure jobs, which inevitably lead to more regulation.
Of course, businesses have to bear most of the burdens of modern regulation. Many would argue that the use of regulation can be an alternative, more stealthy way of governments achieving policy ends without resorting to the more unpopular route of taxation. Therefore, regulation can have a very significant impact on the economy, and particularly on the small business sector.
The specific problems that I have observed with the impact of regulation on small businesses are many and conflicting. First, regulation puts them at a competitive disadvantage against their larger brethren; indeed, there is no questioning that. Bigger businesses have the resources to comply with complex regulations. Small ones do not. The problems of payroll regulation are increasingly costly and worrying for small businesses. However, large businesses actually make money out of collecting taxes for the Government.
Secondly, small businesses are often not given enough time to understand and, therefore, comply with new regulations. They should be given more time. Thirdly, because of their size, the regulation of small businesses is inevitably erratic. Therefore, those who choose to ignore the law, for the most part, go undetected—thereby putting themselves at a competitive advantage over those more worthy businesses who go out of their way to comply with regulations.

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Fourthly, in areas such as public safety, where small businesses can be as much, or indeed more, of a danger to the public as large ones, there is no case for making a special case for exempting small businesses from regulation because of their size or problems of enforcement. Indeed, generally, small businesses do not see more exemptions as a satisfactory solution to their problems and they have told us so. The task force is doing a lot of work on the major barriers to small businesses—that is barriers to growth—both when they start up and when they begin to grow. People are telling us that, while regulatory barriers do exist, their greater concerns relate to access to financial support and the lack of skills which they find.
Noble Lords may be aware that the Prime Minister is taking a particularly close interest in the efforts of my task force to contain the quantity and improve the quality of new regulations, and to seek ways of reducing regulatory burdens, particularly as they affect small businesses. But, of course, this must be done while at the same time maintaining the Government's policy objectives of a safer and fairer world for all our citizens.
The task force has been pleased with the Government's response so far to many of our suggestions. Ministers have agreed to simplify proposals to regulate long-term care for the elderly and childcare. They are looking sympathetically at our proposals to make it simpler for charities to receive funds from departments—a vital part of keeping charities alive. Under the food standards proposals, Ministers have withdrawn what we considered to be very costly and ineffective plans to license over 600,000 food premises, in favour of a simpler registration system—even though this, too. may be an unnecessarily expensive option. Ministers have also greatly simplified the regulations to introduce the national minimum wage, after discussions with us. So far, I have received remarkably few complaints from small businesses about this major policy proposal. They are looking sympathetically at our proposals—long overdue—to deregulate and liberate the licensing laws of this country.
Thanks to a much greater awareness of the issues, departments now consult with the task force at the earliest possible moment in the regulation-making process. We want departments to seek to get agreement with the task force on all major regulatory proposals. We want the task force to seek out regulations which can be repealed or simplified. We all want small businesses to prosper, uninhibited by costly, unnecessary and disadvantageous regulations, while also complying with those necessary regulations, which provide protection to citizens from unacceptable levels of risk and abuse.
My task force—a splendid, knowledgeable and experienced group of independent citizens, which is well balanced—will pursue these challenging, sometimes conflicting, objectives with enthusiasm and, I feel sure, with the strong, mostly consistent and general support of all sectors of the community, particularly the business one.
5.20 p.m.
Baroness Anelay of St. Johns: My Lords, I have the honour on behalf of all noble Lords to congratulate the
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noble Lord, Lord Haskins, on his maiden speech. The Government Whips office provided me with the ammunition to fire back at the noble Lord, but the ammunition comprised merely biographical details from Dod. From that I learnt that the noble Lord grew up and was educated in Ireland; that he has worked with Northern Foods since 1962 and he has been its chairman since 1986; that he was a member of the UK Round Table on Sustainable Development; and that he is currently chairman of the Better Regulation Task Force, about which he has spoken today. But, by its very nature. Dod is able only to give a modest view of a person. Perhaps today I may take the opportunity to be immodest on the noble Lord's behalf.
His speech has given us a glimpse of what Dod could not: that he has great expertise and ability which he has used to drive a competitive business further and further to success in what has been an increasingly hostile and competitive environment in both the European Union and international markets. Northern Foods is one of Britain's biggest food manufacturers and supplies all the major supermarkets. I understand—courtesy of the BBC's Internet site—that after linking up with Marks and Spencer to expand into the frozen food market, the noble Lord became known as the man who invented the ready-made meal. I am not too sure whether that should make me grateful to the noble Lord, but I have to convey to him the thanks of my husband, who otherwise might not have been fed over the past years. I can assure noble Lords that ready-made meals have certainly not been dog's breakfasts. We all welcome the noble Lord, Lord Haskins, to the House. I am sure that we all look forward to his contributions to our debates.
I thank my noble friend Lord Vinson for introducing the debate. I should like to draw attention to the impact of regulations on the job-creating potential of the tourism and hospitality industries. The biggest challenge of the tourism industry—and yet its great strengthߞis its fragmentation and its complexity. The industry is managed by about 200,000 businesses around the country, the great majority of which are small businesses. It is our fifth largest industry, worth more than £53 billion a year, and directly accounts for about 5 per cent of Britain's GDP and 8 per cent of all consumer spending. It employs nearly 2 million people, 7 per cent of the UK workforce and in recent years it has created one in six of all new jobs. Given the chance the industry has the potential to create even more jobs, to generate more wealth and to help rejuvenate run-down areas.
That potential for job creation has been seriously threatened by the raft of regulations introduced by the Government. The document of the Department for Culture, Media and Sports, Tomorrow's Tourism, states:
"Poor regulation is particularly damaging for small businesses who have fewer staff to implement, and are less able to absorb the costs of, regulation".
That point was clearly made by the noble Lord, Lord Haskins. Exactly so; I agree. But, despite that statement, the Government have introduced over 2,000 new regulations over the past two years, many of which bear hardest on the tourism industry—the national minimum wage, for example. I take note of what the noble Lord, Lord Haskins, said with regard to complaints to his

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task force, but I have seen many complaints and individual examples of hardships caused by the implementation of the national minimum wage.
The problem for decent, hard-working people in smaller businesses is not the cost of paying the national minimum wage, as the overwhelming proportion of them do anyway, but the cost of administering it—the extra paperwork, the extra systems, the extra associated costs and the consequent lower profits, which will eventually lead to less investment and fewer jobs.
For some businesses, like members of the British Activity Holiday Association, which employ large numbers of younger people who are away from home on short contracts, the national minimum wage spells possible disaster. I am aware that strong representations have been made to the Government about the adequacy of the £20 accommodation off-set and whether it will be increased or even maintained. I am also aware that the BAHA hopes to have further discussions with the Government. Last week, my honourable friend Peter Ainsworth referred to this issue in a debate in another place and asked the Minister for Tourism to respond. Unfortunately, she did not do so. Perhaps she simply ran out of time.
I hope that the Minister will be able to tell the House today what progress has been made on this issue. In his other role in the Department for Culture, Media and Sport, I am aware that the Minister is knowledgeable about tourism. I feel sure that he is aware that the BAHA is an employer in a very special situation. It employs young people who see their time with the association as time in which they can develop the life skills which will be invaluable to them in their later careers. Its operations can best be described as being akin to those of the American summer camps—and in the United States those have been exempted from the scope of the national minimum wage.
I turn now to the working time directive, which the British Hospitality Association says has been a major cause of concern. More than any other, the tourist industry needs flexibility in its labour force. It is true that the majority of large corporations in this sector can absorb the extra costs of such measures. They do not want to do so; it will cost them many millions of pounds and it will mean fewer jobs. That was pointed out to me very clearly on Monday by representatives of large hotels and leisure businesses whom I met at the British Tourist Authority's annual trade forum in London. However, the majority of the industry is made up of small businesses which can ill afford the extra costs of bureaucracy. The fixed-on costs of compliance in terms of extra clerical work, computer systems and so on are much the same whether a business is turning over £50 million or £500,000, but the burden is greater on smaller businesses.
Again I should like to refer to the special experience of the British Activity Holiday Association. It is a residential community where the staff are considered to be part of that community. The hours of work have of course therefore never before been measured; it does not have a clocking-on and clocking-off mentality. The introduction of the Working Time Directive to this environment is destructive to the character of the whole system.
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Tourism is not an industry that whinges; it gets on with the job. It diversifies; it does what it can to survive and expand; it is not complacent; and it plans for the future. I have read today the West Country Tourist Board's strategy document, which is an impressive and carefully drawn plan for the future of tourism in its region. The British Hospitality Association hopes to create 400,000 new jobs nation-wide by 2005. But it issues a caution: that while the service sector is currently growing, excessive regulation will have only a marginal effect on jobs—that is true—but as soon as there is any slow-down in the economy, however slight, the picture will rapidly change. It points out that the problem with employment regulations in particular is that they create a straitjacket and are not adaptable to changing economic circumstances.
The association points out that it is not necessarily just the individual measure that is seriously damaging but the combined effect of large numbers of such measures, all arriving in a short space of time. The individual proprietor simply does not have the hours in the day to learn about these measures and then to implement them.
When the Minister for Tourism, Janet Anderson, responded to a debate in the other place last week, she recognised that regulations are a burden on the tourism industry. She said:
"The forum and the summit will be considering that issue". —[Official Report, Commons, 5/5/99; col.877.]
But the summit is not until next year, and the future remit of the forum is called into question by Tomorrow's Tourism by referring to it in the past tense. The document refers to the forum as having existed and not having a future existence. Can the Minister tell the House what will be the future remit of the forum with reference to regulations? What guarantee is there that the Government will act upon its advice?
I hope that the Government will take note of the concerns of the tourism industry and stem the flow of regulations that affect it adversely. I hope they will consider amending those which are already in place.
5.39 p.m.
The Countess of Mar: My Lords, I wish to express my thanks to the noble Lord, Lord Vinson, for bringing this matter to your Lordships' attention today. I declare an interest in that my husband and I run a small family farm where we produce quality black Welsh mountain lamb, breed pedigree Blonde cattle, and sell unpasteurised goats' milk and speciality cheeses made from that milk.
We too often lose sight of the fact that farming is a business and that small farms are small businesses. We all know of the parlous state of agriculture. We have heard Ministers exhort farmers to diversify. Millions of pounds have been disbursed in Area 5b payments and central and local government grants to encourage this process. Food producers hear Ministers tell them, on the one hand, that they are in favour of small specialist businesses; that they are supportive of enterprise. On the other hand, instead of listening to small food producers, the Ministers seem to be deaf to the problems created by draconian legislation that puts these same enterprises out of business.

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In the Guardian last weekend, the noted food writer, Joanna Blythman, wrote an article on small food businesses under the strap,
"If the bureaucrats pt their way, our independent producers may soon he out of business".
She was commenting on a recent meeting of independent producers that I attended, where representatives of over 2,000 small businesses expressed their concern that this Government's policies are putting at risk over 100,000 jobs—a disaster far bigger in scale than the parlous state of the Longbridge car plant which so recently exercised Ministers.
All the representatives present at that meeting were agreed on three things: that the scale of the impending disaster was unprecedented; that the cause was not any single impost, but the cumulative effect of many different measures; and that the disaster was largely unrecognised.
The latter, particularly, is the great tragedy, occasioned not least by the fact that when small businesses go to the wall they do not shed thousands of jobs from one plant with dramatic scenes to delight television producers. Instead, anonymously. up and down the country, they put up their shutters—no drama, no television cameras, no MPs standing at their gates declaiming government policies and demanding rescue packages. They drift away in their ones and twos, each with a personal tragedy that goes unheard and is disregarded. These tragedies, repeated daily, represent hundreds of jobs and blighted families. If the current thrust of government policy continues, they will soon represent thousands, then hundreds of thousands of skilled, rewarding and fulfilling jobs lost, maybe for ever.
I turn to Joanna Blythman's article for an explanation. She then turns to the noted food safety expert, Dr. Richard North, for the answer. He reports that, since the salmonella scare 10 years ago, 9,000 small egg producers have gone out of business, without any corresponding reduction in salmonellosis. Whenever there is a problem, he says, the drill is the same: "Round up the usual suspects (small producers) and give them a hard time". People go into specialist food production because it is something they enjoy and believe in, not because they expect to make money. If you drown them in controls, they lose their incentive to continue and withdraw from the aggravation.
Is the Minister aware that some MPs have been led by officials to believe that small food businesses are purveyors of germs? Does he appreciate that most rural food producing businesses are run by families whose interests are to produce quality products to the highest standards? It is not in their interest to produce food that will bring the wrath of officialdom upon their heads and lose them custom. Officials find them difficult simply because they do not fit into the industrial food producer mould; their very independence is their downfall.
MAFF has recently issued draft Dairy Products Hygiene Regulations, running to 165 pages. The last regulations are only four years old. Arthur Cunnynghame,
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chairman of the Specialist Cheese Makers' Association, of which I am a member, has said:
"They are so hideously complicated, you need a PhD in microbiology and a corporate lawyer to interpret them. The cost of such professionals is not a problem if you are a huge dairy churning out thousands of tonnes of cheese, but it is yet another stray to break the back of the small cheese maker".
It appears that there is a requirement that every hatch of cheese should be microbiologically tested. Some of my batches consist of only one or two cheeses. Even if I could afford the tests, I would be left with no product to sell.
Mr. Cunnynghame recently met the Minister for small businesses. It was with despondence that he came away from that meeting. The Minister was able to offer little but sympathy.
I turn now to the Meat Hygiene Service. It has featured much in the news and in Parliament of recent weeks. First, there was the instruction that, in the interests of hygiene, all hairy cattle should have their underbellies shaved. Hairy cattle are hairy because they live out of doors. Many only see their human owners from a distance. In other words, they are wild. To bring these animals from their hill grazing into a yard and get them into a cattle crush is no simple task. To attack them with noisy electrical clippers is a recipe for a very short life. It is hardly surprising that more than 200 farmers and slaughterhouse workers in Scotland alone have suffered serious injuries. Even with the evidence of this human carnage, the Meat Hygiene Service resists any sensible change, such as clipping the animals after slaughter, because the hair might contaminate the slaughterhouse. To add insult to injury, there is no shred of evidence that the campaign has prevented as much as a single case of food poisoning.
There are numerous examples of the inappropriateness of legislation in this field, such as the requirement for eartags which rip animals' ears, causing them pain and infection; washing animals before they go on a long and stressful journey to market or abattoir with animals from other farms when their automatic response will be to produce copious sloppy faeces. It seems that they were dreamed up by a pen-pusher in a thickly carpeted office who has no concept of the practicalities or of animal behaviour.
On 21st April 1999, the Minister of Agriculture announced that the £20 million burden for specified risk material inspection would not be imposed upon abattoirs for this year. The Government would commission a study to examine the dynamics of the slaughtering sector and of the impact of the charges on abattoirs and producers. On 7th May 1999, a consultation document was sent out to a very limited number of interested bodies. This was received on 10th or 11th May. Replies are required by noon on 17th May 1999. The questions in the document are complicated; the recipients will need to consult with their members, some of whom will be unavailable during this week. What of the Cabinet guidelines which state that there should be at least eight weeks allowed for a consultation process?
In these graphic, if rather personal, examples is an illustration of the attitude to small producers embodied in this Government. Legislation that is introduced in the interests of consumer safety seems to cause Ministers to pay little heed to the safety or welfare, the survival or

