Lords Sitting of 14 April 2000

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

Trustee Bill [H.L.]
11.6 a.m.
The Lord Chancellor (Lord Irvine of Lairg): My Lords, I beg to move that this Bill be now read a second time.
Although trust law appears arcane, trusts and charities touch the lives of many. Our pensions may be in pension trusts; our spare cash may be in investment trusts; we may make regular donations to charitable trusts; and may spend parts of our holidays here at home on the premises of the National Trust. We may ourselves be trustees of private or of charitable trusts in our personal or our professional capacities.
However, trust law governing the powers and duties of trustees has not kept pace with the evolving social and economic role trusts now fulfil. This has become particularly clear as the conduct of investment business has changed quite fundamentally with the introduction of new technology, not least on the London Stock Exchange itself. One of the results of this is that trustees who derive their authority from trust documents which make no, or no sufficient, provision for handling trust investments are finding it increasingly difficult to satisfy their primary duty of acting in the best interests of their beneficiaries.
This Bill will implement, with minor modification, the changes in relation to the law of England and Wales recommended by the Law Commission and the Scottish Law Commission in their joint report, Trustees' Powers and Duties (1999) Law Corn No 2 60 Scot Law Corn No 172, published last summer. The report was the result of the commissions' usual rigorous research and consultation, carried out partly in conjunction with the Treasury, and I am pleased to be able to bring the Bill before your Lordships' House today.
The principal change will be the creation of a new, wider statutory power of investment to replace the present limited power under the Trustee Investments Act 1961. This new power of investment will be supported by a range of new powers to appoint agents, nominees and custodians; to insure trust property; and to pay professional trustees. These measures will facilitate the better administration of trusts and enable trustees to take full advantage of the wider investment opportunities now open to them, while protecting the interests of beneficiaries against abuse of the new powers. As under the present law, the new powers will only apply if, and to the extent that, the trust instrument does not provide otherwise.
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Part I of the Bill introduces the duly of care which will apply, subject to Schedule 1, to the exercise by trustees of the new powers granted them by the Bill. Clauses 1 and 2 create a new, precisely defined statutory duty of care applicable to trustees when carrying out their functions under the Bill or equivalent functions under the trust instrument. As in the law generally, the phrase "duty of care" signifies a duty to take care to avoid causing injury or loss.
The new duty will bring certainty and consistency to the standard of competence and behaviour expected of trustees. It will be a safeguard for beneficiaries and so balance the wider powers given to trustees elsewhere in the Bill. The duty will take effect in addition to the existing fundamental duties of trustees; for example, to act in the best interests of the beneficiaries and to comply with the terms of the trust. This aspect of the Bill codifies the present position at common law, where there is already a duty of care, removing uncertainty and highlighting this as a key duty of the trustees.
The duty is a default provision. It may be excluded or modified by the terms of the trust. This new duty will apply to the way trustees exercise discretionary power. It will not apply to a decision by the trustees as to whether to exercise that discretionary power in the first place.
Clause 1 defines the new statutory duty of care. The circumstances in which it will apply are defined by Clause 2, which gives effect to Schedule 1, and it will not apply outside those circumstances. To comply with the new duty, a trustee must show a degree of skill and care that is reasonable in the circumstances of the case, making allowance for his or her special knowledge, experience or professional status.
I now turn to Clauses 3 to 7, which deal with investment. Part II of the Bill implements the most important part of the Law Commission's report. It sets up a new regime for investment by trustees who do not have alternative powers of investment under the terms of their trust documents or under another statute or any subordinate legislation, and who are not prevented by their trust documents from using such powers.
Most modern trust instruments expressly confer wide investment powers. Older trust instruments frequently do not. In the absence of express powers under the trust instrument, the trustees must look to legislation to define their powers. These trustees are presently restricted to the use of the default powers contained in the Trustee Investments Act 1961. These powers, although a generous provision when enacted, are now generally considered too narrow. The controls in the Act are considered to have worked against the best interests of beneficiaries, to be too restrictive and too expensive to administer.
Under the new provisions, trustees who would have had to rely on the powers in the 1961 Act will no longer be restricted to specified "authorised investments" and will be able to invest in the same range of investments as an absolute owner. Coupled with the new duty of care in Clause 1, the new power is intended to confer

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the widest possible investment powers while ensuring that trustees act prudently in safeguarding the capital of the trust. The powers will continue to be default powers and they are expected to be of greatest utility to older trusts, including many charities, and to trusts arising under "home made" wills or on intestacy.
Clause 3 gives trustees the power to invest trust assets as though they were the absolute owners of them—a significant shift away from the present position. The new power is to be known as the general power of investment. However, the power granted by the clause is not quite a carte blanche. Perhaps most importantly, it does not allow for investment in land other than by way of loans secured on land. However, such a power is granted by Clause 8. The principal reason for separating those two powers is that the second—to acquire land for investment or any other purpose—is novel, and the separation is designed to simplify the consequential amendments arising from the use of the new general power by existing users of the 1961 Act.
Clauses 4 and 5 impose specific duties to keep in mind the need for diversification and the suitability of investments and to obtain and consider properly advice where appropriate. Those duties will apply to trustees in the exercise of a power of investment. Clause 6 provides that the new general power of investment is a default provision. It specifies that, subject to the provisions of Clause 7 relating to trusts in existence when the Bill is brought into force, the new power will be available to all trustees in addition to any limited express power of investment they may have already, but subject to any limitation imposed by the trust instrument or by primary or subordinate legislation.
Clause 7 provides for the application of Part II of the Bill to existing trusts. However, your Lordships should also note that Part II does not apply in respect of pension trusts, authorised unit trusts, or funds established under schemes made under Sections 24 or 25 of the Charities Act 1993. I should, in fairness, alert your Lordships to the fact that the Government will introduce an amendment at a later stage to give all trustees the new powers, subject to express restrictions and exclusions and subject to the exclusion of particular types of trust such as pension trusts in Part VI of the Bill, thus avoiding the need for those concerned to seek orders under Clause 41. That amendment will apply also to Clause 10.
I now turn to Part III, Clauses 8 to 10, concerning acquisition of land. The new general power of investment has only limited application to land and is in any event restricted to investment. This part of the Bill therefore makes separate provision to remedy the disparity between the powers of different types of trustees in relation to the purchase of land. Clause 8 gives trustees the power to acquire freehold or leasehold land in the United Kingdom as an investment, for occupation by a beneficiary or for any other reason. Having acquired land, a trustee must be able to deal with it effectively and so, for the purpose of exercising his trustee functions, those who acquire
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land will have the powers of an absolute owner in relation to the land. Clauses 9 and 10 act on that part of the Bill in much the same way as Clauses 6 and 7 acted on Part II. Clause 10 will in due course be amended to be of the same effect as Clause 7.
I turn to Part IV, Clauses 11 to 27, the subject of which is agents, nominees and custodians. That part of the Bill deals with the use by trustees of agents, nominees and custodians. As I am sure your Lordships are aware, under the present law, the trustees of a trust cannot, as a collective body, delegate their fiduciary discretions—that is, powers implying a personal discretion such as the selection of trust investments or the decision whether or not to sell or lease trust property—without express authority in the trust instrument. In view of the increasingly specialised nature of the tasks required to be undertaken by trustees, some of those restrictions are now a serious impediment to the administration of trusts.
Clauses 11 to 15 set out the powers of collective delegation that trustees will in future have in default of express powers being conferred by the trust instrument. Clause 11(1) provides that, subject to the provisions of Part IV, trustees may delegate any or all of their "delegable functions" to an agent. Perhaps I may explain the clause a little more fully, as it is novel in its effect. The nature of the functions which may be delegated will in part be governed by whether or not the trust is charitable. In the case of non-charitable trusts, to which Clause 11 applies, subsection (2) provides that the trustees may delegate any function, except: first, a function relating to whether or in what way trust assets should be distributed; secondly, a power to allocate fees or other payments to capital or income; thirdly, a power to appoint a trustee; and fourthly, a power conferred by the trust instrument or an enactment either to delegate a trustee function or to appoint a nominee or custodian.
Clause 11(3) sets out the functions that a trustee of a charitable trust may delegate. Paragraph (a) ensures that administrative functions that can now be delegated under Section 23(1) of the Trustee Act 1925 will continue to be delegable. Paragraphs (b) and (c) provide for management and income-generating activities to be delegated except in so far as the income is derived from profits of a,
"trade which is an integral part of the carrying out the trust's charitable purpose".
Fund-raising activities which are an integral part of carrying out the trust's charitable purpose, therefore, would not be delegable. The concept of a trade that is
"an integral part of carrying out a trust's charitable purpose"
is defined in Clause 11(4).
Examples of fund-raising activities which are not delegable would include the provision of education by a fee paying school operating as a charitable trust. Paragraph (d) enables further functions to be made delegable by order made by the Secretary of State and Clause 11(5) provides that the order will be made subject to a negative resolution procedure.

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Clause 12 sets out those who may and may not be appointed as agents. Subject to it not being possible to appoint a beneficiary, there are no other restrictions.
Clause 13 makes it plain that, although an agent is not subject to the duty of care under Clause 1, which applies only to trustees, the exercise of a delegated function by an agent is subject to any specific duties or restrictions attached to the function. Agents will be subject to the common law duty of care, but the majority of agents will be bound by a duty of care which will be explicit in the contract appointing them.
Under Clause 14 trustees will be free to agree terms for the appointment of an agent subject to the limitation imposed by subsection (2). The basis upon which the agency will have effect will be governed by the general law of agency.
Although Clause 11 confers on trustees the power to appoint agents and to delegate certain functions to them, Clause 15 provides for special restrictions on the delegation of the asset management functions of trustees, as defined in subsection (5), none of which has previously been capable of being delegated unless the trustees have been given express power to do so in the trust instrument. There is no general requirement for the appointment of an agent under Clause 11 to be made or evidenced in writing but, by virtue of subsection (1), such a requirement does apply if the agent is to be authorised to exercise asset management functions.
Before trustees may delegate any of their asset management functions they must prepare a policy statement giving guidance as to how the functions should be exercised, to ensure that the functions will be exercised in the best interests of the trust.
Clauses 16 to 20 govern the powers of trustees to appoint nominees and custodians in cases where the trust instrument contains no express powers to do so.
Clauses 16 and 17 provide for the appointment of nominees and custodians respectively. Those powers are conferred on trustees of all trusts except pension trusts, authorised unit trusts, or funds established under schemes made under Sections 24 or 25 of the Charities Act 1993.
Whereas Clause 17 provides a power to appoint a custodian, Clause 18 imposes a duty to do so in respect of any securities payable to bearer which are held on behalf of the trust. That provision replaces Section 7(1) of the Trustee Act 1925. Clause 18 does not oblige trustees to appoint a person to collect the income from any securities held on behalf of the trust but, to the extent that any person is appointed for that purpose, he or she will be appointed as an agent under Clause 11.
Clause 19 makes it clear that, to be eligible for appointment as a nominee or custodian, a person must normally carry on a business which consists of or includes acting as a nominee or custodian. However, there is an alternative to that requirement in subsection (2) so that trustees may use special purpose vehicles for nominee or custodianship purposes.
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Clause 20 has a similar effect in relation to the appointment of nominees and custodians as Clause 14 has in relation to the appointment of agents.
Clauses 21 to 23 provide for the review by trustees of the appointments of agents, nominees and custodians and the liability of the trustees for such persons. Clause 21 defines when Clauses 22 and 23 respectively will apply.
Where it applies, Clause 22(1) imposes on trustees a single duty with three elements during any agency, nomineeship or custodianship. First, they must keep under review the terms of the appointment and how the person appointed is performing. Secondly, if circumstances make it appropriate, the trustees must consider whether to exercise any power of intervention that they have: for example, to give directions or to revoke the appointment. Finally, if the trustees consider that there is a need to exercise a power of intervention, they must do so.
Clause 23(1) makes it clear that a trustee who satisfies the duty of care in relation to the appointment and review of the appointment of an agent, nominee or custodian will not be liable for the acts and defaults of the appointee.
Clause 23(2) governs the liability of trustees for the acts or defaults of any permitted substitute of an agent, nominee or custodian. Having agreed terms, the trustees will be liable only for the acts or defaults of a substitute agent, nominee or custodian if the trustees fail to comply with the duty of care under Clause 1 when agreeing that a substitute could be appointed or when carrying out their duties of review under Clause 22 in so far as they relate to the use of the substitute.
Clauses 24 to 27 make certain supplementary general provisions in relation to the use of agents, nominees and custodians by trustees.
Clause 24 facilitates dealings by third parties with agents, nominees and custodians appointed by trustees.
The provisions of Part IV of the Bill confer powers that are exercisable by trustees collectively. However, Clause 25 makes it clear that, where a trust has a sole trustee, that trustee is still able to exercise those powers.
The duty under Clause 18 to appoint a person to act as a custodian in relation to any securities payable to bearer is intended to ensure a high level of security for such assets. That level of security is likely to be provided if the assets are held by a trust corporation, and so subsection (2) of Clause 25 disapplies the duty to appoint a custodian in relation to trusts having a sole trustee which is a trust corporation.
Clause 26 provides that the powers to appoint agents, nominees and custodians conferred by Part IV are in addition to any other powers the trustees may have but are subject to any limitations in the trust instrument or other legislation.
Clause 27 provides that Part IV applies irrespective of the date of creation of the trust. That will bring the benefit of the new powers to the greatest possible number of trustees and beneficiaries.

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Part V of the Bill makes provision for remuneration of certain trustees under certain circumstances. It does that by setting down rules of construction for express charging clauses in trust instruments and by providing a power to remunerate certain trustees in default of such express provision in the trust instrument.
Clause 28 introduces new rules for the construction of express charging clauses. Those rules apply in relation to trusts whenever created provided that their application is not inconsistent with the terms of the trust instrument. However, they apply only in relation to services provided on or after the commencement of the legislation. The clause provides that the services for which a trust corporation or a trustee acting in a professional capacity may be entitled to payment include services which are capable of being provided by a lay trustee.
Clause 29 effectively inserts a professional charging clause into any trust instrument which does not contain express provision (either for or against) remuneration of the trustee in question and where the entitlement to remuneration of the trustee is not the subject of provision in another statute or subordinate legislation.
Clause 29 does not permit the remuneration of charity trustees. However, Clause 30 confers a power upon the Secretary of State to make provision by statutory instrument for the remuneration of such trustees. Although Clause 30 does not constrain the power of the Secretary of State as to the content of regulations made in pursuance of the power, it is likely that any such regulations, if made, would be in similar form to Clause 29, with such modifications as may be appropriate. The Government have noted the report of the Delegated Powers and Deregulation Committee on this Bill and, in due course, will introduce an amendment to bring the clause into line with the committee's recommendation that it preclude the possibility of lay trustees being remunerated.
Clauses 31 and 32 make provision for the reimbursement of trustees' expenses and for the payment of remuneration and expenses to agents, nominees and custodians who are not trustees. These provisions apply in relation to services provided, or expenses incurred, on or after the commencement of the legislation on behalf of trusts whenever created. Clause 33 applies Clauses 28, 29, 31 and 32.
Part VI of the Bill deals with miscellaneous and supplementary matters with which I shall not weary the House in any detail as they are covered in the Explanatory Notes published with the Bill, but I will draw your Lordships' attention briefly to Clause 41, which is a Henry VII 1 clause.
Clause 41 is a Henry VIII power to amend other Acts. I am grateful to the Delegated Powers and Deregulation Committee of your Lordships' House who considered this matter at paragraph 35 of their fourth report and accepted the reasoning for its inclusion in the Bill. The purpose of Clause 41 is to allow those whose investment powers are governed by the 1961 Act but who would wish to take advantage of
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the new powers granted by Parts II and III of this Bill to apply to the Minister to be enabled to do so by the amendment of their governing statute. The Minister will be required to consult anyone who seems to him likely to be affected by the proposed amendment of a local, personal or private Act. Subsection (1) gives a Minister of the Crown power to make such amendments to any Act, including an Act extending to places outside England and Wales, as appear to him appropriate in consequence of or in connection with Part II or Part III. The reason for the extension of the power to Acts which operate beyond England and Wales is that, where a provision has UK-wide application, it may be anomalous to amend it in relation to England and Wales but not otherwise.
Over many years, the statutory investment powers of many organisations which are not trusts have nonetheless been defined in terms of the default powers contained in the 1961 Act. Many of those are thought to be governed by local, personal or private Acts and so not all of them are amenable to identification by the usual methods such as LEXIS searches.
The first schedule specifies the circumstances in which the new statutory duty of care will apply. In brief, a trustee acting under a power conferred by the Bill or the trust instrument will be subject to the duty in Clause 1 in the following circumstances: when exercising a power of investment or of reviewing investments; when acquiring or managing land; when appointing or reviewing the appointment of an agent, nominee or custodian; and when insuring trust property. Paragraph 5 makes clear that the duty of care can be excluded by a trust instrument.
Schedule 2 consists of minor and consequential amendments, Schedule 3 of transitional provisions and savings, and Schedule 4 of repeals.
Speeches at this stage must always be a balance between giving your Lordships sufficient to work on in the debate while not over-elaborating the substance of the Bill. I hope that I have struck that balance here for a substantial and complex Bill and that your Lordships will be willing to make up any deficiency of illustrative detail from the Explanatory Notes.
It is a pleasure to bring before your Lordships' House another Law Commission Bill. The scrupulousness of the processes it carries out when producing its reports, the wide range of its consultations and the regard in which its final conclusions are generally held make piloting them through your Lordships' House a less hazardous process than is sometimes the case with other Bills. This Bill, with the widespread welcome it received from the trust and charity worlds, is obviously a suitable candidate for Grand Committee treatment, and I am grateful for the co-operation of the opposition parties in helping it forward. This Bill will provide an important and very worthwhile enhancement of the powers of trustees for the benefit of trusts.
On a procedural note, I should say that the tidying-up amendments the Government intend to introduce, some of which I have mentioned today, will be made

