Lords Sitting of 12 April 2000

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

Post Offices: Payment of Welfare Benefit
Baroness Byfordasked Her Majesty's Government:
What progress has been made in paying welfare benefits through post offices.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, starting in 2003 we will be moving to a more secure and efficient method of paying benefits through automated credit transfer—ACT.
There will be no change to existing methods of benefit payment before 2003. And we have made clear that people will still be able to collect their cash from post offices if they wish to do so both before and after the move to ACT in 2003.
Baroness Byford: My Lords, I thank the Minister for that response. The many thousands of people gathered in Central Hall will be glad to hear that they will continue to receive benefits in the same way after 2003.
However, are the Government concerned that, with payments being made through the new system, post offices will become unviable? At present post offices receive 40 per cent of their income through handling welfare payments. It is a great concern.
Baroness Hollis of Heigham: My Lords, I, too, share the noble Baroness's anxiety that we do everything we can to ensure the survival of a national network of post offices. I cannot believe that anyone in this House dissents from that view. However, if the Government do nothing, we shall continue to see post offices closing. About 20 per cent of the network has closed over the past 25 years. The reason is that people are voting with their feet. Every year 500,000 people stop using the Post Office's paper order book Giro system and 500,000 new people receiving benefits choose to use ACT. So if the Government do nothing, the post office network will shrink even further.
Instead, the Government are in discussions with POCL and post offices. We shall fairly soon receive a Performance and Innovation Unit report on ways to strengthen in particular the rural post office network so that it sees bank closures not as a threat but as an opportunity to take on some of those services. That is why the Government have been assisting POCL, through the Horizon programme, to spend nearly £½ billion to produce an on-line service facility to those post offices—some of them are not even on electricity
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at present—so that they can have electronic transmission and can provide banking services and help.
Lord Lipsey: My Lords, I wholly endorse everything that has been said about the virtues of rural post offices. However, does the Minister agree that they are more likely to thrive under what will he an innovative report from the PIU than from the declining and distorted subsidy they receive at present by being used to pay benefits?
Baroness Hollis of Heigham: My Lords, it is an opportunity not a threat. People are .voting with their feet. Post offices will decline if they do not offer the mode of payment that most people wish. At present, for example, the average cost of a transaction payment to a postmaster for a DSS transaction is 13p. If, instead, a post office handles a bank ACT transaction, the average cost to a postmaster is 17p. There are huge opportunities. Over half of all our villages have a post office; only 5 per cent have a bank. If we can facilitate the entry of post offices into the Horizon Link electronic transmission age, there is a massive opportunity to offer financial services to those at present excluded from them in our rural society.
Lord Geddes: My Lords, will the changeover in 2003 require positive or negative action on the part of beneficiaries who want to continue to receive their money from sub-post offices?
Baroness Hollis of Heigham: My Lords, we shall discuss the issue with those people. But even if one has a bank account but wishes to continue to receive one's cash paid through the post office after 2003, one can do so.
Earl Russell: My Lords, is the Minister aware that income derived from payment of benefit is at present essential not only to the viability of the post office but also to the income of the sub-postmaster'' Can she offer any concrete proposals which will make the job of sub-postmaster viable after a sharp diminution in the income derived from benefit?
Baroness Hollis of Heigham: My Lords, the noble Earl's question presupposes that there will be a sharp diminution in income and that in turn depends on the willingness of sub-postmasters to take on some of the banking facilities through the Horizon project which will make each transaction more remunerative to them. The Government are doing their bit to ensure that post offices are electronically linked up in order to undertake that role when banks are withdrawing their provision of such services. We are therefore meeting that part of the requirement.
Secondly, POCL is rearranging its payment to post offices and sub-postmasters so that those with the lowest turnover have a higher minimum payment before they receive a charge per transaction. Obviously, we support that.
Lord Higgins: My Lords, are we to understand that the Government have not yet decided how the option to continue to receive cash through the post office will work? Will she state clearly by what method people will continue to be able to do so?
Baroness Hollis of Heigham: My Lords, we expect there to be at least three possible options. The first is through the Horizon project which links up all post offices on line for the electronic transmission of money. That is secure, safe, cheap and convenient. An ACT transaction costs us 1p while a Giro transaction costs us —1.36. That Horizon platform means that post offices can offer banking facilities. They are already doing so for Alliance & Leicester, Lloyds TSB and Barclays, and other banks are considering that course. As regards such facilities, they receive a transaction payment, which is more than they receive for DSS payments.
Secondly, depending on the PIU report, post offices may be able to offer a universal banking service through the same systems. Thirdly, banks are to install about 3,000 cash machines.
Earl Peel: My Lords, does the Minister agree with the comment made by her honourable friend in another place that between 400 and 500 rural post offices are likely to close within the next year? If so, would she not agree that that would have a devastating effect on rural communities?
Baroness Hollis of Heigham: My Lords, I should be most upset if it did. An average of 250 post offices have closed in each of the past two years because the network is shrinking. That is because people are choosing to use ACT. Fifty-four per cent of people who become pensioners choose to have their pension paid by ACT through their bank account. The Post Office is losing 500,000 customers a year. Therefore, if the Government do not encourage post offices to provide banking facilities through the new electronic systems, post offices will wither. That will not be because of anything the Government have done, but because customers have taken their business elsewhere.
Lord Ezra: My Lords, is it not a fact that the Government originally intended that welfare payments would continue to be made through post offices and that a sudden change in that policy has created uncertainty and grave doubts among sub-postmasters and their customers about the future?
Baroness Hollis of Heigham: My Lords, I am not sure whether there has been a misunderstanding of the Government's policy. The Government have always made it clear that cash can be received by customers from post offices both before and after 2003, even if they also have a bank account. If customers choose to have money paid through their post offices they can do so.

Social Services for Disabled People
2.46 p.m.
Lord Ashley of Stokeasked Her Majesty's Government:
What has been the effect of the judgments in the cases of Regina v. Gloucestershire County Council and the Secretary of State for Health ex parte Barry and Regina v. Gloucestershire County Council and another ex parte Barry on social services for disabled people.
Lord Burlison: My Lords, the House of Lords judgment in the Gloucestershire case did not change the law, but confirmed the legal position to be that which the Department of Health has always believed to apply; namely, that authorities may take their resources into account in assessing the needs of a disabled person and deciding what services to arrange.
Lord Ashley of Stoke: My Lords, is my noble friend aware that the significance of the judgment is that it allows local authorities to plead poverty when cutting or eliminating community care for disabled people? A recent report from the Royal Association for Disability & Rehabilitation confirmed that since the judgment there has been a significant deterioration in the service. It quoted the case of an 86 year-old woman suffering from Alzheimer's disease who was refused a bath or a shower for five years and was forced to have a strip-wash at the kitchen sink. It mentioned other severely disabled people who were pushed to the brink of despair and even suicide.
Regardless of what my noble friend said, is he aware that we want a change in the law, even that interpreted by the Law Lords? We want a law which enables local authorities to do their job without pleading poverty and which forces them to carry out their duty to provide such services for disabled people.
Lord Burlison: My Lords, I acknowledge my noble friend's involvement in this area and I appreciate his concerns. The Government do not believe that the Gloucestershire judgment should have led to changes in the practice of authorities as the House of Lords judgment confirmed what had long been the department's understanding of the law.
Following that judgment, we issued guidance which was used to help to safeguard disabled people against possible misunderstandings of it. That made it clear that the judgment did not give authorities a licence to take arbitrary or unreasonable decisions. It also made it clear that the authorities are still under a duty to arrange services for disabled persons where they consider it to be necessary to do so in order to meet a disabled person's need.
I am prepared to examine the specific cases that my noble friend outlined if he raises them with me outside the Chamber.
Lord Addington: My Lords, does the Minister agree that if the social services fail to meet the needs, they

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will have to be picked up by the Department of Health? Does he further agree that robbing Peter to pay Paul later is not what one would call "joined-up government"?
Lord Burlison: My Lords, there are many areas where the department feels that services should be examined. We realise that there are problems and failures within social services. The White Paper, Modernising Social Services, sets out our plans to overhaul the social services and to create services in which we can all have confidence. I agree with the noble Lord, Lord Addington, that robbing Peter to pay Paul should not be the Government's approach on this issue.
Lord Morris of Manchester: My Lords, is it not a straight defiance of Parliament's intention in enacting Section 2 of my Chronically Sick and Disabled Persons Act to deny housebound elderly people even the right to a bath, now one of the most fundamental human rights that is well recognised in the Prison Service? And is it not totally repugnant to Ministers who are committed to social fairness to see an elderly housebound woman stating,
"My husband and I, both in our 80s, are taken to an old people's home twice a year for a bath. We asked the council to put in a bath but were told there is no money"?
Lord Burlison: My Lords, once again, I appreciate the involvement of my noble friend Lord Morris of Manchester in this issue and I acknowledge the past service that he has given to disabled people. It is sad that on an occasion such as this we need to raise issues of the type referred to by my noble friend. The Government are taking great steps to try to improve services: we are modernising social services and setting up a modernisation fund and Fair Access to care services. The Better care, higher standards national charter sets out a number of proposals to promote the independence of deaf and blind people. I also remind my noble friend that, although the Government are not complacent on this issue, there is a complaints procedure which can be used within local government. I am sure that like many other noble Lords my noble friend will want to ensure that the ombudsman is used, if necessary, in extreme cases in local government, to ensure that cases such as those mentioned are not treated unreasonably.
Earl Russell: My Lords, is the Minister aware that where local authorities face statutory obligations and compulsory spending limits they risk being "damned if they do and damned if they don't"? In the light of that, can the Minister tell us exactly what meaning he attaches to the Government's manifesto pledge to abolish crude and universal capping?
Lord Burlison: My Lords, I have already said that this judgment should not affect the relationship between a local authority and the disabled people who need to make use of the service. So far as the Government are concerned, we are absolutely and positively committed to improving social services
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benefits for disabled people. In order to achieve that, we have consulted the various elements involved, such as Sense, Deafblind UK, the RNIB and the RNID. We are keen that proper consultation should take place to ensure that local authorities are able to cater for, and government are in tune with, the needs of disabled, deaf and blind people in this country.

Nuclear Non-Proliferation Treaty Review
2.53 p.m.
Lord Jenkins of Putneyasked Her Majesty's Government:
Whether, at the forthcoming conference on the Nuclear Non-Proliferation Treaty in New York, they will press for a nuclear weapons convention along the same lines as the conventions now in Force regarding chemical and biological weapons so as to emphasise international commitment to nuclear disarmament.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): My Lords, the Government agree that logically the process of nuclear disarmament ultimately is likely to require the negotiation of a nuclear weapons convention to ban nuclear weapons, just as chemical and biological weapons are banned by the Chemical and Biological Weapons Conventions respectively. Unfortunately, the reality is that the circumstances do not yet exist to make starting such negotiations a practical proposition. Therefore, at the Non-Proliferation Treaty Review Conference later this month we shall press for progress towards more immediate goals such as further deep cuts in the arsenals of the two major nuclear powers, bringing the Comprehensive Test Ban Treaty into force and launching negotiations on a fissile material cut-off treaty.
Lord Jenkins of Putney: My Lords, does my noble friend agree that the very process of expressing a desire to move in the direction of banning would of .itself create the situation that the Government desire and make it an obviously sensible and, indeed, inevitable and right thing to do? Unless that is done, the feeling will persist that nuclear weapons are not quite as bad as biological and chemical weapons and do not need to be outlawed. That kind of comparison is fruitless. I suggest to my noble friend that the necessity for banning nuclear weapons is extremely urgent and should be looked at in the same light as the banning of biological and chemical weapons.
Baroness Scotland of Asthal: My Lords, I understand absolutely the passion with which the noble Lord addresses this issue. We have no problem in principle with the idea of a nuclear weapons convention as the ultimate legal underpinning of a nuclear weapons-free world. However, we cannot wish away present political realities and pretend that negotiations on such a convention could be expected

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to make headway in present circumstances. We agree with the noble Lord that it is a consummation devoutly to be wished but, regrettably, unlikely to be delivered very quickly.
Baroness Williams of Crosby: My Lords, despite the Minister's reply, does she recognise that there are great opportunities for the United Kingdom at the review of the Nuclear Non-Proliferation Treaty? Perhaps I may ask her about two of them. First, can she tell us what will be the position of Her Majesty's Government with regard to the redefinition of the position of India and Pakistan, which are both listed in the existing treaty as "non-nuclear states"? Secondly, can the Minister take advantage of the warm rapprochement—almost a special relationship—between the recently elected President of Russia and our own Prime Minister to press for the Duma to ratify the START II disarmament treaty which now seems a real and exciting possibility?
Baroness Scotland of Asthal: My Lords, I can certainly tell the noble Baroness that we hope that both Pakistan and India will consider favourably signing the treaty. We are urging them as energetically as we can to direct their minds to that. We very much welcome the news that the Russian Duma plans to vote on the ratification of START II on Friday. Obviously, we hope for a positive outcome that will open the way for negotiations with the United States on a START III treaty, promising significant further cuts in the two countries' nuclear arsenals. Therefore, we very much welcome this positive move and we are doing everything that we can to encourage our Russian partners to ratify START II as soon as practicable.
Lord Peyton of Yeovil: My Lords, the noble Baroness referred to political realities. Will she bear in mind how stupid and entrenched those obstacles to progress can be? They will be there for ever unless determined action is taken to combat them.
Baroness Scotland of Asthal: My Lords, we certainly agree that determined action needs to be taken to combat them. That is precisely what we are doing in pushing forward with the conference and trying to make the atmosphere as conducive as possible to a rapprochement, as the noble Baroness has already mentioned. Our energy is devoted wholly to that end.
Lord Chalfont: My Lords, is it not the case that a number of countries which have not signed the Nuclear Non-Proliferation Treaty or ratified it are constructing nuclear capabilities, testing nuclear weapons and producing the means to deliver them by ballistic missiles? Is it not pointless to talk about a nuclear weapons convention while that is the case?
Baroness Scotland of Asthal: My Lords, I cannot agree with the noble Lord, although I of course understand his anxiety. We must push ahead with this as a policy and encourage others to follow us keenly.
Lord Archer of Sandwell: My Lords, does my noble friend agree that there is a serious problem of
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confidence among the non-nuclear powers as to whether the nuclear powers are taking seriously their obligations to negotiate for the abolition of nuclear weapons under Article 6 of the treaty? My noble friend mentioned the possibility of negotiations for a fissile material cut-off treaty. Will there be a vigorous campaign to initiate those negotiations, and would that not be a major step forward?
Baroness Scotland of Asthal: My Lords, the Government understand the frustration of some of the non-nuclear weapon states at the slow pace of progress towards nuclear disarmament. We share it. We have been vigorous in pursuing those matters; we shall continue to be robust in our approach with our partners; and we shall strive to reach a satisfactory conclusion. But we must take others with us. We cannot walk that journey alone.
Lord Howell of Guildford: My Lords, one way to end the growing nuclear terror and the spread of nuclear weapons which is taking place is to develop anti-missile defences which render useless nuclear weapons and nuclear delivery systems. Will the noble Baroness say where the Government stand on the proposals of the American Government to go ahead in July with precisely that kind of development? Are we in Britain to be involved with that development which would be a practical way of meeting the nuclear horror?
Baroness Scotland of Asthal: My Lords, the Americans have been considering that issue, but as yet they have reached no definitive view. We believe that it is important that Britain enters into the debate; considers the opportunity which may be available; and takes those decisions which best befit the security of this nation. We are not at a stage now where we have any particular focused policies which are being advocated. But it is a debate which is causing a great deal of concern.

Federal Europe: Party Policies
3.1 p.m.
Lord Clinton-Davisasked Her Majesty's Government:
Whether they have received any representations from the newly-formed Conservatives Against a Federal Europe (CAFE) and, if so, what has been their response.
Baroness Scotland of Asthal: My Lords, we have not recently received any representations from the Conservatives Against a Federal Europe—CAFE— organisation and have not, therefore, made a formal response.
Lord Clinton-Davies: My Lords, is it usual for Front Benchers of the Conservative Party, or any party, to join an organisation which directly targets Opposition Front Bench policy? Is the main element of its

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approach not simply rejection of the euro but withdrawal from the European Union? Where do the Government stand on that?
Baroness Scotland of Asthal: My Lords, your Lordships will know that the Government are very clear that our interests are best met by staying within Europe. We share the concern expressed by my noble friend that many senior members of the party opposite appear to have a contrary view in relation to CAFE. The Government are absolutely clear that we are in Europe. We are staying at the heart of Europe. Europe is acting and behaving to our advantage, not to our disadvantage.
Baroness Rawlings: My Lords, taking, for example, the federal system as in Germany, Australia and the United States, are the Government in favour of a federal Europe?
Baroness Scotland of Asthal: My Lords, the Government are not in favour of a change in the European status. Europe is doing us very well at the moment and it stays exactly as it is.
Lord Marsh: My Lords, does the Minister not agree that if a multiplicity of countries come together with a single currency and a single interest rate, controlled by a central bank, and with a central parliament, there is no argument about it: a federal system is inevitable? Does she not agree that it is what the Fabians would call the inevitability of gradualness?
Baroness Scotland of Asthal: My Lords, I would not.
Lord Taverne: My Lords, surely the evidence is becoming overwhelming that those in the Conservative Party who wish to isolate Britain from the mainstream developments of Europe are now in control of the Conservative Party. They are gaining in confidence and numbers all the time. Indeed, they number some of the closest advisers of Mr Hague. In the circumstances, is it not regrettable that those pro-Europeans who are still in the Conservative Party, unlike their counterparts in the Labour Party in the early 1970s, and with the noble exception of Mr Kenneth Clarke, the noble and learned Lord, Lord Howe of Aberavon, and a tiny band of brave colleagues, prefer to sit on their hands and keep mum for the sake of party unity rather than speak out in the interests of this country?
Baroness Scotland of Asthal: My Lords, we are absolutely clear that the Labour Party's view is endorsed by the great majority of those who sit on these Benches. We have always welcomed freedom of speech. There are those on all Benches who exercise that with great facility, and long may they do so.
Lord Tebbit: My Lords, is the Minister aware that last week the Home Secretary wrote me a letter in which he said that he was as clearly committed to the doctrine of parliamentary sovereignty as I am? Under those circumstances, can we take it that the Home
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Secretary will resign from the Government rather than consent to handing over the management of our monetary affairs to a foreign bank based in Frankfurt, or was he telling me fibs?
Baroness Scotland of Asthal: My Lords, the Home Secretary was being frank. He always is. We have not surrendered parliamentary sovereignty. We did not do so yesterday. And shall not do so today, or tomorrow. What the noble Lord does, of course, is a matter for him.
Viscount Cranborne: My Lords, is the Minister's right honourable friend the Home Secretary able to explain how it is possible therefore for directives to be imposed from Brussels on the British people without any opportunity for Parliament to amend or refuse them?
Baroness Scotland of Asthal: My Lords, the noble Viscount knows that that is not true. We ate playing a very full part in relation to fashioning such regulations. We shall continue to do so. The attempts now being made to bring about reform will inure to the benefit of all European states, including ourselves.
Baroness Williams of Crosby: My Lords, will the Minister confirm that before Britain joins the European Central Bank, if it does, there will be a referendum of the British people; that the British people will decide one way or the other in the light of that campaign; and that that is the highest sovereignty of all and one which many of us respect? Will she confirm that that is the basis on which we should wish to see Britain eventually join the central bank?
Baroness Scotland of Asthal: My Lords, I absolutely and unreservedly agree with the noble Baroness. The British people will have their opportunity to speak in relation to this matter, and this Government, although I cannot speak for any other, will listen to them.

Financial Services and Markets Bill
Lord McIntosh of Haringey: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the amendments for the Report stage be marshalled and considered in the following order:

Clause 1,

Schedule 1,

Clauses 2 to 20,

Schedule 2,

Clauses 21 to 29,

Schedules 3 and 4,

Clauses 30 to 34,

Schedule 5,

Clauses 35 to 39,

Schedule 6,

Clauses 40 to 72,

Schedules 7 and 8,

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Clauses 73 to 86,

Schedule 9,

Clauses 87 and 88,

Schedule 10,

Clauses 89 to 101,

Schedule 11,

Clauses 102 to 109,

Schedule 12,

Clauses 110 to 129,

Schedule 13,

Clauses 130 to 158,

Schedule 14,

Clauses 159 to 161,

Schedule 15,

Clauses 162 to 199,

Schedule 16,

Clauses 200 to 221,

Schedule 17,

Clauses 222 to 329

Schedule 18,

Clauses 330 to 421,

Schedules 19 to 21,

Clause 422.—(Lord McIntosh of Haringey.)

On Question, Motion agreed to.

Small and Medium-sized Enterprises
3.8 p.m.
Lord Harrisonrose to call attention to the steps being taken by Her Majesty's Government and the European Commission to promote small and medium-sized enterprises in the United Kingdom and the European Union; and to move for Papers.
The noble Lord said: My Lords, welcome to the wonderful world of small business! It is a world in which my family has been deeply immersed for decades. From travel agent to launderette owner, from bookshop manager to licensee, members of my Labour-voting family have done them all. My parents' firm of waste contractors emptied the latrines of wartime London's Hyde Park and the post-war cesspits of Blenheim Palace. We were, indeed, the southern version of "Where there's muck, there's brass", and we were proud of it. We were proud of being members of that unique community of self-made men and women who see romance in striking out on your own, achieving something by your own hands or in the company of others similarly dedicated to make something that works and pays. That is the untold story of business Britain. Welcome indeed to the wonderful world of small business!
A warm welcome has been given by the present Government who recognise the enormous job-generating powers of SMEs. Thus recent Budgets have implemented new all-employee share ownership schemes, new R&D tax credits for SMEs, a new 10p capital gains tax rate, a new 10p rate of corporation tax for the smallest companies, and the making permanent of the first-year 40 per cent capital allowance.
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That is all good stuff, but there is much more to do here in the UK. Perhaps I may highlight three areas. I refer first to banks. The recent Cruickshank report identified the £4 billion per year excess profits which banks make from personal and small business customers by charging too much for money transfers and paying too little for deposits. That, in addition to the continuing closures of banks in Britain's rural towns and inner-city areas, is intolerable. Banks have a social function which, if they only had the wit to see it, lays down the firm foundation of future profits. "Short-termism" is a phrase which should be excluded from the banks' lexicon. For the sake of small firms, the Government should continue to act tough with our high street banks.
Secondly, the Government need to spread the news more widely that small businesses are good for you. At the moment, there is a paucity of new SME formation in poorer parts of Britain such as Wales and Merseyside. There are two few women participating in the drive for entrepreneurs and biases remain against go-getters from the ethnic communities. This scandal is, again, partly attributable to the high street banks. A recent authoritative report by the Bank of England details unwitting discrimination practised by banks in their dealings with the ethnic communities. In that respect, perhaps I may say that I look forward to the contribution of my noble friend Lord Patel of Blackburn in his maiden speech.
We must spread our SME net wider. Perhaps I may highlight the situation in schools today where careers advisers are too often dumb in front of an inquiry as to how a young person might be enthused by the exciting world of small business. I am happy to report that my 17 year-old son's school takes this proselytising job seriously with an active young enterprise scheme. "Back to Business Basics" should be Britain's school motto. Business should not be a dirty word in the classroom. We shall widen the base of those confident to come into business only if we catch our buccaneers young and willing.
Thirdly, I welcome the Government's creation of the Small Business Service which, like the SBA in Washington, will become the still, small voice of small firms at the heart of government. For too long, because of the fragmentation of small firms' representative bodies in Britain, that authentic voice has been drowned out; indeed, while ignorant armies clashed by night.
But what of the world beyond Dover beach and Britain's shores? What of our relationship with the European Union and what of the promotion of small businesses in the burgeoning single market? Are we yet blood brothers with our Corsican, Catalan and continental cousins? Well, we are getting there; the more so because our Government take a sensible and pragmatic stance on advancing Britain's cause in Europe. Perhaps I may illustrate that by reference to one of the most tormenting problems of running a small business today: late payment of commercial debt.