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prosperity of the people who actually produce the food. Ministers simply obey the diktats of their experts and officials who tell them that absurdity after absurdity is necessary in the interests of consumer safety. Is the Minister aware that in 1996 32 people sadly died from food poisoning? However, 84 died from falling off chairs or out of bed. When are the Government going to oblige us to sit and sleep on the floor in the interests of consumer safety?
The utterance of the mantra "consumer safety" by a tame expert immediately makes a Minister putty in the hands of his officials. Nothing, it seems, is too draconian, too absurd or too costly if it means improvements in consumer safety. Herein, I believe, lies the nub of the problem: the cult of the expert. Only yesterday the Minister of Agriculture told the committee in another place that he had to take heed of expert specialist advice when considering whether to remove the beef on the bone ban.
"I am not entitled to inflict my personal view",
he said. He could not reject the,
" clear-cut advice of a health professional".
The question is, why can he not do so? He refused to ban the sales of unpasteurised cows' milk, against expert advice, on the basis of consumer choice.
If we are to have Ministers at all—and who better to represent the consumer than an elected Minister?—then it is their judgment, their good sense, that should prevail. They should not be slaves to their advisers, or, as Edwina Currie told the BSE inquiry, simply be there to rubber-stamp the officials' decisions. Does the electorate vote for MPs who subsequently become Ministers in the expectation that they will simply be the spokesmen and spokeswomen for unelected officials and advisers? I think not. Do voters expect their elected representatives to take heed of their wishes and weigh them in the balance with other advice before coming to their own considered judgment? I think so.
Noble Lords will know of my interest in organophosphates. It was government legislation that compelled farmers to dip their sheep in organophosphate dips. As a result, there is evidence that many of those farmers have become ill. Shortly after the present Government were elected, the parliamentary organosphosphates group met the then Minister of Agriculture, Mr. Jack Cunningham. We asked why the promised moratorium on organophosphate sheep dips had not materialised. The Minister told us that he was obliged to take the advice of his scientific committees, and that the advice was that the dips were safe if used in accordance with the manufacturers' instructions. Therefore, there would be no moratorium. He told us that that was confirmed by counsel's opinion. I studied the legislation very carefully. All it said was that the Minister "shall consult with", not that he was obliged to accept the advice.
In several Written Questions, I asked for clarification. First, I was told that the obligation was enshrined in EU and UK legislation. When I asked exactly where in the legislation it was enshrined, I was told in effect that actually it was not in the legislation and remained to be tested in the courts. Are the officials always right?
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If we explore the detail of many of the imposts we are told that we must obey because they come from the EU, we tend to find evidence of the peculiar genius of our civil servants in expanding the provisions of EU law, or its enforcement, to make UK law much more onerous than it need be, matched only by the compliance of Ministers, who seem to be all too readily gulled into believing what their officials tell them.
Do we want to see the survival of the small independent businesses that are the backbone of our economy? If we do, we need Ministers with a healthy dash of scepticism, and with the vision to see how the influence of multinational companies and supermarkets has crept into and taken over government decision-making processes. We need Ministers who will take time off to think through the actions which are proposed. I understand that Clement Attlee used to retreat to the lavatory for an hour or so when he needed time to think. We need Ministers who will question the advice they receive and not simply act as the mouthpiece of their advisers and officials. Most of all, we need Ministers who possess the same courage and independence of spirit so amply present in those who are prepared to invest their talent and possessions in businesses.
5.42 p.m.
Lord Kimball: My Lords, when my noble friend Lord Vinson cast his fly upon the waters of your Lordships' House, I doubt whether he realised what an important rise he would get out of the pool of better regulation.
We are all grateful to the noble Lord, Lord Haskins, for his excellent maiden speech. It was most important that he should have been here for this debate, even though, dare I say, he seemed a little immune from the kind of troubles I have from small businesses.
As your Lordships know, the business of small businesses is not small within the United Kingdom economy. After all, they have created 2 million jobs in the past five years, and 97 per cent of all the United Kingdom's firms employ fewer than 20 people. We cannot afford to strangle the employers of half the total employees within the private sector. What a blizzard they have to stand up to! To stifle enterprise and initiative and erode our competitive position there are the working time directive, criticised vigorously by the noble Lord not long ago in another context, the minimum wage, the working families' tax credit; and the childcare credit; the disabled persons' learning credit; and the student loan repayment administration regulations. It is a massive infliction.
As the noble Baroness, Lady Anelay of St. Johns, said, there have been 2, 400 new regulations since May 1997—an extra £5,000 a year on all businesses. And what do we have going through the House at present? The Employment Relations Bill, with the automatic recognition of unions and immunity from the sack for union leaders. We all know that the unions pay a very large subsidy to the party opposite, and during the negotiations on that Bill there were threats of the subsidies being withdrawn. There was a call for an emergency conference and withholding funding. The party opposite was bought and paid for by the trade union lobby in regard

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to this legislation. It is sleaze with damaging consequences in unemployment and reduced prosperity for the small businesses of this country.
Your Lordships are familiar with Parkinson's law, "Civil servants exist to grow their own jobs": the health and safety inspectors, the fire inspectors, the building regulation officers, the environmental health officers, the wages inspectors and the VAT officers. "VAT officer" is the most overworked description in the English language at present. Often with degrees from some rather bogus new university, which should only be a polytechnic, they are nothing more than inspectors. They are very friendly; they are nattily dressed: they are paid for by you and me. They take up a vast amount of precious time and drink prodigious amounts of coffee.
When the Minister replies he should say that he will seriously consider that any firm employing under 500 people should be allowed to charge the Government for the time spent on compliance. That would very effectively concentrate the minds of those who make the regulations.
The noble Lord, Lord Haskins, made in another context a serious attack on the working time directive. He also made another comment—that the Government do not now allow enough time for consultation. It is understandable. Vs, e now have an unprecedented number of advisory bodies—440, containing approximately 6,000 so-called experts. I believe that the staffing of these advisory bodies is putting a strain on our excellent Civil Service, so much so that the normal standards are being dropped, creating the impression that the Government have made up their mind on another slice of socialist dogma and are only pretending to consult in order to cover their subsequent actions.
I had experience with the rural England discussion document. One would have thought that it would come from the Ministry of Agriculture, but it actually came from the Department of the Environment, Transport and the Regions. A 15,000-word submission was returned in answer to all 11 questions. That submission had the ringing endorsement of the Standing Conference on the Countryside. But as the consultative document made no mention of the largest employer in rural England—country sport—I had the impression that the alliance's submission was not to the civil servants' liking.
I wish we could bear in mind that the imposition of the values of the urban majority on the life of the rural community is a form of dictatorship. The quality of democracy is the protection it affords to minorities, not the domination it gives to majorities. The consultation process should at least be genuine.
Then we have a. great statement by the Prime Minister that he is so much in favour of the way America has grown. The great thing in America is the wonderful contribution that small businesses have made to the dynamo of America's growth. Why? Because the American Government have not done anything about them; they have left them severely alone. Any business in the United States with a turnover of less than 500,000 dollars a year has no minimum wage, no ethnic quotas, no disablement facilities and certainly no equal pay, and it can fire people with or without cause. I see no
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sign of such steps being taken here. All I can say is that, whatever it may say, the party opposite gives the impression of being entirely tied to its trade union paymasters
5.49 p.m.
Lord Haskel: My Lords, I congratulate the noble Lord, Lord Vinson, on raising a very important and difficult matter. It is important because, as he said, regulation affects the productivity, prosperity and competitiveness of our economy. Equally important, however, it affects the quality of life and fairness of our society. Regulation is difficult because it has to achieve a balance between the two.
Perhaps I may pray in aid the words of Isaiah Berlin, who often drew our attention to these mutually irreconcilable and conflicting values which are the price of a liberal society. He said that tolerance enables us to balance these conflicting values. The problem is that the noble Lord, Lord Vinson, and I would not agree on the degree of tolerance required. If we did, there would be no need for regulation because voluntary agreements and codes of practice would do the job.
Noble Lords are concerned about regulation destroying jobs. They are right; so am I. That is a concern. But perhaps I may draw a picture of what an unregulated market-place would look like. Some companies would exploit and deceive their customers through monopoly power. They would use it to destroy the small firms that we are debating. They would exploit their workforce through discrimination and unfair employment practices. They would pollute the atmosphere and endanger life and limb with their working practices and products. Where would our savings and pensions be without regulation in the financial services sector? None of us would want to live in such a society. Of course, some would behave differently. Rowntree, Cadbury, Leverhul me and Simon Marks did not need regulation. They realised that a free-enterprise economy cannot be justified purely on the grounds that it is good for business; it has to be good for society as a whole.
However, regulation also took on other aspects, such as the aspect of bureaucratic control and the quick political fix. Regulations were an easy way of making life simpler for the Government by standardising products and services, thereby inhibiting innovation. New regulation was an easy, knee-jerk political gesture by a government under pressure from an interest group. The legislation on dangerous dogs and on trade union check-off comes to mind.
It is also easier to make regulations universal instead of selective. Of course, there is no need to throw the whole hook at everybody. In fact, many regulations need not apply to small companies. Many small companies are owner-managed and so have no need for the regulations which apply to larger firms, such as those regarding the separation of the duties and powers of shareholders and directors.
It seems to me that there are two kinds of regulation. The first stops people doing what at the time was perceived to be the wrong thing and the other attempts

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to encourage people to do the right thing. In either case, we have to be selective. I think that in recent years we have come to recognise this, particularly with the introduction of the Better Regulation Task Force, so ably led by my noble friend Lord Haskins, and by the business test panels. As my noble friend explained in his excellent and informative maiden speech, through those organisations the Government have come to realise that modern regulation is not about restricting people's freedom to be innovative; it is more about encouraging best practice in order to create a fair society and a thriving economy.
I should like to consider some of our more recent regulatory legislation in rather a more balanced way than that adopted by some noble Lords so far. Perhaps I may take an easy one first. I refer to the Late Payment of Commercial Debts (Interest) Act, which has not yet been mentioned. No one can doubt that it encourages best practice and helps small businesses.
A more difficult example is the national minimum wage. I must advise the noble Lord, Lord Kimball, that even small firms in America are subject to a national minimum wage. Admittedly, it varies from state to state, but companies there are subject to a minimum wage. The issues raised by this example are typical of Isaiah Berlin's "mutually irreconcilable values". That is why it needed months of research and investigation by the Low Pay Commission to arrive at a compromise. Perhaps it is too early to say whether the minimum wage has or has not helped firms to maintain a more committed workforce with reduced staff turnover. Presumably, the Low Pay Commission is monitoring that.
Where I think that small companies really do benefit from this legislation is that those regulations, together with other measures such as the working families' tax credit, help to remove the poverty trap making work pay better than benefit is an important reason why there are now more people in work in this country than ever before. That must be of help to small businesses.
The noble Lord, Lord Kimball, suggested that the Employment Relations Bills is a sop to the unions. I see it as a way of avoiding conflict. Again, there has been a lot of negotiation and discussion over that Bill. When we debated its Second Reading on Monday, I made a forecast, which I now repeat. I said that I thought that the Bill would very soon cease to be a matter for discussion because the basic decent minimum standards that it lays down are already carried out by most reasonably run companies, large and small. The Bill hardly affects those companies. It will affect poorly run businesses and bad employers, but I do not think that they will be able to withstand modern competitive pressures anyway. So I categorise that Bill as one which encourages firms to do better by adopting best practice in order to survive.
The regulations in the Social Chapter are a mixed bag, but many relate to parental leave and the rights of part-time workers, many of whom are married women. I would group those under family friendly regulations. On many occasions your Lordships' House has debated the importance of the family and has consistently called for more understanding of the pressures that modern
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working life puts on the family. Those regulations are designed to achieve precisely that. They bring the pressures out into the open and systemise ways of dealing with them. How much better it is to do that than to force people to conceal family problems and perhaps lie about them to their employers. Can I categorise those regulations as helping best practice? I think that I can.
There has also been legislation to protect whistle-blowers and to speed up the resolution of disputes. The noble Lord, Lord Vinson, is concerned about small employers being taken to industrial tribunals. The Employment Rights (Dispute Resolution) Act, which received Royal Assent on 8th April, is specifically designed to speed up the resolution of such disputes by informal arbitration instead of going to industrial tribunals.
In addition, I advise the noble Lord, Lord Vinson, that any employer, large or small, involved in a dispute with an employee must seek the assistance of ACAS. I was an employer in the textile industry for 30 years. I can assure the noble Lord that that industry knows all about small companies. When I was involved in disputes, I found ACAS very helpful and professional. It favoured neither one side nor the other and avoided quite a lot of the nonsense about which the noble Lord spoke. Of course, if an employee is determined to have his day in court, there is little that anyone can do about it; but the same applies to disputes with neighbours over the garden fence.
I too am concerned that over-regulation will impede the nation's productivity and the ability of small firms to employ people and to flourish. However, improving the nation's productivity and the success of small businesses depends on a lot more than just regulation. It depends on investment, training, skills, innovation and, crucially, management introducing best practice. I have tried to show that some recent regulations and legislation have helped to do precisely that—encourage best practice. Certainly, there are other ways of encouraging best practice. There is the work of the Best Practice Division of the DTI and presumably the new Small Business Service. Firms in supply chains can insist on best practice from their suppliers. There are voluntary codes of practice. But regulation by legislation does not exclude these. It closes the loopholes and sets the often minimal standards.
Regulation is not all static. There is a dynamic element. It is important to differentiate between the two. This work is being carried out by our own Better Regulation Task Force and the Business Test Panels set up by the European Commission and the Internal Council. In nine countries, including the United Kingdom, these test panels act as a test market to assess the regulatory burdens on business of new legislation. I hope that the Government will encourage this work, including the work of the Better Regulation Task Force, for there is a price for regulation. Let it advise if it is a price worth paying.
6 p.m.
Lord Taylor of Warwick: My Lords, it was the comedienne, Victoria Wood, who uttered the rather dubious prayer, "Please God, let me prove that winning