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available to your Lordships seven days in advance of the Grand Committee, and I shall see to it that each of the noble Lords who has contributed to the debate today or who subsequently expresses an interest will receive copies personally. I commend the Bill to your Lordships' House.
Moved, That the Bill be now read a second time.—(The Lord Chancellor.)
11.35 a.m.
Lord Goodhart: My Lords, I am delighted to welcome the Trustee Bill. As has already been explained by the noble and learned Lord the Lord Chancellor, this Bill results from a report of the Law Commission published in July 1999. That was an excellent report and I add my tribute to the commission to that paid by the Lord Chancellor. I also pay personal tribute to Mr Charles Harpum, the Law Commissioner who was particularly responsible for this report.
The Bill was read for the first time in January of this year. The parliamentary process for implementing the report therefore began within six months of its publication. This is an admirable precedent and the Lord Chancellor is to be congratulated on obtaining a legislative slot so quickly.
I speak as a member of the Trust Law Committee, an independent body chaired by the former High Court Judge, Sir John Vinelott. It includes many judges and senior trust practitioners. We gave evidence to the Law Commission and warmly welcomed its report.
Trusts are one of the great inventions of the English legal system. They not only hold a great deal of private wealth, but are now the basis for most pension funds and many charities. Trusts, in forms such as unit trusts and debenture trust deeds, are part of our financial system. I take issue with the noble and learned Lord on only one point in that regard. The National Trust is in fact not a trust at all, but a corporate body.
There has been no major overhaul of our system of trust law since the Trustee Act 1925, three-quarters of a century ago. There has been only one significant change in trust law since 1925. That was the Trustee Investments Act 1961. The 1925 Act authorised the trustees, in the absence of any wider power in the trust deed, to invest trust funds in such admirable investments as the "B" annuities of the Eastern Bengal Railway, but not in equities of any kind. By 1961 it had become obvious that existing statutory powers of investment were absurdly out of date. But the 1961 Act created an extremely complex and restrictive structure involving narrower-range investments, wider-range investments and special-range investments, which made reliance on the statutory powers very unattractive. Indeed, my view—and I am not entirely joking—was that any lawyer drafting a trust deed who failed to include a much wider power of investment overriding the powers under the 1961 Act would have been guilty of professional negligence.
I therefore greatly welcome Part II of the Bill, which abandons the attempt to classify specific kinds of asset as suitable trustee investments and instead requires
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trustees to concentrate on the suitability of proposed investments for the trust in question and on the need to diversify. It may be perfectly reasonable for a £1 million trust fund to gamble £20,000 on shares in a speculative dot.com business; it would plainly not be reasonable for trustees of a £100,000 trust for an elderly widow to put half those assets into dot.coms.
But that is only the beginning. I welcome Part III, which widens the power to buy land, and Part IV, which clarifies and extends the present limited and ambiguous statutory powers to appoint agents. Delegation of asset management functions is now generally desirable, except perhaps in the case of some very large trusts which will have their own in — house asset management capacity. Part IV also authorises the appointment of nominees and custodians, which are in practice now essential for holdings of quoted investments.
I also welcome Part V, which enables corporate and professional trustees to be paid for acting as trustees, even if the trust instrument does not provide for payment. For decades past, all professionally drafted trust instruments have contained a trustee remuneration clause. However, home — made wills do not always contain one, with the obvious result that no professional person can be expected to accept an appointment as trustee of the will.
I understand that my noble friends Lord Dahrendorf and Lord Phillips of Sudbury have some concerns about payments that may be made to trustees of charities under Clause 28, or as a result of an order under Clause 30. I welcome the Government's acceptance of the restriction on Clause 30 proposed by the Delegated Powers and Deregulation Committee which will prevent Clause 30 being used to give trustees of charitable trusts rights to remuneration where, as lay people, they would not be entitled 'to remuneration under Clause 29. This seems a matter of obvious fairness and common sense and is, I believe, in the interests of charities.
I also welcome the extended powers to insure trust property. As is to be expected of a Law Commission Bill, the legislation is very well drafted and there are very few technical issues that will need to be raised at later stages. Perhaps the most important of these arises under Clause 31(1), which authorises a trustee to be reimbursed out of trust funds for expenses properly incurred when acting on behalf of the trust. Use of the word "reimbursement" suggests that this is intended to apply to cases where the trustee has paid a liability and then seeks to be repaid out of the trust fund. In practice, most liabilities incurred by a trustee on behalf of a trust are not paid by the trustee himself and then reimbursed to him, but are paid directly out of the trust fund. It would be unfortunate if Clause 31(1) were to be read as applying only where a trustee needed to be repaid for what he had paid out of his own pocket, and not as entitling him to require direct payment to the creditor out of the trust fund. However, that is no more than a matter of drafting.
I have, however, one general comment on the Bill and one serious criticism of it. My general comment is that the Bill should not be regarded as the last word on

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trusts. There are a number of possible reforms which are not included in the Bill but which will need to be looked at in the longer term.
One of these is the question of the rights of creditors against trustees. At present, if a trustee enters into a contract—for example, a contract for the purchase of property on behalf of the trust—the trustee, and not the trust fund, is the debtor. The creditor can sue the trustee for the whole debt, even if he knows that the trustee is acting on behalf of the trust fund and even if the trust fund is insufficient to indemnify the trustee. This is an issue at which the Trust Law Committee has been looking. Where the creditor is willing to contract on such a basis, it seems reasonable that trustees should be able to make contracts on behalf of the trust as an entity and limit their liability to the trust assets, unless they have acted improperly.
I turn, finally, to my major criticism of the Bill; namely, that it does nothing to restrict the inclusion of trustee exemption clauses in trust instruments. The noble and learned Lord the Lord Chancellor is aware of my concerns in this respect. In their usual form, trustee exemption clauses protect trustees from any liability for anything except personal and individual fraud in an action by the trust beneficiaries claiming damages against the trustees for breach of trust. However negligent, lazy or misguided the trustees may have been, they cannot be held liable for the loss that they have caused to the trust fund.
Part I imposes on trustees a duty of care. This requires a trustee to exercise such care and skill as is reasonable in the circumstances. This is an admirable principle, which is in essence a codification of existing trust law. But the effect of this is demolished by paragraph 5 of Schedule 1, which provides that,
"The duty of care does not apply to powers conferred by a trust instrument if or in so far as it appears from the trust instrument that the duty is not meant to apply".
This is wrong.
If a friend or family member is acting as a trustee without drawing any remuneration, it may be fair as a quid pro quo to allow him or her to be exempted from personal liability for negligence. But there can be no justification, save in the most exceptional circumstances, for extending such an exemption to a paid professional trustee. The Unfair Contract Terms Act 1977 would make an exemption clause of this kind void in a contract by a solicitor or an accountant to provide services to a client.
Strictly speaking, the services provided to a trust by a paid professional trustee are not provided under a contract, so the Unfair Contract Terms Act does not apply. But, in my view, this distinction is a pure technicality. I believe that a paid professional trustee, or a corporation providing trustee services as part of its business, should be entitled to rely on an exemption clause only where it satisfies the test of reasonableness under Sections 4 and 11 of the Unfair Contract Terms Act. I believe that that would happen in very few cases.
This view of trustee exemption clauses is not just a personal hobby-horse of mine. In the recent decision in Armitage v. Nurse, the Court of Appeal rejected the
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argument that exemption clauses were void on grounds of public policy under the law as it now stands. But Lord Justice Millett—now the noble and learned Lord, Lord Millett, a Member of your Lordships' House—recognised in his judgment in that case that there was a widely-held view that paid professional trustees should not be entitled to rely on exemption clauses, and invited Parliament to consider the issue. He expanded on that view in an important lecture delivered in November 1998.
I have been told by senior members of professional bodies, such as the Society of Trust and Estate Practitioners, that they recognise that exemption clauses in their present form are indefensible. With adequate safeguards—for example, allowing trustees who have accepted office in the past on the basis of an exemption clause to continue relying on such a clause—I do not believe that there would be serious or prolonged opposition to my proposals for the restriction of trustee exemption clauses.
I am, of course, very reluctant to do anything that might delay or endanger the passage of the Bill which is admirable in every other respect. However, this is an important issue and I hope that the noble and learned Lord the Lord Chancellor will be able to respond constructively to my concerns on this point.
11.46 a.m.
Lord Dahrendorf: My Lords, it is with some diffidence that I intrude in this little lawyers' feast this morning. My own interest in the matter stems from my involvement in charities. I am a trustee of the Charities Aid Foundation, a member of the Advisory Board of the National Council for Voluntary Organisations, chaired by the noble Lord, Lord Plant, who I am very pleased to see in his place, and I am the chairman of the Council for Charitable Support. I therefore very much agree with the first comments made by the noble and learned Lord the Lord Chancellor on the Bill and its intentions.
It is pleasing to see that the conditions under which charities operate will be made easier and more favourable, not just by the Chancellor of the Exchequer but also by changing the legal framework for trustees. I do not speak for the "sector", as it is called in the ugly administrative language that is sometimes applied; indeed, no one can. However, I should like to confirm the statement made by the noble and learned Lord that this Bill finds wide support with charities. It does so because it will enable trustees to concentrate on policy rather than on the detailed running of trusts. It will give them power to appoint nominees for certain purposes and it will sweep away some of the rigidities of the Trustee Investments Act 1961.
As a rule, I do not much care for the widespread use of the word "modernisation", but in this case I think it can be said that this is a Bill which modernises the law in an important respect. This is really the core of what I wanted to say, but if one is committed to an area of concern one is naturally a bit greedy and wants to see even more. Perhaps I may add two footnotes—not by

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way of threatening or, indeed, promising amendments, but with a view to stimulating the further debate that will undoubtedly have to take place after the Bill is enacted. I entirely agreed with my noble friend Lord Goodhart when he said that this was a step on a road which we shall have to walk for a long time and for a long way.
The thrust of my comments concerns investments. The definition of "general powers of investment" is much less rigid than before. Restrictions remain—the noble and learned Lord the Lord Chancellor has reminded us of them—as regards land and matters of "suitability" and "appropriateness". I wonder, however, whether the arrangement as foreseen takes sufficient account of complexity and new opportunities of financial markets. Is there not a case for opening up even further the possibilities of investment for charitable trusts? Does the Bill allow programme-related investments? That term is not yet common in this country but is quite frequently used in the United States. Those investments have a direct relationship with the policy intentions of trusts. Above all, will it be possible for trustees to adopt what are called "total return policies" in which the rigid and often quite inadvisable distinction between capital and income is abandoned and to look at the total return of investments and thereby have even more freedom to benefit the purposes for which trusts are set up? That is an area which I should like to see discussed further.
My second point refers to the vexing issue of remuneration. I make the following remarks with some hesitation although I believe that it is a matter we should consider. I am particularly hesitant to speak in this regard as a member of the Delegated Powers and Deregulation Committee, which seemed to adopt a different route from the one I shall take. I find Part V of the Bill satisfactory in the circumstances but it is complex and is possibly not the last word on the subject. Explanatory Note 94 states:
"The general rule under the present law is that trustees should not be paid for acting as such".
I wonder whether this general rule is tenable in all cases. I appreciate that we are talking about a range of trusts and thus a range of different purposes but I have in mind charitable trusts, notably fairly large ones.
I was a trustee of the Ford Foundation for many years. It would have been impossible to put together the then board of the Ford Foundation without offering remuneration. The reasons for that are twofold. First, there is the simple reason that active hoards require a great time commitment of their members. The other reason is to my mind even more important; namely, that trustee activity and trust policy are often hard to separate. As regards charities I have long argued that we should not use the words "overheads" or "administrative costs" because in many cases the administrators of charities implement the purposes of the charity or trust. They are part and parcel of a programme.
It seems to me that the same is to some extent true of trustees. Therefore I believe that in due course we shall have to give further thought to the question of remuneration, contrary to the tendency of the Bill and
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even more contrary to the tendency of the Delegated Powers and Deregulation Committee and, I believe, contrary to that of my noble friend Lord Phillips of Sudbury, with whom I agree on almost any matter that concerns the voluntary sector and charities. However, I believe that on this point we probably disagree. We should consider loosening even further the rigidity with regard to remuneration.
I conclude my remarks by welcoming the process of opening up opportunities for trusts. That will encourage a sector which needs encouragement. All I wanted to indicate is that in due course we may have to consider further issues. Nevertheless I hope that it will not be long before the Trustee Bill becomes the Trustee Act.
11.55 a.m.
Lord Phillips of Sudbury: My Lords, I, too, congratulate the noble and learned Lord the Lord Chancellor, his team and the Government on finding space for this very important Bill. As has already been said, few opportunities are given by Parliament to reform trustee law. Some may say that is not a bad thing in an age with a plethora of laws. However, some of the present arrangements are serious impediments to the sensible administration of trusts in this age.
I wish to address my remarks exclusively to charitable trusts of whatever form. My background for doing so is as a practising solicitor who has devoted the bulk of his professional work to charities for more than 20 years. Charities are a critically important pillar of our society and state.
First, I have some remarks on Clause 28 of the Bill which is entitled,
"Trustee's entitlement to payment under trust instrument".
It nowhere excludes charitable trusts and must, therefore, be taken to include them. I am particularly concerned about Clause 28(2) which states,
"The trustee is to be treated as entitled under the trust instrument to receive payment in respect of services even if they are services which are capable of being provided by a lay trustee".
Put simply, if someone is a professional trustee within the definition in Clause 28, he or she can be remunerated, as stated in the Law Commission report, whether or not the work concerned included,
"matters which a trustee acting otherwise than in a professional capacity could have undertaken".
Therefore you could have two trustees working side by side reviewing tenders for services for a charity, for example. Those could be legal services, stockbroking, accounting, human resources services or public relations services. One of the trustees might be a professional trustee, as defined by the clause—I shall return to that point—the other might not be. Both of them may carry out exactly the same work in, for example, looking at a tender document, interviewing applicants, considering applications for grants or doing one of a thousand tasks. One—if he is a gilded solicitor—may be paid at a rate of £200 an hour, or more, while the other may be paid precisely nothing.

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That is an invidious arrangement to allow and one that is wholly inappropriate with regard to charities. It is quite outside the spirit of charity.
I remind your Lordships' House that the essence of charitable service in the capacity of a trustee is to act without gratuity; that is the starting point. It is also worth reminding the House that this is the only branch of British law which has placed at its very heart a moral quality; that is, the duty and characteristic of altruism in the charity sector. Some noble Lords may be amazed to hear that in the year 2000 any part of the law is concerned formally with altruism. This is a real, living, central component of charity law. That supposition, and the fundamental and historic approach to non-remuneration of trustees, should be maintained. Clause 28 as drafted may damage that principle.
Perhaps I may refer to two particularities. Professional trustees, acting as such—whether or not the service they provide requires a professional service—fall within Clause 28 only if three provisions apply. Clause 28(1)(b) contains the provision that the trustee
"is acting in a professional capacity".
I do not see how that is consistent with subsection (2), which states that trustees are entitled to remuneration even if the services they are undertaking are capable of being provided by a lay trustee. I should be grateful if the noble and learned Lord the Lord Chancellor will clarify that issue, either later in the debate or subsequently. The third provision in paragraph (c) states that the trustee must not be acting inconsistently with the terms of the trust instrument.
It is normal to state in trustee remuneration clauses that professional trustees can be remunerated for professional services rendered. Occasionally it may go further and state that they can be remunerated for services rendered to the trust whether or not they are of a professional capacity and whether or not they require professional service. My point is simply this: if Clause 28 does not apply where the terms of the trust instrument make it inconsistent for remuneration to be awarded to a professional trustee, we do not need Clause 28 at all and subsection (2) becomes irrelevant. If, on the other hand, that is not the case, then of course in comes Clause 28. I should be grateful if the noble and learned Lord the Lord Chancellor could clarify that point at some stage. It may be that my fears are ill founded.
Turning to Clause 30, it is helpful and reassuring that the noble and learned Lord the Lord Chancellor said in opening that an amendment would be brought forward to prevent the Secretary of State hereafter laying regulations to allow remuneration of lay trustees. I should say to my noble friend Lord Dahrendorf that I do not disagree with him about the rigidity which could be imposed by the reformulation, if I may call it that, referred to by the noble and learned Lord the Lord Chancellor.
There are at the moment existing opportunities whereby a lay trustee can be remunerated: that is, first, by obtaining the consent of the Charity Commission
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or, secondly, the consent of the High Court. Both the commission and the court will give consent if they consider in all the circumstances, and having regard to precedent, that it is right to do so. Thirdly, lay trustees can be remunerated if the trust instrument itself permits. Fourthly, expenses are allowed in any event. Your Lordships' House may be interested to know that some charities have now extended, or clarified, their expenses arrangements to try to ensure that a poor or not well-off person can take his or her part as a trustee in a busy charitable trust. They have done so, for example, by allowing baby-minding arrangements to be covered by expenses. Indeed, the Charity Commission is sympathetic to a modicum of remuneration—somewhat comparable with the remuneration arrangements for lay justices—in circumstances where it can be shown that to have a wide range of trustees from a wide range of backgrounds would be valuable to a particular charity. So there are existing opportunities for the kind of case to which my noble friend Lord Dahrendorf rightly referred.
I, too, am extremely cautious in my reception for the proposals to change Clause 30. However, we shall wait and see what happens and consider the matter further. I feel strongly that even if, as now appears to be the case, Clause 30 is to be confined to the laying of regulations to make provision for the remuneration of professional trustees, it is still not an appropriate matter to be dealt with by way of regulation.
I come back to the point that altruism and non-remuneration are at the very heart of charity. They avoid conflict of interests. Above all, the success of the charity sector in this country—it is a remarkable success in which we take too little national pride—is built upon public confidence in charity and upon public knowledge that charity is charity; that the voluntary sector is the voluntary sector. The payment of even professional trustees as a matter of course—which, if Clause 30 passes unamended, will be allowed by regulation to be laid hereafter—would not be satisfactory.
Of course, the Government will say that there has been wide consultation. I do not think that there is any consultation wide enough or effective enough for this radical change in charity law, other than that which comes through Parliament itself. There is no better kind of consultation than subjecting a proposed change in the law to the Commons and to the Lords. Between them they provide the only really effective consultation. We have seen too much ineffectual consultation lately, have we not?
The charity sector is becoming rapidly more professionalised, which is a matter of great concern to all of us involved in the sector. For example, the House should know that salaries now account for 36 per cent of all expenses in the charity sector, and that figure is rising fast. A recent survey into the public's attitudes to charity carried out by the National Council for Voluntary Organisations produced a report entitled Blurred Vision, because the public are now more and more confused as to where charity stands in regard to government and to business. It is of the greatest civic,