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Recently, our Parliament enacted legislation to outlaw those who cheat early by paying late. An estimated £20,000 million is lost each year to small firms; it might otherwise provide cash flow to help them to survive, breathe and grow. The good news from the Forum of Private Business is that the 1998 Act is beginning to bite. The availability of a statutory right to interest is beginning to inhibit foul play, as it has in other European Union countries such as Sweden where such legislation has existed since the 1970s. But now there is another problem put to me by a Cheshire businesswoman who deals with Swedish suppliers but sells value-added goods on to a big firm locally. She is caught by the double whammy of having to pay early to her supplier in Sweden while receiving payment late in Britain, with attendant cash-flow crises. In other words, British legislation is no longer sufficient by itself to shelter and encourage this and other small businesses who want to carry Britain's flag of enterprise into Europe's single market.
That is why I am pleased that the Government are currently supporting legislation to eradicate the scourge of late payment throughout the whole of the European Union. It must be the priority of government to work with their partners, and with the European Parliament, a co-decision maker on this issue, to clear away the bracken that impedes creation of a true market. Indeed, if there was one abiding message that I would want this debate to carry today, and which my late payment vignette vivifies, it is the imperative for Britain to recognise the primacy of the single market and for the Government to redouble their efforts for its completion. The single market is the magic carpet on which all our hopes ride, and none is a carpet-bagger who seeks that goal.
In 1997, during the British presidency of the European Union, the Government did indeed reaffirm their desire to drive through completion of the single market. More recently at Lisbon, encouraged by Premier Blair, the European Union has renewed its efforts to help small businesses: first, by agreeing to the establishment of a charter for small firms and, secondly, by providing 1 billion euros through the European Investment Bank for SMEs to access vital venture capital. Welcome, too, is the introduction by the Lisbon Council of a European diploma for basic IT skills and the proposal for a rapid agreement on an effective legal framework for e-commerce within the EU. All those initiatives will lubricate the single market.
I rehearse these points because too often in this country we denigrate, deny and despise the work of the European Community. We allow ourselves to bathe in a sea of scepticism about Europe and all things European. The unsought effect of this tidal wave of scepticism is to demoralise British business in its engagement with continental competition. There comes a point where even the most fervent entrepreneur begins to believe the rhetoric that, in the EU, bananas are bent and cucumbers curled with the sole purpose of blighting Blighty.
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Chief quarry in the sights of the anti-marketeers is the European Commission, which has done sterling work in tackling, for instance, the vexed question of red tape within the single market. The BEST and SLIM programmes reform old rules and simplify new legislation to the benefit of all our businesses. But little acknowledgement is given to the Commission for undertaking the mammoth task of distilling 15 sets of national rules and regulation into one set of EU law which, clearly understood, monitored, policed and enforced, provides encouragement to all potential market participants. Give me, any time, one set of red tape, not 15. The true burden on business lies in retaining 15 unreformed markets—a tangled undergrowth that must be swept away.
To continue that scorched earth policy for business, I look forward to the new programme on SMEs, shortly to be published by the European Commission—a programme foreshadowed by the 1999 report of your Lordships' House entitled Promoting Small and Medium Enterprises (SMEs) in the European Union from the committee chaired by the noble Lord, Lord Geddes. Contained therein are examples of excellent EU initiatives broadening; the base of new entrants to small firms. Women entrepreneurs are a particular resource which we have undervalued as, indeed, are the ethnic minorities, the young and the disabled. I shall place a summary of each of these EU schemes in the Library. Each has the seemingly obligatory acronym: SAFE, EYGE-NET, WEEN, save one entitled "Cross-Border Training: Euro-advisers and Women Entrepreneurs". Here, a network of Euro-advisers is made available to women entrepreneurs to help on all aspects of trading in the single market. Not only are competent Euro-advisers thus created and women entrepreneurs helped, but a booklet is also produced which ensures that useful knowledge gained by this project is passed on to future aspirants. Incidentally, an interesting fact on which to ruminate is that, while women are woefully underrepresented in small businesses, research nevertheless suggests that SME survival rates are higher among women entrepreneurs than men.
I conclude with the single currency. I shall not rehearse the arguments in favour of the euro for those SMEs—often high-tech, highly-capitalised companies at the cutting edge of IT and the Internet—which are already trading in the single market and which readily appreciate that the euro facilitates business. Such firms regret the obligatory entrance fee that has to be paid every time they enter the single market via the pound sterling. I want to comment on the lifestyle small firms, often run by one dedicated entrepreneur, which shy away from any thought of entering the European scene. They, in turn, are the group most sceptical of the euro, yet they also stand to gain from Britain joining the euro. For them, a stable, economic environment is the sine qua non of domestic business success. Mortgages and the cost of borrowing money are their top financial concerns. This longed-for stability is precisely what the euro-zone is now providing to small businesses throughout Europe. Inflation, interest rates

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and hence the cost of money—each has been lower in the European Union than in Britain for some time; an enormous perk to small and micro-businesses alike.
Of course, in Britain we have had the advantage of the Chancellor's superlative stewardship of the economy as a whole to see us through the problematic times of a strong pound. But when the tectonic plates of dollar, yen and euro grind anew into fresh configurations over the next few years, it may well be the pound that suffers financial shakes and shudders. Then, micro-businesses throughout Britain will resent the second-hand philosophy, falling off the back of Euro-sceptic lorries, which tells them that the euro is bad for Britain. Such cod rhetoric will not bring Britain cash on delivery. The cabotage of money benefits all British businesses, not just road hauliers.
I come to journey's end. Small businesses are big business for Britain today. I hope that the ensuing debate will confirm that truism and bring forth other truths which will lead us at its conclusion to celebrate the wonderful world of small business. My Lords, I beg to move for Papers.
3.22 p.m.
Baroness Byford: My Lords, small and medium-sized enterprises are often spoken of in the context of manufacturing units located mainly in towns and employing 50 to 100 people. In rural areas there are often only between one and 10 people engaged in various activities such as farming, agricultural contracting, livery stables, village sub-post offices and so forth. As a woman—the noble Lord referred to the need for women in business—I declare a former interest as a small business woman twice over: first, as a poultry farmer by trade; secondly, by choice as a tennis coach when I ran a tennis school and in fact enjoyed the experience greatly.
I make no apology that I shall home in mainly on the post offices during this debate. After all, they are small businesses. As recently as this morning a member of the board of post offices was explaining how they are converting 300 post offices a week to the new computer technology. By mid-2001 we shall all be able to carry out simple banking transactions at any post office. Deals to do this have already been set up with the four major banks. Negotiations are under way to provide the same service for the remaining big banks, most of the medium ones and some of the building societies.
That is very good news. But in the same programme a lady sub-post mistress said that 85 per cent of all benefit claimants wanted to be able to claim their cash through their giros at the post office. So there is also concern that the Government intend to stop the benefit payments going directly through the post offices and will encourage claimants to have their claims paid through bank accounts. That move will adversely affect small business enterprises in both towns and cities but particularly in the rural village areas. Post offices will be directly affected. Many of them have already gone and will continue to go out of business. This means that people from other small
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rural businesses will have to go into town to post nonstandard letters, parcels and packages and obtain supplies of petty cash, and the village shop may go too.
We have already seen that farmers are leaving the land at the rate of 20,000 per year. They do not receive redundancy, severance pay or a golden handshake. Many have their pensions in the form of livestock, so they lose that too. A similar fate awaits some of our sub-postmasters if this Government persist in their plans to remove the payment of benefits through post offices. A sub-post office franchise has to be bought and carries no rights of compensation for loss of revenue, even if it is caused through the actions of officialdom or government. Nor do the franchisees qualify for redundancy, far less for loss of value of their main asset, their home, which they may have been building up to fund their retirement as well.
Around 8,000 people will be affected, almost the same number as are likely to be deprived of their employment at Longbridge. There, however, the similarity ends. At Longbridge the Government may be blameworthy for not asking the right questions or for not devoting enough time to the situation, but they are far from the sole cause. However, the mainspring of the threatened post office closures is the Government's repudiation of the original Horizon project. Longbridge workers are overwhelmingly urban-based dwellers. The sub-postmasters who are most likely to be affected are primarily based in rural areas.
Ancillary staff are also involved in post office closures. As these are small businesses, many will be part-timers. Estimates of the numbers vary, but between 12,000 and 16,000 people are likely to be affected. Some 20,000 or more job losses, mainly from villages and small towns, will have a serious impact on rural communities. There will be a loss of ability to buy stamps, to post parcels, to pay bills—particularly important for those who, for whatever reason, do not have a bank account but obtain cash and coin from the post office. Where the post office subsidised and justified a village shop, the ability to buy the essential needs of survival may also be threatened, though in response to my Question I was surprised that the Minister did not agree with that.
The problem is compounded by the decision of several banks (but particularly Barclays in recent times) to close large numbers of branches in large villages and small towns. The net result of the two actions will be to force rural dwellers to spend more time, money and fuel travelling to larger conurbations to do even the simplest things—buy a newspaper, post a birthday card, obtain sugar and milk or pay the council taxes and other bills.
Those people with full faculties and with a current driving licence may not perceive the problem. But pro rata there are many more older people who live in rural areas than in towns. Many are widows living on their own on small means, some without cars and often with insufficient money to travel on a regular basis to town. Quite apart from the fact that they do not want to put their money in the bank, they do not pass the necessary

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credit checks that the banks carry out. They do not have any substance for which the banks may try to provide added value. When the day arrives that we are all charged for having a credit account, these ladies— and some gentlemen—will have to pay for the privilege of having a bank account that they did not want in the first place.
A further problem is emerging in that many of those small enterprises which combine sub-post office and village shop sometimes act as collection points for repeat prescriptions. Young mums with no car available during the day, elderly people whose driving days are over and the chronic sick of all ages use such facilities. Their usage is set to rise dramatically, as I understand that GPs will now be restricted to monthly prescriptions instead of specifying three to six months' supply at a time, which has been the present practice.
All this is at a time when the Government claim to be cutting down the opportunities for fraud; yet when publicity is given to either the amount of money lost through fraud or to a particularly successful attempt at catching the perpetrators, my impression is that this is usually associated with fraudulent claims. Can the Minister provide the figures for the value of wrongful payments made because of fraudulent claims and because of fraudulent use of benefit books at post office counters? Can he also tell us what proportion of wrongful payments were made at local sub-post offices in rural areas, where very often the claimants are well known to members of the staff?
It so happens that today's debate tabled by the noble Lord, Lord Harrison, for which I thank him most warmly, is opportune. The National Federation of Sub-Postmasters presented a petition to No 10 Downing Street this morning. If I tell noble Lords that it was signed by 3,120,000-plus people, they will have some idea of the great concern that there is out there in the country about the Government's proposals for the changes to benefit payments: 3,120,000 is an awful lot of people asking the Government to think again.
In the Minister's response to my earlier Question today I was pleased to hear that she did not consider that payments would be stopped if people wished to continue to receive their cash through the post office. But I pose the question again, because if the majority of people do not use the system, the financial viability of those very same post offices will be undermined. If they go out of business, it will put people at even greater risk and make them more vulnerable.
The post offices are not only places where people go; they are centres that draw people from the village to its central heart. Pensioners are forced to go out and draw their pensions from these centres. They then meet other people, chat and become involved in the local community. It also means that they do not have to pay bank charges for drawing small sums of money.
At present, post office users also have a free bill payment service. As I said earlier, they can collect their benefits if they wish, and do so without charge. Most post offices are open early in the morning, from nine o'clock, to 5.30 in the evening and on Saturday mornings. Many organisations realise the value of this
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service. Among those who spoke at today's lunchtime meeting—the Methodist Hall across the road from here was full of people—were people from the National Federation of Women's Institutes, Age Concern, VRSA (of which I am a patron), the Countryside Alliance, the Post Office, the Mothers' Union, the CPRE and many others. This is a very big problem.
The petition signatories are also aware that the Government's action will deprive many sub-postmasters of their living. They are currently paid for each benefit transaction that they undertake. As I said earlier, they will lose between 35 and 45 per cent of their total income if the Government push ahead with this as they plan to do. Many of the people who signed the petition are also aware of some of the unanswered questions; for example, if post offices close, how do the Government propose to ensure that the 1 million emergency payments reach the intended recipients as fast as possible? How can the Government guarantee that mothers will continue to receive child benefit if they cannot claim directly from their post office, which may be forced to close, as I pointed out earlier? Will the Government guarantee that those on low incomes who are forced to open a bank account will never have to pay any form of charges and will never become overdrawn or get into debt because of overenthusiastic selling by third parties? That may not seem likely to most of us, but it could be a very real problem for some families.
Like everyone else in a small business, sub-postmasters are entrepreneurial in spirit and opposed to subsidies—which is one of the rumours. They are keen to embrace new technology, to increase their business, to give customer satisfaction and, it is to be hoped, to enjoy the fruits of their labours later in their old age. However, like most people who live in this country, they look to the Government for support and protection in those areas of their endeavours over which they have little personal control. Does the Minister believe that they will be well served if the Government go ahead with their current proposals? Further, does he feel that the proposed concentration on automated credit transfer will promote small, rural businesses in the United Kingdom?
I apologise to the House for the fact that my speech has concentrated mostly on post offices. However, this is a crucial time. Many of our small businesses in rural areas are reliant on our post offices as a means of survival. Finally, I should like to say how much we are all looking forward to hearing the maiden speech that is about to be made by the noble Lord, Lord Patel of Blackburn.
3.35 p.m.
Lord Patel of Blackburn: My Lords, my interests and activities are community relations, regeneration of industry, business development, religious tolerance and understanding and, of course, Blackburn Rovers Football Club. I was at a loss as to which of these interests I should incorporate in my maiden speech. However, in accepting that there is no danger of Blackburn Rovers being relegated this year, or very

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little likelihood of them being promoted, I felt that there was no point in bringing their situation to your Lordships' notice.
Given my business background in the Lancashire textiles industry, and having served in various capacities with business associated organisations, such as the East Lancashire Training and Enterprise Council, Lancashire Enterprises plc, Blackburn Partnership and Blackburn City Challenge, I felt it appropriate to speak on behalf of small and medium-sized businesses—and particularly those run by businessmen of ethnic heritage origin.
This choice was reinforced when I learned that legislation had been enacted in the other place, which came into force as recently as 3rd April of this year. That legislation brought into existence the Small Business Service designed to assist small and medium-sized enterprises. This new structure replaces training and enterprise councils and other similar organisations. The role of the service is directed towards assisting businesses made up of small traders or partners and businesses with up to 250 employees. At the bottom end of the scale, a small business is described as having between zero and 49 employees and a medium-sized business as having between 50 to 250 employees.
It is the aim of the current Government to ensure that SMEs survive, succeed, grow and move to become world class; to provide a strong voice for small business at the heart of government; and to help small firms in the matter of regulation. In support of this, the Small Business Service is charged with establishing a network of franchises to deliver high quality business support to small firms.
That small business plays an extremely important part in the economy of the United Kingdom is without argument. Statistics published by the Department of Trade and Industry show that small and medium-sized enterprises account for over 99 per cent of businesses in all regions. They have long been recognised as playing a vital role in the economy. They provide new ideas, products and services and, most significantly, jobs. SMEs are the backbone of our economy.
It may come as a surprise to some of your Lordships to learn that India, and particularly my home state of Gujarat, has had a reputation since the 12th century of exporting its people's enterprise and enterprise skills to other countries. These were to the Middle East and other parts of Asia initially and, since the previous century, to the various countries of Africa, South America and, of course, Europe and North America, too. It will be within the knowledge of some Members of this House that one of the most famous and outstanding sons of India, Mahatma Gandhi, practised law in South Africa before returning to India and his life's work. It is certain that it is within the knowledge of all Members of this House that in more recent years people of Indian origin were penalised for being too successful when they were stripped of all their possessions and deported from Uganda by the despot Idi Amin.
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I welcome and fully support the Government's aims and objectives to improve the quality of support and assistance to small businesses. While congratulating them I draw attention to some of the problems being experienced by ethnic minority-owned businesses in accessing support mechanisms. Why should this be? In my experience there is no deliberate intent to refuse or make difficult access to support services.
Many small ethnic minority businesses are run by their owners and immediate family members. To keep them viable and competitive with larger and longer-established business undertakings, they are open long hours, seven days a week, with those who run them taking no or little time off for socialising or other activities. Because of this commitment and way of life, they do not have time to seek out and acquire aid from support services. Neither are they, unfortunately, members of support organisations such as chambers of trade or chambers of commerce, which provide service and advice on either an individual or a collective basis.
Another area of small business requiring attention is the clothing and footwear industries. By reason of unfair competition from abroad, they are closing down and jobs are being lost. This has occurred, and is still occurring, in my home town of Blackburn and in my red rose county of Lancashire. The term "diversification" comes to mind, along with the question: how does one diversify an existing business, and where does one get advice and support on that? It may be appropriate to paraphrase the old adage, "If Mohammed can't go to the mountain, the mountain should go to Mohammed".
It is essential, in my view, that given the importance of the growing number of ethnic minority-owned small businesses to the future economy of our country, there should be sufficient direct representation of those interests on the regional development agencies, the Small Business Service and their associated franchises. I trust that the House will support that point of view.
Finally, I express my sincere, heartfelt gratitude for the manner in which I was received by noble Lords and by the courteous and competent members of staff. I felt that I was being welcomed into a large family and I shall always treasure the memory.
3.44 p.m.
Lord Mason of Barnsley: My Lords, it is a pleasure to follow my newly ennobled friend Lord Patel of Blackburn. I congratulate him on behalf of the whole House. His speech was brief, witty and non-controversial, indeed, a perfect maiden! The noble Lord, Lord Patel, is a renowned counsellor in his community and a major contributor to the Muslim Council of Britain. With that background and knowledge I am sure that his further contributions will be of interest to us all. Incidentally, friends we are but next season that may be in doubt when Barnsley meet Blackburn Rovers!
I am grateful, of course, to my noble friend Lord Harrison for giving us the opportunity to talk about small firms. The Prince's Trust, Business Division, is one of several Prince's Trust schemes to help

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disadvantaged young people. As chairman of the Prince's Trust division in South Yorkshire I welcome the Government's action in establishing the Small Business Service and other initiatives to promote small and medium-sized enterprises. In this respect I look forward to their support for the kind of micro businesses started by young people that the Prince's Trust helps. The Prince's Youth Business Trust, now the business division of the trust, was formed in 1983. Since then over 43,000 young people have been helped to start their own businesses. That is an incredibly successful national operation. Nearly all of those young people were removed from the dole register. His Royal Highness, whose idea it was, could never have imagined that rate of achievement.
The average cost of starting a new enterprise is in the region of £2,550 per person. If a person between the ages of 18 to 30 has a business idea, takes a business course, prepares a business plan but does not have the finance to start, banks having refused it, the trust as a last-resort financier will examine and launch it. Up to £5,000 in cash grants and loans would be considered. Of those started, the survival rate is encouragingly high with over 60 per cent trading after three years. That is a much higher rate than with conventionally funded businesses.
The trust is funded by donations, private individuals, companies and various organisations, but in addition—this is most important—it has been funded over many years by various British governments. The most recent initiative is the Government's support, backed by all political party leaders, to pledge £50 million over the next five years, with the trust itself raising £50 million pound for pound.
In providing this unique service all over the country, the trust has received funds for schemes funded by the European Development Fund and provided by the European Union. We are also in a partnership with government departments—the Department of Trade and Industry and the Department for Education and Employment—with local authorities, Business Link, TECs and, particularly, with providers of business training; an essential service which is offered free to the unemployed. Among those unemployed are able and enthusiastic people who seek our help.
Earlier I mentioned our rate of success. Throughout the trust's business division we have provided a free mentoring service (business advisers) attached to many of our young entrepreneurs. We have 7,500 of these volunteers who can often make the difference between failure and success. But, again, could anyone have visualised such a massive voluntary attachment to the trust and to our young people? Credit and thanks are due to them all.
As will have been recognised, the majority of our businesses are micro businesses—one or two person businesses. However, some go on to generate growth and employment for others. For instance, the top 50 trust-supported businesses total an annual turnover of £147 million and between them employ over 1,260 staff. That is some enterprise.
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I am chairman of the South Yorkshire board of the Prince's Trust, Business Division, which comprises another body of dedicated people. We are grateful for the financial support and encouragement provided over the years by successive governments and for the financial help that we receive from the European Union. We look forward to further national support, and from the EU, under the terms of the Objective 1 status recently awarded to South Yorkshire. This should be a much needed boost for one of the nation's most deprived areas.
I should like to inform your Lordships' House that in the past 13 years in South Yorkshire—that is, Doncaster, Rotherham, Barnsley and Sheffield—we have helped more than 2,000 under-privileged young people with funding, advice and practical assistance to achieve their goal of becoming self-employed. In doing so, we have improved their own and their families' lives, while at the same time boosting the local economy. We have injected £2.5 million into the South Yorkshire economy and we are currently taking approximately 150 young persons each year off the dole and into enterprise.
Nationally, with the support of the Government's major funding, we are aiming to expand—to help up to 30,000 young persons start their own businesses by 2005. To achieve this, we need all the help we can get. In this respect, and from my experience, it is my considered view that support in the form of a funding bridge along the lines of the old enterprise allowance—that is, an initial weekly allowance until an enterprise is established—would give these people some financial cover as they take that often daunting step from unemployment to self-employment. I hope that the Minister and his department will give this some thought.
I turn now to BICs (the business and innovation centres), with which I am involved as chairman of the Barnsley Business and Innovation Centre. One of the key principles underlying the Government's approach to small businesses is that of fostering an enterprise culture that encourages innovators and risk takers. That is precisely what the business and innovation centres are designed to do. The Barnsley BIC was established in 1987 with the specific remit of developing innovative technology-based businesses in order to diversify and strengthen the local economy It is part of a European network of BICs—there are around 120 across Europe—and a national network of eight in this country, which are developing a national incubation strategy promoted by the Government.
With the support of the European Commission, of the Government, of the local authority, of British Coal Enterprises in the early days, of the TECs and of English Partnerships, the Barnsley BIC has to date created, established and seen the growth of more than 85 innovation businesses, which support more than 400 jobs. These are within the coalfield area. The positive impact upon the manufacturing supply chain has been significant, with most of these companies serving national and international markets. The reality is that this is the creation of a high technology and

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innovative culture in an old coal industry area which is effecting a major transformation in business enterprise.
I notice that the DTI's innovation budget is to increase by more than 20 per cent over three years. In addition, I gather that an enterprise fund will provide support for high technology businesses with growth potential. I hope that the Minister will be able to say that the business and innovation centres will benefit from these policy proposals.
3.53 p.m.
The Viscount of Oxfuird: My Lords, I confess that I do not support a football club. However, I do support a club in Calcutta—the Tollygunge cricket club. I have spent many happy hours there enjoying the pleasure of the company of many Indian friends. It was a joy to listen today to the very singular maiden speech of the noble Lord, Lord Patel.
I know that your Lordships' House will have enjoyed the speech of the noble Lord, Lord Mason, which was a clear and incisive summary of the entrepreneurial effects of the Prince's Trust. It is the entrepreneur whom we are talking about today. Small and medium-sized enterprises play a vital part in our economy. Their importance to the supply chain cannot be underestimated—not only in terms of expectation of growth but as a source of considerable employment. I am afraid, however, that many SMEs are currently facing hard times, which are not of their own making.
Noble Lords have made reference to the euro. At the moment, the euro is a weak currency. The strength of sterling is a consequence of that. The boom/bust economy that the Chancellor of the Exchequer wishes to leave behind should be considered in the light of other currencies. It is to be hoped that we can find a way through for sterling which will ensure that our SMEs are not faced with the major concern of massively disparate foreign exchange rates.
The truth is that SMEs are being told by their customers that there is no room to increase their prices— in fact, there is endless pressure on them to reduce their costs—and yet they see an increase in the costs of raw materials because their orders are not as great as those of bigger companies and they do not enjoy the same level of discount.
The situation facing SMEs in the manufacturing sector is difficult. Only yesterday, the Financial Times described what is happening to the machine tool industry. Some 80 per cent of the sector's output is exported. That is important. The Machine Tool Technologies Association (MTTA), the trade body, reported that the sector had cut 2,000 jobs since 1998, accounting for about 14 per cent of its total workforce. Production value has fallen by £100 million in the past year.
The machine tool industry is the pointer of the manufacturing economy. Ever since I started exporting—a very long time ago—people have recognised that the sector is vital to the forecasting of a trading pattern. The machine tool is probably the last
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item to reach the bottom line of a budget; it is more likely than anything else to be cut when hard times appear to be around the corner. It is the first indicator to manufacturing industry that trouble is on the way. I know this only too well. I worked in the materials handling industry for many years. We always watched what was happening in the machine tool industry; it was from there that we got our information.
Although the MTTA forecasts a small increase in production this year, many companies are expecting little or no rebound due to the problems not only affecting Rover—a big buyer of machine tools—but existing across the board. I am sure that many SMEs, given the opportunity, would say to the Minister, "Please, is there something the Government can do to help?"
SMEs are, of course, very low down the supply chain. A major pressure facing them is "on time" delivery. To achieve this they require accurate information. The Government make great play about the importance of electronic communication and the incentives available to companies to go on-line. But no matter how good the communication systems are, what is important to SMEs is receiving information that is dependable and not constantly changing.
The last debate in which I spoke in your Lordships' House was the Second Reading of the Learning and Skills Bill. At the time, I said that it was an important Bill for industry, not least the engineering manufacturing sector with which I have long been associated. Many in that sector hope that the emerging national and local learning and skills councils will make a real difference to the training needs of their industry. For many SMEs, training does not come very high on their list of priorities. In this ever changing and increasingly competitive world, skilling and reskilling is crucial to survival. Yet, for the majority of SMEs, survival is about the day-to-day running of their companies, ensuring that orders will not dry up. They are unable to give time even to medium-term planning.
According to a survey undertaken by EMTA, the Engineering and Marine Training Authority, the national training organisation for engineering manufacture, a very large proportion of small firms do no training at all. However, those that do train do as much proportionally as larger firms. Engaging small firms is an issue which EMTA believes to be of fundamental importance. But, as EMTA sees it, it is a "Forth Bridge" job. Even to scratch the surface requires working with as many third party organisations as possible, including trade associations, group training associations, TECs, LECs and, in the future, the Small Business Service and its franchises and the local learning and skills councils.
I wonder whether the Minister can help me in relation to the SBS and the local LSCs. It is far from clear what the exact roles of the SBS and local LSCs will be in work-related training. The devil is very much in the detail. I hope that the Minister can assure me that the Government will adopt their own mantra of "joined-up thinking" and give each organisation a

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clear remit and proper functional links both with each other and regional development agencies to avoid duplication, competition and gaps in the system.
I would not deny that the establishment of the University for Industry and the emergence of "learndirect" and the various sectoral distance learning centres will go some way to help both employers and employees with training. There is need for more flexibility from both the United Kingdom Government and the European Commission in their attitude towards SMEs which embark on training. SMEs complain that those in government are interested only in outcomes. By that I mean that those undergoing training must also be looking to gain qualifications. Certainly, so far as concerns European funding, training is driven by outputs.
Another complaint is that the European Commission funds only companies with a staff of 250 people or below when no more than 25 per cent of ownership belongs to a large company. I understand that Whitehall officials stick rigorously to the rules while our European counterparts —some not so far from our shores—are a little more relaxed. What is needed is flexibility. Many SMEs are making excellent strides in the training of their workforce but there is still much that can be done. I hope that the Minister will be able to address the concerns I have raised.
4.4 p.m.
Lord Haskel: My Lords, it is difficult to be a small and medium-sized enterprise. Most speakers know that. They have run small businesses themselves. As far as concerns the Minister, I am of course referring to the textile business that he had in another life more than 20 years ago, not to the grocery business.
As noble Lords know, not only do small businesses have to make a profit, keep the staff involved and the customers delighted; they also have to keep suppliers on the ball and the community happy. In addition, if your business is involved in science, the food chain, natural resources or nuclear power, you can find yourself challenged by a well organised nongovernmental organisation which diverts your time, money and energy away from developing the business; and now you can see your asset value depressed for no better reason than that you are perceived to be part of the old economy.
We are fortunate that people who work in small and medium-sized enterprises are practical, down-to-earth people who can cope with all this while turning their hands to anything and everything. If they did not have those qualities of leadership and adaptability, we should all be the poorer for the reasons that my noble friend Lord Harrison gave when moving the Motion. So when they voice their concerns, the Government would be wise to listen to what small business people have to say.
It seems to me that as well as late payments—a point made by my noble friend Lord Harrison—they are voicing two main concerns at the moment. Both are directly tied to our membership of the European
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Union. They are: excessive regulation and the strength of sterling. These are legitimate concerns. What should the response be?
First, on regulation, it is important to point out that regulation is not simply a matter of red tape and the command economy. The down-to-earth, practical business people who work in small and medium-sized enterprises realise that. Regulation is also a matter of subordinating economic values to broader social values. They support these broader social values because they, too, have families and children; they, too, have a stake in the community; and they, too, have friends and family who go out to work. So despite the furore over the minimum wage, socially it is right; and so is the Working Time Directive. This is a good piece of family-friendly legislation. It is probably welcomed by most small companies which are just as interested in the balance between home and work because they realise that treating staff badly is no longer an option. Good staff are too scarce and valuable.
The justified complaint is not that these regulations would force small companies out of business: it is that the process of implementation of regulations is itself a burden on small businesses. The intentions are worthy, but even the worthiest intentions must be put into practice with proper care and attention so that they are not burdensome. Here the Government have to perform better.
The Working Time Directive legislation was poorly drafted; it was unclear; and the DTI had to issue several alternations and clarifications. Its implementation was rushed. I am sure that the reason was partly because of the Government's detailed negotiations with the CBI and the unions regarding the legislation. That led to delays and many derogations. Perhaps my noble friend should learn a lesson from that and consider how well the problems of implementation by small companies were represented at the negotiations. There needs to be more and better co-operation between the regulator and the regulated. I believe that the Better Regulation Task Force has that kind of co-operation in mind and I wish it every success.
Like the noble Viscount, Lord Oxfuird, my second concern regarding small businesses is the strength of sterling. On 28th March in a detailed debate in this House we came to the conclusion that there is little that the Government do about this. As for joining the euro-zone, big business is divided. The small business person is helpless. What can he or she do? Move to the euro-zone? That is probably not practical. Trade in euros? That still leaves the small business with the foreign exchange risk, because it pays wages and overheads in sterling. Hedge the currency? That is expensive.
The only real practical response to the strength of the pound—or the weakness of the euro—is for small companies to raise productivity and to become more efficient and more competitive. My noble friend Lord Patel asked in his excellent maiden speech: how can we achieve that? There are many alternatives and the practical small business person will have to choose the best route and the best combination.