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the lottery won't spoil me". For many, starting one's own business is a lottery with no guarantee of success.
I am privileged to be a vice-president of the Small Business Bureau and president of the African Caribbean Westminster Initiative. Both of these national organisations have given me some insight into the opportunities and problems facing the small business community. I also speak from personal experience as a director of a small company.
Having said that, I acknowledge that my business experience is far short of that of the noble Lord, Lord Haskins. I take this opportunity to welcome the noble Lord to this House. I believe that we all agree that he will be a great asset.
There is no doubt that the future of small companies is vital to our economy. They form the majority of businesses in this country. There are 3.7 million small firms contributing 40 per cent. of turnover and employing 50 per cent. of the private sector workforce. Nearly 95 per cent. of them employ fewer than 10 people.
When I was a full-time barrister the rules of life seemed relatively simple. My experience in the criminal courts had taught me, for example, that one should never buy a portable television set in the street from a man who is out of breath! Furthermore, video recorders described as "genuine Victorian antiques" are usually from a less than honest source.
But starting a small business takes one into another world where one feels a little like David surrounded by an army of Goliaths, including the Working Time Directive Regulations and the Minimum Wage Rules. Clearly, some regulations are required, especially to protect health and safety. But it is the cost and the complexity of the system which is wrong. Since May 1977, when the Government came into power, they have imposed over 2,000 new regulations. I believe that it now 2, 400, but who is counting?
The Institute of Chartered Accountants estimates the extra cost of regulation on the average small business to be £5,000 per year. That sum is enough to close down some firms or to deter others from even starting. The Confederation of British Industry, the Institute of Directors, the Federation of Small Businesses and the Forum of Private Business are all critical of the present situation.
The noble Lord, Lord Haskins, acknowledges—and one is grateful for it—that the compliance with regulation impacts far more on small firms. Large employers can delegate or hire more management to cope with the additional administration. The small businessman usually has fewer options. The sole trader often has to divert time away from his business to ensure compliance with a whole raft of rules. The sheer number of new regulations means that smaller companies are sometime unaware of the latest obligations that they have to comply with. So time is spent trying to find out and then there is a rush to avoid penalties for missing the deadlines.
To most small firms finances are critical. For many, the most beautiful words in the English language, apart from the Bible and Shakespeare, are "Please find cheque enclosed". Noble Lords may agree that the phrase has a
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certain ring to it. So the last thing that a small businessman wants is to become over-regulated to an extent which actually inhibits wealth creation.
The problem has particular resonance for the ethnic business community. I helped to form the African Caribbean Westminster Initiative because I was aware of how difficult it is for black and Asian business people to attract funding from mainstream financial institutions. To tie them down also with excessive regulation is to keep them at the starting block with less chance of competing.
The Federation of Small Businesses, representing 130,000 firms employing 1 million people, has called for a single inspectorate to deal with regulations such as those affecting health, safety, fire and the environment. These agencies have responded by saying that no one agency could ever be expected to handle all these issues. Quite frankly, I have sympathy with that response. But the problem is that that is exactly what the small business owner is expected to do.
The noble Lord, Lord Haskins, does not appear to be complacent about the situation. He may agree with me that the Working Time Directive, certainly in its initial form, was clumsy and unclear. The Government introduced it in a rush with no parliamentary debate. It may be that they were worried about being taken to the European Court. The leaflet explaining the directive contains 72 pages. The problem is that it had a number of errors. I believe that it is on its third reprint at the Department of Trade and Industry to get it right. If the department is unable to get it right how can the small businessman do so?
As regards the National Minimum Wage Rules, I notice that they were introduced on All Fools Day. I make no other comment about that. The DTI did provide a 112-page guide, but firms were given just three weeks to comply, to get it right by day one or face criminal conviction and a fine of up to £5,000 for not complying. Bearing in mind that the rules cover temporary staff, seasonal workers, piece workers and includes bonuses, but not free meal vouchers, this task is not easy for anyone let alone the small employer. The Government seem to be operating on the principle: "If you can't convince them, confuse them. "
I accept that simply exempting small firms from regulation would not be right, especially in areas such as food safety. But, as suggested by the Confederation of British Industry, regulators should put more emphasis on helping firms comply, rather than punitive enforcement.
I understand that there are more than 30,000 regulation enforcers at the moment. But one of the problems is that local authorities put different amounts of resources into enforcement. So a small business in one area could be subject to visits from one inspector after another while those in another area are less scrutinised. Even where advice is given, inspectors from different agencies have been known to give conflicting advice to the same business.

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As regards employment, we know that small companies in America are not covered by many of the business regulations. They seem to do very well. But their employees can enforce their rights through the legal system and frequently do.
There is a strong argument for a freeze or amnesty on many more regulations at least for the rest of the year. We should remember that small firms are already trying to cope with pressures from the introduction of the euro and the need to prepare against the millennium bug. It seems to take more brains and effort now to comply with the myriad of regulations than it does to actually make an income.
There should be at least an annual statement to Parliament on the cost of regulation and the Government's plans to reduce that cost in the following year. I would also welcome a minimum period of consultation; for example three months, on each new regulation, with organisations like trade associations. There could also be a similar period of notice, within which to give firms time to prepare.
I have a business friend with an exceptionally creative mind. But just to keep his small company going amidst the sea of regulations, he feels unable to employ more people to make the business itself grow. As he told me, "John, I started out with nothing and I still have most of it".
It is time for a better balance and greater understanding of the difficulties faced by small firms. Over-regulation is the enemy of job creation. We must not forget the old saying that you cannot fish and mend your nets at the same time.
6.9 p.m.
Baroness Byford: My Lords, I rise today in defence of small businesses generally but particularly small rural businesses that tend to be separated by distance from specialist assistance. Not for the rural business a quick trip for photocopies, replacement stationery or lunchtime baps. Similarly, they lack the casual contact with one another and with professional firms that can occur throughout the day in town and city. Membership of luncheon clubs, golf clubs or even the chamber of trade is more difficult for the man and woman who is situated five, 10 or 20 miles into the countryside.
The noble Lord, Lord Simon of Highbury, speaking in Monday's Second Reading debate on the Employment Relations Bill, said that its purpose was
"to create an understanding between employers and employees". —[Official Report, 10/5/99; col.967.]
I submit that its effect will be to isolate even further those rural businessmen and businesswomen who will now have to cope with union recognition for firms with just 20 people and three months' unpaid leave for maternity and paternity. One wonders whether this will extend to both parents simultaneously where they work within the same small business. Ten per cent. of the workforce is to have three months' unpaid leave. That is interesting, even mind-boggling. There is also to be
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time off for domestic incidents. I point out that neither the Bill nor its proponents has yet defined what constitutes a domestic incident.
In his speech on Monday the noble Lord, Lord Simon, told us that he had spent five years as the head of British Petroleum. I am sure that he is highly qualified to pass judgment on big business, but I wonder whether such accreditation fits him to comment, nay legislate, on a myriad of small businesses affected by a confusion of rules and regulations. Moreover, he told us a little later (at col.971) that the cost of his legislation would be,
"about 5p a week per employee".
According to my elementary mathematics, it will cost £1 per week, or £52 a year, for the owner of a 20-strong business to implement and fund what the Minister described (at col.966) as,
"a radical, forward-looking package of measures".
I turn now to the existing burden of regulation, and I use that expression advisedly. I provide another quotation, this time from my noble friend Lady Miller who said in Monday's debate (at col.974):
"statutory instruments are no substitute for an Act of Parliament, which receives the scrutiny of the two Houses on three separate occasions, whereas a statutory instrument is considered only once and cannot be amended: take it or leave it. Parliament has to accept the bad provisions or throw the good ones out with them".
The Nottinghamshire Chamber of Commerce and Industry has told me that in its latest quarterly survey 41 per cent. of manufacturers and 31 per cent. of service providers quoted legislation and administrative burdens as being of greater concern to them than in the previous quarter. They have suggested that the Government allow a learning space of at least four months between the approval of a regulation and its coming into force. I was interested to hear the noble Lord, Lord Haskins, in his very good maiden speech suggest that there should be perhaps a time delay. This only highlights a situation typified by the beef-on-the-bone ban where a series of industries covering a great many firms, large and small, was given only 24 hours to implement that ban.
Regulations emanate from the Government but we must not lose sight of those that are prompted by European directives. I recall a problem on Radio 4 last year in which the representative of a cheese manufacturer stated that the cost of complying with European health and safety and hygiene rules had put a number of his competitors out of business and that he had survived only by virtue of the fact that he was a charity (Camphill Trust).
The noble Countess, Lady Mar, has consistently, and today, reiterated her concerns about the increasing burden of legislation on small businesses. The NFU claims that 62 per cent. of farmers now obtain part of their income from diversification. Ten years ago off-farm income was only 20 per cent. of agricultural earnings. Nowadays, particularly on lowland cattle and sheep farms, the majority of earnings comes from agri-businesses of one kind or another.
I am also very concerned not only about the legislation with which small businesses are quite happy to comply but the fact that, particularly in the farming industry, small businesses should be allowed to compete

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on a level playing field. On 21st April in the other place my honourable friend Mr. Tim Yeo asked the Minister, Mr. Nick Brown, whether it was true that French pig farmers received extra financial aid. He wished to see proof of it. Today, my honourable friend has provided a press release which shows clearly that additional subsidies are being paid to French pig farmers. In a speech given by the Minister, M. Jean Glavany, to France's National Federation of Pig Producers he spoke of an extra 150 million francs having been given to the pig industry since he became Minister.
If small businesses are to compete surely they should do so in an even-handed way. If that does not happen it is the responsibility of the Government to ensure that it is looked into. The pig industry is in crisis, as one or two noble Lords know only too well. All I ask is that our pig farmers and others are able to compete on a level playing field and that where that is not so our Government refer the matter directly and quickly to the European Commission.
We in this country have set down standards for our industries with which people are quite happy to comply. However, recently I spoke to a small business person who is a farmer and ice-cream maker. We have laid down national standards on environmental and health issues. However, in her case part of the farm is in one district and the ice-creamery is in another. The district councils interpret: the standards in a totally different way. That is a matter of very great concern, and I hope that the noble Lord will look into it.
The noble Countess, Lady Mar, referred to the plight of small businesses particularly within the farming industry. Sometimes one is tempted to query figures when one is on the receiving end of a stream of complaints about the effects of bureaucracy and our work here. There is the problem related to matching European funds, for example for environmentally-friendly schemes. Recently, a scheme for recycling a two-year backlog of waste plastic materials held on farms was itself delayed when the Welsh Office refused to match a successful hid from Europe for money. That is one example, and there are many others.
I thank my noble friend Lord Vinson for enabling me again to stress that small firms often become big businesses. The noble Lord, Lord Haskins, touched on that point. It is my profound hope that they will continue to do so in future. Earlier this year, I went to the Country Living Fair at Islington. I was encouraged more than anything else by the Prince's Trust pavilion, which was put aside for 80 young people to show their skills and entrepreneurship. It was exciting to share their ideas, hopes and drive. My hope is that the Government will realise that small firms must not be overburdened but be allowed to grow, so that those little acorns will be allowed to grow into bigger businesses.
All successful businesses perform a tax-gathering, information-supplying, statistics-compiling faction for central government. Large businesses can support the costs by incorporating those functions in other tasks. Small businesses have to employ somebody else or take time out to undertake that work themselves. I remind your Lordship of Lord Simon's 5p per week per
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employee for running the proposed employee relations legislation. Such glib statements accompany the cost analysis of many government proposals hut the reality is far more onerous. Small businesses suffer disproportionately from laws and statutes. In Europe, derogations are often applied to small businesses, whereas in the UK we seem to specialise in making life even more demanding on them by adopting standards that are even more stringent than those of our competitors—simply gold plating.
6.21 p.m.
The Earl of Kintore: My Lords, I thank the noble Lord, Lord Vinson, for introducing this important debate. I take part as a Fellow-elect of the Small Business Fellowship of the Industry and Parliament Trust, and I declare an interest as president of the Institute of Certified Bookkeepers.
Small businesses are being strangled from trying to comply with regulations, and the costs for small business are disproportionate. A study by the University of Bath in 1995/96 showed that the compliance cost to employers of operating pay-as-you-earn, expenses and benefits in kind, national insurance, statutory sick pay and statutory maternity pay was £288 per employee per annum for firms with between one and four employees. That compares with as little as £5 per annum per employee for companies employing 5,000 people or more.
Another frequently heard complaint is that businesses act as unpaid tax collectors for the Government. It is probably correct that business tax administration should take place on business premises, but could not the Government recognise that businesses and small firms in particular are providing a free and efficient tax-collecting service? That service should surely be paid for, by allowing businesses to retain a small proportion of the tax raised. That simple gesture would raise the morale of small firms no end. If it would be too expensive to apply that measure to all businesses, restrict it to firms with, say, up to 50 employees. France, Germany and Holland have schemes to compensate firms for their VAT compliance burdens that allow them to retain some of the tax collected.
Small businesses up to a certain size enjoy exemption from some of the more onerous regulations. The noble Lord, Lord Haskins, whose maiden speech I enjoyed immensely, is quoted as saying that some firms are deterred from going beyond the point at which they are exempted from some regulations. I am sure that he is correct. As we want small firms to grow, the answer seems to be double the exemption criteria. I hope that the Minister will not say that is impossible because our European partners would not understand. They probably do not understand the rules of cricket either.
The noble Lord, Lord Haskins, is also quoted as saying that Ministers spend far too little time considering enforcement when legislation is planned. Perhaps we could look to Scotland to solve the problem. I am delighted to see that the Minister with responsibility for trade in Scotland is in his place. I welcome also the appointment of the noble Lord,