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cultural and national importance to buttress in every possible way the unique quality of charity and to preserve that altruistic and voluntary element. I should not be happy—I hope that noble Lords will not be happy—to leave the issue of remuneration of even professional trustees to the Secretary of State, acting by regulation. One is half-way to making a change if one allows for the change—and that creates almost an expectation of change.
Finally, perhaps I may say a few words in addition to those of my noble friend Lord Dahrendorf on the question of investment powers. My noble and learned friend spoke, quite rightly, about the total return basis which is at the heart of modern investment management theory and the whole issue of endowed investments. Endowments are basically investments which can never be sold and the proceeds distributed for their charitable purposes; they must always be retained so that only the income arising from the endowment can be used for beneficial purposes. For most charities they have become a severe encumbrance. It is extremely rare now to find anyone creating such an endowment, but many charities have large bulks of such assets. The management of portfolios is extremely difficult and complex where there are some endowed investments and some non-endowed investments.
A committee was established by the Charity Law Association to look at this matter. It came to the conclusion that the balance of public interest now lay in an amendment to the law. Broadly, the amendment would allow a surplus of capital appreciation over the inflation-adjusted value of the endowment—measured over a five or 10-year period to even out troughs and peaks—to be expendable by the trustees on charitable purposes. The association believes—the evidence is quite clear—that were an amendment to be made, there would be a great advantage to the charity sector because the present confinement in the management of portfolios where there is an endowed element and the inflexibility by which managers of portfolios are currently caught lead to much lower capital and income returns over a long period of time. That can be in no one's interest.
I have put this matter very crudely and quickly because I should like to think that before we return to the Bill the Government will consider these matters and give us their views. I am well aware that it is a highly technical and complex issue, at the root of which are some very important public considerations. Therefore, I shall leave my contribution on that matter to these rather inadequate few words.
Lord Bruce of Donington: My Lords, perhaps I may in the interregnum venture to put a question to my noble and learned friend the Lord Chancellor concerning the question of professional advice. I have a feeling—I may be entirely wrong—that there could be a danger of imputing professional advice to a person who is qualified in a particular field, as, for example, is a solicitor or an accountant. Is there not a danger that he may be presumed as offering professional advice although in fact, as a professional, he specialises in completely different fields than are applicable to the circumstances in which he finds himself?
As an accountant myself, I know perfectly well that many members of my profession devote their entire lives—indeed they have to—to the terrific volume of taxation law. It does not follow that they are capable of advising the trustees on the question of which investments they ought to make, even though technically, by virtue of the title of accountant, they ought presumably—I would possibly argue this— to know something about the particular subject. Exactly the same consideration applies to lawyers. Not all lawyers know everything about the law. They tend to specialise in particular fields. If a lawyer is asked for advice by trustees, is it to be presumed that because he is a lawyer, and purely for that reason, he is offering the professional advice that is required?
I may be splitting hairs about this. If so, I apologise to the House. I have been present throughout the debate. I admire its quality and I hope that l may have taken some of it in.
Lord Phillips of Sudbury: My Lords, I am grateful for the intervention of the noble Lord, Lord Bruce of Donington. He has put his finger on a very important point. Again, it is unkind to refer to the particularity of the Bill, but Clause 28(4) attempts to define what is a trustee acting in a professional capacity. I sympathise with the draftsman and those advising the Government, but I think that it is an inadequate definition precisely because of the point made. Clause 28(4) states that,
"a trustee acts in a professional capacity if he acts in:he course of a profession or business which consists of or includes the provision of services in connection with",
the management or administration of the charity. That is a very broad definition. I am concerned that a school teacher, a social worker or someone who works in human resources could claim to come within that definition. For example, in connection with an education charity, a teacher might say, "First, I am a professional, and, secondly, I am in the business of providing services in connection with matters which are pertinent to the management and administration of education and hence, potentially, the charity concerned".
If it is said that the teacher could not be in a professional business if he were a salaried teacher, most teachers have a little extra income from, for example, private tuition, so he would be in business on his own account. Therefore, when sitting, down and looking at the rules on the exclusion of pupils, teachers

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would be able to say, "Yes, we are acting in a professional capacity", and hence they could come within subsection (2) which says that in other circumstances they are entitled to charge even though the services they are providing are capable of being provided by a lay trustee.
Clause 28 is a minefield. I do not reproach anyone. This subject has always been a minefield. But opening it up in this way, especially as, under Clause 30, regulations may be laid to blow open the professional charging arrangements for charities, would be extremely dangerous.
12.16 p.m.
Lord Wilberforce: My Lords, I apologise for not putting down my name to speak on this important Bill—it was due to an administrative error—and for that reason I shall confine my remarks to just two short observations.
First, I join other noble Lords in expressing appreciation of the work of the Law Commission in its report on this matter and of the Government for taking such a good opportunity to bring the Bill before the House when it has a good chance of going through.
My second point relates generally to the clauses in the Bill, particularly the provisions for wider investment. In introducing the Bill, the noble and learned Lord the Lord Chancellor said that it offered wider investment opportunities, which I found in a way consoling and in a way slightly frightening. The 1961 Act is extremely complicated and needed to be revised but, as has already been pointed out, a great number of trust instruments already make provision for much wider investment opportunities and decisions than the Act allows for. It may be that if we enact the very wide provisions in this Bill, there will be found in some future trust instruments some rather more restrictive provisions, cutting down perhaps the dangers which may exist here. On wider investment opportunities, one shudders to think what might have happened if the clause had been in operation before the IT speculative boom or before people became interested in derivatives.
There is no doubt that there is a need to extend the 1961 provisions. The Bill contains general provisions on delegation, advice, the employment of experts and so on, but one has still to remember that not all advisers are competent or even honest and that not all delegation can be relied on. There are provisions in the Bill for discretionary retention of control by trustees. We may want to look rather carefully to see whether there is a proper balance between the wide discretion which we all think ought now to exist in relation to trustees' investment powers, and the necessary precautions which should be retained in order to ensure that things do not go wrong.
I was interested in what the noble Lord, Lord Dahrendorf, said about total return. The noble Lord, Lord Phillips, took up the point as well. It is an important one. In fact, two trusts with which I have some association already operate on the basis of total
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return. Perhaps we have been acting illegally. This is a valuable concept which, if possible, ought to come into our discussions. But perhaps we shall have to leave it for the next time. We need to look both at that point and possibly at the admissibility of ethical investments, which may not be allowed for in the Bill. Whether they come within the term "standard investment criteria", I do not know. We must leave that for later discussion.
I respectfully agree with the reference of the noble Lord, Lord Goodhart, to exemption clauses. It is an extremely important point and one that I hope we shall be able to take up. With those observations, which I hope have not been too lengthy, I am happy to join other noble Lords in commending the Bill, which is not a technical measure but an important policy Bill.
12.20 p.m.
Lord Kingsland: My Lords, I hope that I can be relatively brief. I should like, first, to congratulate the noble and learned Lord the Lord Chancellor on his comprehensive, indeed encyclopaedic, opening speech. It was a characteristically formidable analysis.
I should like also to encourage him in his often repeated desire to increase the number of Law Commission reports whose contents reach the statute book. For the Law Commission to continue to have relevance, it is vital that the fruits of its labours are regularly harvested, both by this House and by another place.
I shall yield almost completely, with an appropriate linguistic adaption, to the temptation found irresistible by many noble and learned Lords in the Judicial Committee of your Lordships House. That is to say, I have had the advantage of listening to the speech delivered by the noble Lord, Lord Goodhart. I agree with it and, for the reasons he gives, I endorse his approach to the Bill.
That stance reflects both the universal respect in which the noble Lord is held as a master of the arts of the Chancery Division; and the benign mood on these Benches following our successful alliance in the course of yesterday's proceedings on the Financial Services and Markets Bill.
We welcome the Bill, which will change the law in England and Wales governing trustees' powers to invest trust funds where there are no, or no satisfactory, express provisions in the trust deed. The Bill will also make the administration of trusts more effective where the deed lacks express provisions. As the noble and learned Lord the Lord Chancellor explained, there have been very few statutory changes to this branch of the law since 1925. One of the few, the Trustee Investments Act 1961, is now out of date and indeed is a liability for many trusts.
So the Bill is the first major change for 75 years, implementing reforms to trustees' powers recommended in a report of the Law Commission and the Scottish Law Commission published in July last year. Its text is based on the draft contained in the report which followed extensive consultation with practitioners.

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As the noble and learned Lord the Lord Chancellor made clear, many older trusts and charities—trusts created under wills and trusts arising under intestacies—give very limited powers to their trustees as a result of inadequate drafting. Present trust law restricts trustees in the investments they can make. Moreover, trustees are unable to place all their trust funds in the investments that give the best returns. Outmoded restrictions also prevent trustees from taking advantage of the best modern investment services.
As a result, as the noble Lord, Lord Goodhart, explained, a great number of small family trusts and charities have lost millions of pounds over the years as compared with the amounts that they should have generated. It has been calculated that the removal of some of the restrictions on investments will benefit the charity sector alone by some £40 million a year.
The Bill will lead to a significant improvement in the returns on capital for many trusts and charities. It will also improve and modernise their administration. Further modernisation of the law of trusts is, however, needed to address other issues not dealt with by the Bill. We hope that legislation will be introduced in the near future to deal with these matters—for example, the rights of creditors against trusts and trustees indemnity clauses. We do not wish to see these issues introduced into the present Bill through amendment since pressures on parliamentary time could lead to the whole Bill being lost. In addition, some aspects will require further consultation before they reach the legislative stage. While more reform is needed in this area, we believe that if the Bill becomes law in its present form, a significant first step will have been taken.
12.25 p.m.
The Lord Chancellor: My Lords, I am grateful to all noble Lords who have taken part in the debate and for the generally welcoming tone of their contributions. The point has been made that the Bill should not be the last word on the reform of trust law; it obviously will not be.
The noble Lord, Lord Goodhart, took me to task over my description of the National Trust. I have a sneaking suspicion that the noble Lord is right; however, I shall use every effort to prove that I was right. If, on research, it turns out that [ was wrong, it will not surprise me; it will simply teach me not to give homely analogies or illustrations without going to the books first to verify their legal accuracy. The noble Lord's praise of Mr Charles Harpum is very well judged, and I endorse everything that the noble Lord says.
The most important point raised by the noble Lord was the matter of trustee exemption clauses. It is right that he kindly put me on notice that he intended to do so. Put shortly, I think his concern is that trust instruments drawn up for professional trustees invariably include a clause or clauses which exempt those trustees from personal liability. Where such a clause exists, the trustees can be held liable only for fraud or deliberate breach of trust. The noble Lord went
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on to say that, as the relationship between a trustee and an appointer is not contractual, the terms of the trust instrument are not caught by the provisions of the Unfair Contract Terms Act 1977, leaving us with what the noble Lord maintains is the anomalous position that a professional trustee can claim the benefit of an exemption clause which may well not be valid in, for example, a contract between trustees and their professional advisers.
I recognise the force of the noble Lord's argument and I have a measure of sympathy with it. However, there are strongly held views on both sides of the question. That suggests that there should be a thorough investigation of the subject before we attempt to legislate on it. I am most grateful for the indication that the noble Lord has given that he is not minded to press his point.
I believe that there should be extensive consultation, taking into account, among other matters, other statutory provisions on the exclusion of liability, the regulatory impact of such provisions and what seems to be a risk—it is certainly claimed to be—that first-class people might be discouraged from acting as trustees and that some of those persons might be driven offshore. One must give consideration to the economic impact of that.
Given what I have said, and having discussed the matter with the Law Commission, I undertake now that I shall shortly make a formal reference to the commission, asking it to carry out an appropriate study with its customary thoroughness. I shall be happy to have the views and assistance of the noble Lord, Lord Goodhart, in settling the terms of reference.
Lord Goodhart: My Lords, I am very grateful indeed to the noble and learned Lord for the undertaking that he has just given. I accept that it is an entirely proper way of proceeding in the matter and it will relieve me of any need to press the matter further in Committee.
The Lord Chancellor: My Lords. I am grateful to the noble Lord for the position that he has just expressed and always adopts. He shares with me an enthusiasm to get on to the statute book in a crowded legislative programme as many Law Commission Bills as possible where they are genuinely uncontroversial. This means that to make the Bills attractive to a parliamentary fast track, as both he and I want, we must abstain front the controversial so that what we individually regard as the best does not become the enemy of the good, and the good gets on to the statute book what is genuinely uncontroversial and beneficial.
I also note the noble Lord's observations on the drafting of Clause 31(1), and I am happy to look at that. Another substantive point raised by the noble Lord, which I hope I summarise accurately, is that trustees should be able to make contracts on behalf of the trust as an entity and to limit their liability to the trust assets, unless they have acted improperly. I accept that that, too, is an issue which should be referred to the Law Commission, together with his point about trustee exemption clauses.

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The noble Lord, Lord Bruce of Donington, was concerned that under Clause 28 a presumption might arise that a professional who offered specialist advice had expertise that he did not really possess because not all professionals were expert in a range of specialisms in increasingly complex areas. I shall also consider that point. The noble Lord is welcome to have access to my officials to elaborate his views further than he was able to do in our short debate.
The noble Lord, Lord Dahrendorf, raised a number of points. He will forgive me if I do not deal with all of those matters. I also offer him access to my officials so that he may elaborate his views. He asked whether the Bill would allow programme-related investment. Yes, it will. Can trustees adopt total return policies? I am content to refer that question to the Law Commission.
I regard the question whether or not trustees should be remunerated for their services as having very wide policy significance. That is a matter which may well require significant consultation that cannot now be undertaken without prejudice to this Bill. The Bill will make the remuneration of professional trustees possible in certain circumstances. As to the remuneration of lay trustees—where there is a departure between the noble Lord and the noble Lord, Lord Phillips of Sudbury—I undertake to the noble Lord, Lord Dahrendorf, to consider the issue. The noble Lord is also invited to have access to my officials, who will co-operate with him, so that he may elaborate his concerns more fully.
The noble Lord, Lord Phillips of Sudbury, dealt with the remuneration of charitable trustees. As I said in my opening speech, the Government will introduce an amendment to put beyond doubt that there is no intention to allow for the remuneration of lay charitable trustees. I hope that in due course the noble Lord will be persuaded of the wisdom of allowing the Secretary of State under Clause 30, following full and proper consultation, to make arrangements to rationalise the positions of the two classes of trustee, so far as is appropriate, without the need to resort to primary legislation. I remind the noble Lord that what is proposed by Clause 30 meets with the approval of the Delegated Powers and Deregulation Committee, subject to the amendment which I have undertaken to table.
The noble Lord also expressed concern about the possibility of allowing professional charitable trustees to be remunerated for doing things which might be done by lay trustees who would not be remunerated. I appreciate that the noble Lord has a strong personal conviction that what is proposed is foreign to the altruism associated with charitable trusts and their central ethos. My inclination remains that these are matters which need to be considered, not at this stage but in due course, by the Secretary of State when he or she comes to consider making orders under Clause 30(3)(a) which allows for the making of different provisions for different cases. I am content
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that the noble Lord should approach my officials and express his views more fully than he was able to do in this short debate.
The noble Lord also touched shortly on the topic of the apportionment of capital to be treated as income, particularly as it relates to permanently endowed charities. I have some sympathy with the suggestion that there should be fall-back powers to deal with circumstances in which trust documents set up a scheme of investment, the result of which is that the capital portion grows out of step with the income portion and, it can be said, unfairly benefits future rather than current beneficiaries. I do not dispute that the law of apportionment is in some disarray, but I believe that it is more productive in terms of resources, policy development and parliamentary time to tackle the whole issue rather than deal with it in a piecemeal fashion. The Charity Commission is carrying out work, including consultation, on this very topic and I do not believe that it is advisable to make statutory amendments to the powers of charitable trustees in advance of its completion. I agree that work needs to be done; Rome was not built in a day. I am willing to undertake, as I did in relation to matters of concern to the noble Lord, Lord Goodhart, that this matter should also be referred to the Law Commission. I am also content that the noble Lord should enter into discussions with my officials on how that may best be achieved.
The noble and learned Lord, Lord Wilberforce, in his welcome but unheralded intervention, was right to praise the Law Commission for its work and the Government for responding quickly. I am grateful to him for that. He made a point on which I should like to reflect further. In summary, he said that new trust instruments could act to cut down the new wider powers. Although my mind is by no means closed, my inclination is to say that this is entirely a matter for settlors and their advisers in relation to new trust instruments. For those who use the powers in the Bill, we believe that the checks and balances are about right. Again, I am content that the noble and learned Lord should either write to me or, to short-circuit matters, have access to my officials to elaborate that or any other points that he may have.
Finally, if noble Lords will forgive me for ending on a gently discordant note, some of your Lordships have been a little unkind to Parliament in suggesting that trust legislation is some kind of Cinderella whose legislative trip to the ball comes but rarely. The noble Lord, Lord Kingsland, was a little unkind to our predecessors in government. In 1996, they introduced the Trusts of Land and Appointment of Trustees Act. In 1999 this Government introduced the Trustee Delegation Act and, within six months of the publication of this Law Commission report, I have introduced this important and substantial Bill. Three important trust measures in four years seems to me clear evidence that governments of different political colours recognise the importance of the subject. Noble Lords with an interest in these matters will also note that these three legislative vehicles all arose from the work of the Law Commission, whose unique position

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in the legal world gives its proposals great authority. Even when government are unable, for whatever reason, to find legislative time for particular proposals, the Law Commission's proposals will often go on to influence academic lawyers and judges when they consider the subject on which the commission has reported.
This Government will continue to rely heavily on the excellent work of the Law Commission in such complex areas as trust law. That is why, although I am unwilling to include in this Bill a range of the proposals made by noble Lords today so that the ideal does not become the enemy of the good, I should be happy, as I said, to arrange for discussions about the way forward if they should wish to be in touch with me or my officials.
I know that this is not a Bill which will set the heather alight but, encouraged, by the warm reception which has been accorded generally to it, I commend it to the House.
On Question, Bill read a second time, and committed to a Grand Committee.