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One way could be to join the knowledge economy. It seems to be working in the USA, even in the textile industry. US businesses appear to be raising productivity by their use of the Internet to speed up production so that there are fewer raw materials, stock and work in progress to finance. Indeed, some companies have eliminated stock and work in progress entirely by using the Internet for mass customisation. Companies are finding cheaper suppliers and services by participating in business-to-business networks. They are also finding more customers through the Internet and are becoming more competitive by using the Internet to cut out the middle men. But the speed at which that is happening varies from industry to industry. In addition, there is an enormous amount of hyperbole to penetrate in order to get at the truth. Small businesses need guidance.
Technology, too, can help small companies to make considerable increases in productivity. But where does a small company with little or no research facilities find that? As well as the innovation centre referred to by my noble friend Lord Mason, the answer could be at the local university or college. The DTI has introduced several initiatives to encourage universities and colleges to reach out to business and to help to develop new techniques, products and services. The universities and colleges need to work with small companies in order to quality for these funds. So there is a shared interest here. In addition, small companies can qualify for the Teaching Company Scheme.
New technologies are often best developed in cooperation with other firms. That is why clusters have been so successful in the biotechnology industry and in the racing car industry. In the Budget, the Chancellor announced a regional innovation fund precisely to fund the formation of local clusters to make it easier for our small businesses to get involved.
Then there is Technology Foresight, which will help small businesses to get a vision of the future in their own particular industry. It is an invaluable tool for the progress and development of small businesses, which on their own do not have the facilities to develop that vision.
I agree with the noble Viscount, Lord Oxfuird, that skills and management training help to raise performance. Time and again, small companies have found how valuable that can be in improving productivity—and not only when there are innovations. Existing methods can always be improved by better skills and training. So many failures of small businesses due to management incompetence could have been avoided by better management training. These are essential aspects of raising productivity. All are supported by the Government. Like my noble friend Lord Patel, I hope that the new Small Business Service will be effective in drawing all these aspects together. Raising productivity is the only practical way for small businesses to cope with the strength of the pound. They deserve all the help they can get. They also need
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a champion. Like my noble friend Lord Harrison, I hope that the Small Business Service will take on that role too.
The Small Business Service should explain to Ministers that, in the new economy, size matters less. Many big companies have big problems. They are in markets where there is over-production. Consumers are fickle and brand loyalty is declining. The Small Business Service should counsel against size as an argument for grants to maintain national champions. It must show that not enough small businesses have grown into large ones, and that money is better spent on training, improving infrastructure, innovation and information technology. That will help all enterprises, large and small; and it will create small enterprises that will become the large enterprises of the future.
4.16 p.m.
Lord Cocks of Hartcliffe: My Lords, before thanking my noble friend Lord Harrison for introducing the debate, I should like to add my congratulations to my noble friend Lord Patel and say how fortunate he is to have a team like Blackburn Rovers on tap, having myself lived for many years on the thin gruel provided by Bristol City. We enjoyed his speech very much and we look forward to his future contributions.
My noble friend Lord Haskel said that most of us have run small businesses. I have never done so. I was Government Chief Whip in another place running a government for some time, but whether that is related as an important function I am not sure. One thing that I will say to my colleagues on the Front Bench is that I should never have countenanced the plethora of amendments to government Bills which seem to appear almost ad lib. It is not necessary if matters are dealt with first. I include that as a mild reproach because it is important that we put these matters into perspective. I have introduced amendments from time to time in this House, but that was to buy off the Conservatives in the Commons. Concessions had to be made from time in order to get the legislation through.
I thank my noble friend Lord Harrison. He is well known for his expertise in this matter. He has given great service to my party with his knowledge of this subject. Indeed, a couple of years ago he produced a booklet entitled Supporting Small Businesses: The European Dimension. I should like to refer briefly to my noble friend's statement on page 5 that,
"The Single Market is dominated and monopolised by multinationals and larger companies. Such incomplete development fails to bring the benefits of increased competition".
That is an important point. Yesterday, there was comment in the press on Tesco's announcement regarding the number of full-time and part-time jobs that it is to create in Britain and overseas. I do not believe that this is all gain.
North of Bristol there is a great shopping centre, Cribbs Causeway. There is a massive Asda hypermarket there which is being modernised. My wife said to me, "Look at the list of things they are going to do here. What is going to be left for anybody

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else?" So I called in there and copied down the list of what is coming when the development is completed. The list reads: Asda fresh food market; "Takeaway World" and "Deli Express"; beers, wines and spirits cave; papershop for your home and office; toys, sports and bikes; home housewares and textiles; do-it-yourself; health and beauty; pharmacy; optical and photo-shop: baby shop; new George clothing—that is the proprietary brand; and a new Asda café. How many small businesses in that area will feel the pinch when that range of activities is grafted on? There is a finite amount of money to be spent. If one has an enormous development of that kind, others will be badly hurt. Without any consultation, people who have spent half their lives building up businesses will suddenly find enormous companies doing this kind of thing.
There are knock-on effects. I very much agree with the observations of the noble Baroness, Lady Byford, about post offices. Other consequences also flow from such decisions. We are all aware of the activities of spin doctors. Perhaps we can make allowance for this as we are to an extent minor practitioners in the art. This practice has spread to the commercial world. A major company will consult its public relations advisers. They will decide on the line to take and, with a few phrases that they repeat in interviews, will not shift from it.
A recent example relates to Barclays Bank. Noble Lords may have seen the interview on television two nights ago with the director of Barclays Bank responsible for retail banking, John Varley. Time and again he was pressed to say whether the chief executive of the bank would appear to explain just what was going on. He replied that that would not happen and that the public would have to do with him. Obviously, a few key phrases had been decided upon beforehand which he kept repeating. I recall that one of the phrases was, "We must give customer choice". I thought that that was a bit of a cheek. To a simple mind like mine, when one closes so many branches it appears that one is reducing choice. I very much welcome the remarks of my noble friend Lord Harrison at the beginning of his speech. I, too, hope that the Government will get tough with high street banks.
On the front page of today's Financial Times Mr Varley comes out with the following gem. Defending the decision to close all 171 branches in one day, he says:
"The instability created by protracted closures is considerable. We had an overwhelming obligation to create as much clarity as we could as quickly as possible".
That is not bad, is it? What would one end up with if one had to précis that comment for the purposes of an English examination? The "overwhelming obligation" did not extend to the chief executive coming before the public to explain what he was up to. Fortunately, that has been remedied in another place. The Treasury Select Committee, chaired by Mr Giles Radice, is to interview the chief executive. Not even the chief executive of Barclays Bank can refuse an invitation to he interviewed by a Select Committee of the House of Commons. One of the great values of such committees
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is that people who are as slippery as eels can be called to account. But what does it come to when this step is necessary before those responsible will appear in public to explain such a far-reaching decision? It is a shame that we have arrived at this position.
The practice of "spinning" and involving public relations is setting in. Unless we do something about it, all this talk about accountability and clarity of purpose will mean very little to members of the general public whose real grievances cannot be addressed. I give the example of Bristol where a local brewery was closed with the loss of 70 jobs. I wrote to the chairman of the company and pointed out that some time ago the local Bristolians had not complained when the company had blocked off a road and incorporated it in its site in order (it said) to keep the brewery going. I asked the brewery what recompense would be made to Bristolians for the free gift of a very valuable piece of land now that the brewery was to close. I received a letter from a public relations man, which was really an insult to the people of Bristol. I wrote back to that effect on 7th September of last year. The site, which is in the heart of Bristol, sustained tremendous damage during the war. I pointed out to the company that 1,299 Bristolians had lost their lives in the war and that the brewery was behaving pretty badly, since it had survived the 77 air raids sustained by Bristol. I have not even had a reply or acknowledgement to that letter. My letter has simply been brushed aside as if it is from a moaning chap with no resources behind him who was formerly a local Member of Parliament. The attitude of the company is that it will all go away.
If we talk about accountability and clarity, we cannot let small businesses which are in real difficulties and are threatened by larger ones manage on their own: we must appreciate their problems and do our best to ensure that they get every consideration. Such businesses are the very stuff of our communities and unless we seek constantly to protect them they will disappear at an alarming rate. Therefore, I very much welcome the debate initiated by my noble friend and hope that the Government will be able to give further assistance in this matter.
4.26 p.m.
Baroness Warwick of Undercliffe: My Lords, I am delighted to contribute to this debate. I should like to deal in particular with the role of universities in supporting SMEs. In doing so, I declare my interest as chief executive of the CVCP, which is the voice of UK universities. I am especially pleased to speak about this matter because I suspect that not all noble Lords will associate universities with small and medium-sized enterprises, or perhaps see their relevance. I was delighted that my noble friend Lord Haskel referred to this matter.
Just as SMEs have assumed greater importance to the UK's prospects for economic growth in recent years, so the role of universities as partners of SMEs has developed at the same level. As the title of the debate suggests, just as government policy initiatives are increasingly focused on stimulating SME growth—we

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see the most recent evidence of that in the March Budget—so too has government policy acknowledged the part that universities have to play in this.
SMEs make up the vast majority of businesses in the UK but also vary widely from small "lifestyle", or so-called "Mom & Pop" family businesses, to high-tech, high-growth undertakings. This last group, which is IT-driven, is vital to the economy. Ideas are its key input, along with rights-based sales, and that is where universities become so important.
A timely illustration of this is that today the University of Kent officially opens a new electronic systems design centre with £250,000 of funding from DTI. The centre is concerned with micro-electronics and provides consultancy and support to SMEs on design techniques and technologies. This morning I was at the University of Wolverhampton, which is located in a region rocked by the Rover crisis and facing the loss of 20,000 jobs, not just within Rover but the intricate supply chain of small manufacturing enterprises which have supported the motor industry. I predict that the University of Wolverhampton, together with its further education partner colleagues, will be one of the future sources of regeneration as well as retraining in that region. Just last week it launched a Competitiveness Centre which will offer technology transfer and support to SMEs. With a keen eye on overseas markets, I suspect, it was launched by the chief executive of British Trade International.
I have used the two examples of Kent and Wolverhampton, which are in very different regions, to indicate how the growing involvement by universities in SMEs is one of the key distinguishing changes which have occurred in higher education over the past five years. The most recent national survey conducted by PREST at the University of Manchester describes spectacular growth in links. There has been a 40 per cent rise in external income from such links in three years.
Many of the government initiatives that several noble Lords have mentioned have been in response to trends in universities over the past few years. They are an acknowledgement of the many ways in which higher education makes a positive contribution to SMEs and to the knowledge-based economy. Of course, we all recognise that there are challenges in getting partnerships between universities and SMEs right. In the past there has been something of a communications gap. SMEs have previously had little experience of employing graduates. Some chief executives may not have been to university or may be graduates from many years ago and so have little knowledge of what the higher education sector can now offer them.
In the past, some universities may also have been a little slow in seeing the two-way benefits of a relationship with small and medium-sized enterprises. However, that is certainly changing dramatically now, as I hope to demonstrate in outlining the proliferation of imaginative and cutting-edge relationships which have sprung up just in the past couple of years. Recently, tremendous university effort has gone into
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identifying training needs of SMEs; into speeding up technology transfer to assist them in achieving business results; and into stimulating graduate employment and employability through student placements. The Government have played a key role in stimulating that work.
The DTI's Science Enterprise Challenge for universities provided funds for eight regional centres. Some, like the Bristol Enterprise Centre, are primarily designed to encourage entrepreneurialism among students and researchers. It was opened on 8th March by Sir Alan Sugar, chairman of Amstrad plc. Others, such as that set up by the Scottish consortium— Glasgow, Edinburgh, Heriot-Watt, Strathclyde and Dundee—include an enterprise management centre. The Scottish one is based in Dundee. It focuses on increasing start-ups through the faster commercialisation of research.
The Government's reach-out fund initiative—HEROBC—has proved an enormous success. The DTI has acknowledged the high quality of bids made by universities to the fund. It is not only the traditional big players—the research-led universities—which figure in that activity. I mentioned Wolverhampton earlier; another example is Huddersfield University, which runs an SME support network as part of its reach-out activity. In the past 18 months it has provided advice to support 60 SMEs. It is a good example of a university which may not be research led, but which is very research active and engaged with SME developments in its region.
From the inception of the HEROBC funding stream, CVCP has been calling for the fund to be consolidated into a proper so-called "third leg", alongside the two traditional streams of funding for the universities for research and teaching. We warmly welcomed the DTI acknowledgement that that fund will continue. My right honourable friend the Secretary of State for Education and Employment referred to the "third mission"—work with business and industry—in his Greenwich speech. That was something of a watershed because it was recognition that the universities' role with business, industry and SMEs is now a major one and that it will increasingly be seen as a core function alongside teaching and research. I must take the opportunity to remind the Minister of CVCP's SR2000 submission, which calculates that around £150 million is needed to put the HEROBC fund on a sustainable basis. We believe passionately that universities' performance in responding to that agenda warrants that investment. I hope that the Minister will take this opportunity to reaffirm the Government's commitment to it.
I mentioned activity at a regional level. The recent Budget made it clear that it is not only an economic agenda that is served by government initiatives and university activity with SMEs regionally. The Chancellor announced a total of £230 million towards innovation, enterprise and the use of IT by business. One of his key points was the need to stimulate economic growth and impetus across the whole of the UK, especially in some of the more economically

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disadvantaged regions, avoiding a concentration of economic activity within the south-east—welcome, of course, though the pace of growth is.
Universities in all the UK's regions will help to deliver that initiative as key drivers of innovation and providers of expertise. It is not only through support and consultancy to existing and fledgling SMEs in the locality that universities are vital. In recent years, economic developments have given university researchers, especially in science and technology, more opportunities to patent and license inventions and then establish their own businesses to develop and exploit them commercially. Therefore, universities themselves are setting up small businesses, known as spin-offs.
There has been a similar increase in rather lower-tech businesses set up to exploit new sources of knowledge and information. Only last month, the University of Essex announced a £6 million agreement with SME managers to form a start-up company, ilotron. Telecommunications engineers at the university sought out the deal to commercialise their ground-breaking research in the rapidly growing global market for network optical routing. The collaborators hope that the deal will tap into an estimated global market for core network routers worth £4 billion in 2002, rising, it is estimated, to £15 billion in 2005. That is the kind of potential that universities up and down the country can contribute to the cutting-edge areas of business.
Here, too, government policy initiatives have played a role. The DTI's University Challenge Fund provided much needed capital or seed funding, in total worth about £30 million. Twelve universities or small consortia of universities benefited from the fund and will use the resources to kick-start spin-offs or startups. The high quality of bids received has meant that the competition is going to run for another year.
Our debate is concerned not only with UK initiatives to encourage SME growth. At European level, too, policy levers are emerging. The Lisbon Council of 23rd/24th March agreed a new strategic goal for the Union in order to strengthen employment, economic reform and social cohesion as part of a knowledge-based economy. The conclusions of the council include the importance of SMEs in making the transition to a competitive, dynamic and knowledge-based economy. The council referred to the need to create a friendly environment for start-up and developing innovative businesses, especially SMEs. I certainly include universities in the list of institutions.
Here in London, Guildhall University has made the running in work with SMEs with the assistance of EU funding. Much of Guildhall's work stems from the fact that the university is within the European Objective 2 area for London as well as being based in the City. Metro new media is a company wholly owned by the university that provides services to SMEs in Lee Valley. With Middlesex University, Guildhall co-founded East London and Lee Valley Teleregion, offering broad services to over 500 SMEs.
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Of course, no debate on SMEs can ignore the dot.coms. It is not only blue chip corporations which can engage in electronic trading or on-line shopping. Many industry experts predict that SMEs will benefit also from the new technologies and provide much of the growth in the new e-commerce market-place. Staffordshire University's Innovation Management Centre, for example, has secured funding of £286,000 from European social funding to develop e-commerce strategies and Internet sites for up to 40 SMEs.
I hope that I have demonstrated that universities are aware of the crucial contribution of SMEs to the UK's knowledge-based economy and the work that they are doing to encourage it. I welcome the government's initiatives, which hive really encouraged universities to find innovative ways of working with SMEs. But, as I said, the funding is still limited. A major injection into the HEROBC fund would really enable that work to take off in every region in the UK.
I am most grateful to my noble friend Lord Harrison for providing the opportunity for the debate. I add my words to those of other noble Lords in my warm congratulations to my noble friend Lord Patel for an excellent and most illuminating maiden speech.
4.39 p.m.
Lord Peston: My Lords, I thank my noble friend Lord Harrison for introducing this debate. I begin at the same place as he did, which is the state of the economy in general. The best contribution that government can make to industry and commerce is to create a sound economy and to pursue a sensible economic policy, which we have at the moment with low inflation and high employment. I regret that we do not have full employment yet, but I believe that we are on our way. We also have reasonable growth which is lower than I would wish to see. However, we hope that the British economy will grow even more rapidly. All firms gain from a sound economy, but small businesses gain especially—because if there is a downturn, the firms most at risk are the small ones. We experienced that under the previous government.
I turn to the banks which have already been mentioned. Small firms are especially reliant on them for funding. The general view among those I have consulted is that their range of contribution ranges from useless to worse than useless. On the whole, the banks will, as in the old joke, lend one money when one does not need it, but take it away or not extend the overdraft when it is needed.
I was somewhat surprised at the remarks and worries of my noble friend Lord Cocks as regards public relations. I imagine that Barclays Bank spends millions of pounds on public relations and spin doctors, which is a marvellous demonstration of the uselessness of that particular profession. The spin doctors of Barclays Bank, and the hank itself, have done more damage not merely to the image of Barclays, but to the whole of free market capitalism, than any group of international Marxist socialists

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could ever have aspired to achieve. I do not believe that we should worry about spin doctors as much as does my noble friend.
There is a serious question concerning the financing of small business which needs to be considered. There is a suggestion that there is less than full competition between the banks in their approach to financing small businesses. I believe that they are facing a competition investigation. I look forward to seeing the results. In that connection, I am particularly sensitive to the views of the noble Baroness, Lady Byford. She was quite right to remind us that a great many small businesses are in rural, not urban, areas. They are probably more vulnerable than any others to the various difficulties that we are discussing today.
There is research evidence which shows that the banks are particularly biased in one area. That enables me to congratulate my noble friend Lord Patel. The ethnic community often finds its way into business via small business enterprises. We have had many examples of that. They have found that they need to finance such enterprises themselves from, say, family money because the banks are less than helpful, or they were in the early days.
My noble friend Lord Harrison also mentioned women. They are involved in a smaller proportion of small businesses, but in terms of women's entrepreneurial activity, small businesses are particularly important. We have a great deal of evidence that the banks are biased against women on the normal ground that they will lend money only if one does not need to borrow it. Women have less to offer in respect of assets and support. It is very important to remember how significant small businesses are for those two groups.
I now turn to the Government. I believe that we were brought here to praise them on this matter and, naturally, being a creep, I add my support to them on matters of this kind. But the Government are as bad as any concerning the problems we are discussing. Reference has been made to late payment. I gather that one should never do business with a public authority and certainly never with government because they are the worse payers imaginable. They keep saying, "We are going to improve our ways". It is about time that the Government did so.
I support the schemes, but by the time one has gone through all the negotiations and activities and tried to get money out of a government scheme, one has lost interest in the project that one had in mind in the first instance. When one looks for help, one wants it now and not after about four years of very hard work. Small businesses do not employ many people, so such involvement means that one is using the very valuable assets which comprise one or two people who cannot also be working for the business. I say directly to my noble friend the Minister that it is all very well for the Government to introduce schemes—I support them—but they must be made much more efficient than they appear to have been until now.
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I turn to the major problem which my noble friend Lord Cocks also mentioned. In practice, the major threat to many small businesses is big businesses. My noble friend mentioned the retail sector. There is the general question of failure to supply; of the cosy vertical integration which we have seen recently as regards Dixons and computer suppliers. With regard to failure to supply, I refer to the ability of small businesses to do so only on poorer terms—not in terms of costs, but of market power. The only body that seems unable to recognise the anti-competitive threat here is that great body, the Office of Fair Trading. The rest of us see it, but the OFT simply says, "We cannot find the evidence". It is astonishing how difficult it is for that body to find evidence of this kind of threatening behaviour whereas everyone else can see it very clearly indeed. Big business really does act as a threat to small business more generally. Therefore, in terms of the X thousand jobs, I congratulate my noble friend Lord Cocks. They are gross jobs—not net jobs to the economy. Indeed, given the Chancellor's policy, there would be no net jobs because the total number of jobs being created is determined by macro and not micro-economic policy. I am glad that my noble friend made that point.
I am grossly unhappy about what I regard as the considerable amount of aggressive and unfair competition today which did not exist in the past. I shall not mention Sainsbury, but I shall mention Tesco instead, as did my noble friend. I believe that Tesco began on a barrow. That shows that one can go from the smallest business to one of enormous size. However, my guess is that at no point was Tesco subject to predatory pricing and all the similar things that would confront a new Tesco. I am most concerned about that matter.
One other aspect of big business has been alluded to. Until I came to your Lordships' House I had no idea of the enormous power of pressure groups. I had never had any experience of them before. But in so much of the legislation that comes before us one sees the enormous power wielded by big business pressure groups. As regards many of the Bills in which I take an interest an enormous amount of material comes from the "big boys". Many of the Bills that we deal with are just as relevant to small firms, but there is no one acting for them in quite the same way, producing the pressure and the amendments. We always know where a large number of such amendments come from. They have not originated in the minds of the noble Lords moving them. We know precisely where they come from. I am very worried about it. I hope, especially in the industrial area, that more than occasionally the Minister will say, "No one else is speaking up for the small firms as regards this Bill, perhaps we ought to do so ourselves".
As an example, I now introduce a genuinely controversial note concerning Rover. An enormous amount of fuss is being made about that company, the loss of jobs and the fact that the Government have to intervene and find millions of pounds. If I were a small businessman about to go broke, I would say to myself, "Whoever thinks about me? I am going 100 per cent