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Lord Steel of Aikwood, as the first Presiding Officer of the Scottish Parliament. Presumably we will be able to welcome him to these Benches when he attends this House.
The Scottish Parliament is to be a unicameral House, and planned legislation will go out to consultation and be thrashed out in pre-legislative committees—so that when legislation is passed by that Parliament, it should work.
It would be churlish not to recognise the lowering of the small business tax rate in the last Budget and that interest rates are moving the right way. However, with all due respect to extremely hardworking small business Ministers at the DTI, I fear that not much more will be achieved until there is a complete change in the way that we regulate small businesses in the United Kingdom.
6.26 p.m.
Viscount De L'Isle: My Lords, I add my thanks to the noble Lord, Lord Vinson, for sponsoring today's debate. He has much practical experience in his own right and is a respected past chairman of the Rural Development Commission. My late father taught me among other things never to disturb him when he was reading The Times or drinking his port; and that self-interest never lies. So I declare an interest as a small businessman in varying enterprises including land ownership, agriculture, tourism and retail—and as the holder of a sub-post office franchise from Post Office Counters Limited.
The creation and maintenance of a viable rural economy has long been of interest to me—not only out of self interest but so that I may help to improve the lot of my fellow country dwellers. The noble Lord, Lord Haskins, would call it best practice. In the gracious Speech at the beginning of this Session, we heard about the Government's wish to promote entrepreneurship. It is from small beginnings that many successful business grow.
The country has a good supply of redundant agricultural and industrial buildings available for conversion, to rent relatively cheaply as work space. They are a good starting point for small businesses. It is irritating to hear from the Islington Tendency that such conversions only profit the landlord. At Penshurst, we are proud to have managed the creation of more jobs in our workshops than have been lost to agriculture since 1945. Three start-up businesses have expanded into much larger companies.
We would be able to create more workshops but for a perverse written planning appeal, when the inspector admitted that a building had been on the site but chose to ignore it for the purpose of the appeal. My only recourse would have been to the High Court, when the cost of the case would have been greater than the rental income would ever have been. One really must have common sense in rural planning decisions.
The threatened loss of the sub-post office in Penshurst some years ago encouraged me to take on the franchise. The sub-post office provides all the normal services. The most profitable is the paying of old age pensions,
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Giro benefits and postage stamps. It seems a little illogical to me that if one buys 26 1p stamps to send a first class letter, rather than one 26p stamp, the sub-postmaster will receive more money at the end of the year. It is probably a symptom of past regulations. I seem to recall that before British Telecom was privatised one could have one's telephone mended by the GPO only on a Saturday or Sunday because that is when the engineers were paid double time.
The closure of the only food shop in the village forced me to open a village store. I was pleased to hear from the maiden speech of the noble Lord, Lord Haskins, that the proposed licence fee will not now go ahead. It seems illogical that my shop, which has perhaps 50 or 60 lines, would pay the same amount as Mr. Fayed would pay for Harrods food hall.
As the owner of a two-pump filling station, I must accept that safety is important when dealing with petrol storage. I am rightly expected to keep accurate statutory records of fuel deliveries, sales and stock sold so that one is able to tell at a glance whether there is any seepage of petroleum spirit either into the atmosphere or the ground. However, as a belt and braces operation, and at some considerable cost, I am expected to have the fuel tanks pressure tested once every two years. It costs something like £1, 500 for five tanks. It seems a rather overbearing amount of regulation.
Where the village high street still exists it is faced with ever more draconian regulation which drives out any possibility of a living wage. As the owner of an historic house and garden open to the public for seven months of the year, I employ a large number of part-time staff. I believe that all members of my staff are fairly rewarded for the work they do. Indeed, I have always believed the adage, "If you pay peanuts you get monkeys". The Government's signing up to the European work directive has meant that every part-time member of staff who works one day a week for more than 13 weeks will receive three days' holiday pay; and from 23rd November of this year that will rise to four days. It seems illogical that people who are paid at a higher rate because they are temporary staff should then receive holiday pay as well.
I imagine that such regulation is driving up costs throughout the tourist industry. In small businesses, the introduction of unpaid paternity leave, maternity leave, and statutory sick pay means that it is difficult to get cover, or one often pays twice for the same job.
Small firms are faced with an array of regulatory bodies: Inland Revenue; Customs and Excise; the Health and Safety Executive; the planning authority; and the Environment Agency, to name but a few. Each agency considers its particular brand of bossiness paramount. The poor employer has to deal with all those demands as well as run his business profitably. The decision to take on more labour is often coloured by the need to keep more records for the many statutory returns, while struggling to meet deadlines and keep the bank manager happy. It is safer and easier for an inspector to say no than to consider an economic and sensible alternative. We should never let the best be the enemy of the good.

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The anarchic nature of free enterprise can be quickly stifled by too much regulation. It must be the duty of the Government and the legislature to keep the amount of regulation to a sensible minimum. The effect of our deliberations, and of those in another place, often translate into draconian measures by those who implement legislation. One would hope for a proactive relationship with regulators rather than a vindictive reactive one.
6.35 p.m.
Lord Rowallan: My Lords, I declare an interest as the owner and director of several small businesses. I am often forced to ask myself why anyone would want to start up a small business. There are so many rules, regulations and laws which make life impossible that we must be mad to contemplate it. There is a battery of red tape to stop one from succeeding and to drive the unwary back to employment, or unemployment, rather than their desired role of employer.
In a tongue-in-cheek manner I wish to take your Lordships through the imaginary beginnings of a small business. First, you need to find a place to run your business. It sounds logical and seems easy until you start looking around, and then it becomes remarkably difficult. Having found it, you are faced immediately with a large insurance bill. You must have liability cover, employee cover, fire and theft cover and many more.
Then you have the joy of paying business rates, and for the pleasure of paying those rates—taking people out of the dole queue and helping the business profile of your local authority area—you will have the great joy of joys: your refuse will be collected. But you will not have a vote in the local elections and so will have no say in who your local councillor is or the political make-up of the council.
Then you probably have to go to your local council to arrange a change of use for your chosen venue in order to comply with the local district plan. In the case of agriculture, farmers are being asked to diversify. They move from being rate free to being rated. That surely has to be the biggest disincentive of all.
Now you have a business and it has been registered in the local authority's record. The next step is visits from health and safety and environmental health officers and the fire brigade. They all tell you different and converse things. That necessitates an annoying and boring round-robin series of meetings until the common denominator is found.
The most extraordinary situation arose in my equestrian centre recently. The environmental health and health and safety officers insisted that we had a small door put into one of the walls of our riding school so that people could get out. I pointed out that right next to that area was a 15-foot by 15-foot door which would make it easier for people to get out if there were a rush because of some crisis. The only people who paid any attention to me were the fire brigade. After a long series of arguments it was agreed that I would not have to put in a five-foot door when there was a 15-foot door within one foot of that area
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Now you have your business and a venue so what do you need next? You need employees. The only problem is that you cannot have those you want. You cannot apply for females only or males only; and you are discouraged from discriminating on age grounds. You definitely cannot choose on grounds of colour or race. Even when you have made your choice, the potential employee whom you turned down can claim that you chose the person you did because he was a Scot and you chose an English person, or because he was white and you chose a black person, or vice versa; or, as the noble Lord, Lord Vinson, said, you chose a non-pregnant person rather than a pregnant one.
After all that, you have your employees. They must only work a certain number of hours. They must be paid the minimum wage as set down in law. You must give them PAYE status and you must quickly understand how to work out wages. You cannot claim that they are all self-employed and give them each £100 a week cash in hand, or whatever you decided to give them. That would be far too simple. We all pay our tax returns now through self-assessment. But you are not allowed to call them self-employed persons and let them work the figures out for themselves. You are now an unpaid government tax official. But do not get the figures wrong because you cannot claim back from your new employee any overpayments or mistakes you have made.
You must also remember that if an employee is sick he must be paid. If she becomes become pregnant you must keep her job open for her, even if you do not know whether she will come back after the birth of the child.
You must also decide whether you are going to opt to be VAT registered, and if you do that you must fill in the necessary returns each quarter. Again. do not make any mistakes, as you will have to pay for these with interest at a punitive rate. Ignorance is no excuse. Again, you pay to do this, but you had better do it, even if you have not got the time to do it and your business needs your attention on the shop floor rather than in the office. Oh, you can employ someone to do it for you, but if they do it wrong it is still your fault because you have not given them the right information.
Now your business is up and running and you have to fill in your annual returns for Companies House, and, guess what, if you are late there is another fine: automatically £100. The bank, if you are in the unfortunate position of having an overdraft, wants you to make a profit and it only accepts that you are doing that if you have to pay tax. You may feel that you should keep that money, reinvest it in the business before the year end and use creative accounting. You realise that you would be better off not paying the tax, but the bank cannot see that and so the man who should remain in his cupboard—your friendly bank manager—more often than not loves to come out of his cupboard and asks to see you. He is now concerned that the bank's money is at risk. You point out that your overdraft interest payments are paying bank employees' salaries. But he is not impressed by that and he says he wants to discuss the matter with his superior, who is probably a

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computer. So instead of reinvesting you pay the corporation tax and trust that the bank knows best. The moral of the story is, do not have an overdraft.
Now everything is running smoothly, the business is going, you are making money; but one of your employees is not pulling his weight. He really needs to be sacked because he is destroying the morale of the rest of the workforce. If you do not do this in the correct way you can be sued. It is your business: you should be in charge, but you are not. In the Daily Mail today there is a little story in Lynda Lee-Potter's column which runs:
"Sales co-ordinator Natasha Jeary was sacked because she had agoraphobia, which made her afraid of travelling and of public places.
She's now been awarded £7,000 after the Exeter employment tribunal ruled that her bosses breached disability regulations by sacking her because of her condition".
As Lynda Lee-Potter asks, what use is a sales co-ordinator who cannot travel?—about as much use as a chauffeur who cannot drive. I think she has got it right.
Even if you do sack someone properly, you can still be accused of bias in your sacking. If you are a male, females can destroy you with allegations of a sexual nature in retaliation, destroying your business, your personal standing in the community and your marriage. Naturally it sometimes happens the other way round, as no one likes to be sacked. As someone who has been sacked in a previous incarnation, I can assure your Lordships that it is not a pleasant experience.
In another of my businesses we were in fact accused and taken to an industrial tribunal by someone whom I had taken on who had AIDS and I knew had AIDS when I took him on. As your Lordships will know, I take on ex-prisoners and I have taken on a variety of people. I do not think I could ever be accused of bias in any direction at all on that score. He was quite ill and after a period of employment in my business he decided that he had to go to hospital to get himself sorted out for a bit. When he came back he carried on working and he worked very well, but then certain other things happened and unfortunately our ways had to part. I was absolutely shocked when a week later a letter came through the post saying that I had sacked him because I had just discovered that he had AIDS. Nothing could have been further from the truth: he knew that, I knew that and it was a question of proving it to the industrial tribunal. It took an enormous amount of time and amount of money and I certainly had other things that I wanted to do. In the end the case was proved in the right way and everything was okay. However, it just goes to show in what a difficult position employers can be placed.
So now the poor old small business man has the industrial employment tribunals to deal with. They tell you what you are going to have to pay by way of compensation to the employee you have sacked because of his or her incompetence. Who would be an employer today? The law is definitely against the employer and does everything to protect the employee. Of course not
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many years ago employees definitely needed protection, but we have surely adjusted the balance too far the other way.
I have had a bit of fun in this debate and I want to thank my noble friend Lord Vinson for introducing it. I have taken things to an extreme; I accept that. However, all the scenarios I have mentioned are possible. The system must be simplified. The small business employer does not have the resources of the big business owner, as we have heard from several noble Lords. We must do something to remedy this, and soon. Too much of our economy relies on small businesses. Too many business men and business women are running themselves into the ground just trying to keep their business going and provide employment in their area, and this group of people should not be allowed to go under beneath a welter of rules and regulations.
I should like to make one comment on the subject that my noble friend Lord De L'Isle mentioned. If it is possible for someone who runs a small post office to get commission on sales of stamps, pension payments and so on, surely it must be possible for small businesses to get something back for the work that they do—totally unpaid at the moment—in the form of tax collection.
6.45 p.m.
Baroness Sharp of Guildford: My Lords, from these Benches I would like to thank the noble Lord, Lord Vinson, for promoting this interesting and very useful debate and to compliment the noble Lord, Lord Haskins, on his excellent maiden speech.
From all the tales of woe that we have heard from the Benches next door to me here, it is surprising what a vibrant sector the small firms sector is in this country. If we take the small firm as being a firm with fewer than 500 employees—that is actually the definition adopted by the National Statistical Office—they constitute 99.9 per cent of all enterprises in this country and they employ 62 per cent of the workforce. Since 1979 the best estimates are that they have created over two million jobs, and, as the Annual Abstract of Statistics also shows us that between 1979 and 1998 a net 1.5 million jobs have been created in the United Kingdom, it indicates that the small firms sector has more than compensated for falls in employment in other sectors.
Perhaps there should be a few caveats. The fastest growing sector among the small firms has been the very smallest sector, the self-employed. We have seen the proportion of the self-employed rise from 6.6 per cent in 1979 to 13.6 per cent today. It has more than doubled, and represents a faster rate of growth than any other sector. Secondly, we have actually seen a drop in employment in small firms of 200,000 between 1996 and 1998. There was a drop of 200,000 in the numbers relating to small firms and particularly in this very smallest sized category. However it reflects the tougher conditions that manufacturing industry is meeting in the relative recession that we have seen over the past year
or so.
As many speakers have pointed out, regulations in this country fall disproportionately on small businesses because they cannot afford the specialist compliance