Deafblind Persons Bill [H.L.]
12.43 p.m.
Lord Ashley of Stoke: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Ashley of Stoke.)
On Question, Motion agreed to.
House in Committee accordingly.
[THE DEPUTY CHAIRMAN OF COMMITTEES (Lord Strabolgi) in the Chair.]
Clause 1 agreed to.
Clause 2 [Register of deafblind persons]:
Lord Ashley of Stokemoved Amendment No. 1:
Page 1, line 10, after ("the") insert ("numbers and the").
The noble Lord said: In moving the amendment, I shall speak to Amendment No. 2. With regard to the amendments in my name, I am grateful to Sense, and in particular Caroline Ellis, for the excellent briefing they have provided. It is help I warmly appreciate.
The purpose of the amendment is to clarify and emphasise the necessity, in order to plan and provide services, for each local authority to have access to reliable statistics about numbers of deafblind people in their area. The Department of Health should also have accurate information for formulating policy and developing nation-wide deafblind services. The estimate of 40 per 100,000 people was based on the average numbers of deafblind people identified across a number of local surveys in the 1980s and 1990s. But some recent surveys have found a higher incidence.
While I welcome the consultation announced to the House by my noble friend Lord Hunt at Second Reading, the Government will not gain accurate
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numbers as regards deafblind people from a consultation exercise. That will only result from implementing the provisions of the Bill. I believe that the Government are making a great mistake if they intend to pursue their opposition. They are making a rod for their own back. Interest is already being expressed in the House of Commons.
Amendment No. 2 raises the issue of the contribution of my noble friend Lord Hunt at Second Reading. He seems to think that there is no need for specific provision for deafblind people in law. He could not be more mistaken. There is currently no requirement on local authorities in primary legislation, or by direction from the Department of Health, to identify, locate or register separately deafblind people. As the law stands, it provides no guarantee that deafblind people will be identified. I believe that that is an irresponsible omission which this House will hope to change.
The evidence and experience available to deafblind organisations point to a duty to identify and separately register deafblind people. The crux of the issue is a separate register. It is an essential prerequisite for monitoring and meeting needs, and planning service provision for those people.
Many local authorities still claim that they have few or no deafblind people in their areas. Alternatively, they say that they do not know the number. That is not good enough. Yet according to Sense, when those local authorities specifically set out to identify deafblind people, they find at least 40 per 100,000 people, if not more. If local authorities do not know how many deafblind people they have, or where they are, they are unable to provide for their needs. They are unable to monitor or assess those people. Nor will they provide the essential specialist one-to-one support services required. That is impossible, by definition.
My noble friend may have been right to say at Second Reading that only a small proportion of visually impaired people are likely to be registered, and that an even smaller proportion are hearing impaired. It is a problem, but not necessarily a harrier to deafblind registration. Nor is it an argument against registration.
The essential point is that deafblind people are a different group with distinct needs for specialist services. Being registered blind, for example, is only one way in which the deafblind person inight—I emphasise the word "might"—eventually come to the attention of social services as someone who requires a different and distinct approach.
Deafblind registration is an issue of a different order. I see those people, as I am sure other noble Lords do, as having an entirely different species of disability. In the provisions of the Bill, a deafblind register would involve an identification and location exercise using a range of methods of which cross-references of existing registers are only one small part. Such exercises have involved checks on records held on elderly people and people with learning disabilities, and close liaison between social services departments, education departments, health authorities, voluntary

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organisations, general practitioners, audiology and ophthalmology departments, geriatric wards of hospitals, residential care homes and ethnic minorities. All are involved in one way or another and all must be tapped and consulted and have all their records checked.
We need a deafblind persons register to be actively maintained because of the extreme isolation and vulnerability of deafblind people and their tendency to lose contact with local authorities, often as a direct function of their disability. It is essential that we tackle this isolation. If the House agrees to the register, local authorities will have to have a system of updating and maintaining their register which means that deafblind people are regularly monitored. Without the monitoring, the registering could simply wither and die.
Both those receiving services and those who at some future date might need help will be assisted. This is particularly important given that many deafblind people have deteriorating conditions. At one stage in their lives they do not perhaps require urgent help, but they may need it later because of the deterioration. Only by the register being kept up to date can we guarantee that they will be cared for.
The essential point of the amendments is that deafblindness should be treated as a specific, special category of disability. When it is established, the Department of Health might pursue deafblind registration as a benchmark for improving the registration of other groups. This is an opportunity for the department and the House to strike a great blow for many disabled people, but specifically today we are dealing with deafblind people. I hope that the two amendments will be accepted. I beg to move.
Lord Swinfen: I strongly support both amendments. It is interesting that local authorities are obliged by the National Assistance Act 1948 to keep registers of blind and partially sighted people and of those who are deaf and hard of hearing. I wonder how they gather their information. Will the Minister be kind enough to tell the House?
I have worn a hearing aid—supplied by the National Health Service, I am happy to say—since 1972. Therefore, I must by definition be at least hard of hearing. But no one from the local authority has ever approached me to make certain that I am on its register. Neither have I approached the authority. And as far as I know, the medical practice that looks after me has not done so, and neither has the hospital that supplied me with the hearing aid. How, therefore, do local authorities at present find the names of those who should be on their registers?
The amendments of the noble Lord, Lord Ashley, are particularly important because life can be very difficult under certain circumstances if one is hard of
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hearing. It is also very difficult if one is partially sighted, but having a combination of the two makes life at times virtually impossible.
Lord Morris of Manchester: I have often heard people talk about whether deafness or blindness is the more severe disability. There is no common view; but what everyone must recognise is that being deaf and blind is vastly more disabling than either and especially where deafness is prelingual.
My interest in people with the dual handicap goes back to my school days when I lived, in Manchester, near to a boy of the same age who was deafblind. Even then I knew that there could be few more cruelly devastating disabilities. Thus I counted myself extremely fortunate to be able to include in my Private Member's Bill that became the Chronically Sick and Disabled Persons Act 1970 the first legislation in this or any country to address the very special needs of people with the dual handicap. But that was 30 years ago and these amendments, like the others on the Order Paper today, are about further advance for some of the most needful people in Britain. By any standard they are eminently deserving of all the help we can give them.
The provision the Chronically Sick and Disabled Persons Act made for them is in Section 25. It imposed a duty on local education authorities to provide the Secretary of State with information,
"at such times as he may direct",
on their provision of special educational facilities for children and young people with the dual handicap. The section also made clear that the arrangements made by a local authority for its special educational treatment of deafblind children and young people must be given in a school maintained or assisted by the authority.
The specific involvement of the Secretary of State in implementing Section 25 gave him or her a major share of the responsibility for failure in any locality to make satisfactory provision. It ensures that any shortcomings in provision are as much the responsibility of central as of local government.
In a message sent to me by Sense, the admirable charity whose unrivalled efforts to help people with the dual handicap are so widely acclaimed, the progress achieved by Section 25 is documented, and it goes on to say:
"It is in education that we have seen some of the biggest advances for deafblind people: Section 25 of the Chronically Sick and Disabled Persons Act began a sea change. Because local authorities had an obligation by law to recognise deatblind children and young people, and also to provide information on the provision they make for special educational facilities, it is much easier for our specialist workers to go in and work in partnership with them—providing special assessment as well as support for families—and it has helped parents to campaign."
Sense says, too, that there have been "huge developments" since Section 25 became law. But much remains to be done and more can be done if the purpose of the first of these amendments is met.

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It must be vitally important for local authorities to have access to reliable information on the numbers of deafblind people in their areas —as well as their location—if the planning, development and provision of services are to be well conceived. Otherwise policy-making itself is severely handicapped. Without accurate statistics, policy-makers in both local and central government are at sea without a compass.
Turning briefly to the second amendment, again I am very happy to support my noble friend Lord Ashley. In doing so, I want strongly to emphasise the importance of registration if we are to make sure that a deafblind child known to the LEA is to go on to the deafblind adults' register at 18.
Schedule 2 to the Children Act 1989 requires social services departments—SSDs—to keep a register of children with disabilities, a provision which is designed to help their service planning and monitoring. And the guidance on the Act, in volume 6, emphasises many important principles in relation to disabled children's registration that might usefully be applied to deafblind adults' registration. It stresses as well the importance of updating registers regularly and says that SSDs should liaise with their education and health counterparts to secure early identification, to facilitate joint working, to encourage parents to agree to registration and to plan services for the individual child and children in general.
The guidance says also, first, that the creation of a joint register by health, education and social services authorities will greatly facilitate collaboration in identification and a co-ordinated provision of services; and, secondly, that when a child is identified, parents should be given clear and comprehensive information about the purpose and use of the register in accessible formats and be fully involved in recording the needs of their child.
These principles should inform the process of deafblind registration: indeed, they are crucially important to its success. That is the case for the second amendment. It really is essential to ensure that deafblind children go on to the deafblind adult register at 18 if they are to achieve a smooth transition from children's to adult services. At the moment, adult services have little idea how to work with young deafblind people and the second amendment can help them to do so. I know that my noble friend the Minister will want to respond to both amendments with understanding and as helpfully as he can.
1 p.m.
Lord Skelmersdale: First, I apologise to the Committee and to the noble Lord, Lord Ashley, for being absent at Second Reading. However, as we had a synopsis of the Second Reading debate in the previous three speeches, perhaps that apology is unnecessary.
I fully agree that a register of deafblind people is required and I fully agree with Amendment No. 1. Knowing the location of such people is not good enough; you must know the numbers involved and the register must be kept up to date. However, if you must permanently inform yourself of the number and
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location of a particular group of people, by definition you must have an active register. Therefore, while I fully agree with the first of the amendment,, the second seems to be totally unnecessary.
Lord Astor of Hever: I, too, support the amendments. The noble Lord, Lord Ashley, clearly set out the reasons behind them. We believe that it is important to maintain a reliable register. As the noble Lord said, there is no requirement on local authorities to identify, locate or register deafblind people. Deafblind people have distinct needs for specialist services.
As the UK population grows progressively older, dual sensory impairment becomes more prevalent. Seventy-five per cent of deafblind people are over the age of 75, and 85 per cent of people over the age of 85 have combined sight and hearing difficulties. It is vitally important to contact those people and to offer deafblind link workers. The active element of the register will ensure that elderly people with, for example, sight loss and a progressive hearing loss will not slip between the geographical loopholes.
Lord Addington: I believe that both amendments would strengthen the Bill. It does not matter whether we are over-egging the pudding by making the same provision twice because the register must be accurate. In ensuring that there is good, accurate, up-to-date information, it does not matter how you do it.
Getting information across in particular to people who need help has been a theme of mine for some time. I believe that the Government should be better at it. I suggest that they should be gathering information in order to establish a more successful interchange. I suggest that the Bill would be improved if contained one if not both amendments.
Lord Burlison: I thank my noble friends Lord Ashley of Stoke and Lord Morris of Manchester for the many helpful points which they made. I know that the commitment and sincerity with which they spoke is strongly felt. However, they will not be surprised to learn that the Government believe that the amendments to Clause 2 are unnecessary. Authorities already have a duty, under Section 1(1) of the Chronically Sick and Disabled Persons Act 1970, to inform themselves of the number of persons in their area to whom Section 29 of the National Assistance Act 1948 applies. People who have a permanent and substantial disability clearly fall within the scope of Section 29 of the National Assistance Act 1948.
The noble Lord, Lord Swinfen, commented on how local authorities compile the registers. Those who meet the criteria of blindness when assessed by the ophthalmologist are offered inclusion on the social services register. That is achieved by the completion of form BD8, which is sent to social services. Section 29 makes specific mention of deafblindness and, rightly, authorities have used the power to provide services not only for deafblind people, but also those with other disabilities. Those who are hard of hearing or deaf inform social services of their desire to be registered.

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Members of the Committee will appreciate that not everyone in those circumstances will want to be registered.
Lord Swinfen: I thank the Minister for giving way. Speaking from personal experience, I do not recall being asked whether I wanted to be registered. Is he sure that all audiologists ask their patients that question? If they are not asked, and they want to be registered, they will not be placed on the register.
Lord Burlison: I thank the noble Lord for his comment. Only ophthalmologists have that relationship with local authorities. It is my view that under those circumstances the lead will come from them and be passed to the local authority. As regards whether information on everyone is passed on, I assume that, yes, they would inform the local authorities. It would then be for the local authorities to decide what action to take.
The Department of Health is currently involved in a consultation with deafblind service users, Deafblind UK, Sense, local authorities and the Local Government Association which is looking at, among other things, improving the ways in which local authorities carry out this duty. The consultation is being carried out on a joint England/Wales basis, involving Sense Cymru, the Wales Council for the Blind, the Wales Council for the Deaf, and the Welsh Local Government Association.
For those reasons, we cannot support the amendments.
Lord Morris of Manchester: My noble friend has laid great emphasis on the importance in this debate of Section 1 of the Chronically Sick and Disabled Persons Act 1970. What monitoring has his department carried out of the adequacy of registration by local authorities? Can he tell me how many disabled people are now registered by their local social services authorities and, therefore, what is the gap between the Government's estimate of the number of substantially disabled people—their latest figure being upwards of 8 million—and those who are registered under Section 1 of the 1970 Act, on which he has placed such emphasis in this debate?
Lord Skelmersdale: Perhaps I may add to the question of the noble Lord, Lord Morris. Can the Minister inform us whether the disability register under the then Bill of the noble Lord, Lord Morris—now, of course, the Act—separately identifies groups of causes of disability? That is the key point in this particular debate.
Lord Swinfen: It may be for the convenience of the Minister and the Committee if he deals also with my question. I understood his response to this amendment to say that ophthalmologists but not audiologists reported cases of people who were blind and partially
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sighted to their local authorities. Therefore, how do local authorities maintain a register of those who are deaf and hard of hearing?
Lord Burlison: My noble friend Lord Morris raised the issue of adequate monitoring of the various figures. We know that approximately 25 per cent of those who are registrable as blind have chosen to register. I do not have the figures at hand for deaf people, and I certainly do not have at hand the figures in relation to those with other disabilities who are registered under this particular section of the legislation. So far as concerns the question raised by the noble Lord, Lord Skelmersdale, the answer is "yes".
Lord Swinfen: Perhaps the Minister will allow me to intervene. What proposals does he have to make certain that the full provisions of the 1948 Act are properly carried out by local authorities? At the moment, it appears to me that they are not.
Lord Burlison: In respect of the monitoring of this particular issue by local authorities, there is a relationship between the department and local authorities to ensure that constant reporting of the situation takes place between local authorities and the department. Therefore, we are satisfied that at least the monitoring aspect of this issue is up to date and carried out thoroughly.
Lord Ashley of Stoke: I have never heard such a complacent speech from the Department of Health. I am deeply disappointed. I want to make it very clear to the Committee that I do not blame my noble friend. I blame the Department of Health for saddling him with a shocking speech. It is impossible for me to understand how the Government can reject these amendments. My noble friend has heard Members from all sides of the Committee supporting the amendments—the support has been unanimous—yet he says that the Government cannot accept them. What on earth is happening?
My noble friend says that he cannot accept the amendments because they are unnecessary. That is simply not true. He should never have been given that kind of brief. It is a disgrace that the department should have done so because the Chronically Sick and Disabled Persons Act simply does not provide what we require in this Bill. We require provision for the location, identification, and assessment of individuals. That is something entirely new. How the department can ask my noble friend to say what he has said is beyond my understanding.
I believe that my noble friend was confused about the contribution of the noble Lord, Lord Swinfen. The noble Lord, Lord Swinfen, was quite right: there is no doubt that audiologists and ophthalmologists simply are not concerned with registration. I have never even heard that matter raised, and I have been interested in the world of deafness for some 30 years. Therefore, how people can saddle my noble friend with that kind of information, again, beats me.