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broke; Rover is also going 100 per cent broke. Both are 100 per cent and a lot of me amounts to the same as Rover". I do not want to deflect my noble friend from helping Rover if he believes that is what is necessary, but I believe that it would be money down the drain, even if the Government were to find any. However, it is up to the brilliant people in the DTI to do the work. If I were a small businessman sometimes I would say, "Why doesn't someone think of me and not simply say to me, 'That's too bad, but that is the way markets work'?". My reply to Rover would be, "Too bad, but that is the way markets work".
I finally make a few comments on Europe. I entirely agree with my noble friend that when, rather than if, we join the European monetary union—I am sure it will be "when"—the benefits to British industry will be overwhelming. As was pointed out at Question Time, it will be the wish of the British people that we join once they see what is happening abroad. Joining would be particularly helpful to small businesses, especially those which want to become involved in international trade. They will then not have all kinds of currency problems, but will be able to trade in a single currency.
I conclude by repeating the main theme which has been raised. There are great advantages in your Lordships contributing on these matters. However, ultimately we can do nothing. There are only two kinds of people who can do useful things; the first comprise businessmen themselves to whom I say, as a non-businessman, "The best of luck to you"; the second is my noble friend the Minister whose comments I look forward to hearing.
4.49 p.m.
Lord Graham of Edmonton: My Lords, I begin, like other noble Lords, by congratulating my noble friend Lord Harrison for giving us the opportunity to debate this issue. I congratulate, too, my noble friend Lord Patel on his speech. I have listened to and enjoyed every speech. They have all conveyed a knowledge of, and a feeling for, the subject which one does not always note in debates.
I am delighted that the noble Baroness, Lady Miller, will speak from the Opposition Front Bench. She is well aware of the problems of small businesses from a successful businesswoman's point of view. The noble Baroness will recall the number of big businesses which were created during the last administration; she may also recall the number of small businesses which were big businesses when her government came to power. I hope that she will join with me in seeking to reverse the trend and ensure that small businesses have the opportunity to grow into big businesses.
I declare an interest as chairman of the United Kingdom Co-operative Council. It appears under category three in the register of interests. The cooperative movement has experience of successful businesses, both large and small. My noble friend Lord Cocks referred to the effect of small businesses as a fall-out from big businesses: the corner shops, workshops, services and factories. I share the view of my noble friend Lord Peston. The factor that affects
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above all the wealth and health of small businesses is the general economic climate. Many small businesses rely on a successful big business. Therefore the picture is not black and white. One has to recognise that one wins some and loses some.
In the past 20 or 30 years there has been increasing recognition that what one requires in industry and business is a partnership involving management, shareholders and workers. We are all familiar with employee share option plans, stakeholder schemes and the sharing of power in one way or another. I reccgnise that if the Government were minded to be more realistic in giving tax breaks, benefits and grants to enable small businesses to survive and prosper, there could well be a spin off because the pot is limited. We cannot give everyone all they want.
Over the past few years many communities which enjoyed the services of a wide range of businesses have lost most of them. It may be a bus service, a cinema, a pub, a butcher's shop, a bakery, a post office, a bank or a grocery shop. I speak from experience. In hundreds of communities the last vestige of the old order was the corner shop. As other grocers left because they became unviable, the only shop which remained was the Co-op. As villagers became more mobile, they took their business elsewhere.
Do the Government consider the implications of major economic decisions? In the United Kingdom, co-operative societies operate 2,300 food shops, three quarters of them small shops of less than 5,000 square feet. If that seems quite large, let us remember that new superstores are aiming at 100,000 square feet. For example, the Tesco Metro in Wimbledon—it is a very small Tesco—is 10,500 square feet. Co-op shops are spread right across the country from St Austell to Stornoway, Gravesend to Donaghadee, and the Isle of Wight to the Isle of Anglesey. There have been Co-op shops for 150 years.
The co-operative movement does not reap the "peace dividend" in Northern Ireland because its shops have been there all the time. The Co-op has not "returned to the high street" because its shops have never left the high street. Those small shops make an important contribution to the life of local communities. They provide employment to large numbers of people. They allow people to shop in their local area. They provide social contact for the elderly, and parents with little children.
How do the Government regard the consequences of the macroeconomic climate, with the decline and ultimately the death of a village or small community staring them in the face? Are they alarmed, as we are? Do they hold an inquest after the event, as we do? Is there a mechanism, unit or department within a major government department which has the responsibility not only of anticipating the consequences of giving permission for a huge hypermarket but also of cushioning the effect?
In the 1980s, when an industry died, the former Government, although late in doing so, took steps to put something in its place. I see the noble Lord, Lord Elliott of Morpeth, in his place. The noble Lord will

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remember the mines in the north, and the Consett steelworks. Strenuous efforts were made, recognising that when the major economic imperatives were served, they left a problem for the state. Perhaps I may ask the Government what steps, if any, are being taken.
The European Union is right to seek to promote consumer safety and to provide consumers with information but it must also always consider the impact of EC legislation on small businesses. My noble friend Lord Haskel did not argue that regulation was not needed or that regulation by itself is costly. He referred to the difficulty of implementing the regulations. That should be taken into account.
In this country, the Industrial Common Ownership Movement (ICOM) is a membership organisation whose primary purpose is to promote the democratic control and ownership of enterprises by the people who work in them. It is simply stated. It is a segment of our economy which flourishes but needs assistance. What kind of small businesses do I speak of? I refer to the provision of a foster care scheme, artists' studios, a brewery, an employment agency, an investment cooperative, a doctors' co-operative, a medical centre, a wood recycling scheme, childcare services, a Braille project, environmental services, production and retail of organic produce, buying, rearing and selling of racehorse co-operatives, domiciliary care services, translation services and a driving school. That is a snapshot of a tiny segment of the global and national economy but those co-operatives employ thousands of people who are sustained and serviced by the Industrial Common Ownership Movement. Those people—they have guts, drive and faith—are survivors. However, I hope that in 2000 my Government, which I support and to which I am proud to be attached, will recognise that they need more assistance. There are more than 1,000 worker cooperatives of one kind or another.
They need encouragement and support. They urgently need recognition of the contribution that co-operative SMEs can make to the economy in the form of job sustainability. There are a number of projects, and advice and guidance is available through ICOM.
Co-operative development is sporadic across the UK and is largely dependent upon the existence of a co-operative development agency. There are many ways in which the Government, without being too generous or giving a great deal of assistance, can encourage the growth of such organisations.
A positive programme is required. It should be designed to stimulate and create new co-operatives. A co-operatives Act for which the co-operative movement has asked would provide a framework to take the movement out of the 19th century and place it in the 21st century.
I hope that I have indicated the inevitability of change. When I left school in 1939, I moved into a new world. However, there was a great deal of similarity with the old, with small shops and businesses, and busy, successful, happy little people in communities.
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Not a great deal has changed. The scale and the consequences have changed, but the spirit of ordinary people to run their own affairs and to manage them, and to take decisions which affect their community, is still alive.
The debate has enabled the Government to pause in their busy existence. They have enormous decisions to make—for instance, those concerning Rover and so forth—but many of the little people have been well served in the debate by Members from all sides of the House speaking from experience. I hope that the Minister will give us and those outside whose problems we try to articulate hope for the future.
5.2 p.m.
Lord Pearson of Rannoch: My Lords, I, too, thank the noble Lord, Lord Harrison, for giving us the opportunity to have this debate. I trust that he will forgive me if I take issue with two of his main contentions. He urged us to acknowledge the vital necessity of the European single market—I believe that he called it the "primacy" of the single market—which he went so far as to describe as the magic carpet on which we should all float into the glorious European dream. I want to do a little to bring the noble Lord's magic carpet gently down to earth.
He also had some rough things to say about people whom he called "anti-marketers" and "Eurosceptics". I imagine that he meant anti-European marketers. I would say to him that we are not anti-marketers, although we are becoming increasingly worried about the way in which the single market is developing.
Like most businessmen in the country today, the noble Lord confused the European single market with the former Common Market and more generally free trade. What is worrying some of us is the use by our "partners" of the single market's qualified majority voting system to damage our international interests and some of our interests at home. I mention particularly the art market, the destruction of which has caused enormous damage to many of our small and medium-sized businesses. I could mention dozens of other British interests which have been damaged by European legislation.
Furthermore, I must query his contention that joining the euro would be good for SMEs. The noble Lord, Lord Peston, joined him in that. They contended that being outside the euro was damaging to SMEs. However, not many SMEs, certainly not the smaller ones, do business overseas. After all, only 9 per cent of our GDP is generated with the EU, yet EU regulations and other UK regulations affect 100 per cent of our economy.
That is why the Federation of Small Businesses, at its conference on 25th and 26th March, voted by massive majorities, first, not to join the euro. There was a vote of 64,743 against 13,741. It also voted for the following motion by 66,210 against some 5,600.
"This conference feels that if genuine deregulation cannot be achieved through negotiation with the European Union in the field of business laws, the United Kingdom should move towards repealing Section 2.2 of the European Communities ct 1972".

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That, in effect, takes us out of the European Union. The Federation of Small Businesses speaks for some 130,000 businesses and is clearly the largest organisation of its kind in the country.
In addition, the British Chambers of Commerce, which used to be a rather Europhile organisation, is now moving against much of the regulation that is coming our way from Europe and gold-plated by Whitehall. At its Conference 2000 last week, it produced a table of 16 measures which have been introduced since the Government came into power, generating a total cost for UK commerce and industry of some £10.6 billion. That appears to be largely an annual burden, led by the infamous working time directive.
The director-general of the British Chambers of Commerce, in his speech last week, said:
"We reject Government attempts to redefine our £10 billion cost burden out of existence. The figures we use are drawn from the Government's own documents and include the full cost of implementing regulations, plus the cost of administering them".
He went on to quote a figure of 4,000 new regulations introduced by government each year. That comes from the noble Lord, Lord Haskins, the chairman of the Government's own Better Regulation Taskforce. The noble Lord, Lord Haskins, might be slightly over-egging the pudding, but nevertheless that is a staggering figure.
What are the Government going to do about that? They could do much worse than to read again the debate on 18th June last year on the Bill introduced by my noble friend Lord Willoughby de Broke, making it essential to gauge the impact of European Union legislation on this country. I wonder what has happened to that Bill. Do the Government hope that it will gather dust into the long-term future or will they read the debate again and take these matters seriously?
5.7 p.m.
Lord Ezra: My Lords, we have had a most useful debate which was so enthusiastically introduced by the noble Lord, Lord Harrison. Noble Lords have taken part with knowledge and experience and we have had a number of constructive proposals. I suppose that the only exception would be the intervention of the noble Lord, Lord Pearson, who continued a major debate which he opened recently on what should be our attitude towards Europe and the case for withdrawing from the EU. It did not appear to be relevant to the subject under debate.
I shall deal with the subject that we are debating under three headings. The first emphasises the importance of small and medium-sized firms. The second acknowledges that the Government have done much to recognise that importance, particularly in the last Budget. The third points out, as have many noble Lords, that major problems remain to be resolved. This is indeed unfinished business.
There is no doubt about the importance of the SMEs. The noble Lord, Lord Patel, reminded us that 99 per cent of all the businesses in this country fall into that category. On the basis of that statistic, we are,
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indeed, a nation of small businesses. Those businesses cover a whole variety of enterprises, from a large number of sole traders to businesses that employ up to 250 people. They cover the whole area of British enterprise and, more recently, have entered the area of new technologies.
The Government have recognised that and I am pleased that in the last Budget—I like to pay tribute where it is due—they introduced a number of fiscal measures to help small businesses. The most important was the reduction of corporation tax to 10 per cent on firms which earn up to £10,000. They also improved the tapering of capital gains tax, which will encourage investment, and extended capital allowances. These are all important. However, as the CBI said in welcoming the measures, they are, of course, a start. We would like to see more of them.
An important further step taken by the Government is the setting up of the Small Business Service. I believe that it has obtained general support throughout the business sector. It was referred to specifically by the noble Lord, Lord Harrison, in his introductory speech, the noble Lord, Lord Patel, and by the noble Lord, Lord Haskel. I also consider that it is a move in the right direction. Of course, previous governments have taken steps to help small businesses, but I believe that this is an important and imaginative measure.
I was particularly struck by the words in the consultative document which was issued last year that the Small Business Service was to provide,
"a strong voice for small business at the heart of Government ".
I considered that to be of vital importance. Following on from that, I believe that the concept that the chief executive will be consulted on all new legislation likely to affect small businesses is innovative and desirable. The service will also provide what is described as a "local gateway" for advice and guidance to small firms. That will be a substantial task. I hope that, in replying, the noble Lord can tell us that the service will be resourced sufficiently to handle that because the requirements for assistance and advice from small businesses which cover the whole range of our economic activity could be considerable.
Having mentioned the positive steps taken by government, I should like, as many other noble Lords have done, to mention some of the issues which still remain to be done. The noble Lords, Lord Cocks, Lord Haskel and Lord Peston, were among those who referred to this. I should like to refer to two issues, among many, that still need to be addressed.
The first is the problem of start-up finance. That was recognised by the Secretary of State for Trade and Industry when he said in a speech in the other place on 8th March:
"I accept that, currently, barriers stand in the way of many businesses starting up and obtaining the finance that hey need for success".—[Official Report, Commons, 8/3/00; col. 1077.]
He went on to say that many small businesses fail in their first three or four years because they have inadequate finances in their early days. As the Minister indicated, the Government are fully aware of that problem and they are reviewing all the sources of

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finance that are available. Indeed, they have set up an enterprise fund amounting to £180 million to help with start-up. However, that fund has attracted much criticism because of the complications of obtaining support from it. That was specifically referred to by the noble Lord, Lord Peston, and, indeed, has been referred to by the CBI in an otherwise positive response to the Government's measures. It is being hedged around with so much difficulty that the time spent by small firms in trying to extract finance from it can sometimes be regarded as entirely negative. Therefore, it remains a real problem.
I recently came across a case in point with regard to a company connected with my old industry—the coal industry—that was set up to exploit methane presently being vented to the atmosphere from abandoned coal mines. The company is trying to collect the methane and supply it to local enterprise. However, it encountered great difficulty in obtaining the start-up finance for the project. Eventually, it asked a venture capital firm to help it and now has two mines from which it is collecting the gas. One hundred and fifty disused mines in this country are wasting what would otherwise be a valuable resource. The company is trying to develop it. I believe that it is unfortunate that, whereas the capture of methane from landfill sites receives special support, the firm that had the innovative idea of capturing it from disused mines was unable to obtain the finance. No doubt, if it had persevered for a number of years it might have received government help, but it went elsewhere.
Another issue, referred to also by many noble Lords in the debate today—in particular, the noble Lord, Lord Haskel—is the growing burden of regulation. Of course, many regulations are entirely desirable, but it is the way in which they have to be dealt with by small firms that creates the problem. One puts oneself in the position of a small firm with two or three persons employed. It could be frustrating if a large part of their time is spent unproductively in filling in forms, trying to understand what answers they must give and negotiating with the government departments concerned. It is a problem which I know the Government recognise. I hope that the Small Business Service will address it as something that must be dealt with on behalf of its customers.
I have concluded that, having accepted the important position that small firms occupy in the economy and the many aspects of the economy that they cover—some of those aspects have been mentioned by noble Lords who have spoken—we are moving into a phase where, I believe, practical action is being taken. In the course of our debate today it was satisfactory to hear that everything is not simply being left to government and that there are other initiatives. The noble Baroness, Lady Warwick, for example, told us about the important part that universities play in helping small firms, particularly with the new technologies. The noble Lord, Lord Mason, told us about the Prince's Trust and the remarkable task that it performs, buttressing and supporting what government are doing. The noble Lord, Lord Graham
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of Edmonton, told us of the concept of partnership, particularly in the Co-operative movement, in which he has played such an important part.
Therefore, we are not turning to government exclusively, but government must set the framework; that is what governments are for. I believe that the present Government are building on what previous governments have done. I do not believe that this is a party political issue. I believe that all governments have recognised this problem. They are building on what has previously been done and expanding on it.
We need to recognise, however, that there are still many problems. Some of them have been mentioned today but there are many others. I am glad also, in spite of what the noble Lord, Lord Pearson, said, that at the recent Lisbon conference there was agreement, largely as a result of the suggestions made by the UK delegation, that special efforts should also be made at European level to deal with the important issue of small firms.
5.19 p.m.
Baroness Miller of Hendon: My Lords, I join other noble Lords in thanking the noble Lord, Lord Harrison, for initiating this important and interesting debate, which he did so well. It has encouraged many excellent contributions.
As has been said several times throughout the debate, SMEs are the foundation of our future prosperity. I congratulate the noble Lord, Lord Patel of Blackburn, not only on his excellent speech but also on making his maiden speech on such a very important subject.
SMEs can prosper only if they are allowed to get on with creating profits and, in the same process, creating jobs. There are fewer opportunities now than in the early 1900s for new industries which produce tens of thousands of new jobs. Rather it is the 10 or 20 jobs here, the 50 there and so on which will be the pattern of the future. According to the Federation of Small Businesses, in the UK, over 94.4 per cent of all businesses employ fewer than 10 persons, so they are very small businesses indeed.
Those small businesses do not have internal accountants or personnel officers, so in order to encourage them, first, to start up and then to develop and grow, they really need to be nurtured and not hindered by too much regulation and all the burdens that come with it.
With that preamble, I immediately give a cautious welcome to the launch of the Small Business Service, especially with David Irwin as its chief executive. Mr Irwin demonstrated his independence when he criticised the failure of the Government to produce their promised guidance to the parental leave directive even a week before it came into force. He described that as being "just ridiculous.".
As the noble Lord, Lord Ezra, has just said, it is not just the directives—many of them may be excellent—but the way that they have to be implemented by small businesses that causes the problem.

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The reason for my caution is that with so many such schemes, the Small Business Service will obviously have to be judged by results. As it has only just been launched, it is obviously much too early to say, but I hope that Mr Irwin will be able to continue as he has apparently begun and be as independent of government as possible. If it follows the model of the American Government's Small Business Administration, his role as chief executive should be nearer to that of an advocate for small businesses. We must hope that Mr Irwin's objectivity will not need to be constrained by the source of funding for the SBS and his lines of reporting. We hope that he will be able to look to all government departments for funding and to reprioritise those funds for SMEs with the backing of all the Ministers concerned. We hope that the Business Link teams, with the expert advisers and counsellors, which will be funded by the SBS, will meet the objective of finding a solution to the manifold problems of small businesses, especially those which are just starting up.
This debate is to call attention to what Her Majesty's Government and the EU are doing to promote small businesses. At this point, I should say that the implementation of many of the directives coming from Europe is placing great burdens on small businesses. I shall concentrate on that. Also, I believe that in relation to some of the Government's legislation, they have not thought through how it affects a very tiny business. It may seem that I am just talking about the bad things but I am quite sure that that will be remedied by the Minister putting the other side of the picture.
Employers are now being burdened with the complicated paperwork and costs (estimated at about £100 million per year) of administering the working families' tax credit. Small firms, by their nature, are likely to be employing a high proportion of the recipients of the payments without having the internal resources to act as unpaid benefits officers. Do the Government really believe that employers will want to get involved in the employees' personal and private family situations? Does anyone believe that that burden will be an incentive to employers to take on staff if that involves administering working families' tax credits?
The part-time workers directive was imposed on Britain this month as a result of the Government's break-neck and irresponsible signing up to the Social Chapter. Part-time workers may now become entitled to the same benefits as full-timers, but there is no definition of a "part-time" worker in the directive, nor, indeed, of a "full-time" equivalent. Employers will be required to provide written statements to part-time employees informing them why they are not to be given pro rata conditions. That will provide a feast day for the lawyers.
But that written statement is not a requirement of the European directive. Chris Humphries, the Director-General of the British Chamber of Commerce, described it as a blunt instrument and
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accused the Government of gold-plating the EU directives and of imposing unnecessary burdens which small firms will find very difficult to shoulder.
From an entirely laudable ambition to have identical regulations affecting similar goods and services throughout the EC, a giant industry has been spewing out long-winded and verbose legislation of unimaginable prolixity. I remember reading—I only wish that I could have found the quote for today's debate—a comparison between the brevity of the Ten Commandments and the thousands of words that it took to regulate the thickness of the covering on a chocolate biscuit!
But more seriously, the Government never lose the opportunity to proclaim themselves the friend of business, especially SMEs. However, only last week we read of the unfortunate Mrs Janet Stephens who employs just seven people making canopies for babies' buggies. Courtesy of Hector, the Inland Revenue friendly tax inspector, 234 pages, weighing 1¾ pounds—I beg your Lordships' pardon, 795 grams—thumped on to her desk. Your Lordships will be relieved to know that that included a two-page leaflet telling her how more supplies of that bumf may be ordered just in case she did not have enough.
Naturally, I should like to give credit where credit is abundantly due; that is, to the Companies Registry. For years, the Small Business Bureau, of which, before I came to the Front Bench, I was an active member, has been campaigning against the unnecessary complexity and repetitiveness of the annual return which every company must file. Last year, the registry produced a simple new form containing all the data on file and which the company only has to sign and send 'back with any amendments noted. That will certainly save most SMEs time, professional fees and the risk of late filing fines. I believe that that is very good.
Although the Government claim to be the friend of small businesses, they have piled costs and overheads on them. When I was dealing with the national minimum wage from this Dispatch Box, despite my begging them ever so politely, they refused to give similar exemptions which are allowed for small businesses in the United States of America, despite the fact that that country invented the national minimum wage. They even refused to exempt workshops where disabled people work, not for wages but for therapeutic purposes. They refused also to exempt holiday camps, where many of the instructors were simply students taking on a holiday job.
The Government fell over themselves to sign up to maternity leave, parental leave and time off for so-called "domestic emergencies" but alt the same time, they adamantly set their face against exempting the smallest of corner shops and village stores and very small businesses. That was not to conform with the requirements of the single market or even for the sake of uniformity throughout the EU—on the mainland, such exemptions are granted—I believe that it was because our Government were anxious to be seen by their partners in the EU as more European than they

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are. That little group of regulations alone costs some £5,000 million per year, a large part of it falling on SMEs.
The working time regulations, which were sneaked through Parliament by being laid before Parliament the day before the 1998 Summer Recess, are producing a deluge of paperwork affecting more than 1 million businesses. The Government's own estimate of the cost of that alone is £2,300 million per year every year. By coincidence, that is the same amount as is produced by 1p on income tax—
Lord Pearson of Rannoch: My Lords—
Baroness Miller of Hendon: My Lords, this is a timed debate and I hope that the noble Lord will forgive me. As I do not want to overrun my time, it would be very discourteous.
We seem to have the knack of producing regulations that are more stringent than our obligations require them to be and more stringent than our competitors on the Continent impose on their own industries. That is the point I wish to make. The process, to which I have already referred, we describe as "gold-plating". The Environment Agency, for example, is proposing new regulations on the pig and poultry industries which will cost a reported £1,250 per day to enforce. Those regulations do not apply to the rest of the EU. They do not even apply in Scotland.
On Tuesday last week, the Secretary of State triumphantly announced new regulations relaxing the requirement of SMEs to have their accounts audited, which he claimed would save them up to £180 million per year. I think the phrase "up to" is good, but it might be meaningless, as most of the firms will still need professional assistance to prepare their accounts for tax purposes, and no reputable accountant will probably wish to produce a balance sheet without an audit. However, either way, it is certainly a step in the right direction.
What emerged from the recent Lisbon conference, as from so many similar meetings of heads of state and trade Ministers is, I believe, a lot of lofty rhetoric. I do not doubt for one minute that the heads of state sincerely meant every word of their very high-sounding communiqué. But as so often is the case, it is easier to say the right thing than to do the right thing. Politics proposes, but it seems to me that Brussels disposes.
I have urged the Government during several previous debates to bear in mind that the corner shop is not the same as a giant conglomerate. The noble Lord, Lord Cocks, made that clear when he referred to Asda. It was very careful of noble Lords opposite to refer to Asda and Tesco and to make sure that they did not talk about Sainsbury, but that is just the polite way in which this House conducts its business.
The same rules and regulations which can easily be absorbed by large businesses cause a wholly disproportionate burden to small and medium-sized enterprises. The noble Lord, Lord Graham, was
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careful to say that he thought I had experience of that. Fortunately, I sold my business before all these rules and regulations were introduced. Looking at them now, standing here at the Dispatch Box, I am glad that I did that.
I ask the Government to examine every regulation they make, not from the point of view of uniformity but of proportionality to small businesses. That is the key point. On his return from Lisbon, the Prime Minister called for reforming the EU. He said that we should encourage the EU to follow the United States and UK models with an emphasis on deregulation and flexible labour markets. But as will be seen from the many examples I have given, we are no less bureaucratic. In some cases, we are more bureaucratic than our European competitors. They are sometimes called our "partners", but we should not forget that they are our competitors.
As Adair Turner pointed out recently, Britain's low unemployment and low inflation reflect the profound liberalisation of the labour market introduced by the previous administration. I believe, therefore, that much of the "knocking" about what we did was somewhat unfounded. I urge the Government not to throw away the advantage gained then. Last year, Britain's commerce was inundated with a record-breaking 3,468 new regulations. We are more than a quarter of the way through this year. I ask the Government drastically to cut the number in the nine months or so left to come.
5.33 p.m.
The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I start by thanking the noble Lord, Lord Harrison, for initiating this debate and, indeed, thank noble Lords for the many interesting contributions. I congratulate the noble Lord, Lord Patel, on his speech. It is always a pleasure to hear the first speech in this House of someone who will obviously be a star performer. We look forward to his future contributions. Perhaps I may say on a personal note that I hope he will continue to champion the cause of small businesses. That is clearly a subject of which he has great personal knowledge.
I welcome the opportunity to respond to the debate on behalf of the Government because I believe that there is a good story to tell. The Government are working to create an environment that enables business to meet the challenges of the modern global economy here in the UK, Europe and throughout the world.
I want to focus on small firms, as did most of the speakers today. As many noble Lords said, we recognise that government does not create wealth; small businesses do. Small businesses are the future of our economy and the Government's role is to create the right conditions for them to thrive and prosper. The following statistics show why that is so important. I endorse the comments of the noble Lord, Lord Harrison, that small businesses are, in fact, big business.