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staff that the larger firms can afford. Therefore in terms of cost per employee or even in terms of overall cost, this is often disproportionately high for small firms.
We have had sterling speeches from a number of speakers, including the noble Viscount, Lord De Lisle, the noble Lord, Lord Taylor of Warwick and, in particular, the noble Countess, Lady Mar, who have told us how small businesses, and particularly small rural businesses, have been suffering. In this respect I should like to draw the attention of your Lordships to an Early Day Motion being put forward in another place by my friends on the Liberal Democrat Benches. It occurs to me that perhaps some noble Lords may like to ask some of their friends to sign this Motion. It draws attention to a survey by the Institute of Chartered Accountants, revealing that some small business advisers believe that the annual cost of implementing new legislation is more than £5,000 for small businesses. It points out that this is a very significant sum for small businesses and it calls upon the Government to carry out an immediate audit of the regulations affecting small businesses and to establish a statute for ameliorating these difficulties. It further requests the Government to commit themselves to ensuring that future legislation will not add unnecessarily to those burdens; to produce an annual impact assessment detailing the costs of all new legislation specifically upon small businesses; and to exploit fully the opportunities offered by the Internet for streamlining the administrative demands upon business.
As I say, we have heard a good deal about the burdens imposed by European legislation and in particular, the problems encountered by small fanners and rural business. Yet, wearing our other hats, as consumers, we are concerned about food safety, about outbreaks of e-coli and that we should have internationally comparable food standards.
If we look at European legislation, there is little doubt that over the years, there has been a good deal of gold-plating by both governments. There is considerable evidence that in other countries—and some of your Lordships have mentioned this—such legislation is not implemented as meticulously as it is in this country. In some of those countries, that legislation is not regarded as the great burden that it is in Britain.
In that respect we all welcome the Better Regulation Task Force mentioned by the noble Lord, Lord Haskins. But there are other lessons which we need to remember and think about. It is important that we should try to engender different attitudes among those whose responsibility it is to administer the legislation. In Britain, there has often been a problem of double-banking of legislation because we have not repealed UK legislation when it has been superseded by European legislation.
We should also like to see more business-friendly enforcement. Enforcement officers should try to be more helpful towards small firms in relation to compliance and be advisers and counsellors rather than prosecuting for non-compliance. It is unfortunate that current performance targets set in the Department of Trade and Industry frequently reward officers in terms
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of the numbers of prosecutions they make, rather than in terms of the numbers of small firms which they have helped to comply with the legislation.
I wish to draw your Lordships' attention to research which has been undertaken to look at what it is that creates employment in small businesses. It is extremely valuable to look at what it is that creates the jobs rather than what destroys them. In particular, I wish to mention three pieces of research which are relevant to the issue.
The first piece of research is by Professor David Storey who, for the past 10 years, has run the Economic and Social Research Council unit on small firms research at the University of Warwick. Among other things, he was investigating the position of fast-growing small firms. He found—many people already knew this—that most employment growth comes not from general growth of all firms but from one or two firms growing very rapidly. Birth and death rates among the population of small firms are extremely high. Those which survive create jobs.
Those firms which grew most rapidly and generated the highest profits and growth of employment were the small high-tech firms, often led by a scientist or engineer with a PhD.
We need to see what hampers those firms. The noble Lord, Lord Haskins, pointed to that. The research shows clearly that it is not regulation which inhibits the growth of those firms but access to finance and entrepreneurship. I for one welcome what the Government are doing to promote both venture capital in this country and to train our scientists and engineers who have doctorates in science and technology in management techniques because we need those new entrepreneurs for the future.
That research by Professor Storey has been complemented by further work by Professor Derek Bosworth who is now at the Manchester Business School but he undertook the research when he was at Warwick. He looked at a sample of firms in the Midlands, cross-cutting large and small firms. Among those, he found that only half the firms undertook anything which they called R&D and only half of those firms employed a graduate scientist in R&D. But he also found that those companies which employed graduate scientists, whether in R&D or in the company as a whole were generally more successful and gained faster in profits, turnover and market share than their competitors. Those firms which had a graduate scientist or engineer on the board of directors did even better. Those which had an R&D department and employed graduate scientists and engineers in that department did best of all.
He found that confronted by stiff competition within the global world in which many of those companies operate, those which had an R&D department moved to redesign their products and moved upwards with higher value-added products, whereas those without any resort to science and engineering frequently tried to compete in terms of price and found themselves going under.
Finally, I draw your Lordships' attention to what I call some action research that was sponsored not by the Economic and Social Research Council but by the

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European Union under its structural fund in Liverpool. That took place from 1992–94 when there was in Liverpool a surplus of those graduating from the science departments at the two universities—Liverpool University and John Moores University. It was an initiative which took some of those unemployed scientists, trained them for six months in management techniques and then offered them to the small firms in inner city Liverpool on the basis that if they wanted them, they could take them, and if they did not want them, they would be taken back again.
There were problems. Some people were extremely doubtful as to whether they had any use whatever for a graduate among the staff. But the majority of firms took them on. At the end of the year, the EU paid their salaries as interns for a year and offered to take back the graduates. Almost all those small firms said, "No, no. You cannot possibly take them back. We will pay their salaries. And have you got any more where they came from because we found them so useful?".
I believe that in this country we are confronted by a very real problem in terms of innovation; namely, that it is not our large firms which fail us in that respect but, because we have a large number of small firms which are not using up-to-date techniques, they are failing to create jobs. It is the entrepreneurial firms which create jobs. It is vital that we should get scientists and engineers into small firms.
Yes, it is certainly true that regulations are disproportionately expensive for small firms. It is often difficult for them to comply with them. But I echo the words of the noble Lord, Lord Haskins. By all means, let us be vigilant and let us keep the regulations to a minimum. Let us beware of the gold-plating of the regulations. But let us also beware of prejudice and let us heed the results of research. Jobs are being created by the small innovative firms. The key constraints on their expansion are not regulations but finance and skills. We need to concentrate our attention at least as much on those issues as we do upon regulation.
6.59 p.m.
Baroness Miller of Hendon: My Lords, like other noble Lords who have spoken today, I congratulate my noble friend Lord Vinson on the excellent way in which he introduced the debate, and thank him for doing so. I am particularly interested as I was a member and director of the Small Business Bureau until I was appointed to the Front Bench of the previous Government in 1994.
I am also particularly interested because I started my own small business in 1972 which I ran and developed into an international business covering three countries by the time I left it in 1998; but not, I hasten to say to the noble Lord, Lord Haskins, as successful as his father-in-law obviously made his. Judging by the standard with which he spoke in his maiden speech today, I am quite sure that his father-in-law must be delighted with the way in which he runs the business. On behalf of all noble Lords, I welcome him to this House.
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Inevitably, many contributors to the debate have focused on the potentially disastrous effects of the national minimum wage, the forthcoming Employment Relations Bill and the Working Time Directive. I, too, shall touch on those matters, but first I should like to talk about the difficulties for small businesses.
Businesses have troubles that are started by government. I refer not just to this Government but to every, successive government. Such troubles are caused because government departments seem to be unable to grasp one simple elementary fact; that is, that small businesses are not the same as large businesses. There is a difference between, say, Sainsburys and the local corner shop. The local bicycle repair business is vastly different from Fords. There should be different degrees of regulation and control to which they should be subjected. Many noble Lords have mentioned that today. Small businesses simply do not have the internal resources to put in place the record-keeping requirements imposed on their businesses, nor the money with which to pay professionals to do it for them.
The vast majority of businesses in this country are small and medium-sized enterprises. The directors and their families are also often, indeed usually, the shareholders. The complex rules of meetings, delivering and filing of accounts are totally irrelevant. Every year a limited company has to file a document at the companies registry called an annual return. There are dire financial and personal penalties for failing to do that in time. Why, I ask, do small family companies where the directors, shareholders, registered office and capital remain unchanged year after year have to do more than fill in a simple form asking, "Have your particulars changed during the past year; yes or no?" Why do small private companies have to file their accounts every year, under ever escalating automatic penalties starting from £100 for being late by one day? Indeed, my noble friend Lord Rowallan mentioned that point. It cannot be to inform potential creditors. There are months from the end of the financial year before they have to be filed so they are virtually worthless except to make work at the companies registry. Unincorporated businesses do not have to file their accounts publicly.
Only this weekend we read in the Sunday Times that the Government are about to demonstrate their aversion to the public finance initiative by axing the Pathway Project to computerise social security payments through the Post Office. Indeed, the Benefits Agency wants to pay them through the banks. That is despite the fact that a high proportion of the recipients do not have bank accounts and the banks purportedly do not want this time-consuming business.
It is also despite the fact that the Post Office may have to axe thousands of sub-post offices which depend upon customers collecting their benefit and spending some of it in the shop. The National Federation of Sub-Postmasters has estimated that 5,000 sub-post offices, which is nearly a quarter, might have to close. I very much hope that my noble friend Lord De L'Isle will not be one of those affected. These are the same

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sub-post offices far which the Labour Party, while in opposition, shed crocodile tears when the subject of privatisation of the Post Office was floated.
I turn to the topical subject of the national minimum wage, the Employment Relations Bill and the Working Time Directive which I believe will have a devastating effect on British commerce, especially on small businesses, to say nothing of employment prospects for unskilled and young persons.
The Government set up an advisory body called The Better Regulation Task Force. I note that the noble Lord, Lord Haskin, informed us that it is an independent organisation. I also note that the noble Lord, Lord Haskel, called it "our task force". I certainly do not blame him for laying claim to it. Half of its members consist of representatives of small businesses, including one from the Federation of Small Businesses.
Prior to the passing of the National Minimum Wage Act, the task force gave the Department of Trade and Industry certain advice which the Government ignored. The task force loses no opportunity to repeat in its various reports and consultation documents that its criteria for good regulation are transparency, accountability, consistency. proportionality and targeting. Its advice under the heading of targeting welcomed the idea of an enabling Bill, giving the Secretary of State power to make detailed regulations because:
"It means that where regulations need to be changed or fine tuned in the light of experience this can be done by sample means".
What do the Government do in the face of that advice? Under Clause 2(8), Clause 3(3) and Clause 4 the Secretary of State expressly forbade himself from making any regulations which allowed for variations between different areas, different sectors of employment, undertakings of different sizes, small businesses or persans of different ages or different occupations. In other words, in the face of those recommendations of their own advisers they set their face against any form of flexibility which is absolutely necessary in dealing with small businesses. They did it in such a way that no matter how cogent a case there might be for derogation from the national minimum wage in special cases, the Secretary of State could wring his hands and say, "I'd like to help you but I do not have the power".
I proposed an amendment, both in Committee and on Report, removing those self-imposed obstacles and giving the Secretary of State power to vary the national minimum wage in any way, for any purpose and for however long he chose to do so. The amendment was the only one that was passed in this House. Incidentally, my noble friend Lady Anelay mentioned the British Activity Holiday Association. That association would have benefited from that amendment. Its members came and lobbied me on that matter. Were the Government grateful for this aelpful, constructive and totally discretionary new power I gave to them? No, they were not. The Minister rejected it. In the other place they described it as a wrecking amendment. Wrecking? All it did was to give the Secretary of State a discretionary
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power to use or not to use as he chose. All it did was to follow the advice of the Better Regulation Task Force, as I believe the Government should have done.
The task force recommended:
"any form of record which enabled an employer to demonstrate compliance with the act should be acceptable".
Following the specific advice of the task force that the record-keeping requirement:
"should he non-bureaucratic and minimise the need for additional documentation"
I proposed, in the interests of making life simpler for small businesses, that PAYE records should be. just one such method as an alternative to whatever else the Secretary of State might propose. What happened? The Government rejected my amendment and produced a set of draft regulations that would have entailed the employment of a team of accountants and statisticians on every single pay day.
Fortunately, however, common sense broke through. Regulation 38 now provides for the records to be:
"sufficient to establish that the employer is remunerating the worker at a rate at least equal to the national minimum wage".
That was just as I had suggested. Why did the Government give me such a hard time? Why were they so negative? The reason is that the needs of small businesses are really at the bottom of the Government's priorities. The task force expressly advised that:
"the absence of records should not be a criminal offence".
But, Section 31(2) makes an employer who fails to keep or preserve records liable to a fine on the highest legal level; a maximum of £5,000. I believe that is pure intimidation, especially of and bully boy tactics against small businesses who might not have the means or possibly are too ignorant to even keep the records. No major public company, or one which can afford to employ book-keepers or accountants, will find any difficulty with that.
I turn briefly to the Employment Relations Bill at present before your Lordships' House. I say "briefly" because some of your Lordships will have heard me speaking to it for some 23 minutes the day before yesterday. Your Lordships will be most relieved to know that I do not propose to repeat all of my arguments made then. We shall certainly have plenty of time to go through them point by point in Committee.
For the moment, it is sufficient to say that the proposals for maternity leave, paternity leave and waiting-for the-TV-repair-man-to-come leave will all rebound most severely on small businesses while adding to the overheads and reducing the competitiveness of all businesses. The noble Lord, Lord McIntosh, did not answer my question on Monday when I asked for a definition of the so-called "domestic incident". I hope he will be able to do so—I do not suggest today—certainly before Committee stage.
Small firms with, by definition, few employees will be the most hard hit by employees being able to take time off for some personal problem that could be dealt with at some more convenient time.
Then we come to the working time regulations. This concept was originally contained in the Social Chapter from which the former Prime Minister negotiated

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Britain a complete exemption. However, the Brussels bureaucrats and the socialists controlling the various organs of the EU ruled that it was a health and safety measure over which Britain had no exemption—a piece of legal chicanery which deserved an Olympic gold medal for sophistry.
The former Prime Minister protested, but to no avail. It would not have mattered anyway, because no sooner had this Government taken office and without even stopping to take off his jacket, the present Prime Minister was on his way to Brussels, biro in hand, eagerly asking where the dotted line was for him to sign up to the Social Chapter with what many of us believe to be its costly job-destroying provisions. The devastating effect of that directive on small businesses has already been commented on and I shall not repeat it. But what is disgraceful is the way in which that regulation was sneaked on to the statute book. It was laid before Parliament on 17th August during the last Summer Recess. It came into force before Parliament had any opportunity to discuss it. No wonder the task force complained about government failing to allow time for consultation; no wonder the Government are contemplating amending the regulations before they have barely come into force.
I should like to summarise the effect of the regulations the Government introduced in their first two years and which they described as business legislation: minimum wage regulations, £2.4 billion a year (the Government's own estimate); working time regulations, £2 billion a year (the Government's own estimate); Employment Relations Act, £60 million a year (the Government's own estimate); administration of working family tax credits, student loan repayments, stakeholder pensions and disability discrimination compliance costs, a total of another £322 million. That is a total of £4.75 billion a year, apart from the over £300 million non-recurring set-up costs. That is a burden on the whole of British industry and commerce.
According to the Daily Telegraph of 26th April, the noble Lord, Lord Haskins, said,
"The cost of small businesses complying with employment regulations is disproportionately high".
He went on to say,
"the level has been reached where they present barriers to the growth of small companies…especially from the Working Time Regulations".
I was going to say that he described the working time directive as "a dog's dinner", but I believe my noble friend Lord Vinson described it as "a dog's breakfast". I am sure the noble Lord, Lord Haskins, will be able to tell me which meal he did describe it as; in any event, I could not have put it better. I shall be interested to hear the Minister's response to his colleague's comments.
It is abundantly clear that the Government surrender to Brussels and the Government's legislation has been based on political considerations that do not have concern for the commercial interests of the United Kingdom, the interests of commerce generally and small businesses in particular. I believe, unfortunately, we may all have to pay for this folly.
7.13 p.m.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord, Lord Vinson, and all who have taken part in the debate. I say that sincerely, though the thrust of the debate has inevitably been critical of the Government. I do not complain of that. I am grateful also, despite that fact, that my noble friend Lord Haskins has taken this opportunity to make a maiden speech. If that was a non-controversial speech, I wonder what his speech would be like if he were freed from the confines of the traditional maiden speech.
I am clearly not going to get away with a whitewash in my noble friend's presence. All I can do, as humbly as I can, is set out what the Government are planning to do about the undoubted burden of regulations on small businesses. Let me start from that common point. I shall say what we are planning to do about it and try and give some answers to the specific questions raised.
As everybody else began by declaring interests and qualifications, let me say that in humble contrast to my other noble friends who have spoken—my noble friends Lord Haskins and Lord Haskel—I ran a business for 30 years which started as a small business and ended as a small business. So I had the disproportionate burdens that have been described right from the beginning.
But in all of those 30 years, from 1965 to 1995, I did not recognise the vast majority of criticisms made by noble Lords opposite; I much more closely recognised what my noble friend Lord Haskins said. The problems for a small business are, above all, finding the working capital and the development capital to get going and continue—in other words, the bank manager rather than the state—and in finding skilled staff to do the work. Those are the two real difficulties.
Baroness Byford: My Lords, I thank the Minister for giving way. I believe the Minister said he was in business between 1965 and 1995. I am sorry to interrupt, but my reason for doing so is to say that we have had a plethora of regulations coming in, within the UK and particularly from abroad. The noble Lord would therefore find it much more frustrating now than he did then.
Lord McIntosh of Haringey: My Lords, I shall come to the numbers. However, I have to say now that this is a timed debate and I shall not be able to give way to interventions as I was able to do on Monday on the Employment Relations Bill.
As I said, the second difficulty of being a small business was in finding skilled staff. It was not employment relations that were the problem—they were in place for nearly all of the period in which I was in business very much as they are now—it was the lack of skills in the workforce in this country and the lack of continuing education and training for adults. That was certainly the responsibility of the last government, but probably goes back to previous Labour governments as well. I do not want to make a point of that. I was fascinated by the research described by the noble Baroness, Lady Sharp, and I shall have to read carefully what she said, think about it and write to her if I can make any positive contribution to her points.