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My noble friend mentioned consultation. I warmly welcome consultation. I believe that that was a great step forward by the Government. However, consultation is not a panacea; it is not a magic word, and it does not give us a register. Consultation is one aspect of the issue. I am left in the position of being really annoyed at the response of the Department of the Health; I am not annoyed with my noble friend. If I could vote against the Government now, I should certainly do so. However, because I cannot, I shall, regretfully, withdraw the amendment. I do not believe that I have an option.
1.15 p.m.
Lord Skelmersdale: Perhaps I may say to the noble Lord, Lord Ashley, that it is his Bill. If he wishes to put these amendments into it, he is perfectly entitled to do so.
Lord Swinfen: I shall strongly support the noble Lord, Lord Ashley, if he wishes to press the amendments. I should not like it if he was to withdraw them. So far as concerns the Government, I believe that neither of the amendments will do any harm whatever, and I would consider it to be extremely bad manners and in bad taste if the Government were to try to vote against them. I hope that the noble Lord will press his amendments.
Lord Addington: I wish to make it absolutely clear that I believe that the noble Lord, Lord Ashley, is totally in charge of this Bill. I consider that the amendments would improve it. Therefore, I suggest that there is absolutely no reason why they should not go into the Bill.
Lord Ashley of Stoke: I am not very hot on procedure, but my intention was to bring back this matter on Report and to vote on it then, if necessary. Therefore, in view of my understanding of the procedure, that may be the best thing to do. I am banking on the support of my noble friends when we reach Report. I do not believe that a vote now would mean very much. I give way to the noble Lord.
Lord Skelmersdale: It is extremely unlikely that there will be a vote. Rather than go through the whole debate again on Report, would it not be far better to settle the matter now?
Lord Ashley of Stoke: No. I believe that the best thing is to follow normal procedure. I warn the Whips that I shall call for a vote on Report and then we shall see what happens.
Lord Swinfen: Perhaps the noble Lord will allow me to intervene. If the voices were taken and the Committee were to be Not-Content, I should find that extremely strange. Everyone who has spoken in the debate, except the Minister, has been in favour of the
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amendments. If by some chance the noble Lord were to lose the debate, he could come back at the next stage.
Lord Ashley of Stoke: I am torn on this. I am willing to vote. However, in view of the powerful speeches made on all sides, I hope that the department will think again. That is the possibility that I hold out. It is my decision and I believe that the responsible thing to do is to give the Government an opportunity. I shall let them consider the matter and, if they will not move—they jolly well should move!—we shall vote. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 2 not moved.]
Lord Addingtonmoved Amendment No. 3:
Page 1, line 11, at end insert—
("(1B) It shall be the duty of every local authority to actively identify and locate deafblind persons within ethnic minority groups in their area and to ensure their register of deafblind persons includes arrangements for monitoring by ethnic origin."").
The noble Lord said: I move this amendment with a degree of deference because one is talking about ethnic minorities. We surviving hereditary Peers are not, generally speaking, the best group to talk about ethnic minorities. This amendment is based once again on the principle of gathering information. It has been put to me that deafblindness occurs approximately twice as often within the ethnic minority groups as it does within the rest of the community. That alone deserves to be looked at.
Much of this Bill is concerned with making sure that there is access to information in order to take corrective action. It has been pointed out to me by virtually everyone who has spoken to me about this matter—the main conduit is Sense— -that if someone comes from another country and English is not the main language, there are problems with exchanging information. The problem with these disabilities is in not having information passing between the end user and those providing the services. There is a particular problem with the first and second generation of the ethnic minorities.
Deafblindness is often caused by rubella. If a link has not been established between vaccination and a greater ethnic weakness or susceptibility to that disease, particularly in the Asian groups in this country among whom there is a higher incidence of that disease, and if there is a danger that that higher incidence of the disease is due to the fact that there is not the same access to vaccination, then surely we should be gathering the appropriate information. Once we have it we shall know where to place the correctly trained workers to help the persons whose first language has not already been established and also the carers. We need information.
If I am told that the wording of the amendment is defective I shall bow to that, provided it is done with the usual degree of authority and grace. If that happens I shall be prepared to give way. This

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amendment concerns extracting more information so that we can give the correct help. I hope that all those concerned will be favourably disposed to at least the intention behind the amendment. I beg to move.
Lord Swinfen: I support the amendment moved by the noble Lord, Lord Addington. It is extremely important that the first language of deafblind people is known to the authorities so that the help provided is given in as intelligible a form as possible. One must also take into account religion. Help may come in the form of meals. With some groups the food needs to be kosher or halal. Some religions are purely vegetarian. In addition, in strict Moslem families it is no use having a male social worker going into a Muslim house to help a female member or, indeed, a male member of that household, where the family does not feel that there is proper provision for the protection of the womenfolk. Therefore it is an important amendment. The noble Lord said that its wording might be defective. So be it. That can be corrected at a later stage. However, the principle behind the amendment is extremely important and something should be put into the Bill on this issue in the long run.
Lord Astor of Hever: Very reluctantly, we on these Benches cannot support this amendment on account of the defective wording. We support the spirit of the amendment. I assure the noble Lord that I know that it is very well intentioned. We accept the high incidence of deafblindness among ethnic minority groups. On these Benches we would want to ensure that local authorities give particular regard to these important groups.
As a matter of good practice, local authorities already monitor ethnic origin in areas such as child health and special needs. I accept that that monitoring has highlighted flaws in services which need rectification. We believe that it is fundamentally wrong for one group to be singled out in this way. Local authorities should, and must, ensure that there is fair treatment for all deafblind people.
Lord Ashley of Stoke: I am sorry to disagree with the noble Lord, who is giving such strong support to the Bill generally. I support the contention of the noble Lord, Lord Addington. He is quite right in the arguments that he put forward about ethnic minorities. If they are disadvantaged in being unable to articulate the problems, as obviously they are when English is not the first language, that is a very good reason why we should give special consideration to ethnic minorities. The incidence of these disabilities is much higher, according to Sense, in the ethnic minorities, and that is another reason why we should support this amendment. We should not risk missing the opportunity to help any ethnic person who is deafblind. This amendment should be accepted by the Committee. I hope that my noble friend will not argue about it that it is inadequate or inappropriate. As has already been said, it can be changed at Report stage. I support this amendment.
Lord Burlison: There have been a number of speakers on this particular issue. Authorities have a duty under Section 1 of the Chronically Sick and Disabled Act 1970 to inform themselves of the total number of persons in their area to whom Section 29 of the National Assistance Act 1948 applies.
The particular aspect of this issue is identifying, assessing and providing services for the people within the area. We would expect local authorities to take into account the cultural diversity of the communities they serve. We recognise that people from ethnic minorities may have particular needs. That will be reflected in any guidance which results from the ongoing consultation of the Department of Health on deafblindness.
Step by step the Government are modernising the National Health Service and the social services so that they are fit to meet the needs of everyone, including black and minority ethnic groups. There are the evolving structures and functions arising from national strategies, including Modernising Government and The New NHS. There is Saving Lives: Our Healthier Nation, besides Modernising Social Services, the appropriate White Papers and the working together of the human resources framework. They will enable us to ensure mainstream race equality in all service provision and workforce development. For those reasons, the Government cannot support this amendment.
1.30 p.m.
Lord Addington: When the two Front Benches decide that there is something wrong, one feels that one should listen long and hard. The noble Lord, Lord Astor, said that he did not think that any one group should be singled out in that way. I agree in principle but disagree in relation to one matter. The information I have shows that certain groups of people are three times more likely to be deafblind than others. As I said previously, that is probably due to genetic conditions caused by years of living in other climates and so on.
Communication is clearly a problem. The issue is how best to deal with it. The Government say—I paraphrase—that this should be happening already. Members of the Committee would not be taking part in this discussion if they felt that it was happening already. On virtually every single Bill on which I have spoken in this House, something was in place beforehand which, if we had got it right, would be working properly. Indeed, if we managed to pass legislation which worked properly first time round, Parliament would sit for about three days a year. Therefore, I cannot really take that seriously. Everything changes.
There are two areas of disagreement here. Perhaps the noble Lord will undertake to look at another amendment which will achieve the same ends. I am quite prepared to talk to him. Indeed, it may be that the noble Lord, Lord Ashley, is willing to talk to me about this matter so that we can achieve what we wish more satisfactorily before the next stage of the Bill. I should be more than happy to engage in those discussions. With that understanding, I beg leave to withdraw the amendment.

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Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3 [Assessment of needs]:
Lord Ashley of Stokemoved Amendment No. 4:
Page 1, line 16, at end insert—
("( ) the Disabled Persons (Northern Ireland) Act 1989,").
The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 5 and 9. These amendments will ensure that when deafblind people living in Northern Ireland have their needs assessed, the assessment will include and specify the need for deafblind link services and the services will then be provided.
Deafblind people in Northern Ireland need this legislation as desperately as their counterparts in England and Wales. The current constitutional position is that the legislation must come from Westminster. Northern Ireland has a population of 1.6 million which, taking the incidence of 40 per 100,000, means that there is an estimated deafblind population of 640. Those 640 or more people really need the provisions of this Bill.
Sense tells me that Northern Ireland has developed a personal support workers scheme which can provide a service similar to the communicator-guide service. That could possibly be extended under the aegis of this Bill and this amendment, I hope that it will be sympathetically considered by the Government. I beg to move.
Lord Astor of Hever: I support the amendments. Only a tiny number of deafblind people in Northern Ireland currently have access to deafblind link services. It must be right, as the noble Lord, Lord Ashley, said, to ensure that when deafblind people living in Northern Ireland have their needs assessed, the assessment will include and specify the need for deafblind link services.
Lord Addington: If it is going to occur in any part of the United Kingdom, surely it should occur in Northern Ireland.
Lord Swinfen: If the listing by authorities in Northern Ireland is anything like as bad as that in England, which has already been admitted by the Minister, then this amendment is essential.
Lord Burlison: The Bill deals with a transferred matter; that is, a matter on which the Northern Ireland Assembly may legislate. Northern Ireland has its own body of legislation dealing with transferred matters and during the suspension of the Assembly, primary legislation on matters falling within the transferred field may be made by Order in Council.
I hope that my noble friend and Members of the Committee appreciate that accordingly it would not be appropriate to extend the provisions of the Bill to Northern Ireland.
Lord Swinfen: Before the noble Lord sits down, it may be possible to make an Order in Council but what
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harm would it do to have this amendment in the Bill. We have no idea when the Assembly is to be reconvened in Northern Ireland. It is hoped that it will be shortly but it could be quite a long time. With the admission which the noble Lord has already made about the paucity of making the proper lists in this country, which probably extends also to Northern Ireland, he is doing deafblind people in Northern Ireland a disservice by what he has said on the amendment.
Lord Burlison: I hope that my comments do not do a disservice to any deafblind people. It would certainly not be my intention to do that. But I hope that Members of the Committee will appreciate that in relation to the Northern Ireland issue I do not want to digress from the recommendations and advice I have been given; namely, that, legislatively, it would be inappropriate and unique to go down the line suggested by the amendment.
I have made the point, to which the noble Lord, Lord Swinfen, referred, that matters falling within the transferred area may be dealt with by Order in Council. I hope that the Committee will understand the situation.
Of course, along with my department, I should be prepared to have further discussions if that was felt necessary. But at this moment I hope that my noble friend will see fit to withdraw the amendment.
Lord Ashley of Stoke: I am grateful for that offer. Of course we want those discussions. I hope that my noble friend will go back to his department and explain the strong feelings which have been expressed on all sides of the Committee. Not only would the amendment not do any harm; it would do positive good.
I do not want to embarrass my noble friend any further. But we want Northern Ireland deafblind people to be provided for one way or the other. I shall take his word on this occasion. I shall withdraw the amendment on the clear understanding that the issue will be raised again. I hope that between now and Report stage there will be consultation between Members who have spoken in the debate and the department. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 5 not moved.]
Clause 3 agreed to.
Clause 4 agreed to.
Clause 5 [Interpretation]:
Lord Ashley of Stokemoved Amendment No. 6:
Page 2, line 5, after ("a") insert ("severe degree of").
The noble Lord said: This amendment is intended to meet the Government's wish for a "tighter" definition in so far as that is possible and to tie the definition in the Bill more closely to that used for the purposes of planning services.
On Second Reading, my noble friend Lord Hunt referred to the definition adopted by the Deafblind Services Liaison Group. In 1988 the group published

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a report, Breaking Through - Developing Services for Deafblind People. In the report, the group used the following definition:
"Persons are regarded as deafblind if they have a severe degree of combined visual and auditory impairment resulting in problems of communication, information and mobility".
The emphasis is on,
"a severe degree of combined … impairment".
The report went on to say that the category will include persons who have had severe vision and hearing impairment since birth or early childhood and those who develop dual sensory impairment in adult life. It will include also persons who, having one severe sensory impairment, are in the early stages of a second sensory impairment with a prognosis of further deterioration; people who are born deaf and have an acquired visual loss, and people who are born blind and have an acquired hearing loss. It will, in addition, include those people whose degree of vision or hearing impairment is difficult to assess, perhaps because they have learning disabilities, but who function as "vision and hearing impaired". The majority, at some point in their lives, are likely to need the link services for which the Bill seeks to legislate.
The identification projects subsequently carried out for or by local authorities have used that definition successfully. I refer, for example, to the Royal National Institute for the Blind's research into services for deafblind people in Essex which identified people with dual sensory disability. The partners in that project, RNIB and Essex social services, stressed that they were seeking to identify people less by the degree of sensory disability and more by their functional response to a combined hearing and sight impairment. They emphasised that the severe combination of sight and hearing loss creates a separate, complex and potentially isolating situation and that even less severe levels of loss, when in combination, occasion profound disability and resulting handicap. That combination is the heart of the matter. If one has a sight impairment, it is difficult. A hearing impairment is difficult. But the combination creates an entirely different—indeed, a unique—disability. That must be driven through the heart of the debate. A recent project in my former constituency, Stoke-on-Trent, in Staffordshire, also emphasised that,
"it is not just a matter of adding two disabilities together and should be recognised by all agencies as a distinct disability".
Where different combinations of sight and hearing loss have been used as categories or classifications for the purposes of identification, they have usually included the following combinations: deaf/blind; partially hearing/blind; deaf/partially sighted; and partially hearing/partially sighted. The latter category is as important as the others. That is because of the compounding effects of dual sensory loss. The effects of a partial hearing loss and partial sight loss are multiplicative. Where one sense is impaired, as I have just mentioned, even a slight problem in the remaining sense assumes an importance out of all proportion with the actual measured degree of impairment in the second sense. It is not necessary to be totally deaf or
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totally blind to be deafblind. One can be partially one and partially the other and have an extremely severe disability.
What we need now is a legal definition of "deafblindness" as provided in Clause 5 to ensure consistency in the identification process and in the planning of services to facilitate an appropriate response from local authorities. Such legal definitions as apply to deafblind people—for example, in the "deaf" and "blind" provisions within the Disability Living Allowance Regulations—have been deeply unhelpful and disfranchising, based upon purely medical criteria and failing to take into account the compounding effects of dual sensory impairment. I believe that that is why most people do not understand the problem of deafblindess. They see one aspect or the other, but they do not really comprehend the unique nature of the disability. We should try to get the definition on to the statute book in this clear form and make provision for people who have been neglected for many, many years.
It will be impossible to develop any measurable performance indicators for deafblind people unless the Government, first, adopt a definition which all local authorities can use consistently and, secondly, impose a clear, specific duty on local authorities to identify people who fall within that definition. I beg to move.
Lord Astor of Hever: I rise to support the amendment. The noble Lord, Lord Ashley, has explained the problem clearly. We agree that a legal definition of "deafblindness" is needed to ensure consistency in the identification process and in the planning of services and to facilitate an appropriate response from local authorities.
Lord Burlison: I thank my noble friend Lord Ashley for tabling the amendment. It brings the definition of "deafblindness" in line with that used by local authorities and the Social Services Inspectorate. People who have a permanent severe degree of combined visual and auditory impairment resulting in problems of communication, information and mobility come within the scope of Section 29(1) of the National Assistance Act 1948. With that in mind, we are happy to go along with the amendment.
On Question, amendment agreed to.
[Amendment No. 7 had been withdrawn from the Marshalled List.]
1.45 p.m.
Lord Ashley of Stokemoved Amendment No. 8:
Page 2, line 11, leave out ("or") and insert ("and").
The noble Lord said: This is a purely technical amendment. This clause needs to state clearly that the role of a deafblind link service is to encompass the functions of communication, access to information and to mobility, which are, after all, inseparable. That is what makes the service a unique solution to what are unique needs. If one is guiding a deafblind person, one will need to stop and communicate environmental and verbal information to him via his

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preferred communication methods: deafblind manual/ hands-on sign or other methods. It is no use a person being guided by someone who cannot communicate with him, or to have someone who may be able to communicate with him but has not been trained in how to guide him. That will not meet a deafblind person's needs. Because this is a simple and purely technical amendment, I am hoping that the Government will be as generous and as helpful as they were on the previous one. I beg to move.
Lord Burlison: Once again, I thank my noble friend Lord Ashley for the amendment. We believe that its intention is to clarify that a deafblind link service will cover all those services, rather than just one on the list. We recognise that one-to-one support workers will provide any or all of the services listed in the clause. One-to-one support workers can be provided under Section 2(1) of the Chronically Sick and Disabled Persons Act 1970. In view of that, we are pleased to give the amendment our support.
Lord Ashley of Stoke: I am most grateful to my noble friend. I was remiss not to thank him on the previous amendment. I thank him for accepting both amendments. I am very grateful.
On Question, amendment agreed to.
Clause 5 agreed to.
Clause 6 [Short title, commencement and extent]:
[Amendment No. 9 not moved.]
Clause 6 agreed to.
House resumed: Bill reported with amendments.