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There were an estimated 3.7 million small businesses in the UK at the start of 1998—that includes 2.4 million sole traders—compared to just 25,000 medium-sized businesses and 7,000 large businesses. In 1998 2.4 million businesses were run by sole traders or partners without employees. In 1998 small businesses with under 50 employees accounted for 99 per cent of businesses, 45 per cent of non-government employment and, excluding the finance sector, 38 per cent of turnover.
We have heard much about the need to reduce the burden of regulation. We agree that that is central to building a better business environment. I shall turn in a moment to some of the things we are doing on regulation and how we are managing the process to reduce the number. The noble Baroness, Lady Miller, talked about 3,400 regulations. That is last year's figure and is slightly below the average of the former government in their last two years. That figure is not totally reliable. It involves all sorts of things—some of which are not regulations—to control businesses, but also to enable them to do things. However, if we take that figure alone, it is below what was the previous running rate.
We live in a knowledge-driven, global economy, where information and finance can move around the world at the click of a mouse. That affects the way in which people do business. We must ensure that business can take advantage of the new opportunities which now arise with such rapidity. That means providing economic stability, introducing fiscal measures which encourage enterprise and investment, promoting fair competition, investing in skills, encouraging innovation and removing barriers to finance, especially for the innovators and risk takers that generate wealth in the small firms sector.
Our first task over the past two-and-a-half years of Government has been to establish a platform for economic stability and put an end to the damaging cycle of boom and bust. As someone who has spent most of his life in business, there is nothing more damaging for businesses big or small than a boom and bust situation.
We are aware that the strength of sterling causes problems for many businesses. However, taking the point made by the noble Viscount, Lord Oxfuird, I totally disagree with his analysis of what can be done about it. The idea that we should weaken the strength of the pound, which can only basically be done by taking policies which will allow inflation to grow in the economy, is to return to that cycle of boom and bust which is so disastrous for small businesses.
It is worth reminding ourselves that in the late 1980s and early 1990s 1 million businesses went under, 1 million jobs were lost in manufacturing and 2 million jobs totally disappeared. I do not think that that is the sort of situation that small businesses want to see happen again. The people who suffer most from that sort of boom and bust are those people in industries such as the machine tool industry. As was
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rightly pointed out, they are the people whose investment or sales are cut right back in those periods of recession and slump.
The Viscount of Oxfuird: My Lords —
Lord Sainsbury of Turville: My Lords, I am sorry; this is a timed debate and there are a lot of questions to answer.
I should like to say also that machine tool manufacturers are the sort of people who can raise their productivity; they can use new technology to improve their performance and take advantage of the schemes mentioned by my noble friend Lady Warwick.
Noble Lords on the Benches opposite may not want to be reminded that the previous administration managed an economy which saw insolvencies peak at nearly 16,000 in one quarter in the early 1990s and the lowest number of business start-ups on record—just 77,000 in one quarter. But over 1.2 million new businesses have started up in the lifetime of this Government. There were over 439,000 new business start- ups during 1999 alone. In contrast, the number of business closures during 1999 (386,000) was the lowest for a decade. I believe this demonstrates that the Government are providing the right economic platform on which all of our small businesses can achieve their full potential.
A major step forward was taken with last month's Budget. As a result, Britain now has its lowest ever corporation rates for small companies and, with the 10p starting rate from this month, the lowest starting rate among major industrialised countries. The measures introduced this year, together with the 3p cut in the small companies' rate already announced, will cut corporation tax bills of small companies on average by nearly 25 per cent.
Budget 2000, as has already been mentioned, set out a substantial package of further tax measures to help small businesses. These include cuts in capital gains tax; permanent first-year capital allowances; 100 per cent first-year capital allowances for investment in ICT by small businesses; an R&D tax credit for SMEs; and a new all-employee share ownership plan and enterprise management incentives giving employee share ownership in the UK its biggest ever boost and helping small firms to recruit and retain the key staff they need to succeed.
In answer to the point of my noble friend Lord Graham, we are taking action to encourage employee share ownership because that is clearly an important aspect of new businesses over a period of rapid growth. A final feature of the Budget was tax reliefs to promote corporate venturing, encouraging large and small companies to work together for their mutual benefit.
Let me now turn to the Small Business Service, which is a key part of the Government's overall strategy to create an entrepreneurial Britain. I welcome the endorsement of my noble friend Lord Harrison and say to my noble friend Lord Peston that one of the prime tasks of the SBS will be to put the

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viewpoint of small businesses right at the heart of government. It has three over-arching aims: a strong voice for small business at the heart of government; world class business support services; and to mitigate the effects of red tape. And no one should doubt that David Irwin, the chief executive of the Small Business Service, will make a great success of the venture. He has great experience in this area and has already shown considerable independence in that regard.
At the same time, we need to do more in relation to ethnic minority businesses. We are therefore setting up an ethnic minority business advisory forum to act as a sounding board to help to address the kinds of issues mentioned in this debate. I agree with my noble friend Lord Patel that, if Mohammed will not go to the mountain, the mountain should go to Mohammed. In the case of the Small Business Service, it is key that the people involved go out into the field, visiting small businesses, rather than sit in their offices waiting for people to visit them. Small businesses do not have the time.
The noble Baroness, Lady Byford, raised the question of sub-post offices. We will certainly make available what information we have in relation to some of the deficiencies in the current system which lead to considerable opportunities for fraud. We cannot delay the modernisation of the benefits payment system any longer, though in fact there will not be any change to existing arrangements until 2003.
It should be said, on the other side of the equation, that, with the Horizon project, sub-post offices will have the ability to provide more banking services. With the closure of some rural banks, which is regrettable, they will have an opportunity to take their place. It should be made clear that those receiving benefits through sub-post offices will do so without deductions. People will still be able to receive benefits in cash. As I said, there will be no changes until 2003, so there is a lot of time to take account of this.
I agree with the praise of my noble friend Lord Mason for the Prince's Business Trust. It is an excellent and highly successful initiative which achieves both economic and social objectives, and shows how they can be achieved at the same time. The New Deal for young people allows 18 to 25 year-olds to select a self-employment option at the gateway. Young people receive financial support and advice throughout the self-employment route and the guidance of a mentor. But we will always look at new ideas, and are currently looking at professional, regional innovation funds, which could help to fund the sort of innovation centres my noble friend mentioned.
The noble Viscount, Lord Oxfuird, raised the question of the boundary between the Small Business Service and the Learning and Skills Council. There is no specific problem in that regard. The Small Business Service does not have training as a primary target, whereas it is absolutely integral to the objectives of the Learning and Skills Council.
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I should like to say to my noble friend Lord Cocks of Hartcliffe that, while we want to see small businesses succeed, they in turn must consistently adapt to the changing economic scene and the changing needs of their customers. Regrettably, there will always be failures in management and it is not the role of government to intervene to support those situations. The role of government is to create the right environment and incentives; it is for business to take advantage of the opportunities.
I was delighted by the speech of my noble friend Lady Warwick. She identified something of great importance; that is, the cultural change taking place in our universities. It is extremely impressive. The number of spin-off companies and the research now being done for companies has risen dramatically in recent years. We want to build on the success of Science Enterprise Challenge and the HEROBC scheme. I agree that the universities of today should be at the heart of our knowledge-driven economy. They should not be seen, as so often was the case in the past, as parasites of our economy, but as being at the heart of our knowledge-driven economy. I was greatly encouraged by the way the universities are rising to this challenge and incentive.
My noble friend Lord Graham raised the question of the impact of economic change on urban and rural communities. That is something that both the DTI and the DETR are conscious of. That is why it is essential to promote new sources of growth and jobs created by SMEs as the way forward.
The noble Lord, Lord Pearson, to our surprise, raised the question of Europe. I should remind him of the survey conducted by the British Chamber of Commerce which found that 38 per cent of companies favoured joining or making a commitment to join the euro; 36 per cent were against and 24 per cent were for keeping the options open. Also, the figure of £10 billion needs to be looked at carefully; £7.5 billion of that is the implementation of the working time directive. This Government believe that that was an important and highly desirable piece of legislation. We make no apology for it, nor for the cost involved.
Let me turn briefly to the future. The Small Business Service will make sure that the Government think "small" first. David Irwin has a specific mandate to examine new and existing regulations and is already making his voice heard. To make it easier to remove the burden of regulation, the Government are introducing a Bill that will enable changes to be made without having to wait for space in the main legislative programme.
We have acted to do something about deregulation. The new Labour Government have introduced effective mechanisms for tackling red tape across government. The Government have appointed a Regulatory Reform Minister in each department to examine and get rid of unnecessary regulations and to minimise the burden of any new, necessary proposals by consulting with business.
The Government have established a top level panel to call Ministers to account for the regulatory performance in their departments. These reviews have

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now begun. Following the meeting on 27th March, the Department for Trade and Industry and the Department for the Environment, Transport and the Regions agreed to a package of specific regulatory reforms. Both departments issued press notices, as well as issuing a joint notice with the Cabinet Office. In the next meeting on 18th April, the panel will scrutinise measures being put forward by the Department of Health and the Home Office to reduce regulatory burdens. Again, a press notice will be issued.
Business has been given a powerful voice in this process. David Irwin, Chief Executive of the Small Business Service, and my noble friend Lord Haskins of the Better Regulation Task Force are both members of the panel. David Irwin's role will be to put the special needs of small businesses at the heart of the Government's regulatory reform programme.
I turn now to some of the specific actions that we have taken to minimise burdens on business. We have merged the Inland Revenue and the Contributions Agency, thus ensuring that companies have to deal only with one organisation and one company audit. This was recommended by the previous administration's deregulation task force in 1995, but was something that that administration failed to do.
We are modernising the weights and measures legislation. So far as concerns the Employment Relations Act, we have exempted employers with 20 or fewer employees from the trade union recognition procedures. We have exempted small shops from the EU requirement to show the unit price of pre-packed goods. We have also exempted employers with four or fewer employees from the requirements to provide access to stakeholder pensions and deduct pension contributions.
Last month, the Chancellor of the Exchequer ordered an investigation into competition in the provision of banking services to see whether the market is working effectively and whether it is serving the interest of smaller firms in the United Kingdom. From the viewpoint of the small business, I believe this to be the key issue. I was pleased that my noble friend Lord Peston raised the matter. Much still needs to be done on the question of finance for small businesses, but we have already taken a number of steps. We shall continue to look at this area and take more steps in the future.
I was delighted that my noble friend Lord Harrison drew attention to the serious harm caused to small businesses by the late payment of commercial debts. The Government are determined to change the late-payment culture that existed under the previous administration. In November 1998 we introduced the Late Payment of Commercial Debts (Interest) Act and we have also taken very strong action so far as concerns government payments. I should point out to my noble friend Lord Peston that the Government have improved the overall payment performance of central government year on year since taking office. We shall continue to publish data annually showing the percentage of invoices paid on time by central government.
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As this debate includes the European Union, I should also say that I believe the Lisbon summit also moved the date very firmly forward in terms of the enterprise agenda. Some very specific and clear targets were set at that time.
In summary, through fiscal and monetary reforms, the Government have created a sound and credible platform of stability and long-term economic growth. Now, with both the lowest corporate tax rates for businesses ever and the lowest ever capital gains tax rates for long-term investors, Britain is becoming one of the best places for companies to start, to invest, to grow and to expand. That is why we are seeing so much inward investment to the UK at the present time.
The Government want to see a highly competitive environment for business in the United Kingdom, but we also want to make certain that people have the knowledge, skills and equipment to create competitive advantage in the fast-moving economy in which we now live. The Government want to create an environment where opportunities for enterprise are open to all—young or old, male or female and regardless of ethnic origin or where people live—and to make sure that the global knowledge-based economy is a bringer of opportunity and not a threat.
We cannot stop change; we cannot hold back global forces. However, we can provide economic stability. We can provide people with opportunities to upgrade their skills through organisations, such as the University for Industry, and we can provide incentives for innovation and enterprise. In all of this we will listen carefully to the voices of small businesses so that our policies are always attuned to their needs. In the future, the Small Business Service will always make certain that the voice of small firms is heard in all parts of government.
In a period of rapid economic change small businesses are faced with many opportunities, as well as many difficulties. Their speed of response and flexibility gives them a real advantage. I hope that I have made it clear in this debate that the Government see small businesses as playing a vital role in the knowledge-driven economy and that we want to enable and incentivise them to seize the many opportunities that they have for profitable growth.
5.55 p.m.
Lord Harrison: My Lords, in concluding this debate, perhaps I may take up the theme of my noble friend Lord Graham of Edmonton who said that he had enjoyed today's debate. I have thoroughly enjoyed it, for two reasons. I enjoyed it, first, because I have learnt an awful lot today about small businesses. I thank each and every speaker for his or her contribution to the debate about the role of small businesses. Secondly, I enjoyed it because of the diversity of views expressed by all speakers. In that respect, I believe that we reflect the diversity of small businesses in Britain today. Indeed, our discussion has ranged from the Prince's Trust to the role of universities, to the problems of post offices and ethnic communities and to the possibilities for workers' co-operatives, to name but a few.

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We even invaded the football pitch of some of the smaller teams around the country in our debate—for example, Barnsley, Blackburn and Bristol. I wonder why there is no major team in the Premier League whose name begins with the letter "B". However, I recall that Sir Alex Ferguson and his colleagues are in Strasbourg today in an attempt to try to change the Bosman ruling on the single market, which so affects our football teams—especially the smaller clubs.
I should just like to make one remark that I have been provoked into making by the noble Lord, Lord Pearson of Rannoch. I should tell him that life has moved on. I invite him to walk down the Corridor of this House into the Salisbury Room. I do so because he made mention of the art market. I also invite the noble Lord to inspect the catalogues from Sotheby's, Bonham's and other major art houses here in London. If he does so, he will find that even in respect of sales of British paintings the suggested sale prices are now expressed in both pounds sterling and the euro.
During our debate today much mention was made of shops, from corner shops to the major supermarkets. However, this debate has not been a talking shop: we have really made a contribution to the well-being of small businesses. I hope that we can go further in future debates to ensure that small businesses are put at the heart of Britain's business. I thank all noble Lords for their contributions. I am advised that I need to beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

NHS: Disability Equipment
5. 59 p.m.
Lord Ashley of Stokerose to call attention to the recent Audit Commission report on the provision by the National Health Service of specialist disability equipment; and to move for Papers.
The noble Lord said: My Lords, the Audit Commission's report on equipment services for old and disabled people is a truly shocking indictment. It vividly demonstrates indifference, neglect and incompetence which have lasted for decades. The report examines five essential services provided to some 4 million people, including 700,000 wheelchair users, 400,000 users of orthopaedic shoes and callipers (orthotics), 65,000 users of artificial limbs (prosthetics), 2 million people using National Health Service hearing aids, and 1 million users of community equipment services who require basic but essential equipment.
The Audit Commission is in no doubt about the value of these services. Its report states:
"Equipment services provide the gateway to independence, dignity and self-esteem for many older or disabled people. Proper equipment is central to effective rehabilitation; it improves quality of life: it enhances people's life chances by allowing access to education; and it reduces the effects of illness and disability at very low costs compared to other forms of healthcare. It is no exaggeration to say that these services have the potential to make
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or break the quality of the lives of many older or disabled people, and the lives of those 1.7 million people who provide informal care for more than 20 hours each week. Equipment services are central to the Government's drive to promote greater independence for older or disabled people".
I agree with the Audit Commission. The value of good equipment services is undeniable. But so, too, are the consequences of bad equipment services. What kind of life is it if a person is lost in a fog of misunderstanding because of a poor hearing aid; or cannot walk without pain and discomfort because orthopaedic shoes are faulty; or cannot cope with a heavy, unsuitable wheelchair; or, when confined to bed, develops painful bed sores because a special mattress is not available? It is an absolute disgrace that this equipment, which is so obviously needed, has not been routinely available to a universal high standard. The record is deplorable and disabled people are suffering as a result.
I mention some examples. Some noble Lords may have heard of the woman who lost her hands and legs. She said that she was given a poorly made hook for a hand, and artificial legs which did not fit and caused blisters. She said that she was in total desperation and that going to the prosthetics department of the hospital was like stepping into a time warp; nothing had changed in 50 years. She eventually obtained excellent prostheses privately, but only because of a wealthy philanthropist, which, of course, is simply not an option for millions of other disabled people.
What are we to make of the trust which had an explicit policy of not issuing pressure relieving mattresses until bed sores had developed? Sores are not only painful. They take a long time to heal and can also be life threatening. My only criticism of the Audit Commission is that it did not name and shame the trust.
The Audit Commission's report is comprehensively damning. It found that essential services get no priority. Waiting times are excessive. The patient often receives equipment that is unsuitable or painful. It is an incredible saga. The views of patients are not sought. Good practice is not copied. Research and development are inadequate. Specialist, multidisciplinary centres are lacking. Referral systems are poor. So, too, are information systems. Management is weak and inadequate. There is no feedback or audit of services or failures. A conflict of interest can exist between the clinician and the salesman selling the equipment. That is an incredible saga of incompetence. Any one of those shortcomings would be a cause for concern. Added together, they are a cause for anger and condemnation.
This nation prides itself on progress. However, the report's findings regarding equipment services take us back to the early part of the previous century. All too often equipment turns out to be out of date. This is especially true of hearing aids. More than half of the hearing aids provided by the National Health Service are the cheapest and the most basic. Those are the official facts. It must be a major reason for one-third of the aids being infrequently or never used. The pilot digital programme initiated by the present Government is welcome, but I wonder why it was not

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introduced years ago. The substantial advances in digital technology in the private sector have existed for a long time.
In view of the enormous number of inadequacies it is no surprise to read not only of disabled people receiving poor equipment, but, as a result, of much financial waste with faulty equipment left unused. If people are forced into institutional care because of inadequate services, the cost escalates. Everyone loses—disabled people, the Treasury and society as a whole.
There are some bright spots, some good centres and some helpful local authority service providers. However, good practice is not copied. We hear a great deal today about the postcode lottery. The report reveals gross inequalities between regions and within them. It states bluntly that the standard of service is "unacceptable" in many parts of the country.
The report is a grave reflection on those who were responsible in the past. I welcome the present Prime Minister's response when he said,
"We cannot have a situation where older and disabled people are let down in the way this report suggests".
I want to raise the question of how it has happened that millions of disabled people have suffered so much and so needlessly. Who is responsible? Very little, if any, of the material in the Audit Commission's report is new. All that the report has done is to find evidence, collate it and present it admirably, thus authenticating something we have known for years.
So, we must ask, did Ministers of the Tory government, in power for 18 years in the 1980s and 1990s, know about this state of affairs? If so, what did they do about it? A well informed report by the noble Lord, Lord McColl, in 1986 complained about the unhealthy lack of competition in the prosthetics market. But what happened next? Very little, it seems. The Audit Commission report states that few new suppliers have entered the market since. Overall we have to conclude that if effective action had been taken during those years on the issues dealt with by the Audit Commission, this sorry situation would never have arisen. The government of that time bear a heavy responsibility.
Today, fortunately, there is a new spirit in the air. The voluntary disability organisations have a new spring in their step. The vigorous organisation, emPOWER, a consortium of charities, has made a major contribution to these key issues by its conferences, charters and case studies. I pay tribute to it.
The welcome for the Audit Commission report by the Prime Minister, the statement by the Minister of State at the Department of Health, John Hutton, that work has already started to drive up standards in the main areas of the report, the setting up of a working group by the Department of Health to see how the orthotics service can be improved, and the establishment of the Disability Rights Commission before the end of this month—I think on the 28th—are all happy auguries for the future.
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But they are just that—auguries. Nothing more or less. We need now an absolute commitment at every level to make radical improvements, and to make them a high priority. We need to sustain the momentum rather than have a seven-day wonder.
The report makes some excellent and welcome recommendations which require changes in organisation. But the main change needed now is one of attitude. Unless we stop regarding equipment for older and disabled people as unimportant and dispensable, we shall make no substantial progress. We require now—I hope my noble friend can give the House such an assurance—a clear timetable of improvements that can be expected, and when, and an explanation of how they will be monitored by the Government. Nothing less will do. Those of us with a special interest in disability will carefully monitor progress.
If the Government follow the Prime Minister's constructive lead and vigorous action is taken to deal with the shortcomings outlined in the report, we shall at last provide older and disabled people with the quality of equipment services they deserve, undoubtedly enriching their lives. My Lords, I beg to move for Papers.
6.12 p.m.
Baroness Greengross: My Lords, I congratulate the noble Lord, Lord Ashley, on securing this debate on such extremely important issues. As he said, the Audit Commission has produced an excellent report. It highlights particular services which are of great importance to many people. It will ensure that they are given at least a higher priority than they have been in the past.
The report demonstrated how poor and patchy the service often is; the long wait that people often have to endure to obtain what they need; that individual needs are frequently still not met; and that the equipment is often poorly fitted and arrives after individuals have waited for a very long time.
I also welcome the recommendation in thy report to consult service users and their carers. In regard to carers, I am sure that the noble Baroness, Lady Pitkeathley, will undoubtedly address their specific needs. I should like to mention the needs of individual elderly, frail people who often care for chronically sick and disabled elderly partners, usually spouses. Such people need specialist equipment—hoists, stair lifts, baths and so on—to make life bearable and to ensure that the cared for person is able to stay at home—a big cost saving to public services. It would also alleviate much personal suffering and restore dignity to many people.
I want to stress the fact that two-thirds of disabled people are elderly. Their disabilities are often multiple, both in cause and in effect. They are often neglected by comparison with the more frequent acute tragedies which tend to affect the younger victims of accidents or injuries. The disabilities which affect older people are often associated with their age and often become more incapacitating over the years.

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Finally, I wish to mention rehabilitation. Last year my own organisation, Age Concern, produced a report entitled Rehabilitation discovered. It demonstrated that the medical profession is often more comfortable and better trained to deal with acute conditions. Staff and patient expectations are often very low. Good rehabilitation services can help many people with disabilities to regain their independence, but they require prior investment, particularly in community-based services.
In its report, the Audit Commission recommended the provision of integrated rehabilitation centres which would provide clinical and managerial leadership. For this a different culture is needed, as the noble Lord, Lord Ashley, said, in which users and professionals work in partnership to obtain the services that they need. We would like to see a new national service framework for disablement services established by the Government, to set national standards and to define service models which would significantly improve the independence and dignity of life for many older and disabled people.
6.15 p.m.
Lord Morris of Manchester: My Lords, my good and noble friend Lord Ashley has done the House an important service in securing this debate. Since it takes place in parliamentary time allocated to these Benches, disabled people will also be indebted—as I am—to Labour Peers generally for having agreed, within a week of its publication, to give the Audit Commission's report such priority.
The noble Earl, Lord Snowdon, expressing deep concern about the report in a speech he made last Thursday, called it "a real shocker". That was no exaggeration. The report describes in graphic detail the outdated and unusable equipment supplied to disabled people by the NHS and local authorities alike and the inhumanity of the treatment meted out to them. It cites the case of a woman who has waited 12 years for a hoist to help her to move her chronically sick husband in and out of bed. We are told as well of the 25 year-old woman, referred to so movingly by my noble friend, who lost both her hands and legs when she was hit by meningococcal septicaemia, a rare form of blood disease. Let me briefly remind the House of the extent of preventable suffering in this shocking case. She was given a poorly-made hook for a hand that did not work properly, and artificial legs that did not fit. The report quotes her as saying:
"They had cut these two enormous holes in the front which caused terrible problems with blisters. I was in total desperation".
Last year she won a "Pride of Britain" award for outstanding bravery, and her life was transformed when publicity about her plight led to a benefactor paying the £27,000 bill for the new limbs she now wears. Memorably, she told the Audit Commission:
"It was very important: children and young women need a limb that looks like a limb, not something cobbled together and covered with an orange stocking".
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Another case cited is that of a three year-old child who was born without a right foot. Her parents complained of long delays in obtaining an artificial one. When it finally arrived, the quality was poor. Of three prostheses made in nine months, one split, one was too small and the other was too large. She, too, eventually received private care.
A quarter of the people who have artificial limbs provided by the NHS cannot use them properly due to poor fitting that causes discomfort and pain. A fifth of amputees wait for more than six months for a first fitting of their artificial limbs. Nearly one in five wheelchair users has to wait more than two months for delivery and the Audit Commission's controller says that the policy of promoting independence for disabled people in the community is undermined by,
"long waiting times, unclear eligibility criteria and poor-quality products".
What compounds the concern and anger of the disability organisations with which I have discussed the report is that it only confirms what they have been telling Whitehall and Westminster for years about the extent of avoidable hardship among disabled people who depend for their mobility and independence on equipment from the NHS and local authorities. The organisations claim that Whitehall's main preoccupation has been with initiatives such as the costly and now discredited and abandoned Benefit Integrity Project, not with improving disability equipment or increasing the take-up of disability benefits. They point out that not one case of proven fraud was revealed by the Benefit Integrity Project after over 40,000 visits to the homes of disabled people by DSS inspectors and that Ministers themselves have said that the amount unclaimed in disability living allowance alone may exceed £6 billion.
Of course, my noble friend who will be replying to this debate speaks as a health Minister and these other issues are the responsibility of the DSS; but disabled people and their organisations say that repetitive emphasis has been put by Ministers on "joined-up" government and that palpably it cannot happen when priorities are so ill chosen and the shortcomings of one department undermine the policies of others.
Let us take one example from this scathing report. It says that people are being forced unnecessarily into nursing homes, costing the NHS millions of pounds when, with proper help and equipment, they could live in their own homes. Millions more are being wasted, insists the report, because some local social services authorities lose up to 80 per cent of the disability equipment they supply, including items such as hoists and mattresses. The report examined equipment provided by the NHS and social services departments for 4 million people in England and Wales. It found that poor services are stripping disabled people of both their dignity and independence.
Commenting on this on 29th March, the author of the report says:
"There are lots of people using these services and the quality of the help they get can make or break the quality of their lives, their families' and those who care for them. If people can live independently in the community it saves lots of money in the