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So I simply do not recognise what is described as being the position of a large number of small businesses. That is not because in any way I underestimate the importance of small businesses to our economy. The noble Lords, Lord Vinson and Lord Kimball, and the noble Baroness, Lady Sharp, all referred to the statistics. Our figures say that 99 per cent of UK businesses employ fewer than 50 people; that they provide 46 per cent of jobs in the private sector and account for 42 per cent of turnover. If we add that to the job creation figures of the noble Baroness, Lady Sharp, we see how important they are.
Let us be clear. The Government cannot make small businesses succeed; but we can help in three ways. We can give help to ensure that those with the will to succeed have a fair chance to do so by providing a supportive and stable economic environment. The most fundamental difficulties I had in those 30 years were the huge swings in business confidence that undermined our customer base in the market research business, which some noble Lords might think is a little remote but it certainly is not. Then we can tackle specific barriers to performance and growth, including regulation, and provide high quality support services. We are committed to doing all three of those.
First, the stable macro-economic environment is already paying dividends. Inflation is under control. Interest rates have come down 2.25 per cent since last October. Long-term interest rates are at their lowest level for 40 years and the public finances are in good order. Of course there have been difficulties for some time with the strength of the pound. That is a problem which exists in many parts of the world. Manufacturers in Europe are struggling as a result of the global downturn and the decline of exports to the Far East. But the figures seem to suggest that this is getting better. However, we still need to take action to address the longer-term performance of the economy and in order to do that we have to close our performance gap with our competitors through productivity and enhancing businesses' ability to innovate ahead of the market. That is what small businesses in particular can contribute to the process.
So we must encourage enterprise. That was the first of my suggestions of things that we could do. We have created the Enterprise Fund, a new fund to support the financing needs of small and medium-sized enterprises. It is worth £160 million over three years and includes a more cost-effective Small Firms Loan Guarantee Scheme and support for regional venture capital funds specialising in the provision of small-scale equity. We also intend to provide tailored business advice and support to at least 10,000 innovative high growth potential start-ups by 2001. Funding of £20 million will be available for that over the next three years, together with a further £20 million to help small firms realise the benefits of communication and information technology.
When I think back to when I started in business, I sometimes wonder how we ever managed without PCs, accountancy programs, payroll programs, VAT programs and even a photocopier. Surely it must be a
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minimum aim that any small business which comes within the scope of regulation should have the benefit of electronic processing.
In addition, we have heard much talk about costs. The Budget contained a raft of measures aimed specifically at the business community: the reduction in the starting rate of corporation tax at 10 per cent; the cut in the small companies' tax rate to 20p. in the pound, down from 23p. as at the election; a 10p. starter rate of income tax for the self-employed; and a I p. cut in the basic rate for next year. All small businesses will benefit from the additional £325 million being set aside for small and medium-sized enterprises to write off 40 per cent of all they invest in plant and machinery in the coming year. There is also the new Enterprise Management incentive scheme to provide more generous tax-advantaged equity-based incentives to attract successful managers to the new companies that our economy needs. Smaller businesses should also benefit from the new R&D tax credit for small and medium-sized enterprises—a boost of some £150 million a year.
I do not deny some of the figures as regards the cost of regulation, but they must be set against the help which is being directed specifically to small businesses. We are of course aware of the burden of regulation. We know that the burden is harder to bear for small businesses. We inherited regulatory control systems from the previous administration and we have gradually come—perhaps too gradually—to the conclusion that that administration did not deliver what it wanted to achieve. It tended to come into play too late in the policy-making process and looked at individual measures in isolation, with little appreciation of the cumulative effect on business.
I believe that we addressed the latter in the Modernising Government White Paper published in March, which includes improvements to the Regulatory Impact Assessment system. That means that the Cabinet Office Regulatory Impact Unit will have to be consulted on all regulatory impact assessments on both primary and secondary legislation. There will be a forward programme of regulatory proposals over the next three years, including European Union proposals, to enable Ministers to decide collectively on the overall shape of the regulatory programme and how to cut it down. We have asked the Better Regulation Task Force, led by my noble friend Lord Haskins, to spearhead the Government's drive to remove unnecessary regulation from the statute book. So there is no doubt that we are trying in many ways, through central government, to relieve the burden of regulation which has been described.
The third element that I referred to was advice and support. That is why we decided to set up a new Small Business Service. We found that traditional government structures have not worked to the advantage of small business. We agree with the noble Baroness, Lady Sharp, that what we should be doing is helping small firms to comply, and not setting targets for prosecution. Therefore, for the first time we are creating an institutional structure which reflects the importance of small business. The new body will have three main functions: first, it will improve the quality and

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coherence of government support programmes; secondly, it will help firms meet the demands of regulation, working with the Regulatory Impact Unit and the Task Force; and, thirdly, it will act as a strong voice for small business at the heart of government.
I will have to race through the answers to specific questions, but I shall do my best. Perhaps I may, first, talk about the number of regulations. The noble Baroness, Lady Byford, intervened at one point, but I was interested in the question put by the noble Lord, Lord Taylor, namely, "Who's counting?" Well, we are counting; and, indeed, we have counted. In terms of the total number of regulations, including those which do not impact on business, the numbers have varied over the past five years between 3, 200 and 3, 400 and there is no pattern of increase whatever. The number of regulations imposing costs on business in 1995 was 180, in 1996 it was 209, in 1997 it was 168 and in 1998 it was 199. Therefore, there is no good evidence to show a significant increase in the number of regulations. I say that in the face of what has been said by a number of speakers about surveys on the impact of new regulations.
One of my favourite surveys is one which was not referred to in the debate, but it has been quoted in a number of press reports during the past month. It was produced by Peninsula Business Services and the first question was:
"Do you wish that employment legislation was easier to implement?"
I have to tell your Lordships that 16 per cent of those surveyed wished that it were easier to implement while 84 per cent appear to have said, "No"—so presumably they wanted it to be made more difficult. We shall not satisfy them.
On the cost of implementation, it seemed to me that the noble Baroness, Lady Byford, simply did not believe my figures on the Employment Relations Bill. I think that the Opposition had better look at the Regulatory Impact Assessment. No criticism was made of it when it was possible to do so on Second Reading. We will welcome debate on the assessment. The amount of £60 million a year is small compared with the benefits which we have been able to introduce as a result of the last two Budgets.
I had hoped to say a few words about enforcement, but no speaker referred to it. I wanted to do so because I wanted to congratulate the noble Lord, Lord Vinson, on his work at the time of the Deregulation and Contracting Out Act 1994 and on his contribution to the creation of Sections 5 and 6 which very much improved the enforcement provisions. I hope that the noble Lord will be pleased to hear that we are looking at them again in the hope of improving them further.
On the issue of small firms exemptions, the noble Lord, Lord Vinson, asked for a blanket exemption for small firms, while the noble Lord, Lord Taylor, asked for a freeze until the end of the year. However, I believe that my noble friend Lord Haskins answered that. With all the contact that he has had with small businesses, he simply said that small firms are not looking for that. Of
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course, there are many exemptions for small firms, for example, there is a threshold for company accounts below which companies only need to file abbreviated accounts, and there is also a threshold below which there is no statutory requirement to have accounts audited. Moreover, in comparison with most other European countries, there is a very high VAT registration threshold and there are of course the lower rates of corporation tax to which I referred. There is a threshold for statutory union recognition under the Employment Relations Bill. Indeed, there are plenty of examples of tempering the wind to the shorn lamb, but that does not appear to be a major issue in the representations being made to the task force.
The noble Lords, Lord Vinson and Rowallan, made particular points about employment tribunals. We certainly recognise that there is always a possibility of what we call "blackmail applications" being made to employment tribunals. The Employment Rights (Dispute Resolution) Act 1998, to which my noble friend Lord Haskins referred, encourages alternative forms of dispute resolution. It enables ACAS to find and promote a scheme for the arbitration of unfair dismissal as a speedy, formal and private alternative to tribunal proceedings. Much has been said about the Employment Relations Bill. Perhaps it would be better to leave discussion of that Bill until the lengthy debates that will undoubtedly take place.
In responding to the noble Baroness, Lady Miller, I failed to give her a definition of "domestic incidents". I am not able to give her a definition but I can give her examples of what is in and what is out. What is in are certainly things such as the sickness of family members and others or being called to a school; what is certainly out is being called to the TV repairman, as the noble Baroness suggested. I was going to use the example of the lost hamster.
I am surprised that the noble Lord, Lord Kimball, in particular, should repeat the canard that we are tied to trade union paymasters. If he looked at the history of the Employment Relations Bill he would recognise that it has arrived as a result of 18 months intensive consultation with employers' organisations and with trade unions. He will find that, in general, employers' organisations are as satisfied with the provisions as the trade union organisations. I will pass on from that Bill because there is so much we can debate on another occasion.
The noble Baroness, Lady Anelay of St. Johns, asked me about the tourism industry. Yes, of course we recognise the position of the tourism industry. She is wrong in thinking that Tomorrow's Tourism is a government statement only. It is a government statement in association with the industry itself, which was responsible for a very large part of it. It is very much an independent report on what needs to be done.
The noble Baroness mentioned particularly the British Activity Holiday Association and the problem raised by Peter Ainsworth about the £20 accommodation offset. That has been referred to the Low Pay Commission, which recommended that there should be no immediate change. However, there will be further monitoring, a

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further report and further evidence from the new earnings survey of 1999. In contrast with the statistics of the noble Baroness, the report issued by Coopers and Lybrand and the London Business School identifies low pay in the tourism industry as a factor which undermines morale in the industry rather than a factor in the other direction. As to the working time directive, as I am sure the noble Baroness will now recognise, the regulations do not require the keeping of logs of hours worked—and, yes, the forum will continue.
I shall have to write to the noble Countess, Lady Mar, the noble Baroness, Lady Byford, and the noble Lord, Lord De L'Isle, about sector-specific cases. It would have been impossible for me to have been briefed on such cases. The noble Countess made many points about the plight of small farms, the Meat Hygiene Service and so on. With the help of MAFF, I shall write to her on those points.
We accept and understand some of the criticisms of the way the working time regulations were introduced in the first instance. We recognise that the original leaflets were too long, too complicated and sometimes even wrong. a point made by the noble Lord, Lord Taylor. But we are making changes to the guidance to reduce the burden on employers. We have made every effort to deal with the undoubted difficulties which arose then. Fortunately, they do not appear to be arising with the national minimum wage.
I have taken longer than I wanted in reply to the debate because I try to answer as fully as possible the points made by noble Lords. However, I cannot reply to the noble Baroness, Lady Byford, about French local government boundaries. That is a little bit beyond my remit.
Baroness Byford: My Lords, I may have
confused the Minister. There are two separate issues. The ice-cream farmer is in this country; this has nothing to do with France. I hope that Hansard will show that I have not misled the noble Lord.
Lord McIntosh of Haringey: My Lords, I will read what was said in Hansard. I thought it was two French local government boundaries.
I repeat my gratitude to the noble Lord, Lord Vinson, and to everyone who has taken part in the debate. I repeat the assurances that the Government greatly value the contribution of small businesses. I hope that we have shown that we intend to do not only as much as reasonably possible but sometimes as much as unreasonably possible to improve the prospects for small business in this country in every way we can.
7.36 p.m.
Lord Vinson: My Lords, at this latish hour in the evening I know your Lordships would not wish me to open up too many of the points made in the debate. We have had such a good-natured debate that it would be wrong for me to raise any particularly contentious points.
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We have much to learn from the American scene and how the Americans interpret and enforce regulations. I wish to make it quite clear that I recognise that there is a place for regulation; however, I do not recognise that there is a place for overregulation.
We have been lucky to have the noble Lord, Lord Haskins, here to make his maiden speech. I am sure that he has seen the House at its best.
I am fond of looking to America because we have so much to learn. It is always 20 years ahead in terms of its economic and often legislative development. I once saw a sign outside a town in the mid-west which said, "As you come to our town here, please remember that a smile is a curve that helps straighten out a lot of things".
We have had a good-humoured debate but behind it has been a heartfelt and deeply experienced expression of the realities of the world. I welcomed the Minister's sympathetic summing up, but there is one point I would like to leave with the Government Front Bench. When we talk about SMEs we muddle together—the muddle has been made by a number of speakers today —firms employing 500 people with firms employing one. They are totally different animals and legislation should and must be framed to recognise that fact. The global expression "SME" means nothing when it is related to the realities of the precise size of the firm on the ground. The self-employed person taking on one man and thereby turning himself or herself into an employer is a critical point that legislation should examine.
I thank noble Lords for the great support we have had today. I hope that many of the good ideas that have been put forward will be taken on board and digested by the Government. I know that they have at heart the welfare of this very important sector. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

Road Traffic Regulation (Cycle Parking) Bill [H.L.]
Lord Rotherwick: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged. —(Lord Rotherwick.)
On Question, Motion agreed to.