Life Peerages (Appointments Commission) Bill [H.L.]
1.50 p.m.
Lord Kingsland: My Lords, I beg to move that this Bill be now read a second time. Why do I wish to place the selection of life Peers on a statutory basis? Fundamentally, I believe that it is constitutionally undesirable for the composition of a parliamentary body to be determined by the executive. The executive is supposed to be accountable to Parliament.
In the present circumstances, that is especially true because the executive powers are to be exercised through the Royal Prerogative, unfettered by the inconvenience of parliamentary scrutiny.
Moreover, decisions about the size of your Lordships' House and its political composition remain exclusively with the executive. In that respect, I regard it as significant that the PricewaterhouseCoopers information pack, distributed by that august firm in the context of its responsibilities for selecting members of the appointments commission, states:
"The Prime Minister will decide the overall number of nominations for the Queen's awards as Peers".
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No Prime Minister, who retains control over the overall size of your Lordships' House and over the political proportions within it, can claim to have given up the powers of patronage in respect of your Lordships' House.
I should add that there are no guarantees whatever for the numbers of Cross-Bench Peers. Those guarantees can only be made by statutory arrangements.
My purpose in promoting this Bill is to seek a consensus in your Lordships' House on the appropriate way forward. Until recently, consensus was the normal way in which constitutional change came about in our country. I trust that consensus will be established following discussion of appropriate amendments in Committee.
The Government are already on record as accepting the desirability of a statutory appointments commission for stage two of their proposals for reform. As the Government have said that they will certainly move to stage two soon, I cannot understand why there should be any objection to anticipating it. Indeed, that may give the nation some confidence in the Government's assertion that they want to get there.
In order to help the Government further, the text of the Bill is founded as closely as possible on the content of the Government's White Paper and the PricewaterhouseCoopers information pack.
I turn to the clauses. Clause 1(2)(a) states that the commission shall,
"be appointed in accordance with the rules of the Commissioner for Public Appointments and may seek his advice about best practice in attracting and assessing potential nominees".
That accords precisely with the riding instructions given to PricewaterhouseCoopers by the Cabinet Office.
Paragraphs (b),(c) and (d) of Clause 1(2) deal with the type of person whom the Cabinet Office and PricewaterhouseCoopers hope to attract. Clause 1(2)(b) states that the commission shall,
"operate an open and transparent nomination system for members of the House of Lords not belonging to, or recommended by, any political party".
Clause 1(2)(c) states that the commission shall,
"actively invite nominations by the general public and encourage nominations from such professional associations, charities and other public bodies as it judges appropriate".
Clause 1(2)(d) states that the commission shall,
"publish criteria under which it will determine candidate's suitability for nomination".
Those three paragraphs reflect almost precisely the statement made by the noble Baroness the Lord Privy Seal on 20th January 1999 to your Lordships' House that the commission will,
"be encouraged to seek nominations from many sources, including members of the public".—[Official Report, 20/1/99; col. 584.]
Paragraphs (e) and (f) of Clause 1(2) state that the commission shall,
"reinforce the function of the Political Honours Scrutiny Committee in vetting the suitability of all nominations for the conferment of life peerages tinder the 1958 Act by the political

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parties; and scrutinise all nominations for life peerages under the 1958 Act on the grounds of propriety in relation to political donations, as proposed in the 5th Report of the Committee on Standards in Public Life".
Again, the wording mirrors the tasks set out in the PricewaterhouseCoopers information pack which states:
"The Commission will vet all nominations to life peerages, including political nominations, for suitability. That will include scrutinising them on grounds of propriety in relation to political donations".
The only one, clear exception to what is reflected in Cabinet Office stipulations and the information pack seems to appear in Clause 1(3), which requires that,
"The Commission shall appoint its own Chairman".
Clearly, that is meat which proves too strong for the Cabinet Office because the Government propose a chairman appointed by the Cabinet Office.
Clause 1(4) states that the commission,
"shall, at most every 6 months, and at least every year, propose to the Prime Minister sufficient nominations as Cross Bench members at least to fill any vacancies among Cross Bench members that may occur through death, disqualification or a decision to join a political party represented in that House".
Some noble Lords may recall the debates during the passage of the House of Lords Bill, and in particular an amendment tabled by my noble friend Lord Coleraine. This clause is inspired by the consequences of that debate. Of course, in addition to the obligation to consider matters "at most every six months", there will be the normal New Year's Honours List and the Birthday Honours List appointments. I foresee that those appointments will also be taken into account by the commission. That means that non-political, Cross-Bench Peers will be appointed to your Lordships' House more frequently than in the past.
In my submission, what appears in the draft Bill reflects reasonably well what appears in the PricewaterhouseCoopers information pack, which states that the commission,
"will be likely to be called to contribute at least twice a year".
Clause 1(5) states:
"The Prime Minister may not refuse to submit to Her Majesty the names of those recommended as Cross Bench members by the Commission, and shall not seek to influence such nominations, save in exceptional circumstances, such as those endangering the security of the realm".
Again, the clause reflects, and is reflected by, similar wording in the PriceWaterhouseCoopers information pack.
Clause 1(6) states:
"In considering nominations as Cross Bench members the Commission shall not give any additional weight to recommendations from the Prime Minister or the Leaders of other political parties".
This clause, as your Lordships must have been aware at a glance, seeks to prevent the Prime Minister trying to influence the commission's recommendations. It is, in particular, intended to block pressure to put party supporters on the Cross Benches in order to frustrate the effect of Clause 1(7)(b). That subsection states that
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one of the criteria the commission should follow in making appointments is that,
"there is broad parity of numbers between the number of members of the House of Lords who support Her Majesty's Government and the number of those who support the main opposition party in the House of Lords".
I readily admit that such a clause would be otiose in an elected House.
Clause 1(7)(c) states that,
"the proportion of the Cross Bench members to the total number of members of the House of Lords holding life peerages under the 1958 Act remains as it was on the day before the passing of the House of Lords Act 1999".
The intention is that, when additional political appointments are made, those appointments will automatically trigger proportional increases in Cross-Bench Members. I suspect that those Cross-Bench Members who are present in your Lordships' House today are acutely aware of the deterioration in the proportion of Cross-Bench Members to political appointees since the passage of the House of Lords Bill. I believe that, at the time of its passage, the proportions were 354 out of a total of 1,211—in other words, nearly 30 per cent of your Lordships' House—whereas now, the equivalent numbers being 166 and 698, the proportion has dropped to under 24 per cent.
Clauses 1(8) and (9) seek to establish the way in which the commission is appointed. Clause 1(8) states:
"The Commission shall consist of eight members of the Privy Council, of whom four shall be appointed by a special Commission of the Prime Minister, the Speaker of the House of Commons, and the Lord Chairman of Committees of the House of Lords".
Clause 1(9) states:
"Each of the three largest parties in the House of Commons shall appoint one Commissioner on the nomination of the Leader of each such party, and one Commissioner shall be appointed from the Cross Bench members on the nomination of the Convenor of the Cross Bench peers".
The reflection of these subsections in the Cabinet brief can only be described as being a very pale one. What the Cabinet brief requires is previous experience as a spokesman in a high profile role.
There may well be arguments advanced later in the legislative stages of this Bill which convincingly demonstrate that persons other than Privy Counsellors might be appropriate to be candidates for seats on the commission. I believe that Privy Counsellors are the right persons, first, because matters of confidentiality and secrecy will be discussed concerning certain candidates and Privy Counsellors have access to information which other citizens do not; secondly, there is something to be said for the fact that, at least in political life, it is the view of some that once the rank of Privy Counsellor is obtained, most, if not all, ambition is vanquished. Therefore, there would be at least a degree of objectivity in the process of selection which might be absent in those who are simply aspirants.
However, at this stage of the Bill, I do not wish to appear dogmatic about this matter. Whoever sits on the commission can do better than what is proposed by the Government. In my view, the saddest observation of all on the Government's handling of this matter is that future selectors of Members of your Lordships' House

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will be directly appointed by the Cabinet Office on the recommendation of a firm of chartered accountants. Some might have thought that that was an abuse of Parliament's powers. But we have become so accustomed to the nature of constitutional change that has been made by the Government in the past two or three years that our sensibilities in this regard might now have been blunted. I commend the Bill to your Lordships' House.
Moved, That the Bill be now read a second time.—(Lord Kingsland.)
2.5 p.m.
Viscount Bledisloe: My Lords, I start by expressing my genuine and humble apologies for the fact that I shall not be able to stay until the end of this debate, and my thanks for my consequential elevation in the list of speakers. Before this Bill was scheduled for today, I had already arranged a number of meetings in the country. I succeeded in cancelling and rearranging those which were to take place in the daytime, but I am afraid that I have an immovable obligation to preside over a meeting early this evening and therefore, with my apologies, I shall have to absent myself.
I hope that, notwithstanding my premature departure, the Minister will answer at least most of the questions which I shall be posing. I have given him notice of them—albeit somewhat tardy and, indeed, scruffy notice. I venture to believe that they raise matters of concern to a number of Members of this House and, in particular, to those Members who sit on these Benches.
For two reasons, to which I shall come, I welcome this Bill and both thank and congratulate the noble Lord, Lord Kingsland, on his initiative in introducing it. My reasons for welcoming the Bill are, first, because it is high time—or, indeed, on the figures given by the noble Lord, Lord Kingsland, well past high time—that we had an appointments commission and, so far, none has been forthcoming. Secondly, when we have an appointments commission, it will be a body that has to perform a very important function and one to which, in reality, a sizeable part of the Royal prerogative is being delegated. In those circumstances, such a body should be established on a statutory basis. As the noble Lord, Lord Kingsland, said, it is wrong that a body which is in effect selecting members of the legislature should be set up by the executive act of the Prime Minister, without debate and without the authority of Parliament.
I apprehend that the noble and learned Lord may well say to the House that this Bill is unnecessary because the Government are going to set up a voluntary commission anyway. As I have said, I would regard such an answer as constitutionally inadequate. It is also somewhat unconvincing. During the passage of the House of Lords Bill, the House was frequently told that the commission would be set up almost immediately; indeed, we were told that it could have been in place by the time that the Bill was passed had it not been for the conduct of the Conservative Party in amending the Bill, or inducing the House to do so, to include a statutory commission. Whatever the constitutional validity of
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that may have been, it is somewhat depressing that, notwithstanding the assurances that it was; all ready to go, we are now five months from the passing of the legislation and still without any commission; and, therefore, without many Cross-Bench Peers being appointed.
To enable the House to evaluate and compare the prospect of a non-statutory commission as against the commission envisaged by this Bill, there are certain questions that I should like to put to the Minister about the Government's unofficial commission and the way in which it is intended that it will operate. I venture to suggest that these questions will raise issues of principle and importance to the effective maintenance of a genuinely independent element in this House.
I turn to my first question. Clause 1(9) provides that of the eight members of the commission, three shall be nominated by the leaders of each of the three main parties and one shall be nominated by the Convenor of the Cross Benches. As the main function of this commission is to select independent Members of this House, as opposed to merely vetting the party nominations, there would seem to be a very much stronger and more obvious justification for having a nominee of the Convenor rather than three party nominees. Can the noble and learned Lord say whether it is intended that the commission to be developed by the Government will include a nominee of the Convenor? If it will not, can he say why on earth not?
Secondly, Clause 1(7)(c) allocates to the Cross Benches a percentage quota of the membership of this House. As the noble Lord, Lord Kingsland, said, that quota is founded on the numbers and proportions that existed immediately before the enactment of the House of Lords Act. Subsection (4) of the clause requires that that quota be maintained. Under the Government's scheme, can the noble and learned Lord say whether it is intended that there shall be an express percentage quota that has to be maintained? Further, if it is so intended, will that quota be that calculated in accordance with Clause 1(7)(c); that is to say, in accordance with the proportions immediately before the coming into effect of the Act? If it is not to be that quota, can the noble and learned Lord tell us what it is be and how it will be defined and calculated?
Thirdly, I should like to know how the fulfilment of that quota is to be measured. Can the Minister say what categories of Members of this House are to be included as counting against the independent quota? In other words, are those who make up the quota to be those Peers who are genuinely independent of any political party, or can the quota be deemed to be fulfilled by counting everyone who is net currently taking a party Whip in the House?
The Government have frequently expressed their commitment to maintaining "a strong independent" element in this House. But that commitment will have very little real value if a considerable part of the quota is in fact taken up by persons who have a fin n and well-known commitment to one of the political parties,

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albeit that such persons are not, for the moment, taking a party Whip. I seek to indicate some of the categories of person which I have in mind.
We all know that there are persons with a firm and strong party political commitment and who have followed a party political career who, at a particular moment, occupy a non-political post, albeit everyone knows that their politics remain the same and indeed that they will return to their party, and probably to the Front Bench of their party, when they cease to hold the relevant post. Two names spring readily to mind. One is the noble Lord, Lord Robertson, who obviously cannot sit on a party Bench while he holds his present post. The other is the noble and learned Lord, Lord Mackay of Clashfern—I mention the noble and learned Lord to ensure that I am not scoring a party political point—who sat on the Conservative Front Bench as Lord Advocate, on the Cross Benches as a Law Lord, and who then returned to the Conservative Front Bench as Lord Chancellor. One ventures to believe that neither of those persons greatly changed their political views while they held non-political office.
I now turn to persons who are currently not in receipt of their party Whip. They may have had their Whip withdrawn. One can think, without doing a great deal of historical research, of one or two recent examples. However, those persons are determined to return to their party fold as soon as their party will have them back. Are they really to be treated as independent and as a partial fulfilment of the quota merely because they have been temporarily expelled for party reasons?
My next point is more serious because it concerns potentially greater numbers. Are those who voluntarily resign their party Whip and move to the Cross Benches for tactical reasons to be counted towards the quota of independents? I can say with some certainty that the officials of at least some parties are certainly not blind to the substantial numerical advantage of moving some of their supporters to a "slot" on the Cross Benches, thereby counting against the Cross-Bench quota, and thus obtaining for their own party additional appointments to their ranks.
The Bill seeks to prevent the parties achieving appointments of people who are too closely allied to them, but it says nothing about the subsequent movements of persons who are presently in the House or who come into the House under party guise. I accept that this point will arise whether we have the statutory commission in accordance with the Bill or a voluntary commission set up by the Government. However, it is an important issue if this House is to maintain a genuinely independent element. I believe that the issue has not been addressed so far, at least publicly; and it is one to which an answer is badly needed.
My final question arises out of that point. Is it intended that once some kind of commission is established all appointments to this House, other than those made on party nominations, shall be of persons who are genuinely independent and who intend to commit an appreciable amount of their time to the
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work of this House? Or, is it envisaged, as the noble Lord, Lord Kingsland, anticipates, that peerages will continue to be conferred honoris causa to the great and the good? Of course, it will be for the appointments commission to decide on individual nominations, but is it to select only active independent working Peers, or are peerages still to be conferred on the great and the good? If peerages are to be conferred on the great and the good, where are those persons counted if, for example, they are either well-known supporters of one party or another—albeit not actually nominated by that party—or if they have manifested, and indeed publicly stated, an intention not to play a great part in the House but merely to accept the honour?
I hope that the noble and learned Lord will be able to answer some of these questions which will enable us to evaluate whether the voluntary commission is an acceptable substitute for the statutory commission, notwithstanding its constitutional deficiencies. I reiterate my apologies to the House for my premature departure.
2.20 p.m.
Lord Wedderburn of Charlton: My Lords, there is an honourable tradition of dealing with difficult subjects on Friday afternoons. In 1906 the government of the day successfully pressed the completion of the Committee stage of the Trade Disputes Bill in a sitting extending beyond 11 o'clock at night.Hansard records that at one point Mr Balfour said,
"I shall take no further part in these proceedings myself, and I advise my friends to follow my example".— [Official Report, Commons, 3/8/06; col. 1775.]
Hansard goes on:
"[The right hon. Gentleman then left the chamber followed by most of the Unionist Members.]" —
leaving Lord Robert Cecil to carry the torch of the last-ditchers. I am sure that there will be no exact parallels with this Bill, except perhaps that the Cecils may once again be at the cutting edge of subterranean political events.
The parallels that emerge today are more relevant to the efforts made to reform this House in 1968–69. Indeed, our discussions about the current problems of the House may be improved a little if we all read again in full the difficulties which arose at that time, when reforms which were perceived to be a threat to the House of Commons united a most remarkable group: my right honourable friend Michael Foot and Robert Sheldon on one side of the House; Mr Boyd-Carpenter and Enoch Powell on the other. They successfully stopped the reforms in their tracks, in what the noble Lord, Lord Callaghan, called "a brilliant mockery of the Bill's proposals". Under those provisions, hereditary Peers could still sit but could not speak. So far, I think we have done better by comparison. However, I do not believe that there are no such independent spirits at the other end of the corridor to take issue with some parts of the present Bill.
The Bill is concerned with the composition, the personnel, of the House—not with its powers. Anything I say about powers is not meant as a criticism