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health care system. If you give people access to the equipment they need, there is a much lower rate of hospital action, decline is much slower and they have a better quality of life".
He goes on:
"The problem that we came across just about everywhere was that budgets are under very significant pressure and it is always easier to reduce expenditure on equipment than on staff. The quality you get depends on where you live. It is a real lottery by post code".
This does not suggest that he found much evidence of "joined-up" thinking—even perhaps of "joined-up" writing—let alone "joined-up" government. Very clearly what he has established is that present arrangements are inhumane; that if the right agency gives the right help at the right time and in the right place, a huge waste of resources can be avoided; that pressure on hospital beds, not least in the winter months, can be reduced by timely and appropriate help in the community; and that cost effectiveness is now at a discount among both NHS and local authority suppliers.
It is, of course, true that N HS budgets no less than those of local authorities have been under relentless pressure and that the perverse—and indeed bizarre—judgment in the case of Regina v Gloucestershire County Council and the Secretary of State for Health ex parte Barry has been widely interpreted as an invitation to local authorities to argue lack of resources for failure to provide the statutory entitlements that enable disabled people to live independently in the community.
It is plainly in straight defiance of Parliament's intention in enacting my Chronically Sick and Disabled Persons Bill in 1970 to deny housebound disabled people the right to a bath, now one of the most fundamental of human rights which, as I said earlier today, is well recognised in our prisons. Yet the recent Out of Service report, published by the Needs Must Coalition of disability organisations, shows that some disabled people have now been waiting five years without being able to bathe in their own homes. Here are brief extracts from the statements of two of those quoted in the Audit Commission's report. The first is from a woman in Staffordshire. She says:
"My husband and I, both in our 80s, are taken to an old people's home twice a year for a bath. We asked the council to put in a bath but were told there is no money".
The second comes from a housebound person on the south coast, who says:
"All care was withdrawn over the Christmas and New Year period. I went without food as there was no one to cook it for me. All baths stopped and my home help's hours were cut by two-thirds without letting me know".
A third case quoted is that of a 73 year-old man who was paralysed in an accident at the age of 28. He worked all his life until retiring a few years ago. He lives independently on industrial injuries benefit and the basic state pension and requires help in his home for up to 14 hours a week. He was charged £12 a week for this help. Now his local authority has put up the charge to £112 a week: a cripplingly punitive ten fold increase.
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In effect, statute law on home-care facilities for disabled people is now in abeyance in many parts of Britain and both the Audit Commission's report and Out of Service graphically document a crisis in community care that cannot be allowed to continue. Their withering criticisms of present arrangements can only be convincingly addressed if ministerial directives are now issued both to health and local authorities that take full and urgent account of the strikingly clear message of both reports. At the same time I urge Ministers to respond quickly and positively to the call of the 35-strong disability charity consortium, emPower, for a National Service Framework on Disablement Services and to let us know this evening—I speak as honorary parliamentary adviser over many years to the Royal British Legion—what consultation they have had or will be having with BLESMA and other ex-service organisations about the Audit Commission's report.
I heard the Prime Minister say with clarity and eloquence two days ago that a strong economy and social fairness are the two overriding objectives of his Government. Much to the credit of my right honourable friend, no one can doubt that our economy is stronger now than for many years and that social fairness is more achievable than before. But the Audit Commission's report and Out of Service show how long a road disabled people still have 10 travel to win anything like social fairness.
Where a person with a disabling condition cannot be cured, the supervening duty of parliamentarians is to do all they can to reduce the handicapping effects of her or his disability. Sadly, what both the Audit Commission report and Out of Service demonstrate is that, far from being reduced, the handicapping effects of disability are being gratuitously increased by health and local social services authorities all over the country, leaving disabled people disadvantaged twice over and doubly distressed. I strongly urge my noble friend to respond quickly and positively to both reports. I have every confidence that he will want to do so.
6.30 p.m.
Baroness Pitkeathley: My Lords, I, too, am grateful to my noble friend Lord Ashley for giving us the opportunity to debate this important issue. As ever, he and my noble friend Lord Morris of Manchester lead the way in these matters. Perhaps I may say also what a pleasure it is to have the noble Baroness, Lady Greengross, with us now to add her powerful voice and experience. The noble Baroness was right to predict that most of my remarks will be about the issue of carers.
As noble Lords have reminded us, the opening paragraphs of the Audit Commission's report recognise the effect that providing the right equipment has on the lives of carers. That comes as no surprise to those of us who have worked in this field. Complaints about delays in the supply of equipment, failure of the equipment itself, and unsuitability of the equipment

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for its purpose are among the most common problems that are brought to the Carers Help Line at the Carers National Association.
Some of my most vivid memories are of conversations with carers revolving around their stories about these problems. I remember in particular one small woman called Kathleen, disabled herself, who was caring for her even more disabled 14 stone husband. After a wait of almost six months following his stroke, a wheelchair was eventually supplied. Neither was given any instructions on its use. It was in any event too large for most of the doorways in their small flat. One of the things that they wanted to do was eat their meals together at their kitchen table. The wheelchair was so inadequate for the intended purpose that the husband had to eat his meals in the hallway with a tray across his knee because the wheelchair would not go through the door. His wife's existing disability was exacerbated by the weight of the wheelchair and she, like many carers, injured her back.
If there are problems with wheelchairs, problems with hoists are even worse. I remember one mother's astonishment when her heavily physically disabled son was admitted to hospital. No nurse would even attempt to lift him without another nurse and a hoist, while his mother lifted him several times a day from bed to chair, to lavatory, and back again, with no help at all and indeed was expected to do so. She had already been waiting 14 months for a hoist to be fitted.
A survey of carers' experiences of the NHS carried out by the Carers National Association in 1998 found that half of the carers who responded had sustained a physical injury since they had begun caring. Women, at 54 per cent, were more likely to incur an injury than men, at 43 per cent—largely because of their less robust physical condition. Many carers also reported exhaustion and there is no doubt that reducing the level of care that carers have to give by providing the right equipment is desirable.
Carers say that small but important pieces of equipment can make a difference to their lives by reducing the level of the caring tasks. Pressure-relieving mattresses are among those. It must be remembered that some carers have to turn patients not just once or twice a day, but constantly, and through the night too, in order to prevent pressure sores. The Audit Commission found, as my noble friend Lord Ashley reminded us, that one trust did not even think about providing pressure-relieving equipment until sores had actually developed. The commission also estimates that the cost of treating pressure sores is in excess of £35,000 per episode.
We must not forget, too, the cost of treating carers for the injuries that they suffer. As one carer put it, "I strained every muscle in my body". The survey that I have quoted, Ignored and Invisible, mentioned also that occupational therapists were second only to general practitioners and district nurses in providing practical help to carers and that they were very much valued for that.
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Incontinence services are mentioned only briefly in the report, but we should not forget them either. I always remember the particular problems that carers have had with those services, when lack of information and clarity was coupled with embarrassment about dealing with the subject, and that led to many horror stories. I was always struck not only by the physical problems of disabled people and their carers but the emotional anguish which resulted from the fighting and the chivvying. "You get weary", said one carer. "You shouldn't have to fight for equipment. You get passed from pillar to post as they argue about whether you are entitled to this or that. I felt just like giving up many times and just managing alone".
The report confirms that there is confusion over people's eligibility for help, which then results in arguments between departments and in even more delay. In that area, as in so many others, co-operation must exist between departments. If things worked better, the health benefits for carers and those for whom they care could be significant.
The Audit Commission suggests that local authorities and health authorities could use the powers in the Health Act 1999 which allow integrated services, pooled budgets and lead commissioning where there is a health benefit. Carers often find a lack of integration between health and local authority services and the report highlights that. Along with increased funding of the NHS, the survey of carers' experiences that I have quoted mentioned better integration as a key priority. That could help reduce delays. Carers often experience a threefold delay. They experience delay in having a carer's assessment, a further delay in having an occupational therapy assessment, and yet another delay in having the equipment delivered and fitted.
The report gives a sobering account of how lack of co-ordination blighted the early life of a baby born with disabilities in both legs and the distress of the parent carers. One of the baby's legs was amputated and a full-length splint was prescribed for the other. But the consultant responsible for fitting an artificial limb decided that the splint—the responsibility of a different clinician—needed to be modified. As the report puts it, a "debate" ensued. Even when that issue was resolved, the modified splint,
"sat on a shelf for several weeks",
as the supplier and the hospital argued over outstanding invoices. Meanwhile, a separate argument was taking place among the wheelchair service, social services and the regional centre for disabilities about a special buggy for the baby and a chair. In the end, all three units did their own assessments.
The story in the report concludes:
"The package of care eventually provided was considered inadequate by the specialists at the regional centre".
Yet that inadequate process, with its inadequate result, took over a year to complete. And who was providing the care for the baby during that time? The parents of course—with very little help.
I do not really see how anyone who is familiar with this field could disagree with the recommendations in the report on greater integration, better leadership,

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improved quality and cost-effectiveness. Like the noble Baroness, Lady Greengross, I am delighted that there is emphasis on user involvement in developing and improving the services.
The commission recommends that the Government include key monitoring, performance and practice issues into key areas such as the national priorities guidance and national service frameworks. It also highlights a further couple of helpful suggestions. It says that hospital discharge procedures could be improved and that this would be an ideal time properly to consult and assess the needs of carers. The assessment could include assessments which have regard to a carer's need for equipment. New guidance on hospital discharge is being developed at present and would be an ideal place to reflect on these issues. I hope that my noble friend will be able to reassure us on that point.
The second helpful point that I should like to draw to your Lordships' attention is that professionals need to have more reasonable views about what are acceptable levels of care for a carer to provide. Carers are left in situations where they have to lift a person alone and without appropriate assistance. If the carer was employed it would be a clear breach of health and safety lifting and handling regulations. Given the additional stress and injury suffered by a carer, it suggests that early intervention and the provision of the right equipment can deliver health savings as well as make carers' lives more tolerable.
I remind the House that the Carers and Disabled Children Bill awaits its Report stage in another place. That Bill is expected to come before your Lordships' House after Easter. If that Bill becomes law it will open up new possibilities in terms of carers' rights and updating guidance on carers' assessments. The Bill makes provision for carers' assessments and services to help carers to care. While the services are not defined, the Bill excludes those services which would be considered to be of an intimate or personal nature to the disabled person. Equipment, such as pressure-relieving facilities, could therefore be defined as a carer's service. I hope that that will be borne in mind when the Bill comes before your Lordships' House.
Finally, as other noble Lords have said, it makes sound economic, as well as moral, sense to give disabled people as much independence as possible and to support carers. We should never forget that carers save our nation billions of pounds by the care that they give willingly and with love. We must provide the equipment to help them.
6.41 p.m.
Lord Addington: My Lords, to put it bluntly, this report reads like a Kafkaesque bureaucratic nightmare. It says that good service is provided but that it is patchy and one may spend hours trying to find it. If one is the right person in the right place, something will be done; if not, one has a struggle. The essence of the report is that one may never find the right service; or one may find it having wasted a vast amount of time and money. The technology is
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available to do much of what is described in the report. I do not believe that the report suggests that anything should be provided which is not a developed product. However, the report suggests that increasingly the services do not reach the right people and that the structures currently in place tend to work against and not with each other.
People do not talk to each other. It appears that "doctor knows best" has now turned into "the specialist knows best" or "the department knows best"; in other words, one department cannot possibly do something if another department knows best. The noble Baroness, Lady Pitkeathley, said that carers are now being treated for slipped discs. They Lave had to lift perhaps twice their body weight a number of times in the absence of a comparatively inexpensive piece of equipment to help somebody in and out of the bath.
At Question Time noble Lords drew attention to the problems arising from the judgments in the cases in Gloucestershire which mean that local authorities do not have to provide certain kinds of care. I tried to draw the attention of the noble Lord on the Government Front Bench to the fact that, as a result, in acute cases often the health service will have to pick up the bill later. The Government then have to fork out more money and the lives of the people concerned are damaged and wasted. Nobody wins. Often the only person who benefits is a professional paper-pusher in a low-grade job. I am sure that the same person could be employed to ensure that people talked to each other. One of the few bright spots in the report is its assertion that many of the current government initiatives could, if used correctly, solve a number of problems. Was it not ever thus? When have we not had the capacity to do it? However, without the necessary will to do something, it will not happen.
Having got the main criticisms out of my system as quickly as possible, I believe that we should seek to make people's lives as full and independent as possible. In many cases people's lives can be improved comparatively easily, quickly and cheaply if the structures and cultures are in place. At the moment, in the majority of cases, that is not so. If the structures are in place, one has artificial limbs that work properly, wheelchairs in which people can sit for long periods of time, and supportive shoes in which people can walk comfortably. It appears that one of the greatest enhancements of personal lifestyle at home or in public is independence of movement.
Technological initiatives have already been taken. The RNID suggested in its briefing that one-third of people did not use their hearing aids because they were simply not worth using. It also suggested that one could double the number of users of hearing aids and improve their quality of life by using currently available technology; in other words, social exclusion can be dramatically reduced if we make the best use of what is available and stop wasting money on out-of-date equipment which cannot be used and which the public do not tolerate.
I thought for a minute that I had got rid of all the bad bits of the report. The report does not contain very much good news, other than possibly the suggestion

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that one day we may be able to do something slightly better. We cannot do much worse than we are doing, unless we seek to make people's lives unpleasant. But we can ask the Government to address one problem; namely, to state what should be available according to best practice and then let users know. For the foreseeable future, people will still have to struggle through the machinery to access the right services. I am aware that in the field of special needs education, for example, if people have the information, they are usually much better able to obtain what is needed. Usually they have a struggle to find it, but once they have the information that they need, it is much easier to ensure that something is done. I believe that recently one of the Minister's colleagues told a meeting of emPOWER just down the corridor that there was a problem here.
The first step that the Government can take is to inform people of best practice within current levels of resource. We are talking primarily about resources. Reference is made to back-up services but not carers. We are talking here about a cheaper form of assistance. People are expensive. The main thrust of the report is that the Government have the opportunity to introduce the right people in order to retrieve acute situations by means of the correct assistance. We have to get the bureaucratic system right to give people the necessary expertise without too many forms to fill in and too long a wait. Invariably, an acute condition which is treated early is easier and cheaper to deal with. If these services can be provided quickly, we shall improve everybody's quality of life.
If the culture of buck-passing, departmentalisation and Chinese walls is not attacked soon—since I do not know how far back this problem goes, I do not attack those on the Benches to my left—we shall merely create a new situation where the barriers are shifted slightly sideways. A new department which is set up to deal with the matter will say, "But this is our department to deal with a new initiative". Unless joined-up government is pursued with real vigour we are in danger of creating new blocks. I know that that happens. Therefore, another challenge faced by the Government is the need to look sideways.
Much of what I was going to say regarding cases has already been used by other noble Lords. Therefore, I shall conclude my remarks by saying that unless the Government are prepared to use their resources to the best of their ability—or rather, at least to make an improvement in the use of the resources they already have—they might as well give up. They must put energy and time into the problem; not just money. I have come to the conclusion that those are probably more difficult than money to get out of establishments, particularly establishments within government.
6.50 p.m.
Earl Howe: My Lords, I, too, thank the noble Lord, Lord Ashley, for giving us the opportunity to discuss this disquieting report. I am proud to declare an interest
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as a patron of DEMAND, a registered charity founded by the late wife of my noble friend Lord Renton which makes special bespoke equipment for disabled people.
The saga began a long time ago. The McColl report of 1986 revealed a service for disabled people which was inadequate and inefficient, largely due to the actions of officials who unwittingly distorted the market-place. They did so by giving the manufacturers design specifications instead of performance specifications. That resulted in uncomfortable and unattractive wheelchairs with profit margins so low that many of the companies went out of business. The limb fitting service was in the hands of a monopoly which supplied 75 per cent of the UK market on the back of a poor service from a workforce much of which was complacent and sloppy.
Happily, almost all the recommendations of the 1986 report were implemented. Great credit is due to the distinguished team behind it. That included the noble Lord, Lord Hussey of North Bradley—who has asked me to say how sorry he is that he cannot be present for the debate—and my noble friend Lord Griffiths of Fforestfach. A special health authority was established to effect the necessary changes under the chairmanship of my noble friend Lord Holderness, himself a bilateral amputee from the last war. My noble friend Lord McColl was the distinguished vice-chairman.
I can say to the noble Lord, Lord Ashley, that considerable improvements ensued. The artificial limb providers' monopoly was broken with the help of the Monopolies and Mergers Commission and the trade opened up to allow more competitors. There was better training of prosthetists and orthotists. Modern techniques were made more readily available throughout the country. Later, indoor and outdoor powered wheelchairs were supplied to those severely disabled people able to make use of that provision. Unfortunately, it is abundantly clear from the Audit Commission's report that the situation has deteriorated over the past few years. The task of the commission is, of course, to examine the economy, efficiency and effectiveness of the use of resources, with the aim of the best possible delivery of services within the money available for the 7 million disabled people in the UK.
I turn first to orthotic services. There are 400,000 people who use orthotic footwear, callipers, splints, surgical collars, spinal braces and so forth. Improvements have undoubtedly occurred during the past eight years, but, as the report identifies, they have been uneven. The criteria for supplying orthotics have not only varied between trusts, but have varied also at different times of year depending on the available budget. The service itself is fragmented. Will the Minister take steps to correct those unacceptable anomalies and to implement the report's recommendations to ensure that each service receives complete medical records, is subject to clinical audit and has sufficient throughput to ensure high quality? Will the Minister implement also the recommendation that those orthotic services which currently supply breast prostheses, wigs and support stockings should

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be located in clinical directorates alongside breast care specialists, physiotherapists and vascular nurse specialists?
I turn now to prosthetic services. As we have heard, there are approximately 60,000 amputees in the UK served by the NHS, some of whom are content and some of whom are not, especially young people who lost their limbs through accidents rather than disease. The curious thing about the report is that I can find no reference in it to the 5,000 surviving ex-servicemen and women who risked their lives and gave their limbs in the service of their country and who traditionally rarely complain about anything. The organisation which represents more such limbless people than any other is, of course, BLESMA. It is extraordinary that no one seems to have talked to its representatives. Had the noble Lord, Lord Hussey, been present, I know that he would have expressed his firm and authoritative view that—as he put it to me—there is far too much whingeing on the part of some service users and that many are perfectly satisfied with the service that they receive.
However, it is clear that there are too many quite unacceptable delays in supplying legs for recent amputees. My medical friends tell me that that should occur as soon as the stump has healed—usually within four weeks—but two-thirds of patients have to wait much longer for no good clinical reason. Prosthetists are skilled and dedicated people. However, each of the 42 centres in the UK has on average only two or three new amputees per week; a workload which could hardly be described as excessive. What is even more unacceptable is the time taken to repair prostheses. Only 54 per cent of repairs are carried out within 24 hours. Ten per cent take up to 48 hours, 15 per cent take two to five days and 21 per cent take over five days.
Equally worrying are the 25 per cent of people who do not use their artificial limbs once they have received them. The reasons include: too much pain—which accounts for 25 per cent of those people; too heavy—18 per cent; too uncomfortable and "doesn't fit"—12 per cent. Those are shameful statistics. As a result of the McColl report the number of companies fitting limbs increased significantly, but in the past few years the number has been reduced to three, which is even more of a monopoly than there used to be. I hope that the Government view that situation with as much dismay as I do. Will the Minister take appropriate steps to reverse that trend and to encourage excellent firms such as Dorset Orthopaedic Services to tender again?
I should like to ask the Minister also about the present policy of the NHS Supplies Authority, which seems to take the cheapest tender even if the quality of the service offered is poor. Does not the Minister agree that a poor service means that the cost of correcting the damage is usually more expensive in the long run, to say nothing of the unnecessary distress caused to patients? We desperately need more companies to come into that area.
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Continuity of care is too often lacking. As that is an essential component of proper care, will the Minister implement the recommendation that trusts should allocate a named prosthetist for each patient to manage treatment on a long-term basis and should arrange appointments in such a way that patients are able to see their own named prosthetist?
I turn to wheelchair services. As we have heard, there are at least 640,000 wheelchair users in the UK, about 70 per cent of whom are more than 60 years old. The provision is described in the report as a lottery that is dependent on postcode. It states that services could be improved by being more responsive to the views of the users and by better practice in procurement, stock management and recycling. Waiting times presented serious problems, with 25 per cent waiting over a month for an assessment and 10 per cent waiting more than two months to get an outpatient appointment. Waiting times for receiving chairs were lengthy; 17 per cent waiting four to eight weeks and a further 16 per cent waiting more than eight weeks. Will the Minister implement the three main recommendations here: first, that most users be assessed close to home; secondly, that proposals be introduced to deliver incremental quality improvement programmes; and, thirdly, that systematic re-assessment programmes be introduced for all users?
Equipment that enables a million people to live independently in the community is supplied by local authority social services and NHS community trusts. I am, of course, referring to community equipment services. Unfortunately, the hapless patient may find, through no fault of his own, that he falls between these two stools. The noble Lord, Lord Morris, mentioned the case of Eleanor Jones, who had to wait for 12 years before she could get the electric hoist that she needed to move her husband who had been left paralysed by a stroke almost two decades ago.
Effective working relationships must be established throughout the country not only to provide co-ordinated and caring service, but to avoid the waste of resources. For example, walking sticks, zimmer frames, bath benches and simple home adaptations not only preserve the independence of older people and improve their quality of life, but also cut healthcare costs in half. In a recent trial quoted in the report of those who had unlimited help according to need, which amounted on average to 14 devices each, cost 14,000 dollars per person in total healthcare costs over the following 18 months. In marked contrast, users given standard care, which amounted to two devices each, cost over 30,000 dollars in total healthcare costs per person during the same period.
Lastly, I should like to mention the very important field of audiology services. Although there are 5 million or 6 million people in the UK who could benefit from a hearing aid, fewer than 2 million people actually have one. As the report states, millions of people could benefit from reduced waiting times and the provision of more modern hearing aids and from the integration of NHS hearing aid services with local

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authority assistive listening services which provide such devices as telephone and doorbell aids. I was very much struck by one sentence in the report which says:
"Nowhere is the cost versus quality debate in public service provision better exemplified than in the provision of hearing aids".
In order to correct the present deficiencies in the audiology services, can the Minister tell the House which of the recommendations he intends to implement?
In summary, this excellent report describes the unsatisfactory state of all of these services, which are plagued, first, by the lack of involvement of the users at all levels of service planning and delivery; by the low priority given by managers to the service; by under-investment on the part of the public sector and supporting industry and, lastly, by geographic variations in the quantity and quality of the service.
It is abundantly clear that urgent action is needed to implement the recommendations. Will the Minister give the House an assurance that this is one area where a decision need not be put off by the setting up of yet another taskforce; but rather that he will follow the wartime example of Mr Churchill and place the recommendations in a box clearly marked "Action this day"?
7. 3 p.m.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, this has been an important, uplifting and, I believe, instructive debate. I begin by expressing my gratitude to my noble friend Lord Ashley and other noble Lords for drawing to the attention of the Government what all noble Lords consider to be a very important report published by the Audit Commission. I know that a number of other noble Lords would have wished to take part in the debate. I am grateful to my noble friend Lord Morris for informing me of the regret of the noble Baroness, Lady Masham, that she is unable to attend your Lordships' House tonight.
We are all aware of the importance to disabled and older people and their carers of the services examined in this report. I do not believe that there can be any doubt at all that these services have not had either the profile, the attention or the leadership that they deserve within the National Health Service and local agencies. My noble friend Lord Ashley and other noble Lords have rightly drawn attention to many of the shortcomings identified in the report—the consequences of poor equipment services which have proved to be painful and unsuitable.
My noble friend Lord Ashley referred to the trust which, quite extraordinarily, was not issuing pressure-relieving mattresses until patients developed sores. We have heard also of inadequate local authority services, of inadequate research and information systems, and of out-of-date equipment. The noble Baroness, Lady Greengross, referred to long waits and to the need, a view I very much share, to consult users. She referred to the particular problems faced by older people caring
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for frail spouses in the context of multiple disabilities. I say to her that I fully accept that we need to do much better as regards services generally for older people. That is one reason why we shall be developing a national service framework for older people.
My noble friend Lord Morris, who has always been a doughty fighter for disabled people, spoke about the problem of long waits to be fitted and to receive equipment. Much of that equipment can be poor and, as he said, has been poor for many years. I accept fully the comments of my noble friend Lady Pitkeathley, as regards carers and the problem of unsuitable wheelchairs arriving too late and being the wrong size. She is right to draw our attention to the exhaustion felt by many carers having to cope in such circumstances. I was particularly struck by her comments on the problem of lifting. That is something we face in the National Health Service. There is a high incidence of back problems among nursing staff as a result of lifting accidents. How much more is the pressure on vulnerable carers having to deal with that kind of situation in their own homes.
I accept the strictures of the noble Lord, Lord Addington, when he spoke about a bureaucratic nightmare illustrating the problem of structures in place at local level which can often seem to fight against each other rather than provide a cohesive service. There can be little doubt that these services have been neglected for many years and that insufficient attention has been given to management, leadership, performance and development. I agree with my noble friend Lord Ashley and understand the anger felt by so many people over the poor quality of service that is often available.
However, there is a brighter side. I believe that the noble Lord, Lord Addington, was unduly pessimistic. Within the report there are excellent examples of good service and clear clinical leadership, with doctors, nurses and technicians working together and health authorities and local authorities also working together. It is these examples of good practice on which we have to build in order to get the services up to scratch. I could not agree more with my noble friend Lord Ashley when he said that because many of the services have a make or break impact on so many people, we have to do better.
My right honourable friend the Prime Minister and my right honourable friend the Secretary of State for Health have acknowledged the shortcomings. Some are already being tackled. We have promised that further action will be taken to improve services where it is clear that there is scope for doing so.
As made clear in today's debate, the report looks at five key areas of service of particular importance to disabled and older people. These services can make all the difference between isolation and dependence, being able to get out and about, and living lives with a minimum of support from other people. As the report says, they are the gateway to independence, dignity and self-esteem for many older or disabled people. For carers, equipment such as lifting devices and