Human Rights
7.39 p.m.
Lord Lester of Herne Hill Lord Lester of Herne Hill rose to ask Her Majesty's Government whether they will reconsider their refusal to make available the international remedies for breaches by the United Kingdom of the International Covenant on Civil and Political Rights (1996), the Convention against Torture and Other Cruel, Inhuman

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or Degrading Treatment or Punishment (1984) and the International Convention on the Elimination of All Forms of Racial Discrimination (1966).
The noble Lord said: My Lords, perhaps I may thank in advance noble Lords who will participate in this debate. I am sure that its quality will be in inverse proportion to the number of noble Lords participating.
The United Kingdom is bound by several important international human rights covenants and conventions. The Attlee Government ratified the European Convention on Human Rights in 1951. The first Wilson Government ratified the UN Convention on the Elimination of All Forms of Racial Discrimination in 1969. The second Wilson Government ratified the two International Covenants on Civil and Political Rights and Economic, Cultural and Social Rights in 1976. The Thatcher Government ratified the UN Convention on the Elimination of All Forms of Discrimination against Women in 1986 and the Convention against Torture in 1988 and the Convention on the Rights of the Child in 1991.
These decisions to become bound by those human rights instruments had to overcome strong objections within Whitehall. They were made because enlightened Ministers and their advisers were committed to the effective international protection of human rights and because there was the necessary political will.
The decision to ratify the European Convention on Human Rights was made most reluctantly by the Attlee Government and only on condition that the UK would not accept the jurisdiction of the European Commission and Court of Human Rights to deal with individual complaints of breaches of the convention by the United Kingdom.
The historic decision by Harold Wilson's Government in December 1965 to allow British cases to go to Strasbourg was taken after a full year of debate within Whitehall. The decision to ratify the two UN covenants in 1976 was taken in the face of strong resistance from within the Cabinet and again only on the basis that complaints of breaches of the Covenant on Civil and Political Rights would not be permitted to be made to the UN Human Rights Committee.
Similarly, successive British Governments have also refused to accept the jurisdiction of the UN Committee on the Elimination of All Forms of Racial Discrimination and the Committee Against Torture to deal with individual complaints of breaches by the United Kingdom.
When the new Labour Government won power two years ago, I and many others, in our innocence, hoped for a change of heart. We hoped and believed that Tony Blair's Government would not only introduce the long overdue legislation to make the European Convention on Human Rights enforceable in British courts, but would also follow the example of the other 14 member states of the European Union, of the great majority of the member states of the Council of Europe and of Commonwealth countries such as Australia, Canada, New Zealand and South Africa, by accepting that British complainants could take their cases to the
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Human Rights Committee, where domestic remedies had failed to provide redress. The Government speedily set up an inter-departmental working party to study the implications.
But when at last the Government announced the results of their labours on 3rd March 1999, our hopes were dashed. Instead of seizing the opportunity to enhance the human rights protections offered by these instruments, the Government merely said that they would "look again" at the issue,
"once the Human Rights Act has been fully implemented".
Apparently the Government has had cold feet about bringing the Human Rights Act into force so as to enable British courts to review the Government's measures and decisions. The Act, which was introduced with such enthusiasm as the Government's first measure of constitutional reform, will not be brought fully into force apparently until late 2000 or even 2001: rights brought home not now but at a snail's pace to please the convenience of the Executive, rather than to give speedy and effective domestic remedies for breaches of convention rights. The Government have not even yet set the timetable for judicial training on the Human Rights Act.
Deferring decisions on the acceptance of the international complaints mechanisms until convention rights really are brought home means that the people of this country will have to wait several more years until the Government decide whether at last to take the modest but important step of accepting the competence of the Human Rights Committee to give redress for breaches of the covenant. They will also have to wait for the Government to accept the competence of the Committee for the Elimination of Racial Discrimination (CERD) and the Committee Against Torture (CAT) to be able to give redress.
The Government's excuse for further delay does not bear close scrutiny. In a Written Answer on 31st March 1999 the Minister explained, as he will probably do in his reply to this debate—and I sympathise with the task he will have—that,
"There is a great deal of work to be done by public authorities across the United Kingdom to prepare for the commencement of the Human Rights Act 1998 and to ensure that it is assimilated successfully. The Government consider that preparing for the right of individual petition under the International Covenant on Civil and Political Rights and the other Conventions, and responding to any complaints which may be brought under those procedures, is likely to divert resources from implementing the Human Rights Act 1998". —[Official Report, 31/3/99; col. WA 77.]
It is an answer worthy of Sir Humphrey Appleby. The United Kingdom has been bound by these human rights instruments for many years and has had to report for many years regularly to the Human Rights Committee, the CERD and the CAT about the UK's compliance with our treaty obligations. Indeed, it is in the process of reporting to the CERD right now. As the Government and public authorities are already bound to comply with these instruments, there would be no further work involved in securing compliance within this country. That work has already been done, in any event.
The international human rights bodies themselves have recognised the anomalous position of the UK. As noted by the noble Lord, Lord Burlison, in a Written

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Answer of 7th May 1999, all three human rights bodies have made specific recommendations on the need for the UK to accept Me right of individual petition.
To avoid an unnecessary duplication, the Government could follow the example of other European countries by accepting the tight of petition under the covenant only for complaints that cannot be dealt with under the European Convention on Human Rights. My noble friend Lord Dholakia will have something to say on the important issues relating to racial discrimination. As regards racial discrimination and torture, complaints can be made to the Human Rights Committee, the CERD or the CAT only after all effective domestic remedies have been exhausted. The domestic remedies rule acts as an effective filter to reduce the likely number of cases that would be taken against the United Kingdom in these international fora. The experience of the many European and Commonwealth countries that have accepted the right of petition under the covenant shows that the caseload is perfectly manageable. Yet in some way, apparently what the Germans, Italians, French and the rest of the European Union can accept is unacceptable to Her Majesty's Government.
Because of the Government's procrastination, the UK remains in unsplendid isolation as the only member of the European Union that has not accepted the right of individual petition under the covenant. The covenant and the convention are complementary, rather than conflicting. The Council of Europe, whose 50th anniversary was celebrated here last Wednesday, has encouraged the ratification of both instruments since the 1970s. Within the 40-strong, now 41-strong, Council of Europe, the UK remains with only Albania, Andorra, Moldova, Switzerland and Turkey outside the covenant's individual rights mechanism.
The covenant contains several rights which are not in the European convention. It contains children's rights, voting rights and a right of access to public services on an equal basis. It also contains rights for ethnic, religious or linguistic minorities and very specific rights on what are the humane standards of treatment for detainees (unlike the European convention which is not as detailed). Most importantly, the covenant contains a free-standing right to be free of arbitrary and unfair discrimination without restriction. There, I suspect, is the rub for the Home Office and other departments.
Acceptance of the right of individual petition would enable individuals to seek a remedy for discrimination on grounds currently not forbidden by UK law—for example, on grounds of religion, in Britain, or sexual orientation or age—and without the restrictions on the right to equal treatment contained in Article 14 of the European convention. That is what happened in the case of Australia, where Tasmania had discrimination based on sexual orientation. A complaint went to the UN Human Rights Committee and, as a result, legislation was enacted to give effect to its opinion.
It is in this area that there is the most significant gap in practice between covenant and convention rights. I am sorry to say this as well: Work is currently being done by a Council Europe committee of experts to fill the gap between the covenant and the convention
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by creating a new protocol to widen the guarantee of non-discrimination in the European convention, a very sensible and laudable attempt. I have been told by a member of the committee of experts that the only opposition to this work comes from the United Kingdom and Turkey. I have not given the noble Lord the Minister notice of this, but I should be most grateful if he could indicate in his reply, or by letter, whether what I have just said is the case. Are we undermining the work being done on the protocol or procrastinating in relation to it?
Very sadly, I have come to the conclusion that the main reason for the Government's continued denial of the right of individual petition, at least with respect to the covenant, is that they do not want breaches of the right to equality and non-discrimination to be dealt with at an international level by the body established by the covenant for this purpose: the UN Human Rights Committee. It is not some kangaroo court. The Human Rights Committee of 18 distinguished jurists is a most eminent body. Indeed, in many ways the quality and qualifications of those who are on the committee are at least equivalent to those of the European Court of Human Rights. One of the most distinguished and long-serving members, Professor Rosalyn Higgins. is the wife of the noble Lord, Lord Higgins. She is now the British judge on the International Court of Justice.
Acceptance of the right of individual petition would, in the words of Dame Rosalyn Higgins, take the covenant "out of the shadows" and make it a more significant source of United Kingdom law. A few rulings by the Human Rights Committee in British cases would also encourage British courts and administrators to take the covenant more seriously, enhancing its standard-setting nature and reinforcing the covenant's role as a universal yardstick for respecting human rights. That would also contribute to an ethical foreign policy in which we were able to set a good example to other countries.
The covenant and the conventions are important standard-setting instruments of universal human rights. It is a great disappointment that the new Labour Government, like their predecessors, continue to block victims' use of the international mechanisms available for the protection of human rights. It sets a very bad example abroad. It weakens the effectiveness of international human rights law, and it denies victims of alleged breaches the opportunity to assert their case before an international body of jurists, such as the Human Rights Committee, for an effective remedy. If the Government will not bring home all the rights guaranteed by those instruments, by incorporating them into domestic law, they could at least allow the rights to be exercised on the international plane, as did Harold Wilson's Government from 1st January 1966 in relation to the convention. I hope that the Government will reconsider the case for doing so soon so that we can celebrate with them next year.
The new Labour Government are too fond of invoking the "principle of unripe time". That, as

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F. M. Cornford wrote in his satire on university politics some 90 years ago, is the principle
"that people should not do at the present moment what they think is right at that moment, because the moment at which they think it right has not yet arrived".
As Cornford also observed,
"Time … is like the medlar; it has a trick of going rotten before it is ripe".
7.55 p.m.
Lord Dholakia: My Lords, I welcome this debate, and congratulate my noble friend Lord Lester of Herne Hill on raising some important issues today.
I wish to concentrate on matters relating to the International Convention on the Elimination of All Forms of Racial Discrimination.
My noble friend's record on race relations is unique. I remember his contribution in the late 1950s and early 1960s, when, as a member of CARD, the Campaign Against Racial Discrimination, he did much work to bring about awareness of the extent of racial discrimination in this country. I remember that he promoted the first Anglo-American conference in 1967, which was chaired by the then Archbishop of Canterbury, Dr. Michael Ramsey, and which was the forerunner in establishing comprehensive race relations legislation in this country.
It was no surprise to many of us that when my noble friend Lord Jenkins of Hillhead was Home Secretary my noble friend Lord Lester was appointed his special adviser. The 1976 Race Relations Act bears the hallmark of his efforts in this field. When we add to this his record on human rights we see that he should be listened to with great respect, because he makes sense on matters of equality of opportunity and the elimination of all forms of discrimination.
Let me stress what we all know. The United Kingdom has signed, but not ratified, several important protocols to the International Convention, which enhance the protection of human rights. It should therefore be no surprise to anyone that without ratification those protocols remain non-binding on the United Kingdom. That has left us without international remedy. What we now do is to submit periodic reports on the legislative, judicial and other measures that the Government have taken in order to give effect to the International Convention on the Elimination of All Forms of Racial Discrimination. In other words, where British legislation is silent we are left without international remedy.
The international convention we are all talking about is the great theme based on the United Nations Charter and other instruments, both national and international, concerned with human rights and civil liberties. The bottom line is about equality.
I simply want to concentrate on one issue: Part 4 of the International Convention on the Elimination of All Forms of Racial Discrimination. I need not spell out all the details. It is sufficient to say that the term "racial discrimination" means any distinction, exclusion, restriction or preference, based on race, colour, descent or national or ethnic origin, which has the purpose or
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effect of nullifying or impairing the recognition, enjoyment or exercise on an equal footing of human rights or fundamental freedoms in political, economic, social or cultural life, or any other form of public life.
I must admit that we have a record in this area which is the envy of the western world. This is not denied. There has been a long, slow process of race legislation introduced in 1965, 1968 and 1976. It would be wrong not to admit that the Government are committed to the elimination of all forms of racism and to the development of policies which address racial discrimination, intolerance and violence. We all subscribe to a society in which every individual, whatever his or her racial or ethnic origin, is able to fulfil his or her potential through the enjoyment of equal rights, opportunities and responsibilities.
But, despite this enviable record, there are some crucial gaps in the way in which we tackle racial discrimination in this country. This is particularly so when discrimination surfaces in public bodies. Let me explain. The last Race Relations Act was passed in 1976. It established the Commission for Racial Equality and charged this body to eliminate racial discrimination and promote equality of opportunity. It has also been given the task of reviewing legislation to ensure that it is effective.
We all know that in the past 23 years the commission has reviewed and reported to the Government on three occasions about the inadequacies and flaws in the current legislation. One particular concern is the exemption granted to public services.
Of course, I am aware that as a response to the Macpherson inquiry, the Government are committed to removing this anomaly and bringing all public services within the scope of the race relations legislation. To the credit of the Home Secretary, he established the Macpherson inquiry which highlighted the extent of racism in one of our public services, the police. The previous Home Secretary steadfastly refused to order an inquiry despite the pleas made by the Lawrence family, the Commission for Racial Equality and a good number of other organisations. Of course, he was entitled to do that but if that attitude had prevailed and the same administration was in power now, would we have ever found out the extent of racism and racial discrimination, as highlighted in the Macpherson Report?
If, on the other hand, we had ratified several important protocols, there would have been an opportunity for individuals to submit complaints or communications to the United Nations Human Rights Committee. All the European Union member states, except the United Kingdom, allow for individual petitions to the United Nations Human Rights Committee. By not ratifying the protocol, the UK Government do not fully ensure that an effective remedy is provided to all victims of violations of the rights contained in the International Covenant on Civil and Political Rights.
We have a sympathetic Minister in the noble Lord. Lord Williams of Mostyn. He stands for all that is decent in our multi-racial society but governments come