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of the Bill of the noble Lord, Lord Kingsland; I congratulate him on bringing it before us. After I had read it, I likened it to being not quite so difficult as the favourite question of some Oxford colleagues: "Question One. What is Question One about?" There is a list in the Bill which makes a useful agenda to confront part of the issues with which we and the Government are struggling so much.
In 24 years of attending this House, I have found, somewhat to my surprise, that I have been persuaded that my initial unicameralist views were not wholly correct. But that prompts the question: why do we need a second Chamber? In my submission—this is relevant to the Bill—it is in order to have a proper scrutiny of all important and public Bills. That raises the question: by whom?
As the noble Viscount, Lord Bledisloe, made clear, the Bill makes a special point or the Cross-Bench category. I take issue with the noble Viscount about the question of who are the Cross-Benchers. In my view, if someone with an eminent but political career says that he or she no longer holds to the Whip of a political party, he or she has a personal right to be treated as a Cross-Bencher, even though everyone knows that what he says may still be affected by his past and present beliefs. It would be quite intolerable for the Cross-Benchers to have the power to exclude anyone for reasons of that kind.
This agenda, which is admirably set in Clause 1, will not be accepted as the full agenda by large groups of people. It will not be accepted by the young—who tend to join political parties rather less than when I was young, which I regret. It will not be accepted easily in terms of a set of criteria to be proclaimed by the commission itself. Surely such criteria should be put at least to the House of Commons. The ethnic communities will not buy it; feminists are unlikely to trust it as not having a glass ceiling quota. In other words, this structure will not easily be accepted.
All manner of religious and non-religious bodies will want a special place in the sun, raising issues as to the Establishment of the Anglican Church, and the parallel case for atheists will be quite unanswerable. MI6 may buy it because, under subsection (5), it is to retain a special route to the Prime Minister, but protesters against genetically modified food and other gene manipulation will be unlikely to buy it. What I am saying is that putting eight Privy Counsellors in charge, instead of another person or another group of persons, will not buy acceptance in a very large number of areas of modern life. It might have worked once, but, unless there is a miraculous change in the composition of the Privy Council, the formula of eight Privy Counsellors is unlikely to solve the problems of which we are all aware.
One of those problems is patronage. We have to be clear that almost—
Lord Campbell of Alloway: My Lords, I am very much obliged. Perhaps I may ask the noble Lord: why not: and who else?
Lord Wedderburn of Charlton: My Lords, I understand that. It is rather like democracy. It is
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sometimes a very bad system but all the others are worse. That is what I take to be the point of the noble Lord's question. I am not sure. What I am saying is that Privy Counsellors, as we know them, would not command clear acceptance across a large part of the community and would not necessarily deliver what the noble Lord, Lord Kingsland, is asking for.
It will be difficult for the criteria to guarantee that the new composition will install personnel with special experience for scrutiny in the delay that is allowed in this House. Some work should be done on obtaining a group of that kind. The delay should be used less for devising awkward amendments—I remember having produced some awkward amendments—and more as a period in which special committee work is done on the structure of Bills. Perhaps I may refer to a scholarly work of as long ago as 1974. Professor John Griffith's authoritative work on parliamentary scrutiny of government Bills made a large number of suggestions of that kind, such as the use of specialist committees and cross-examination—something on which the House of Commons has built rather more than this House.
Complaints of patronage, which will be made because we cannot get rid of the ghost of Lloyd George and others, will go on, no matter what system is used. They are difficult to avoid even if one has an elected Chamber, an answer for which people reach easily as though it is a complete solution. I rather share the view that if systems of election are in any way the result of nominations by party machines they will not provide even a quarter of what the Bill seeks to have. It is about election—I appreciate that—but in fairness to the Bill one should say that many systems of election, especially closed lists and other species of proportional representation, will come in for just the same criticism. It will be another category of what on 3rd February 1969 my right honourable friend Michael Foot criticised because there were to be nominations through party machines. He said:
"Think of it! A second Chamber selected by the Whips. A seraglio of eunuchs".— [0fficial Report, Commons, 3/2/69 col. 88.]
That criticism can be made of many of the systems of election that have been proposed.
We do not like to speak much of money. But we all know that, if the Chamber were partially appointed and partially elected, horrendous problems would arise in respect of who should be paid what.
At Committee stage, there will be matters for debate almost as important as the ones I have mentioned. One example is Clause 1(5), which states that,
"The Prime Minister may not refuse to submit to Her Majesty the names of those recommended as Cross Bench members by the Commission".
"May not refuse to submit" is an odd phrase. Presumably the Prime Minister is under an obligation to submit the commission's lists. Can he just sit on his hands? What is he going to do in regard to relations with the sovereign? Will the commission become a body with absolute sovereign powers to appoint under the pretence of nomination? Is the Prime Minister to be allowed to advise Her Majesty? If he is not, the

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sovereign is left stranded in the middle of a political crisis without being able to obtain the advice of her or his Prime Minister. I take it to be a bedrock of our modern constitution that the position of the Crown is established, wisely, to be that which the sovereign will do on the advice of the Prime Minister— the leader of the party of democratic choice.
Questions of that kind will arise in Committee, and they will need to be debated in relation to another area of the agenda for the middle period of the reform of this House. I refer to a matter with which the Bill rightly does not deal, but which must be stated— because, even if the Bill were wholly unanswerable in its propositions, there would be a different part of the problem to confront; namely, the powers of a second House.
The powers of this House are limited primarily by the 1911 and 1949 Parliament Acts, other than in regard to Money Bills and so on. In common parlance that means a 13-month delay. The Wakeham report explains all the other details and problems very well— although it is one of the least imaginative areas of the report. It explains the powers of delay and the suspensory veto. The periods of delay, too, may need to move with the times. I take it that they should be modernised. For example, however it is composed, the second Chamber must, as the report clearly states, have only a suspensory veto; it must be cautious about obstructing the House of Commons in government business beyond a reasonable time; and it must maintain the Salisbury Convention, especially in not delaying unreasonably the manifesto commitments of the majority party.
Those of us who may be somewhat to the left of centre of the political spectrum do not usually see Cross-Benchers as favourable to their views. "Cross-Benchers" is a curious term. Most Cross-Benchers are at least to the right of the middle point of the spectrum, and one has to face the commitment that no party shall have a majority in this House in that way.
Why do I raise the question of powers? I do so because 13 months is not necessarily a reasonable period in modern conditions to apply to all government Bills. Vetoes are not sacrosanct. The period of 25 months in 1911 was changed, after relatively little debate, in 1949 because it was necessary to stop the last two years of a Labour government's power being utterly useless through inability to govern.
I suggest that the agenda will have to be widened to take in rather more matters than are dealt with in Chapter 4 of the Wakeham report. Some might be resolved more easily by a Joint Committee of the two Houses. The adoption of a Speaker's Certificate as to the nature of a Bill might be taken into account, as it is in relation to Money Bills, and a second Chamber might do better work in not delaying for as long as 13 months a Bill which is at the core of a government's manifesto commitments.
Our constitution has moved. I believe that in the middle or latter part of the term of a government, of whichever party, 13 months is an unreasonable delay.
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Even a big Bill of great importance could be dealt with quite satisfactorily by changes in the procedures of this House if, for example, the Committee stage was devoted more to eliciting information to be debated in the Chamber than to special political questions and amendments which could, quite properly, be dealt with on Report. One thing is clear: we have become so devoted to the issue of composition and personnel that we have not examined sufficiently the problem of the powers and duties of the new Chamber. I feel confident that the latter will, and should, dominate the agenda at some point. There is a strong case for shortening the period of 13 months to six months in relation to core manifesto Bills.
I congratulate the noble Lord, Lord Kingsland, on offering us this Bill as an agenda on composition. I look forward to his next contribution, which must surely help us to devise a proper agenda on the question of the period of delay and the powers of the second Chamber.
2.35 p.m.
Lord Craig of Radley: My Lords, I too welcome the opportunity that this Bill gives to explore the advantages of, and arrangements for, a statutory appointments commission. The Government are finally putting in place, entirely on their own authority, the interim independent appointments commission which was outlined in the White Paper (Cmnd. 4183) well over 12 months ago. This Bill is too late to set up the interim commission and too early to be the final solution, because to seek the consensus to which the Government aspire we need to concentrate not only on this but on the many other aspects of the Royal Commission's work still to be agreed.
I hope, nevertheless, that we shall receive an indication from the Minister of the stage the interim commission has reached. Has a chairman been identified? I hope that he or she and the other independent members will have more than a superficial knowledge of this place. As the Leader of the House told me in a Written Answer, the commission will nominate all new Cross Bench Peers. Her response, however, suggested that these nominations would replace half-yearly creations associated with the New Year and Birthday Honours Lists. Perhaps the noble and learned Lord can clarify the position.
I wrote to the Prime Minister on 9th March to point out that, while the Wakeham commission and the Bill before us today envisage roles for the Convenor of the Cross Bench Peers, no arrangement has been made to involve the Convenor in the interim appointments commission. It would help to underline the Government's commitment to a strong independent element in your Lordships' House if the Convenor were involved in the work of setting up the interim commission. I await the Prime Minister's response with optimism.
To return to the Bill before us, there are a number of points which I welcome. First, implicit in the Bill is the concept of an independent appointments commission

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set up by statute. This would underline and enshrine, in a way that no lesser step could do, the strength of support by all political parties in both this House and another place for an independent element in the new House of Lords. I hope that today's debate will reveal a consensus for the statutory route. While so much is made of the importance of a strong independent element in your Lordships' House, it would be perverse if, when put to the test, it transpired that there was really no strong committed support for entrenching the appointing authority. I remind the House of the words of the White Paper:
"Cross-Benchers will become more important with the removal of the Conservative in-built majority".
I shall judge the strength of the commitment of the political parties to the independents in this House by their reactions to the statutory approach. But given their acceptance of it, the other side of that coin must be accepted too.
It will also entrench occasional parliamentary setbacks, government defeats in this Chamber and difficulties with the passage of legislation. A quarter, I hope, of this Chamber—it will not be supine; it will never be whipped; it will not be brigaded; and it will come and go as it wishes—will have this potential even though it will not be marshalled in any attempt to do so. One cannot but have a sneaking admiration for any executive so broad-minded as to accept such a large lump of intellectual grit in the works of their legislative programme. For my part, I think that it gives the country an assurance that the legislative programme will be well scrutinised and debated, and that the outcome will in the long run be beneficial.
On a mundane issue, I have to say that none of the political parties has shown any strong inclination to recognise an increased importance for independent Peers when it comes to addressing the stark discrepancy between the ratio of desks allocated to Cross-Bench Peers and the parties.
The second point I welcome in the Bill is the place for Privy Counsellors in the appointments commission. If the commission is to be heavyweight—and it must be, if it is a statutory body—then the standing and experience of members must be clear to all and widely acknowledged. Whether under this Bill, the Wakeham commission proposals or something akin to them, the commission will have an authoritative responsibility which must be above and beyond serious challenge. Lesser men and women will not have the respect which each and every member of the commission must enjoy to fit them for their responsibilities.
The White Paper, amazingly, has no formal provision for any member of the commission to be a Member of your Lordships' House. I hope that when it comes to party appointees, this will be corrected. The Bill before us provides for that because the Convenor is to nominate a Member of the Cross Benches to be a member of the commission.
The Bill also proposes that the commission would,
"publish criteria under which it will determine a candidate's suitability for nomination".
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I shall turn to the complexities of determining the appropriate criteria in a moment, but I raise this question. Who would approve those criteria? Are the commissioners really going to be given completely free rein by this House, Parliament, the Government and the opposition parties of the day? How will all this sit with transparency and openness?
A number of Cross Benchers have been giving some thought to devising criteria for accepting nominees as independent Members of your Lordships' House. Your Lordships will recall that the noble Lord, Lord Wakeham, placed some emphasis, with which I agree entirely, on the acceptability of part-time attendance among the independent element. I hope that part-time attendance will not be a bar to selection by the appointments commission. But there are more difficult issues about selection to address, in particular as the criteria will have to be open and transparent. I am concerned that the Government's interim commission, breaking new ground on all of this, will be hard pressed to be ready to make nominations in a matter of weeks, as is expected of them.
At present there is a tendency to perceive independent Peers and Cross-Bench Peers as synonymous terms. New independent Members will have been appointed only after establishing their independence of all political parties. The independent appointments commission will devise its rules for establishing such independence, but it will have to be done by means of a number of criteria to which a candidate will have to make satisfactory responses. The guidance to public bodies produced by the Commissioner for Public Appointments, which follows the Nolan principles, may be a good starting point, but it will not produce a complete answer. Some criteria, such as current or very recent membership of a political party, would be a bar. Other criteria might require no party political activity, or donations to a party, for a period of time.
Once these new Members are introduced, they should be logged as independent Peers, thus emphasising their status of independence.
Lord Wedderburn of Charlton: My Lords, is the noble Lord saying that the job of the commission would be to inquire, in a committee or some such body, into the subjective beliefs of a person who says that he is a Cross-Bencher and that he no longer wishes to receive a party Whip? Would that be challengeable by the commission in what one can only regard as a rather curious investigation into people's personal beliefs?
Lord Craig of Radley: My Lords, I do not dissent from what has been said. I am only drawing on the material that has been made available at this stage, in the White Paper and in the report of the noble Lord, Lord Wakeham.
Also, from time to time, existing Members of your Lordships' House may wish to give up their party affiliations. Previously, they were free to become, and sit as, Cross Benchers. In future it would be better if such individuals were classed as "other" Cross Benchers or "others". Without this additional

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distinction, the percentage of genuine independents within the House could be eroded. Some seven Members of your Lordships' House are now classed as "other". There should therefore be no difficulty in adding to this number any existing Peers who, having left their party, would not be accepted as independent by the criteria devised by the appointments commission. Where they sit in the House is not an issue. Whether any of them should fall within the ambit of the Convenor—if, for example, they wish him to look out for their interests in Select Committees, give information about future business and so on—is a matter for consideration when the total number and make-up of "others" is known.
Another point in the Bill is the intention that the appointments commission shall nominate individuals under the 1958 Life Peerages Act for life. I welcome that clarity. I do not favour retrospective legislation for those who are, and will he created, life Peers under the present Life Peerages Act. The noble Baroness the Leader of the House did not adopt that position in her reply to a Written Question that I asked. I was disappointed by her response, which seemed to depart from the statement in the White Paper that new Members of the House of Lords will continue to be appointed in accordance with the Life Peerages Act 1958 and that there will be for the time being no changes to the conditions attached to life peerages.
If there were to be retrospective legislation on the 1958 Act, I also fear a re-run of last summer's arguments about hybridity, because some life Peers would he affected and others would not.
The Bill, where it mentions "broad parity" between the government supporters and those of the main opposition party, raises a number of further questions. What role should the commission have other than reporting on this matter annually? How should it define "broad parity"?
Will the new House of Lords be fixed in number or not? The Bill envisages a fixed number of Cross-Bench Peers—I would prefer them to be classed as "independents"—and expects the commission to make up the shortfall in numbers that may arise through death or disqualification, or through individuals moving to accept a party Whip. But the latter will still be Members of the House, so total membership numbers would have to be flexible to allow for that type of move and still maintain independent numbers.
As noble Lords have mentioned, there could also be realignments the other way. In that case, and in other attempts to spell out the size of the independent element of the new House, there are complexities in the Bill that will need to be resolved if there are not to be continual difficulties over the rules to be applied by an appointments commission.
I welcome the opportunity which the debate gives the House to address some of the interlocking points that will have to be considered to prepare the way for an independent appointments commission. Whatever method of appointing is ultimately agreed, devising it
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will not be an easy or straightforward task, especially so if, as I hope will be the case, it is to be enshrined in statute.
2.50 p.m.
Lord Weatherill: My Lords, this is a debate in which I can utter with total truth a phrase that I longed to hear when I was Speaker in the other place, "The contribution I had intended to make has been much better made by others and I shall not detain the House". I apologise for doing so today. The arguments about the independence of the Cross-Bench independent Peers were well made by the noble Viscount, Lord Bledisloe, and by our noble and gallant Convenor, Lord Craig of Radley, and I shall not repeat them.
It is well known, and it is true, that the Cross-Benchers never hunt as a pack. However, on the question of our independence and numbers in your Lordships' House, now and later when we all hope the Government will legislate to implement the recommendations of the Royal Commission, we are wholly agreed and united. The amendment which I moved to the House of Lords Bill last year was always intended to be temporary.
I intervene briefly to plead for the greater independence of your Lordships' House not only on our Benches, but in the House as a whole. It is my perception that this House is held in somewhat higher regard and respect by the general public than, sadly, is the case for the other place. As a former Speaker, I say that with great sadness. I suspect that that is because we tend to reflect public opinion more accurately and to show a greater independence than does the House of Commons. In my submission, the low repute in which Parliament is held today is both serious and dangerous. It is far easier to lose our freedoms than it is to regain them and we owe all our freedoms to Parliament.
When I was in Brussels about three weeks ago, a Belgian MEP made a significant comment to me. She said that all the countries in the EU had come to their democracy through revolution or troubles of one kind or another, but that ours had always been achieved through Parliament. That is true: France, Germany, Italy, Portugal and Spain came to democracy late in the day. All our freedoms have been achieved through Parliament. The one blip (at the time of King Charles I) was Parliament taking on the executive in the person of the King.
Lord Shore of Stepney: My Lords, perhaps the noble Lord will forgive me for intervening. Did he really say that the remarkable and marvellous demonstration of the urge for responsible representative government which was shown by the British people, and which led to the Civil War, was a "blip"?
Lord Weatherill: My Lords, it was hardly a blip; I used an inappropriate phrase. The greatest enemy of freedom is apathy and I fear that we have it today in terms of our parliamentary system. When I entered the House of Commons in 1964, to be a Member of

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Parliament was different from what it is today. It was prestigious to be called a "Member of Parliament" and we had a red badge on our cars to proclaim the fact.
In those days, the House of Commons was stuffed full of very independent people. I must say to the noble Lord, Lord Kingsland, that that was especially true of the Privy Counsellors. Not many of the awkward squad are left there today. We need more people of that calibre. I refer, for example, to Tam Dalyell and to the honourable Member for Bolsover. Noble Lords who believe that the honourable Member for Bolsover is a bit of a nuisance should know that Colonel Sir Walter Henry Bromley-Davenport was one of the greatest disrupters of Parliament that I have ever heard. The honourable Member for Bolsover would not hold a candle to him these days.
In those days, the awkward squad was reluctant to take "no" for an answer and was pretty doubtful about "yes". In those days, too, the influence of the Whips was heavily constrained. I should know because at that time I was a Whip and for six years it was my duty to represent the views of the awkward squad.
I believe that it was famously said of Mr Campbell-Bannerman:
"I am their leader. I think I must follow them".
That was true. In those days, party leaders could not force through measures which did not have the support of their Back-Benchers. It is sometimes forgotten that the noble Baroness, Lady Thatcher, had a nickname. She was called "Milk Snatcher". Noble Lords may remember that the government of the day, in which I believe she was Secretary of State for Education, had stopped free school milk. That was said to ruin children's teeth. When Tony Barber (now the noble Lord, Lord Barber) as Chancellor of the Exchequer was going to put value added tax on children's shoes, I, as the Whip, had to tell him that he would have to think again because the party would not follow him. We had ruined their teeth and we were proceeding to ruin their feet as well. He said that it would ruin party strategy. I had to tell him that the party would not agree with him; that there was no point in proceeding because the measure would be voted down in Committee.
I pray that this House will retain its reputation for independence and, in days to come, will not be a pale reflection of the other place. It is our undoubted duty to examine and improve legislation and to ask governments to think again. I agree wholly with the noble Lord, Lord Wedderburn of Charlton, regarding what he said about the importance of a second Chamber. Governments should accept and welcome independent points of view. I pray that the Whips in your Lordships' House will not look with disfavour on those who speak or vote against the party line on either side of the House or, indeed, on the Cross Benches. I believe that our reputation will be enhanced if we have a reputation for independence.
A few weeks ago, I attended the memorial service for the late Sir Robert Rhodes James. Some of your Lordships may also have been present. He was the distinguished and independent-minded Member of
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Parliament for Cambridge. On the service sheet were printed the words from a speech that he had made in the House of Commons in 1990:
"The growing belief that any opposition is treachery and a course towards disaster is itself a disaster because this House is based on debate and discussion, and on agreement and on disagreement.
Once that is destroyed, the heart and soul of this House is destroyed and, with it, the heart and soul of British democracy".
Those are wise words, and pertinent to this debate and to the future of your Lordships' House.
I suspect that the noble Viscount, Lord Bledisloe, was right when he said that the Government will say that this Bill is unnecessary because they intend to put into practice the commitment that they made to set up an independent commission. However, if they succeed in expediting that commitment, they have my support.
3 p.m.
Lord Goodhart: My Lords, I do not intend to delay your Lordships for very long. In the past hour or so I have had a distinct sense of déjàvu. After all, this Bill is a revised version of amendments which were moved and debated at some length during the passage of the House of Lords Bill through your Lordships' House last year. We did not support those amendments on that occasion. That was partly because we wished to see the Bill enacted as cleanly and simply as possible and in the belief that the Bill should concern itself with no more than the removal of the hereditary Peers from this House. To a large extent that has now been achieved and so that situation no longer applies. However, while I do not believe that it would be fair to say that my party looks on this Bill with hostility, we look on it with a distinct lack of enthusiasm.
I certainly agree that when we reach stage two the independent appointments commission should be a statutory body. T believe that setting up such a commission now would send the wrong signals because it would show that we in this House believe that the interim House will continue for a very considerable time. It seems to me that the present form of the independent appointments commission, as proposed by the Government, is acceptable on the footing that it is a short-term interim arrangement.
Lord Strathclyde: My Lords, perhaps I may gain some clarification from the noble Lord. Am I not right in believing that the position of the Liberal Democrats is that there should be a wholly elected House at stage two and therefore that there will be no need for an appointments commission, statutory or otherwise? We are dealing with the current House. Therefore, does not the noble Lord believe that it should be backed by law rather than by the whim of the Prime Minister?
Lord Goodhart: My Lords, perhaps I should have made it clearer that if there is to be a continued appointed element in the House at stage two, then there should be a statutory independent appointments commission to appoint it because at that stage it would be clear that it will continue in existence for some time.