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adjustable beds are often critical in enabling them to cope without risk to their own health, as my noble friend Lady Pitkeathley so vividly pointed out.
These services can provide a critical component of rehabilitation after illness and can reduce the need for more costly forms of healthcare such as delayed hospital discharge or premature admission to residential care.
We are not talking about a handful of people with special needs. There are a very large number whose needs vary from simple pieces of equipment to complex artificial limbs or electrically powered wheelchairs. The cost of providing these services is estimated at around £400 million a year. It is therefore important not only that we provide the services but that those services are of high quality and provide value for money.
The Audit Commission's report is hard hitting. It highlights an unacceptable variation in the availability and quality of service across the country. Procedures, it says, follow tradition rather than reflect local need. Staff as well as users are often unclear about eligibility criteria. Services are fragmented and there is a lack of clinical leadership. Equipment is not always of the best quality.
The report makes several recommendations as to how standards can be improved and a fairer service provided. For example—it is an important recommendation—it proposes the development of a "hub and spoke" arrangement across regions with specialist services at the centre supporting local services. There are proposals for joint health and social service arrangements for community equipment stores; the raising of the profile of those services and engaging the attention of senior managers, which I suggest is crucially important; and the better tracking of equipment to improve quality and save money by increased recycling.
From the tenor of my remarks, noble Lords will understand that the Government welcome the report. We believe it to be fully in line with our aim of tackling variations in the availability and quality of health and social services across the country for which the increase in NHS spending announced by the Chancellor in the Budget provides an important launchpad.
We are already working on improving equipment services. The measures we are taking will deal with many of the shortcomings identified by the commission. Even before considering the recommendations of the report, we are committed to significant improvements. We are investing £4 million this year in modernising the NHS hearing aid service. We have set up a working group to consider the introducing of silicone cosmesis in artificial limb services. We have funded the Disabled Living Centres Council to publish guidance on community equipment services. This has been promoted through national conferences. We are also funding the DLCC to promote the continued exchange of good practice on an Internet website.
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NHS purchasing and supplies has set up a number of working groups to bring together service commissioners, providers, representatives of the disability equipment industry and disabled people themselves to advise the authority on the services it provides. We shall be discussing specific recommendations from the report with them. Perhaps I may say to the noble Earl, Lord Howe, that of course we want to ensure that the best equipment is provided in the most effective way. We shall consider the points he made in the context of those discussions within NHS supplies which will embrace the views of users. I also understand the noble Earl's point about the number of manufacturers in the market. I understand that the NHS Supplies Authority operates an open tendering process. There is no limit on the number of manufacturers during that process. But we will reflect on the specific point he makes in the context of considering the role of NHS supplies in this area.
We have also commissioned the Oxford Brooke's University to develop a national training framework for all providers of wheelchair services. We are making £14 million recurrent with effect from 1st April for the provision of powered wheelchairs and for the continuation of the wheelchair voucher scheme which gives users the opportunity of contributing to a higher performance wheelchair of their choice. The recently published report on the evaluation of these two schemes has confirmed the success of the powered wheelchair initiative and the real contribution that it is making to the quality of life of severely disabled people. It has, however, made it clear to us that local services have found it difficult to supply the number of powered wheelchairs needed. The wheelchair voucher scheme has been slower to pick up than we had expected but there is now a steady increase in the number of people taking advantage of it.
I have made clear that we welcome the Audit Commission's report. We are already tackling many of the issues raised and we shall be looking carefully at the recommendations for change in areas that we have not so far scrutinised. But it may be helpful if I summarise the Government's response under the headings of the five services on which the commission reports.
First, I turn to orthotic services. The Department of Health issued guidance on contracting for orthotics services as long ago as 1995. Although the guidance dealt with many of the points raised by the commission, I accept that our advice has not been taken fully into account, although the Audit Commission report reveals that 53 per cent of trusts have complied with the key aspects of that guidance.
Following a conference last year put on by the disability organisation, emPOWER, my honourable friend Mr John Hutton has given a commitment that we will take action about improving the quality of orthotics services. He has asked that an NHS supplies orthotics group look at how individual users' views can be taken into account and more attention paid to the design and appearance of orthotic footwear. The

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Department of Health, in conjunction with NHS supplies, has set up a small steering group to monitor progress on this front.
The noble Earl, Lord Howe, asked some specific questions in relation to the recommendations in this area. These are early days. However, I assure the noble Earl that we shall take a careful look at the recommendations. Some fall to local decision because it is right that local services are able to come to a view. On others we shall have to take a national view; and we shall come to that view as soon as we can.
I refer next to artificial limbs services. Although in many respects those services are of a high order, it is nevertheless disappointing that some centres are not achieving the standards of practice we would expect. I pay tribute to the work over a considerable number of years by the noble Lord, Lord McColl, in recommending action to be taken in relation to the old artificial limb and appliance centres. It undoubtedly had a positive impact. However, it is clear that we need to build on those improvements.
Reasons for the reported under-use of limbs supplied are complex. They may be related to patients' general health, the quality of rehabilitation in getting them mobile again, or environmental barriers which affect their confidence. That is something we need to consider more closely. The delay in getting a first fitting may be for sound clinical reasons. But where that is the case it is important that clinicians give patients a full explanation of how their care will be managed.
The Government have given their broad support to emPOWER's users' charter for prosthetic and orthotics services. We look to health authorities and primary care groups to work with service providers and users to improve those services. As I said, the NHS Supplies Authority has set up a strategic commissioning group. I expect that group to consider carefully how it can respond to the report's findings and recommendations.
Perhaps I may say this to my noble friend Lord Morris and the noble Earl, Lord Howe. Of course we would very much wish to engage with ex-servicemen's organisations to gain their views and opinions about the report and the developments in services that need to take place.
I referred earlier to the measures being taken to improve the wheelchair service. The sum of £50 million of added investment has been made since 1996 to allow NHS wheelchair services to provide indoor and outdoor powered wheelchairs and to introduce voucher schemes. In recognition of unacceptable variations in eligibility criteria and speed of assessment around the country, we endorse the report's recommendation that health authorities and trusts need to establish clear targets to improve performance. We agree totally that disabled and older people should not be unnecessarily confined to their homes because they are unable to get a wheelchair when they need it.
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I turn to audiology services. My noble friend Lord Ashley and the noble Lord, Lord Addington, referred to issues of cost versus quality, as they described them. We recently announced a £4 million investment in 2000/2001 to modernise NHS hearing aid services. All NHS trusts are being invited to put forward proposals to take part in the scheme. The scheme will evaluate the benefits and costs of digital hearing aids for the NHS. It will evaluate efficient and effective ways of supplying hearing aids and examine the delivery of a modern hearing aid service for NHS patients.
The Department of Health will be working in partnership with the RNID, the NHS Supplies Authority and the Institute of Hearing Research to deliver the project and to ensure that it is properly evaluated. We know that this initiative has struck a chord. By the time the deadline for applications for pilot status was reached, we had received more than 80 expressions of interest from audiology departments.
I turn to community equipment services. It is clear that these services can be the key in helping people to live independently in the community. However, we also know of the historic confusion around the respective responsibilities of health and social services.
I agree with my noble friend Lady Pitkeathley that there is a compelling need to achieve a joint approach. That is reflected in the good practice guidance from the Disabled Living Centres Council, which I mentioned earlier. We want health and social services to take advantage of the new flexibilities—that is, lead commissioning, integrated provision and pooled budgets—which will enable them to work jointly in getting better co-ordination and efficiency.
Much mention has been made of the problem of getting health and local authorities to work across boundaries. I believe that the situation has drastically improved during the past two years. There is plenty of evidence of health and local authorities being prepared to sit around a table and reach good agreements on how they will work together. I accept that we need to go further and monitor their performance. However, we should be prepared to acknowledge the good work that has recently taken place. As regards the emergency planning of services for winter pressures in the NHS, the NHS was enormously gratified by the willingness of local authorities to work with it. There is a new and constructive relationship which we need to encourage. The flexibilities as regards finance between the two agencies will enable that to happen.
There is clearly considerable scope for improved efficiency and effectiveness across the whole range of disability services. I understand and accept the proposition put forward by a number of noble Lords that investment in services and support for carers can have an impact on lessening demands on other services because people will be able to live independently. I accept also the risks of authorities believing that equipment is an easy hit when budgets come under pressure. We cannot allow that to continue.

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My noble friend Lord Ashley asked for a clear timetable. We are studying the recommendations in the report and are working on the modernisation plan for the NHS. Any timetable will have to await the outcome of those exercises. Similarly, monitoring arrangements will have to be put in place in this context and in the context of overall changes in developments in services. However, I listened carefully to the comments made tonight and I will ensure that they are fully considered in the discussions that we need to take forward.
My noble friend Lord Ashley said that the main change that is needed is in attitude. Perhaps I may say how much I agree with him. I assure him and other noble Lords that the Government accept that change is needed. It is accepted that we need to monitor the performance of management and we will ensure that improvements take place.
7.24 p.m.
Lord Ashley of Stoke: My Lords, I do not intend to detain the House, but I want to thank all noble Lords who have taken part in what I regard as having been a splendid debate. All the contributions were well informed. We differed in emphasis, but we had the same objective of helping disabled people.
However, I am afraid that the noble Earl, Lord Howe, and I must disagree about what follows the splendid report of the noble Lord, Lord McColl. I was quoting from the report of the commission, but, like the noble Earl, I was surprised by the omission of BLESMA. It is possible that the commission discussed issues with BLESMA, but did not mention that in its report. Until we discover whether discussions took place, the thrust of what the noble Earl said was right. It is a pity that ex-servicemen and BLESMA were not mentioned, but we shall have to see what can be done about that.
I was heartened by my noble friend's response. I liked its tone and welcome the significant amount that is being done. However, I am not too happy about his comment on the timetable. Although I recognise that he wants to set things in order and in motion to create a timetable, such things have a habit of drifting on. I can only ask my noble friend to ensure that the question of a timetable does not drag on. We strongly believe that without a timetable we shall get nowhere.
The same comments apply to monitoring, which my noble friend said will also come. But, like Christmas, it can be a long time coming. If it is continually deferred by the pressures of other events, we might not get monitoring. Therefore, I press my noble friend to see what can be done about the timetable and the monitoring.
I am grateful for my noble friend's response and I appreciate what the Government are doing. I thank him and all noble Lords who took part in what I regard to have been a most constructive debate. It has taken the issues forward most strongly and vigorously for disabled people. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

Suspension of Hospital Medical Practitioners Bill [H.L.]
7.27 p.m.
Baroness Knight of Collingtree: My Lords, I beg to move that this Bill be now read a second time. It came into being because a serious number of hospital consultants have been victims of a most unjust system. I gave full details of the situation in your Lordships' House on 13th January 1999 and I shall not take time tonight repeating all I said then. But I will remind the House of the salient points.
I want to make it crystal clear from the beginning that neither I nor any of those who are kind enough to support me in this matter are in the slightest degree interested in excusing or protecting doctors who behave wrongly. That is not the purpose of this Bill and it is not the purpose of any of the speeches which I am sure will be made in its support.
However, I continue to make the case for doctors who are suddenly suspended by their hospitals without being told what they are supposed to have done, with no right of appeal, kept on suspension for months or even years and literally locked out of their hospitals at once. I know of a case in which the wife of a suspended hospital doctor was dying of cancer in the same hospital and, because of his suspension, he was not even allowed to visit her.
Sometimes doctors are not even informed when they have been found innocent. That cannot he right. A doctor's reputation, good name and career are totally destroyed. These days, the medical profession moves so quickly that if a doctor has been out of the system for even a short time it is virtually impossible—or, if not, then it is extremely difficult—to return to making a success of his career. Therefore, careers are destroyed. There have been breakdowns, debts and suicides over this matter, and I cannot stress sufficiently that the seriousness of the situation screams for a remedy.
Even if all the doctors were guilty, there is no justification for treating them in that way. Even felons who commit the worst crimes in the criminal calendar are treated better than those trained and dedicated hospital doctors. However, the overwhelming majority of them are not guilty; they are found to be innocent of all charges. In the debate last year, I stated that out of 201 cases of suspended doctors I hat I knew of, only 25 were subsequently found to be guilty of the charges against them. I repeat: only 25 out of 201 were found to have acted wrongly. Some of the remaining 176 must wait years to be cleared.
I also listed some of the trivial reasons why consultants had been, and still are being, suspended. One consultant, for example, merely wrote a repeat prescription for his ward sister. Another deleted from his own files on his own patient, whom he had treated for a very long time, repetitious details which he did not feel were necessary. That was enough; he was suspended. Another helped with a charitable appeal

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for equipment, then, with others, spent the money on the very equipment for which the appeal had been made. That was enough; he was suspended.
Your Lordships should also bear in mind that, because the suspended doctors receive full pay throughout the period of their suspension and legal costs are involved, this wrong and crazy system costs the NHS millions of pounds. A recent study on the matter came up with a figure of £10 million to £12 million per annum. I have been monitoring the situation myself for 40 years and I hate to think of the sums of money that have been wasted in this way over that period of time. As I listened to the previous debate, I considered in how many ways the money could be better spent. Other noble Lords will have their own ideas about that.
However, it is not only a question of the waste of money; the system deprives patients who need care of the specialist who supplies it. Only this week I have received letters from people in Coventry. I read from one such letter:
"There is deep public concern in Coventry, especially among women breast cancer patients, that Miss Ackroyd—a surgeon they greatly admire and respect—has been 'removed' from her duties".
I am told that already 600 people have signed a petition asking for her reinstatement because she is such a good doctor and has served them so well. Now, those patients are treated in a kind of piecemeal way. Apparently, one doctor has been brought in and another may or may not be. This is a case where patients are being deprived by the system of a much loved, greatly respected and, from what I gather, extremely efficient doctor.
Following the debate in January last year, I drew together a committee with representatives drawn from the BMA, the HCSA, the medical defence unions (there are two) and from other interested people and doctors who, either themselves or perhaps within their family, have experienced the evil of suspension. I chaired the committee and we worked for six months. Finally, we drew up a list of nine points which we felt should be established in order to remedy the situation and to give fair play.
Following that, the Summer Recess intervened. However, as soon as I could, I set to work with parliamentary draftsmen to produce the Bill now before your Lordships. It incorporates all the nine points which we worked upon. At this stage I should like, if I may, to pay a most warm tribute to a very expert lady from the parliamentary draftsmen's department who helped me. Her help has been absolutely invaluable.
Since then, the Chief Medical Officer has produced a document which I was assured advocated procedures which would address the situation just as effectively as does this Bill. I was informed that it contained all that was needed to gain justice for hospital doctors who are suspended. I rushed off to the Library to find a copy of this miraculous document. It was not there; neither was it in the Printed Paper Office. I am much indebted to the noble Lord, Lord Hunt, who arranged for me to
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be sent a copy. I received it on Monday and read it eagerly—every page of it. I was never more disappointed. I should have known. I had already received reports from several medical sources that the solutions offered in the report failed in almost every respect to solve the problem. Of course, the BMA has made its views about it quite plain, and I have no doubt that the noble Lord, Lord Hunt, has received a brief on the matter from the BMA. The BMA is very disappointed and does not consider that the proposals will help a great deal.
When I read the report I wondered why this much vaunted document did not give us what we need. I came to the conclusion that the Chief Medical Officer and the rest of us view the problem from fundamentally different angles. The main—and I believe perhaps the only—aim of the medical officer's report is to deal with doctors who behave wrongly. I am not surprised about that because there have been many cases in recent months, and indeed even years, where doctors have behaved wrongly. We read screaming headlines about it in the press. We know all about what happened in Bristol and in various other places, and a shudder of horror goes through the public when they read about it. I can well understand why the Chief Medical Officer felt that that was the problem. The document's first and main aim is to deal with doctors who behave wrongly. The whole thrust of it is "dealing with poor performance".
I must say with some regret that the language is lofty but really rather woolly. It talks about "professional self-regulation", "implementation of standards and quality improvement", "co-ordinating mechanisms to prevent poor clinical performance"—that is a favourite; it is mentioned twice!—and "developing skills in handling poor performance". The document suggests that doctors should receive retraining, be monitored and obtain medical treatment. The doctors I am talking about are trained. Many have been working for years and would find it rather insulting to be monitored when they do not even know what they are supposed to have done.
The doctors I am talking about do not really need medical treatment, or at least they did not, though they might after a few months or years of being suspended, because it is an agonising experience to go through.
I shall detain the House for a few moments with an example of what I am saying and why I believe that that is the aim of the Chief Medical Officer. He said:
"The strategy set out in this consultation document aims to bring to an end the past failure in preventing, recognising and dealing with poor professional performance in medicine".
On the next page it states:
"Across the NHS as a s hole the present arrangements for dealing with poor clinical performance exhibit serious weaknesses".
I can understand him being worried about that but the point I make is that that is not the problem that the Bill seeks to address. The Bill's aim is to prevent injustice and to speed up the procedure whereby a competent, proficient consultant can be suspended for months or years without even the slightest attempt at fair treatment.

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I remind the House that the problem is said by the BMA to be increasing. The Chief Medical Officer acknowledges the need for procedures to be speeded up but that is really the only need which is met in his proposals. It is as though he is treating a bunion and we, or the Bill, are treating glaucoma—two totally different problems.
The nine points on which the Bill is based incorporate the precise steps which experts in the field think are essential to remedy the situation. The first is that suspension should take place only to protect patients, staff, evidence or the doctor himself and should not be confused with the disciplinary process. That is something else with which the Chief Medical Officer's report deals. It talks about the disciplinary process. The Bill is not concerned with that.
Reaching a decision on whether or not to suspend must be dealt with urgently. The Bill then deals with who should be responsible for ma king the decision; namely, the chief executive of the health trust. Then it says that the allegations against the doctor, the classification or category in which they lie and the reasons for suspension must be clearly stated and made known to the accused in writing without delay. That is absolutely fair and right.
The Bill then goes on to provide that the doctor should have an immediate right of appeal against the suspension and how that appeal should be dealt with. The trust must then decide within one calendar month of the decision to suspend whether prima facie evidence exists to invoke a disciplinary procedure and if so, whether suspension should continue. All the nine points deal with the matter of urgency and not allowing people to be strung on that particular rack for months, if not years.
Any decision to exclude the doctor from hospital premises must be made separately from the decision on suspension. The reasons for it—namely, that the doctor poses a danger to staff or has an ability to tamper with evidence—must be relayed to the doctor concerned.
The Bill then deals with the fact that the decision to suspend must be notified immediately to the NHSE, which is then responsible for monitoring the continuation of the suspension. Again, that is a move to make sure that it does not go on.
There are two more small points. At no time can the inquiry panel add new charges to those originally put forward. It must deal solely with the existing charges unless the doctor himself agrees. That provision is included because there have been cases where some doctors found themselves suspended; the inquiry found they were totally innocent of all the charges, but they remained suspended while there was an attempt to find some further possibility of other charges. That cannot be fair.
Full reasons for the suspension of a hospital doctor must be conveyed to any private hospital where the suspended doctor has admitting rights. Many doctors working as consultants work in private hospitals. We felt that it was important that those private hospitals should be kept informed.
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Therefore, I hope that the House will agree that the nine points are carefully put together, and I believe that they are just, fair and right. The Bill puts those nine points into effect. There may be a few amendments to be made. Nobody would suggest for a moment that one can always get everything perfect first time round. But those are the main aims and I think that they are fair.
The Bill is the result of a great deal of work. I started working on this 14 years ago, when I first became aware of this kind of case, during the time 'hat I was a Member of the other place. The Bill has the support of Members on all sides of the House. It is totally nonpolitical. Several noble Lords have written to me, regretting that they cannot be here this evening to speak in support of the Bill.
The Bill is quite literally the only way that the present inhumane situation can be remedied. I beg to move.
Moved, That the Bill be now read a second time.— (Baroness Knight of Collingtree.)
7.45 p.m.
Lord Rea: My Lords, the noble Baroness, Lady Knight, certainly does not let this issue slip out of the parliamentary view. All doctors and many of their patients will be grateful to her for that. Although we know that this very fair and well thought-out Bill will almost certainly not reach the statute book, it gives us a further opportunity to examine the situa lion and to assess progress, if indeed there has been any, since the noble Baroness's Unstarred Question, on 13th January of last year.
On that occasion, my noble friend Lady Hayman ended her reply as follows:
"I hope that, in replying to your Lordships this evening. I have made clear that we recognise that there is a problem, and that we are taking firm action to produce solutions and improvements in the current system. However, I must reiterate that that has to be done as part of an overall commitment to improving the quality of care and protecting patients. The systems in place at the moment have not served either some suspended doctors or some patients well in the past. It is our responsibility to change them as part of the modernisation of the National Health Service and to ensure consistently high standards of care for all patients".—[Official Report, 13/1/99; col. 270.]
It is for my noble friend's successor, my noble friend Lord Hunt, to tell us what action the Government have taken since then and what changes in procedures are either in place already or are proposed.
The department's report published last November, Supporting Doctors, Protecting Patients, does not really offer very much to improve the current unsatisfactory position. Further work is needed to ensure that the suspension procedure is used only to protect patients, or the doctors themselves, when the clinical care being given by a practitioner is of an unacceptably low standard.
Other disciplinary matters should he dealt with by procedures which involve interviewing the doctor concerned and with verbal and, finally, written warnings. In normal employment practice, the employee concerned has the right to representation

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at each of those stages and, in most cases, continues at work unless the behaviour is actually dangerous. He goes on working, unless that is the case, until an agreement is reached or the employee is dismissed or agrees to some redundancy terms. Good employers will often suggest counselling or offer opportunities for the employee to retrain if that is relevant. The noble Baroness has told how, in this case, it very seldom is relevant.
There is a strong case for returning to national, across the country, guidance on disciplinary procedures. I am sure that that is something which the noble Baroness's Bill would ensure. There is still a tendency for trusts, in varying degrees, to use suspension as a disciplinary measure when the problem first requires investigation of the facts. Suspension may be appropriate if patient safety really is at risk; but usually it is not.
In my speech during the debate on the Unstarred Question tabled by the noble Baroness, I quoted some of the points made by the British Medical Association's Consultants Committee in response to the October 1998 internal review by the Department of Health of the procedures for the suspension of hospital doctors. Doubtless my noble friend Lord Hunt has in front of him the BMA document of that date and any current statements by that association. Many of the points made then are recorded in my speech in last year's Hansard. Therefore, I do not need to repeat them.
Sadly, in the BMA briefing which I had before this debate, the same points are made as those in January 1999. In other words, there has been little progress, except in Scotland where a report entitled Suspensions—a New Perspective was published last April. The recommendations contained in that report were accepted by profession, hospital and health authorities alike, and appear to be working well. If it can be done in Scotland, surely it needs only a further heave to bring in a system in England and Wales which will work here and meet the points which were made so well by the noble Baroness.
However, the problem has not gone away. As the noble Baroness mentioned, the number of NHS consultants suspended from work has been increasing, according to the BMA. In four out of five cases of suspension, concerns about clinical competence are not upheld. However, as the noble Baroness said so well and fully, patients are denied the services of a doctor unnecessarily for months or even years.
I shall be delighted if my noble friend can say that the British Medical Association is wrong and that the trend is now coming down. But I am afraid that that will not just happen. A new, fairer, broom is required to sweep out the inefficient and unjust non-system which now appears to prevail in too many trusts. The noble Baroness's Bill points the way forward. Why do not the Government incorporate its main content, as hinted last year by the noble Baroness, Lady Hayman, as part of the proposed modernisation of the health service?
7.53 p.m.
Lord Colwyn: My Lords, I declare an interest as a council member of the Medical Protection Society. I listened with interest to my noble friend Lady Knight and commend her on her sterling work on behalf of hospital and medical practitioners.
Since the publicity associated with the General Medical Council's determination of the Bristol case, which was alluded to by the noble Lord, Lord Rea, there has been a surge in the number of doctors suspended from their NHS posts. Where there is a threat to patients, removing the danger is obviously right, but steps short of suspension may be adequate; for example, the doctor might well agree to cease certain areas of work during an investigation. Outright suspension has serious consequences for both the doctor concerned and for the service that he or she is providing. Doctors, as well as patients, require protection, first, from unnecessary suspension and, secondly, from unduly prolonged periods of suspension.
Suspension in employment law is meant to be a neutral act. Doctors, especially consultants, are high-profile individuals within their hospitals. Their absence cannot go unnoticed and inevitably it will be assumed that there is no smoke without fire. The doctor is stigmatised, and that stigma is compounded if he or she is excluded from the trust premises, as that carries the implicit suggestion that some ghastly act might be committed if the doctor is allowed back into the hospital. There is a lack of expertise in many trusts in the way in which these matters are handled. There is a strong case that medical directors and chief executives should be required to seek legal advice before taking unilateral action.
The majority of the suspensions are measured in months, not days or weeks; some extend to years. During that time, the doctor's skills are eroded. The National Health Service is deprived of resource and, most invidious of all, the individual's position is progressively undermined to the extent, in some cases, that his or her position becomes untenable even if exonerated at the end of the inquiry. There is also a need for a simplified and easier system of redress for doctors whose cases are mishandled.
The medical profession is a profession under siege. Currently up to 40,000 patients a year die as a result of hospital accidents and one in 14 suffers an "adverse event", such as diagnostic error or operation mistake. Only a tiny proportion pursue any claim, but the number is on the increase. The Government have tremendous difficulties with current figures on litigation. Health authorities in England and Wales spent £1 billion in 1998–99 on settled claims and an estimated £2.4 billion is unpaid in current cases where the claimant is likely to win. There is possibly another £3 billion to £4 billion on claims which are as yet unreported. Perhaps the Minister can comment on that and on how it might affect the new funding announced for the health service.