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and go. We need to ensure that effective remedy is provided so that governmental actions can be challenged by individuals.
I said earlier that it is now over two decades since Parliament put the. Race Relations Act on the statute book. The Government's intention is not in doubt. It is implicitly to assert the right of all individuals to be free of discrimination and the positive value of good relations between different groups. The Commission for Racial Equality has argued on a number of occasions that the law falls short of this promise. Legal action and formal investigative powers have in most cases served as the trigger for change. There has been measurable progress in tackling discrimination over these two decades. The value of legislation has been well established. The vast majority in Britain supports an inclusive society, yet reality falls short of this vision. Inequality, prejudice and racial discrimination are still a reality in the lives of many people. The law as it stands today has several weaknesses as identified by the Commission for Racial Equality.
Perhaps I may cite them. It leaves many people who are aware that they have been racially discriminated against unable to secure justice. It provides no incentives to encourage institutions, public or private, to end discrimination and implement good practice. Although the Act properly raises the expectation that racial equality objectives are basic to the approach of Parliament and the Government, the Act does not in fact take precedence over other legislation: Parliament can continue to pass discriminatory legislation and important areas of government activity are exempt from the provisions of the Act. While the Act gives a duty to local authorities to have regard to the promotion of equality of opportunity in carrying out their functions, it leaves this duty unenforceable, with the result that it continues to he ignored, even flouted. Confusing and limited provisions for positive action mean that this is little practised. Since a House of Lords ruling in 1984, the commission face obstacles in embarking on formal investigations which prevent it from using its power as effectively as Parliament originally intended.
I am aware of the Government's stance on these matters. The only confirmation we have so far is that all public services will be brought within the scope of the discrimination legislation. We need much more than that. Very shortly we will deal with asylum and immigration legislation. Immigration legislation is, by definition, discriminatory on grounds of nationality or citizenship. Since the case of R. v. Entry Clearance Officer Bombay, ex parte Amin (1983) it has not been possible to challenge immigration practices under the Race Relations Act. To give precedence to the Race Relations Act would mean that, in future, when new immigration legislation is likely also to be discriminatory on the grounds of race, colour or ethnic origin, this would need to be justified when it was proposed. But the indications given by the Government are that that is not on offer. It has been accepted that the actions of the Immigration Service, like those of the police and other public bodies, pertaining to racial discrimination will be subject to the provisions of the
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Race Relations Act, but that will not apply to immigration and asylum legislation promoted by the Government.
There is another major anomaly. Religion is not covered by the Race Relations Act, except in Northern Ireland. Again in one of its reviews, the Commission for Racial Equality sought to open the debate on the need for legislation to prevent religious discrimination. What has been the Government's stance on that issue? Perhaps I may quote what the Government have said:
"Groups are entitled to protection under the Race Relations Act if it can he demonstrated that they have suffered on racial grounds. It is for the courts to determine that a particular group constitutes a racial group within the terms of the Public Order Act 1986 or the Race Relations Act 1976. While the courts have not to date developed much case law under the Public Order Act, a number of cases have arisen in the civil law under the Race Relations Act. As the civil law currently stands, Jews and Sikhs arc considered as a racial group under the Race Relations Act, but not, for example, Moslems, Christians or Buddhists. The case law on this in both the criminal and civil law area is, however, still developing".
The Government are obviously sympathetic to religious groups on this issue, but say that there is no straightforward solution. One must give credit where it is due, and the Government have recognised the grave harm caused to whole communities by racially motivated crime. The Crime and Disorder Act takes the religious factor into account in the criminal offence of racially aggravated violence. We certainly welcome that.
The point that I am trying to make is the importance of having an international remedy when our own legislation is lacking in its anti-discriminatory provisions. We should ensure that we have ratified important protocols which will enhance the protection of human rights. We cannot claim a proud record on anti-discrimination issues if the international remedy is denied to individuals.
8.7 p.m.
Lord Cope of Berkeley: My Lords, the noble Lord, Lord Lester of Herne Hill, has once again done us a service in drawing our attention to these matters. He set out the history of the various covenants and conventions in some detail. He has great expertise in, and enthusiasm for, these causes and he has shown this over a number of years. I shall not try in any way to match his expertise—and, as will become clear, I do not entirely share his enthusiasm.
In short, I think that the Government are right not to rush these matters. They are right to consider them most carefully. No doubt in due course they will come forward with proposals to Parliament in this area, but I do not want to be counted among those who would press them to do so before they feel that they are ready.
My main experience in this area comes from my time as a Minister in Northern Ireland, with particular responsibility for the security situation. At that time, we faced a small number of very determined and extremely sophisticated terrorists who used the most vicious methods, partly to prevent their members being successfully prosecuted and brought before the law. They succeeded in making the proper working of the law very difficult indeed. They also used every

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opportunity provided by both domestic and international law, where possible, to further their own cause. The previous government, like the present one and our predecessors, went to very great lengths to ensure so far as we could human rights in every respect. We reported extremely fully to international bodies on this matter. I am in no doubt at all that the powers which the noble Lord seeks could and would have been used by such terrorists to further their own cause and to make life much more difficult for those fighting for democracy itself because that is what the conflict is about.
The Northern Ireland conflict is sometimes represented as a religious struggle which might fall within the terms of religious discrimination. It is not a religious struggle in the sense of being about religious controversy or doctrine. Indeed, the Churches on all sides have condemned the terrorists of their own persuasion as well as other terrorists of apparently different religious persuasions, and asked them not to pursue their methods. I do not believe that in any real sense it is a religious struggle, but it could certainly be represented as such. Frequently, in a form of shorthand, it is represented as a religious struggle in the newspapers and in comment. It is this kind of misuse of the powers which should make the Government reflect very carefully on what they are doing.
Lord Lester of Herne Hill: My Lords, I believe it was a Conservative Government that wrote into the Northern Ireland constitution legislation in, I think, 1972 that there should be no religious discrimination, gave effective legal remedies for religious discrimination and made it perfectly plain that any religious discrimination or torture would be wholly contrary to the law of the land. Therefore, what does the noble Lord fear in the mechanisms under the covenant and the conventions which could be abused and exploited in the way that he had suggested?
Lord Cope of Berkeley: My Lords, the noble Lord is quite right. I referred in extremely general terms to our efforts to ensure human rights. I included the kinds of provisions that the noble Lord referred to. However, I fear that international tribunals would be used for propaganda purposes to some degree in order to bring additional international pressure on the United Kingdom Government as regards the struggle in Northern Ireland.
I do not want to dwell too long on the subject of Northern Ireland. We all hope that the present situation will be advanced and that we shall get what is described as peace becoming permanent and that we shall not return to the kind of situation that prevailed when I was a Minister there. Had these provisions been available at that time I believe that they would have been used as a propaganda weapon.
In addition to those factors, the United Kingdom already has important legislation, not least that to which the noble Lord has referred. There is also legislation on race relations generally. The noble Lord, Lord Dholakia, drew attention to that. I have always understood that our law compares extremely favourably with the legislation of other countries. In those circumstances it does not
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seem to me that there is a great need to advance too quickly on that front. I am not necessarily against advancing, but I am not going to join in pressing the Government to do so before they have had the opportunity to reflect.
The general point is also relevant. The Government are in the process of taking through Parliament many extremely sweeping changes to our constitution. They are doing so at very high speed in many respects. I believe that changes to the constitution should take place more gradually. When the Government are ready, no doubt they will put proposals before Parliament. It may be that when he replies the Minister can give us a clearer idea of the timescale that the Government have in mind. We shall of course consider the proposals carefully. As I say, I am not pressing the Government to produce their measures before they are ready to do so.
8.15 p.m.
Lord Williams of Mostyn: The noble Lords, Lord Lester of Herne Hill and Lord Dholakia, were uncharacteristically gloomy this evening. There was a shade of reproach which I am happy to deal with as regards the fact that the Government have dragged their feet. We have been in government now for two years. In that time we have provided a devolved parliament for Scotland; a devolved assembly for Wales; and new constitutional arrangements for Northern Ireland which were supported by over 70 per cent of those in the North and by over 90 per cent of citizens of the Republic. In addition, there was the Human Rights Act. I pay credit to both noble Lords and in particular the noble Lord, Lord Lester of Herne Hill, for the very long struggle that he engaged in for many years past. That legislation is on the statute book. An entirely novel constitutional device is to fetter executive power. I believe that the key to devolution is not simply the shorthand devolution to assemblies. The whole of our programme is about the devolution of power to the individual, which is much more significant.
I imagine that there will be an announcement about a freedom of information Bill within the next few days, which I have promised on a number of occasions would be available for pre-legislative scrutiny by the appropriate committee in the other place chaired by Rhodri Morgan MP. The Crime and Disorder Act is already on the statute book and will change almost unrecognisably the way in which we deal with the treatment and prevention of crime, particularly in the young. There is also the Data Protection Act. Its name is not on the lips of everyone, but it is a very important piece of legislation dealing with civil liberties. As the noble Lord, Lord Cope of Berkeley, pointed out, it will be remembered that at the moment we are engaged in the wholesale reform of this House, which will be the first successful effort this century. Without being unduly boastful, that is not a bad record for two years.
The noble Lords, Lord Lester and Lord Dholakia, referred to the comparison which might be made as regards our relationship in the Council of Europe with those who have signed "pieces of paper". I am not being dismissive of important treaty obligations. I was there for the 50th anniversary last Friday. Without being

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unduly chauvinistic, but with a decent regard for our own achievements in this country, whatever conventions have been signed by many of our colleague national members in the Council of Europe, I welcome in many respects a comparison with what they have actually delivered in terms of the protection of human rights for their citizens with what we have delivered in terms of judicial protection, lawful protection and access to remedies. There is no comparison between our achievements and what they have achieved.
We are looking not simply for a signature to important documents, but the actual delivery of positive remedies, preferably, in the first place, within this jurisdiction. I deal with the specific point made by the noble Lord, Lord Lester. We are not undermining the working group of the Council of Europe on the draft additional protocol. It is being considered by a committee of experts at the moment. The Council of Ministers has yet 10 consider the issue. We have not taken a position for or against the protocol. We have taken a prudent decision to wait and see what is the text and to consider it before coming to a conclusion.
The noble Lord's Question to the Government is whether we will reconsider our refusal. We have not refused to take the course of action that the noble Lord wants. I stress again that we have not closed the door on acceding to treaty obligations referred to by both noble Lords on the Liberal Democrat Benches. We are preparing for the implementation of the Human Rights Act.
I believe I can say without exaggeration that the preparations needed fully to incorporate into our systems not simply the Act but the culture behind it are the biggest single effort in the context of public administration that has ever taken place in peacetime. That may sound overblown but I shall develop my theme shortly. Jack Straw asked me to chair the implementation group. We have not cast the net narrowly. For example, we have on it John Wadham, Francesca Crew and Sarah Spencer, who represent organisations that have a very good record here. We have senior represeltatives of the police, the Crown Prosecution Service, our colleagues in Scotland, Wales and Northern Ireland, the Bar Council, the Lord Chancellor's Department and local government. We are preparing for the efficient introduction into our systems and culture of something that in 15 years' time will be regarded as the flagship Act of this Government which brings about a fundamental and deeply subtle change to the way that we do our business and think.
At the moment officials are preparing core guidance—I pay tribute to them because it is extremely difficult work—for departments and public authorities. We have under way a programme of public information and dissemination of rights and responsibilities at different levels so that all our fellow citizens, whatever their positions or capacities, will know that these rights are there for them.
As the noble Lord suggested, we could have proceeded in a different way. I believe that we are going forward in the right way. We have to train the courts, for which the budget is available. It is notoriously well known that most of the challenges, perhaps 75 per cent,
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will arise in the context of criminal cases. The magistracy must be trained since it deals with substantially more than 90 per cent of the cases in this country in the criminal jurisdiction. The judges must also be trained properly, and the Judicial Studies Board will see to that. I do not believe that it is being backward. Whenever I have made approaches on behalf of colleagues from other jurisdiction who are interested in benefiting from our experience I have always had a most generous response from the board.
Even within the context of the Home Office perhaps the short logistical description that I give indicates the amount of work that we have to do. We must look at every subsisting Act of Parliament and statutory regulation to see whether over the years—sometimes centuries—any relevant Bill that has a connection with the Home Office is convention compliant. That is not the work of a week or a month; it is an extremely intensive, difficult task. We must look at every system that operates within any part of the Home Office empire.
I take almost at random the example of the Prison Service. We must ensure that for every practice in that service it is possible to assert that it is convention compliant. We must also make absolutely certain that all human rights described, defined and guaranteed in the convention are available within every government department. Further, we must advise our colleagues in all public authorities as to what they must do. I believe that that is a small price to pay in order to get it right internally before we go to external remedies. After all, if we provide an effective internal system of remedies it should satisfy the overwhelming majority of legitimate complaints and provide a decent platform for those complainants who find that they have no domestic remedy. I do not regard that as an ignoble stance but a practical way of taking matters forward.
Lord Lester of Herne Hill: My Lords, I am grateful to the noble Lord for giving way. I have never suggested any ignoble stance at all. I wonder whether he can clarify two points. The first is why the Government have not yet set a date for the judicial training programme so that at least we know that there will be a beginning and speedy end to the process in order to bring into force the Human Rights Act. Will the Government set a date for that programme? Secondly, am I right in thinking that there will still not be any effective remedies on the international or domestic plane for the kinds of discrimination that are not covered by domestic law, and that that is the real gap which we will not fill unless we accept the right of petition?
Lord Williams of Mostyn: My Lords, as to the JSB I shall certainly make inquiries about its timetable. It is not an organisation with which I have a direct connection, but I shall find out its timetable. As I have said on earlier occasions, a significant budget has been provided by the Lord Chancellor's Department. However, one is talking about the training of many thousands of magistrates, justices' clerks, Crown Court judges, recorders and assistant recorders who will have to deal with these points on an everyday basis. I repeat that these are utterly novel points for many who have to

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carry out these judicial functions. I believe I can say with the concurrence of the noble Lord that when many of those presently in judicial office were trained this matter was not taught in university syllabuses or, to our reproach, as part of the Bar or Law Society courses. This will be a complete culture change.
One matter that strikes me as I go round the country urging people to get themselves ready for implementation is how strange it is that we have discussed these things so often, at such great length, and have become accustomed to thinking in ways that are appropriate to the new Act, but many practitioners, whether judges, magistrates or advocates, have not begun to attend to that.
As to the second point, I believe that I can fairly refer to a Written Answer to the noble Lord. I do not dispute his point that there may be remedies that will not be immediately available. However, in response to his helpful Written Question about the Joint Committee on Human Rights, I said:
"The terms of reference for the Joint Committee have yet to be finalised and proposed to both Houses. However, it is envisaged that they will include the conduct of inquiries into general human rights issues in the United Kingdom". —[Official Report, 31/3/99: col. WA 77.]
It seems to me—it is a matter for both Houses and those who have the infinite privilege of serving on a joint committee—that the kind of questions that have
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been put by both noble Lords are those that that committee may wish to consider. I did not intend to cross swords with the noble Lord, Lord Lester of Herne Hill. Objectively, I do not believe that we have adopted an ignoble stance. It has taken a little longer to get things ready than I would have contemplated and the Home Secretary and the Lord Chancellor would have wished. It is a vast effort. We are determined to get it right, and I believe that we have the energy and commitment to do that.
In specific answer to the noble Lord—he has been extremely courteous in all his questions and correspondence with me—we have not refused to make available the remedies but have taken a course that we believe to be right. We must do the best we can to get the perfect solution to our own incorporation. I have always believed that once we start on this journey there is no possibility of turning back because the moral and philosophical transformation has already begun. One cannot get away from that.

Local Government Bill
Reported from the Grand Committee with amendments: Bill ordered to be printed as amended.
House adjourned at twenty-eight minutes past eight o'clock.