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We know that the majority of doctors are hard working and do a tremendous job, often in very difficult circumstances. However, that is not the stuff of headlines, which remain the province of the Shipmans and Ledwards of this world. It is imperative that the current debate on the accountability of doctors is not allowed to distort further the public's perception of the profession.
The Minister kindly sent me a copy of the consultation document Modernising Medical Regulation in which one of the proposals is that the General Medical Council should have an enhanced power to suspend doctors from the medical register on an interim basis, making that power wide ranging and enabling the GMC to act quickly. That is a positive step and should be commended. I know that the General Medical Council is keen to have those changes as a first step towards a reassessment of its powers to protect patients.
As much as public confidence must be restored in the profession, the profession's confidence in those who manage the NHS must also be restored by removing knee-jerk management and over-reaction. Restoring a proper balance is what this Bill is all about. Providing the proper degree of protection to hospital doctors demonstrates Parliament's commitment to fairness and natural justice. The Bill does nothing to undermine proper regulation of the profession but a great deal to protect doctors in whom we have invested large sums of money on training. The Bill is to the good of patients and doctors and there are no plausible arguments to block its passage to the statute book.
Finally, I commend my noble friend Lord Howe and the Minister on taking part in two debates in a row, and recognise their stamina.
7.38 p.m.
Lord Clement-Jones: My Lords, I add my thanks and congratulations to the noble Baroness, Lady Knight of Collingtree, on pursuing this subject so diligently over the years and on dedicating her time, in particular over the past year, to the drawing up of the Bill in conjunction with representatives from so many different interested bodies.
As the noble Baroness stated, it is clearly understandable that in the light of so many recent high profile cases in which medical practitioners have acted negligently, incompetently or even criminally, public and government attention has been focused on toughening disciplinary procedures in an effort to ensure the safety of patients at all times.
Government proposals outlined in March, referred to by the noble Lord, Lord Colwyn, build on the earlier consultation paper, Supporting Doctors—Protecting Patients, and will involve inter alia the implementation of lifetime bans and additional powers of suspension for the General Medical Council. The Health Minister, John Denham, was quoted last October as saying:
"Recent events have highlighted that the current system is inadequate. Patient safety is paramount and it is vital that the Government—and the GMC—act quickly to restore public confidence".
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He went on to say:
"The majority of our doctors are hardworking, honest and trustworthy but where problems arise patients need to know we will act fast to protect them and take strong steps to ensure that they receive the best possible care".
I am sure that all the supporters of the Bill agree with both sentiments. They certainly do not intend to minimise the need for patient protection. The GMC itself has been active in promoting the need for new powers and proposals such as revalidation which will ensure higher quality among doctors, and is to be commended on that.
Massive attention is being given at local trust and health authority level, with the assistance of the Royal Colleges, to the issue of clinical governance. However, as we have heard tonight and in previous debates on this matter, there is another group that requires and deserves a rapid response when problems arise: the medical practitioners themselves. Mr Milburn, when he was Minister for Health, recognised the isslue, hence the review commenced in October 1998. The noble Lord, Lord Rea, mentioned the response of the noble Baroness, Lady Hayman, when she was Minister for Health in this House.
I am sure that many of us received correspondence from doctors after the debate in January last year, also initiated by the noble Baroness. Lady Knight, outlining severe injustices which had taken place. One correspondent wrote to me as follows:
"The disciplinary action taken against me and the manner in which it was conducted were excessive and unjust. The procedures pursued by the Trust were deeply flawed leading to 'abuses of process' throughout … meetings which I was required to attend prior to my suspension were clearly disciplinary in nature and intent but were not conducted according to the Trust's Disciplinary Procedure. I was given no prior warning of impending disciplinary action, no verbal warning and no prior, lesser disciplinary sanction".
I am personally aware of many other cases of suspension which have been inspired by nothing more than professional rivalry. It is notable in these circumstances how much distress is caused not only to the doctor involved, but also to the patients of that doctor who are denied access to the doctor's services. Generally—we have seen the press over the past few months—there are many reported cases where practitioners have been suspended for what seem 10 be entirely inappropriate reasons; for example, the hospital doctor who was suspended for purchasing a piece of medical equipment for his department for which he had been fund-raising with the trust's knowledge for some time; and the head of a hospital pathology department who disputed the merits of merger proposals and remained suspended for nearly nine months, taking early retirement shortly after his reinstatement.
One case that truly highlights the sheer folly of some of the suspensions is the recently reported case of Professor Savidge, a senior blood specialist at St Thomas'. He was suspended for a full 10 months following a complaint about an alleged indiscretion with a female colleague while they were attending a medical conference in Moscow. The complaint was made by a third party. Eventually, Professor Savidge

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was reinstated after no evidence whatsoever had been put forward by the complainant. To this day, Professor Savidge denies having even met the woman cited. Dr Peter Tomlin, who runs a support group for suspended doctors, described the case,
"as an outrageous waste of time and money".
That clearly must be the case. The common pattern of so many of these suspensions seems to be unfair procedures which provide inadequate natural justice for the medical practitioner involved.
Complaints against doctors have more than trebled in the past six years, according to figures from the GMC. In 1999, there were 3,000 general complaints in comparison to only 1,000 in 1993. As the public appear to become increasingly litigious, the financial burden on the health service grows exponentially. We now know that the total projected liability of the NHS is £3.4 billion, according to the National Audit Office.
Clearly there is a need to provide protection for the accused as well as for patients and complainants in this increasingly contentious environment. We need a set of national standards which apply in the case of suspensions and provide the necessary procedural protection. Clarification of the procedural steps that need to be taken in the case of suspensions is long overdue.
The Bill of the noble Baroness, Lady Knight of Collingtree, is therefore an important step towards redressing the current imbalance. From nearly all the cases we have heard about during the course of these debates, the key issues that appear time and again are fairness, openness and speed. There is no valid reason why some of these cases have dragged on for so long with so little disclosure of evidence and at such cost to the health service.
In addition, as has also been mentioned in previous debates by the noble Baroness and other noble Lords, including the noble Baroness, Lady Kennedy of The Shaws, there are many instances where suspension practice appears to be in breach of the Human Rights Act. As British legal practice moves further forward towards concordance with European law in this field, the provisions of this Bill may well help to avert an even greater leap in the NHS's potential litigation liability. Legislation of this kind, which facilitates the fair and prompt administration of suspension procedure, can only be a positive step.
I believe that the specific steps required by this Bill and the rights provided are highly significant: the requirement for there to be no delay; the requirement for consultation particularly with appropriate practising clinicians; the duty to consider alternatives to suspension and whether it is really needed to protect the interests of patients, staff and the practitioner; the requirement to give written reasons for decisions and to convey them to the NHSE and any private hospitals involved; the requirement to review the suspension; the right of appeal to a tribunal, and the right to appear before it.
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The Bill also helpfully deals with the vexed question of exclusion from NHS premises, so graphically described by the noble Baroness, Lady Knight. We are in her debt for formulating these proposals in a timely fashion, in contrast to the Government who, despite their earlier assurances, failed to introduced anything equivalent. The outcome of their review proved disappointing. The issue is even more important now that it is proposed that health authorities be given the power to suspend GPs. As the noble Lord, Lord Rea, said, it is notable that in Scotland, regrettably so often ahead of us, proposals have been agreed between government and the professions on this matter.
These safeguards are extremely welcome and important. I hope that the Government will give the Bill their full backing in principle so that in Committee we can argue only about the details and not about the principles involved. The Bill should be seen as a significant waymark on the road to ensuring not only the safety of patients, but also the fair and equitable treatment of medical practitioners.
8.8 p.m.
Earl Howe: My Lords, my noble friend Lady Knight is to be congratulated on her assiduous pursuit of these important issues. I believe the Bill deserves our support.
By way of a baseline in this debate, I suggest that there are two propositions on which most speakers, if not all, would be agreed. The first is that professional standards of practice on the part of doctors should be properly assessed. That is the principle upon which clinical governance is based and to which the professions are fully signed up. The new revalidation and fitness to practice proposals are an important part of that agenda. No one wants to see poor standards of clinical care in the NHS.
The second proposition is equally widely accepted; that is, that the procedures currently employed in NHS trusts for suspending those doctors who are believed to be performing poorly are not working, either efficiently or fairly. In some cases, as we heard, they lead to gross injustices. It is those injustices which this Bill is designed to address.
Much has happened since this matter was last debated in January 1999 and it is right that we should be fair to the Government. Last November, as my noble friend mentioned, the Department of Health published its proposals designed to prevent and tackle poor performance on the part of doctors in the document, Supporting Doctors—Protecting Patients. I am grateful to the Minister for sending me a copy.
I shall not anticipate the Minister's speech too closely; he will doubtless wish to explain the document in his own words. But, perhaps unlike my noble friend, I believe the paper makes a positive contribution to the debate. The proposals lay weight on the early recognition of problems and the need to deal with them in a manner that is both easily understood and, as far as possible, non-confrontational. The emphasis is on making sure that patients are not put at risk and on giving support and, where necessary, retraining of

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doctors whose clinical performance falls below acceptable standards. Existing disciplinary procedures would he abolished and a clear set of revised procedures laid down covering the different types of issue—for example, disciplinary, contractual or clinical—that can give rise to complaints in the first instance. Importantly, however, the power of suspending a hospital doctor would remain.
My own view is that these proposals have a great deal to recommend them. However, as my noble friend pointed out, their defect is that they do not go nearly far enough. The underlying assumption in the consultation paper is that, providing the new procedures are in place—procedures to be promulgated largely, I understand, by means of guidance—the suspension of doctors will not be an issue. That seems to me to be a somewhat pious hope. There is perfectly reasonable guidance in place at the moment, and it has signally failed to achieve a fair outcome. Even if the majority of hospital trusts abide fully by their revised procedures, situations are simply bound to arise where decisions about the suspension of doctors have to be made. If that is so, we have to ask what systems should be put in place to govern the conduct and process of such suspensions.
Nothing in the Government's proposals seems to me to address the issues of equity and fairness that my noble friend has highlighted both in her speech and in this Bill. It is simply not acceptable for the nature of a complaint to be withheld from the doctor whose suspension has itself resulted from that complaint. It is not acceptable for members of a trust to be judge and jury of a complaint that the trust itself has initiated. A doctor should be entitled to representation before an assessment panel. He should have a right of appeal. There should be mechanisms to ensure that delays in hearing a complaint are kept to a minimum. Where doctors are wrongly treated and then exonerated, there should be compensation. Above all, suspension should only be resorted to when patient care is jeopardised and there is no other appropriate procedure open.
Statistically, four out of five cases where there are concerns about a doctor's clinical competence are not upheld. Yet, at present, there is a definite Kafkaesque quality' to the suspension procedures as operated in some trusts to the extent that doctors are made to feel condemned, before they have even been heard, for an offence of which they are often completely unaware. As my noble friend Lord Colwyn emphasised, the unjust stigma suffered by doctors and the damage to careers is considerable.
Surely none of this can be consistent with the human rights legislation that is due to come into force later this year. Indeed, because of that legislation, it seems to me to he all the more essential that these issues are gripped and resolved without delay. It really would be deeply unfortunate if, by October—when, I understand, the Act comes into force—we had no adequate systems in place to deal with suspensions, and then found that doctors were resorting to court action to resolve perceived injustices. As at 31st December last, 27 hospital and community medical and dental staff had been suspended for six months or more at an estimated cost to the health service of £2.5
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million. The systems that are needed should be fair, open and transparent; and they should be nationally applied. It should not be acceptable for each hospital trust to have its own, sometimes idiosyncratic, procedures to deal with complaints. I am very far from convinced that a national system is achievable through mechanisms that are not legally binding; which is the reason why I support this Bill.
I understand that the Government have expressed a willingness to negotiate on putting in place a set of formal procedures to cover suspensions. That is welcome. However, what I would like to hear from the Minister is a firm commitment to enter such discussions and a definite timetable for doing so. The Government also need to address the possibility that the systems to be put in place in England will differ from those in Scotland which, in turn, will differ from the Welsh and Northern Irish procedures. It would be retrograde if each part of the Union had a set of procedures that differed in a material respect from procedures followed in another part. What action are the Government taking, for example, to ensure that the proposals contained in Supporting Doctors—Protecting Patients are taken up across the United Kingdom as a whole? Will the noble Lord also look carefully at the suspension procedures as practised in Scotland?
For the reasons that I have identified, I sincerely hope that the Government will not dismiss this Bill out of hand and that they will wish to look further at what it contains. I join my noble friend in commending the Bill to the House.
8.15 p.m.
Lord Hunt of Kings Heath: My Lords, I welcome the opportunity presented to the House tonight by the noble Baroness, Lady Collingtree, to debate this important issue. Like other noble Lords, I am indebted to her for once again bringing this matter to our attention.
These issues affect not just individual doctors; they affect the whole performance of the National Health Service and the quality of service that we offer our patients. Doctors are very important members of the health community. I certainly very much agree with the noble Earl, Lord Howe, that we rely on their expertise and their ethical obligations to ensure that we are looked after properly when we go to see a doctor with our most private concerns.
We know that the great majority of doctors provide an excellent service and give their patients the best possible care. But, sadly, we also know that some doctors let down the profession. They may find the demands being placed on them too great. They may have difficulty in keeping up with the dramatic technological advances made in patient care in the past two decades. Undoubtedly, doctors who provide inadequate care are a danger to patients. There are also others who, because of ill health, pose a threat to patient safety. Although these doctors represent a very small minority, they have undoubtedly damaged public confidence in the medical profession at a time

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when, as the noble Lords, Lord Colwyn and Lord Clement-Jones, have suggested, complaints and litigation are very much a rising trend.
Clearly the paramount interest in all this is that of patients. We must ensure that doctors who are criminal, inadequate or ill will not have opportunities in the future to harm patients. We must have systems in place to ensure that such cases can be easily identified and discovered. When they are discovered, action needs to be taken quickly either by the NHS or the General Medical Council. In these situations, immediate suspension is often the only way to stop a dangerous doctor from threatening patient safety. It has always been the Government's policy that suspension should be used primarily when a doctor's continued practice causes a danger to patients, or when it is necessary to facilitate investigation into serious allegations.
The noble Baroness has raised her concerns about the practice of doctor suspensions on a number of occasions, most notably in our debate in your Lordships' House last year. I fully appreciate the stress that suspensions can place on doctors and their families. The Government believe that such suspensions should be resolved as quickly as possible. As the noble Baroness said, it makes no sense to keep expensively trained doctors suspended unnecessarily. One has to point out that suspension is often resorted to when there is a question about a doctor's poor performance. Too often, perhaps, a disciplinary route is taken quite inappropriately. We need to help doctors long before they reach the suspension stage and long before they can do harm to patients. I very much agree with the noble Baroness that we need to look at alternatives to lengthy suspensions.
My noble friend Lord Rea mentioned current performance. Since 31st March 1995 a total of 75 cases of suspension lasting over six months have been reported. As at 31st December 1999—the latest date for which figures are available-27 hospital and community medical and dental staff, including 17 consultants, have been suspended for more than six months. That shows a slight reduction over the figures for the quarter ending September 1999. There are indications that the health service has already taken note of the concerns that have been expressed about the way suspensions have been developed and used in past years. The NHS is much more aware of the need for extreme care and caution in resorting to suspensions.
In order to address some of these problems, and indeed the wider problems of dealing with the poor performance of some doctors, the Chief Medical Officer published his paper, Supporting Doctors—Protecting Patients. Hospital doctors' suspension is one of the issues addressed. The consultation on the paper has just finished and we are carefully considering the responses. The comments made by noble Lords tonight will be invaluable in considering those responses.
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I was disappointed in the comments made by a number of noble Lords on the document. I do not share noble Lords' pessimism about it. The noble Earl, Lord Howe, was right to reflect on its positive points. I say to the noble Baroness, Lady Knight, that a key reason for referring a doctor to the new support and assessment service is when a concern is raised but where there is no agreement on the cause of the problem. Quick referral to this service will enable independent assessment of the problem. The doctor may be exonerated or an action plan may be suggested to deal with the problem. In those circumstances, the doctor will be clear about what the concerns are and will have the benefit of an independent review.
I shall return to that matter in more detail later. It is also important to reflect that it is not just the NHS which has a responsibility to patients to ensure that they are safe in the hands of their doctor. We must not forget the role of the General Medical Council, which, through its statutory duties to regulate the medical profession, also has a legal duty to protect patients. Following the tragic and disturbing case of Dr Shipman, the Government propose to widen the GMC's powers so that it can deal more effectively and quickly with doctors whose fitness to practise comes into question. The changes to those powers are intended to strengthen the bond of trust that must exist between doctors and their patients, and to express the Government's and the GMC's determination to apply the lessons of those tragic events so that patients have proper protection.
I return to the details of hospital suspensions. At the time of the debate in your Lordships' House last year, my noble friend Lady Hayman informed noble Lords that the Government intended to order a review of the current suspension procedures for hospital doctors and dentists with a view to speeding up the process. The noble Lord, Lord Clement-Jones, asked me what progress had been made on the review. My noble friend informed your Lordships last year that this was to be an internal management review which aimed to develop a new national policy for suspensions. The review, which took place last year, identified four areas for improvement: the early detection of poor performance which if not remedied could lead to suspensions; the consideration of other options short of formal suspension; more rigorous control of the length of suspensions; and strengthening of local capacity and expertise to manage suspensions.
Noble Lords will see that the issues of suspension and poor performance are linked in those conclusions. I do not believe that it is straightforward: it is difficult to consider those issues separately. They have to be considered as part of the whole package of measures needed to tackle poor performance. Because of that, and before the review of suspensions was completed, the Chief Medical Officer began to address the wider issues surrounding the identification and handling of poor clinical performance. The whole question of suspensions is bound up with those wider issues. It was therefore decided that the conclusions of the review of suspensions should be subsumed within the proposals

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for a comprehensive reform and modernisation of the present arrangements for tackling poor clinical performance in the NHS.
I turn to the specific aims of the Bill. Many of the proposals in the Bill are not, I believe, very different from the findings of the review team, nor from normal practice in most trusts. The noble Baroness proposes that in future the chief executives of NHS trusts are made responsible for the decision to suspend doctors and that they must consult practising clinicians and other appropriate persons as they see fit. In reality, that is what happens now. Normally, prior to the suspension, the medical and human resource directors and the chief executive will all be involved in the decision-making process. Other interested parties, such as the health authority's director of public health, the GMC and the medical Royal Colleges might be asked for help and guidance prior to making a decision to suspend.
The noble Baroness also requires the chief executives to consider whether there are alternatives to suspension and to satisfy themselves that this is in the interests of the patients, staff and practitioner. The Bill also requires them to inform the NHS executive who will monitor suspensions and, if the practitioner has a private practice, the chief executive is to be required to notify the private hospital where the practitioner has admitting rights. The noble Baroness's Bill also requires each suspension to be reviewed monthly by the chief executive and the suspension automatically revoked if disciplinary proceedings are not commenced within one month. The Bill also gives certain appeal rights to the practitioner and requires the chief executive to follow certain rules before a decision can be made to exclude a suspended doctor from the premises.
We have sympathy with some of the aims of the Bill, some of which, as I have indicated, were identified as areas for improvement by the internal review. However, I have one serious concern about one aspect of the Bill which suggests that, where disciplinary procedures are not invoked within one month of suspension, the suspension ceases to have effect. That would mean in the future that, where a doctor is suspected of a serious criminal offence—for example, like Dr Shipman—or where performance has endangered patients' lives or there has been a drug problem, or in cases which, because of their complexity or the need to investigate a large number of matters, are bound to take time, that doctor would have a statutory right to practise, even though the risk to patients is still there. I believe that that would also cut across our proposals for dealing with poor performance. In the few cases when suspension was considered necessary, the Bill would force a doctor into the disciplinary route—the very thing that we are trying to avoid.
I certainly want to ensure that the new system on which the CMO is consulting at the moment will allow us to deal with many of the issues that have been raised in your Lordships' House tonight. I believe that those proposals will help the small minority of doctors whose performance gives cause for concern. In this
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way, in the future, by supporting doctors to improve their performance, we shall see the end of protracted delays and the legalistic inflexibility of the old arrangements. We need doctors' support for that process. Suspending highly trained doctors is an expensive business. It does not help the doctors unless there are means of improvement available to them. It is certainly not good for the taxpayer to have a doctor who might perform reasonably for 90 per cent of the time but requires help to gain the other 10 per cent—for example, through further training— suspended for lengthy periods unnecessarily. It is not in the public interest to suspend doctors if there are alternatives to disciplinary action.
We are looking at these alternatives. For example, Birmingham Heartlands Hospital is currently developing new ways of identifying doctors' development needs. Problems will now be identified earlier and action taken before patients are put at risk. I am convinced that the proposals contained in the Chief Medical Officer's paper should help poorly performing doctors because it would provide an early diagnosis of the problem in a neutral environment. It would give the NHS, the patient and the doctor an objective assessment of the nature and seriousness of the problem and the action needed to address it.
The noble Earl, Lord Howe, raised the point that suspension would still remain an option. The proposals for the support and assessment service would largely resolve the need for many of the suspensions that currently take place and for several separate and time-consuming investigations. In future, suspensions should only be needed where a doctor refuses to be referred to a support and assessment service; where an employer is investigating or taking action under internal disciplinary procedures because of alleged personal misconduct or failure to fulfil contractual responsibilities; where there is imminent danger to patients and there is a need to ensure that they are immediately protected; and where an employer is dealing with a doctor who is referred back from the support and assessment service with a report concluding that the problem is "serious and intractable".
As I said, the current number of suspensions lasting over six months is 27, the large majority o which are performance related. Under the Chief Medical Officer's proposals, in future, rather than suspending the doctor, these kinds of cases will be referred to the assessment and support service. The Government believe that the proposals contained in the Chief Medical Officer's paper will address most of the current problems surrounding hospital doctors' suspensions.
However, I recognise that in spite of everything that might be done to help poorly performing doctors, there will always be some doctors who are either criminal, incompetent or ill, who will continue to pose a serious threat to patients. In those situations, the Government have to be able to take all action necessary to have systems in place to stop such doctors harming patients.

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We are, of course, carefully considering the responses to the CMO's consultation document. We shall certainly, in the light of that, wish to clarify the circumstances in which doctors should be suspended. For those doctors who are suspended by their employer, we shall ensure that there are robust monitoring processes in place so that doctors are not suspended unnecessarily, nor for an inordinate length of time.
I should say to the noble Earl, Lord Howe, who expressed some scepticism about our ability to manage performance in that area, that we shall ensure that every avenue is explored to avoid suspension and to help the poorly performing doctor.
In answer to the noble Lord, Lord Colwyn, I say again that as a backstop to all these measures we shall be giving the GMC additional powers to suspend a doctor, as well as stopping rogue doctors from coming back on to the medical register. In the meantime, we want to ensure that those few doctors who will continue to be suspended are dealt with fairly—I accept the point entirely—and as quickly as possible. But uppermost in our mind will always be patient safety.
In conclusion, the issue of hospital doctors' suspensions is but a small part of the bigger picture of identifying and handling poor clinical performance. The issues of discipline and poor performance need to be handled as part of a package. I fully accept the point made by the noble Earl, Lord Howe, that the NHS is not exempt from the Human Rights Act and that we must ensure that the way in which we deal with those working in the National Health Service complies with that Act and with employment law. We do not consider that doctors need special treatment in law over and above other citizens; we do not believe that it is either necessary or appropriate to put on to a statutory footing the procedures whereby NHS employers suspend doctors.
We recognise the underlying aims of the Bill of the noble Baroness, Lady Knight. But, as I said, we believe that it is flawed and we are not able to support it. I accept that, undoubtedly, the debate has been timely and informative. I shall certainly ensure that the important issues raised are fully considered in the consultation on the CMO's paper. I assure the noble Baroness that we will take on board many of her concerns in the action we propose to take on suspensions and discipline.
Lord Colwyn: My Lords, before the noble Lord sits down, can he say whether the escalating costs of suspension litigation will affect the recently announced increased spending on the NHS, which of course we all applaud?
Lord Hunt of Kings Heath: My Lords, if we are having to pay more money out as a result of litigation, clearly that has to come from the pool of money we make available to the National Health Service. However, some of the figures I have seen in the media
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have been rather exaggerated. The figures quoted list the potential liability if all the claims currently being made against the NHS were to be successful. While I would by no means underplay the significant implications of the rise in litigation, I think that some of the figures are exaggerated.
Lord Rea: My Lords, before the noble Lord sits down, perhaps I may make one point. Both the noble Baroness, Lady Knight, and I mentioned the solution that appears to have satisfied most people in Scotland. She asked whether the Government would take into consideration what has happened in Scotland in any decisions that are made in this area in relation to England.
Lord Hunt of Kings Heath: Yes, my Lords. I recollect that the noble Earl, Lord Howe, also asked me about the position in Scotland. We are aware of the arrangements that have taken place in Scotland. As I said, we were going to develop our own guidance in relation to the suspension of doctors, but this has been overtaken by the wider work contained in the Chief Medical Officer's report. That is why we are developing the support and assessment centres and why I believe that suspensions in the future will be much fewer than at the moment.
I accept that we need to learn from the way in which our health services are being developed in the four countries of the United Kingdom. I also accept that we need to make sure—particularly in the case of actions taken against professionals—that there is a sharing of information. This should help to prevent practitioners who are the subject of disciplinary proceedings in a country where it is considered they should not be practising from moving to another country.
I refer noble Lords to the announcement last Friday by my right honourable friend the Prime Minister about the setting up of an initiative to enable both him and the First Ministers of the other countries to discuss matters relating to the National Health Service. That will allow us to have both cohesion in terms of NHS developments generally throughout the UK and will reflect the distinctive approaches of the four countries.
8.39 p.m.
Baroness Knight of Collingtree: My Lords, I thank most warmly those noble Lords who have been good enough to speak in support of the Bill. I would say to the Minister—I made this amply clear in my earlier remarks—that all of us feel that patients must be supported. None of us supports for one moment doctors who have behaved wrongly. What worries me is that the Chief Medical Officer's report and a good deal of what the Minister said is based on an assumption that many doctors out there are behaving very badly and must be dealt with. Suspensions come in almost as a second thought. That is why I said earlier that it is not a question of supporting bad doctors; it is a question of trying to support and help those doctors who have not behaved badly.

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I remind the Minister that the overwhelming majority of doctors who have been suspended are subsequently found to be innocent of all charges. All the way along the argument seems to be, "We must protect the patients. Therefore, we cannot protect the suspended doctors". That worries me very much.
I am very sorry indeed that Dr Shipman found his way into the debate. I have my own view about that monster, which I think is shared by many. The amazing point about the Shipman case is that other doctors cheerfully signed the papers for Shipman which enabled him for years to get away with what was going on. The machinery was in place, but it did not function. That is what troubles me about the Minister's answer. I have an awful feeling of déjà vu because I raised this matter on numerous occasions in the other place. I have had two debates on it in the other place and one in your Lordships' House. On each occasion the Minister on the Front Bench has assured me, in rather the same terms as the Minister has assured me tonight, that all will be well, that official steps will be taken and the problem will fade away. But it never, never does. That is the trouble. That is why the Bill has been brought forward.
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I would assure your Lordships that the Bill's wording is not mine. We drew up the Bill because all the experts involved decided that these points had to be brought in as a fair way of dealing with innocent doctors who are suspended. The Minister referred to a trust deciding within one calendar month whether prima facie evidence existed. The view of the experts was that it was relatively simple at least to see that there was evidence—not to go into the evidence, of course, but to say, yes, there is evidence and that decision does not need to be dragged out over a period of years. That is why the experts wanted that point included.
It is because I am aware of the gross injustice which is going on and because I have lost faith that the matter will be sorted out without any national answer such as a parliamentary Bill would provide that I must ask your Lordships to be good enough to give the Bill a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at sixteen minutes before nine o'clock.