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We do not believe it appropriate to include it at this stage because it writes something into statute which is likely to have effect only for a short, interim period.
In saying that I am not indicating in any way any failure to recognise the important contribution that Cross-Benchers make to this House. It is certainly our very firm wish that as long as the interim House continues there should be measures that ensure that an adequate number of Cross-Benchers are appointed by an appropriate system. However, for the moment we believe that the system proposed by the Government is adequate. I believe that our views would change if the present government were to be re-elected and did not show a wish to proceed immediately to stage two.
We on these Benches wish to press on as soon as possible to stage two, although if the Wakeham commission proposals, or anything significantly like them, are accepted that would have to be described as stage one-and-a-half rather than stage two.
Looking in more detail at the Bill, I note that there are two specific defects. First, subsection (7) broadly repeats the government proposals in the White Paper. However, it omits one element which, not surprisingly, we on these Benches regard as crucial; that is, a reference to proportionality of representation for other parties in your Lordships' House. As your Lordships will know, that has been the subject of some controversy recently between my party and the Government.
Secondly, subsection (8) requires the members of the commission to be members of the Privy Council. That is something which has been proposed by the noble Lord, Lord Kingsland, and approved by the noble and gallant Lord, Lord Craig of Radley. But the Privy Council seems to me to be a most inappropriate body to make such a selection.
The members of the Privy Council are, to a very large extent indeed, senior politicians or judges, either from this country or from a number of member states of the Commonwealth. Those who are judges or politicians from the Commonwealth are not likely to be involved in the selection process. Clearly, that would be inappropriate. But a body which consists almost entirely of senior politicians and judges, which contains very few women—a quick glance through the list of Privy Counsellors shows that the number of women is in the low 20s—and which contains, so far as I can make out, no members of an ethnic minority in this country is plainly not an appropriate body.
The noble Lord, Lord Kingsland, said that there are two grounds for believing that the Privy Council is the correct body. First, there would be matters of confidentiality; and secondly, ambition would be vanquished. But that is not exclusive to Privy Counsellors. I should say that it has been announced that my party's nominee to the proposed interim appointments commission is my noble friend Lord Dholakia. He is a person who is, I believe, of unchallenged integrity, would make a wholly appropriate member of that commission, but is not a member of the Privy Council.
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Those particular defects—that is, the exclusion of proportionality for other parties and the restriction on membership of the commission to Privy Counsellors—could be corrected by amendments in Committee. But I cannot hold out any real hope to the noble Lord, Lord Kingsland, that that would be enough to persuade us to take an interest which would become positive support for the Bill.
3.8 p.m.
Lord Strathclyde: My Lords, I am grateful to my noble friend Lord Kingsland for keeping this issue before the House. I congratulate my noble friend both on his initiative and on the way in which he introduced what I believe to be an extremely important Bill. I pay tribute to all noble Lords who have spoken in the debate. It has been particularly good to have so many distinguished contributions from the Cross Benches.
There has been something a little unseemly in the way in which the Government's plans in relation to an appointments commission have been advanced without consulting the Cross Benches and without giving this House an opportunity to debate the matter. I need not add to the complaints which your Lordships had to learn from a Cabinet Office press release on 18th January of the appointment of head-hunters to appoint a non-statutory appointments commission to appoint Members of this House. This House should be informed properly of developments which affect it or its Members. At least now, with this Bill, we have the opportunity to debate those important issues.
Several undeniable facts underlie the debate. First, as my noble friend Lord Kingsland pointed out, the House of Lords Act has doubled the proportion of life Peers under the 1958 Act within the total membership of the House from some 40 per cent last November to almost 80 per cent once the latest introductions have themselves been introduced. Secondly, in our recent debate on the Wakeham report, the noble Baroness the Leader of the House implied that she would accept no more than 87 elected Peers in a House of 500 or 550. That would mean about three-quarters of the Government's favoured long-term model for the House being made up of appointed Peers. Thirdly, the present Prime Minister has been dubbed, "the uncrowned King of Ermine". In less than three years he has created as many life Peers as my noble friend Lady Thatcher created in 11 years. Fourthly, there is a growing public sense that the life peerage has moved—as I forecast that it would in our proceedings on the House of Lords Act—to the frontier of what is acceptable in a modern Parliament.
The growing place of patronage in this House, the growing—indeed, unprecedented—use of patronage and the growing sense among the public that that system is out of keeping in a modern Britain all point to the fact that we need some new system for supervising and safeguarding the creation of the dominant element in this House. It will be remembered that the hereditary peerage did not owe its place to anyone living. The appointed peerage, by contrast, by definition does. Without any offence to the many distinguished figures who are here as a result of it, it is

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that process which must be put beyond question. We cannot go on with a Prime Minister creating a Peer, on average, every five days or so and not expect people to ask some questions.
An independent appointments commission is essential for so long as the appointed peerage dominates three-quarters to four-fifths of one House of our Parliament. That is incontestable. I fully expect the noble and learned Lord, Lord Falconer of Thoroton, whom I am delighted to see is replying to the debate, to set out in detail today the personnel identified by his head-hunters to serve on the Government's quango commission. Perhaps he will set out their terms of reference, the number of Peers they are to appoint, and the limits the Prime Minister will accept on the size of the House, if any. After all, he and the rest of the Government have had three years to think about the matter and, 200 Peers later, it is time for an answer.
I was amused to see the Prime Minister saying in a recent interview in the Observer:
"I am the first Prime Minister to give up patronage".
You could have fooled me. Is it not odd how after three years in office, the view looking out from the balcony of No. 10 is so different from the view of the outside world looking in? Whatever else may be said of the Prime Minister in the "Dog and Duck", that he has given up patronage is not the first thing that would spring to mind.
I must say also to the noble and learned Lord, Lord Falconer, that to announce the la test news on his quango commission will not be enough. I hope that he will tell us when we can expect to know more on the details of the new commission; when it will be set up; and when the details will be announced of the chairman and the other personnel who will be involved. I and many other noble Lords were struck by the terms in which the noble Baroness the Leader of the House accepted the Wakeham commission's recommendation— in line with what we have been saying for the past three years— that any appointments commission must be statutory. She said "Yeees", in principle, in due course. We then had a classic paragraph of Cabinet Office prose on all the difficulties that would then ensue.
Of course, there are difficulties with the details of the proposals of my noble friend Lord Wakeham. The noble Lord, Lord Wedderburn of Charlton, mentioned some of them, as did other noble Lords. Those are, of course, precisely the kinds of area where I hope that my noble friend Lord Kingsland will invite the House to propose amendments when we reach Committee stage. But the possible existence— this year: next year; sometime; never—of a stage two is no reason not to bring in safeguards on the use of patronage now. Those safeguards should include independence rooted in law for the appointments commission. They should include an independent chairman chosen by the commission itself, and not by the Cabinet Office. I cannot understand why the Government have decided that they must appoint the chairman and that he or she should not come from
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members of their commission. They should include checks on the Prime Minister's power to control the overall number of Members of this House and the relative strength of the main parties and of the Cross Benches. They should underpin and strengthen the Cross-Bench role in this interim House.
Lord Wedderburn of Charlton: My Lords, is the noble Lord suggesting that there is any system at all that will be found not to include a large clement of patronage in relation to membership of this House? The noble Lord quotes the Prime Minister's appointments. Over the years there have been many objections to "patronage", as it is called; I am not sure that a system of necrophilic patronage is better than a living one.
Lord Strathclyde: My Lords, on the hereditary peerage, my point is that it owed no duty to anybody living. There is a doubt as to whether that is true of the current system.
The point that we make from these Benches is a broader one. At the moment, the only way into this House is if the Prime Minister ticks your name. He decides not only who will be a Member here, but also the political balance and the overall number of Members. I hope that the noble and learned Lord, Lord Falconer, will put me right if I am wrong in saying that. All we propose today is that some of that patronage should be taken away from one person— the head of the executive, the Prime Minister—and be put into the hands of a commission. We have attempted to introduce an element of independence.
Of course, the Government have accepted that argument because they propose their own appointments commission. The difference between our commission and theirs is that ours is backed by law. As I said a moment ago to the noble Lord, Lord Goodhart, theirs has been produced a t the whim of the Prime Minister. The Prime Minister could wake up tomorrow and decide that he will not do it. Under this system, it can be changed only by the will of Parliament. That is why it is so much more important.
This Bill provides for all the matters that I have mentioned and all those that my noble friend has mentioned. Perhaps I can also tease one other point from the noble and learned Lord. Your Lordships will know my strongly held view, and that of my party, that we should now proceed to the creation of a Joint Committee of both Houses to consider proposals for stage two. There is no reason why that commission should not be set up. This House and another place expect and deserve no less. As Mr Tony Wright, the chairman of the Select Committee on the constitution said recently in another place, it is wrong for the Government to exclude Parliament from this discussion just as it was wrong to exclude the Cross Benches from discussion on the interim appointments commission.
I hope that my noble friend's Bill and this debate will provide a basis for discussion of the stable and long-term statutory commission that is widely demanded inside and outside the House. I confirm what my noble

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friend has said: for our part, we are ready to consider amendments from all sides of the House in order to get it right. In fact, we offer the Bill to the Government as a vehicle by which we may achieve a statutory appointments commission.
My noble friend has shown that his proposals differ from the Government's only in the sense that they entrench independence further and limit the Prime Minister's power of patronage. It is right to err on that side. I hope that we can find a way, with the good will shown by most speakers so far—
The Minister of State, Cabinet Office (Lord Falconer of Thoroton): My Lords, as I understand the principled position taken up by the noble Leader of the Opposition in this House, he accepts that the appointments commission will reduce the Prime Minister's power of patronage, but his point is that it should be a statutory appointments commission. Therefore, I assume that, apart from that point, he is content with the arrangements in relation to the appointments commission proposed by the Government.
Lord Strathclyde: My Lords, not entirely. I shall tell the noble and learned Lord why. I agree with his point about it being statutory and hope that he agrees with my view on that. But it is difficult to take part in this discussion because we do not know enough about the appointments commission currently being proposed and cooked up in the Cabinet Office by the Government. I understand that the Prime Minister will still decide the political balance in this House and will still decide the overall numbers. If I am wrong, perhaps the noble and learned Lord will put me right.
Lord Falconer of Thoroton: My Lords, the noble Lord, Lord Kingsland, fairly pointed out that what he sought to do was to reflect in his Bill the Government's proposals. I am entirely unclear now as to what the Opposition's position is.
This Bill is being presented by the noble Lord, Lord Kingsland, as a reflection of the Government's position. It is being put forward on the basis that the only two differences are the Privy Counsellor point and the selection of the chairman by the body itself. Apart from that, no other changes have been made. I take it, therefore, that the Opposition are content that that is a suitable discharge of the power of patronage, apart from the point, fairly made by the noble Lord, that it is statutory rather than non-statutory.
Lord Strathclyde: My Lords, if it was a fairly made point, I hope that the noble and learned Lord will accept the principles underlying this Bill and give his support to getting it through Parliament; in which case, I shall continue to support him.
There is one other difference. The Bill entrenches the point on the proportionality of the House, which is why the commission needs to be statutory.
Lord Falconer of Thoroton: My Lords, I apologise for continually interrupting. Perhaps the noble Lord will stop me if it causes difficulties. The noble Lord, Lord Kingsland, took the proportionality point from the White Paper. We accept that the proportionality which he seeks to reflect—I am not taking any drafting points here—broadly reflects the point for proportionality that we have always put forward for the transitional House.
Lord Strathclyde: My Lords, that takes us back to the point on which the noble and learned Lord and I agree—it is good that we agree because we bring this Bill to the House in a spirit of consensus—that is, that the commission should have a statutory basis. If we do not disagree about the details, then when he rises in around 30 seconds the noble and learned Lord must be going to tell us the reason why the commission cannot be statutory.
The Bill before us will strengthen the life peerage; it will strengthen this House; it will strengthen the political process itself. On that basis, we should seek to be equal to the challenge that my noble friend Lord Kingsland has set us this afternoon.
3.22 p.m.
Lord Falconer of Thoroton: My Lords, the exchange I have just had with the Leader of the Opposition is significant. As I understand it, it has been the position of the Opposition in this House that the Prime Minister has not adequately shed his powers of patronage. As I understood the effect of our exchange, apart from the issue of whether or not the commission should be statutory, the Leader of the Opposition would be content with the arrangements advanced by his noble friend in this Bill.
The only difference between the proposals advanced in the Government's White Paper and this Bill are in effect points of detail rather than points of substance, such as how the chairman is appointed and the Privy Counsellor point. That is how the noble Lord, Lord Kingsland, introduced his Bill. At the moment, therefore, I am quite unable to understand how the noble Lord, Lord Strathclyde, can continue to make what appear to me to be thoroughly bad points about the Prime Minister not having given up his power of patronage.
The noble Lord, Lord Kingsland, looks pregnant with excitement, as though he wishes to rise and interrupt me. If he does, then I shall immediately give way.
Lord Kingsland: My Lords, I am relieved to say that, in my case, pregnancy is quite impossible!
I should like to assist the noble and learned Lord, Lord Falconer, though I suspect he is not in the mood to be assisted this afternoon. If the noble and learned Lord would be kind enough to cast his mind back to the beginning of my speech—though I accept that that may, perhaps, be too distressing an experience for him—he will recall that I said that my fundamental objection to the route that had been chosen by the

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Government was the fact that the executive, through the exercise of the Royal prerogative, would be determining part of the composition of Parliament. That seems to me at any rate to be the reverse of how a good constitution should work. A good constitution requires the executive to be chosen by Parliament.
If the selection process is statutorily based, which is what I seek, we will have a commission that is independent of the Royal prerogative determining the composition of your Lordships' House. That would satisfy the constitutional criterion that I laid down at the beginning of my speech. In my submission, that is the fundamental objection to what the Government are seeking to do at the moment.
Lord Falconer of Thoroton: My Lords, as I understand it, the Conservatives would be content with the following arrangements in the interim House—I make no claims for what their position would be in relation to a final House. First, they would be content with the Prime Minister nominating the Labour Peers; with the leader of the Conservatives nominating the Conservative Peers; and with the leader of the Liberal Democrats nominating their Peers. Secondly, they believe that the makeup should be broad parity between the two main parties; that the Cross-Benchers should equal as a proportion of the whole House the proportion that they broadly represent now; and that the Cross-Benchers or "independents", as some noble Lords wish them to be called, should be nominated not by the Prime Minister but by the appointments commission.
I do not want to go into any further detail, but, as I understand it, the Conservatives would be happy with such an arrangement and would regard it as being satisfactory. The only difference is that, instead of the appointments commission being established under arrangements that the Government presently propose, they believe that it should be established under arrangements contained in a statute. I see that noble Lords opposite are nodding their heads. That is what the position will be, except for the statutory point. Therefore, I imagine that the noble Lord, Lord Strathclyde, will now no longer complain about patronage—
Lord Strathclyde: My Lords, has not the noble and learned Lord said something quite significant? Does he not feel ashamed of himself and of his government? The first time that we in this House have heard what it is that the Government propose in their interim commission is when they have been dragged to this Chamber on a Friday afternoon by a Bill tabled by the shadow Lord Chancellor. They sneaked out the announcement in a press release and in a Written Answer about the setting up of an appointments commission that disposes of seats in Parliament. This is the first time that this House has had the opportunity to debate the matter.
Lord Falconer of Thoroton: My Lords, what an utterly bogus point made completely mischievously by the noble Lord, Lord Strathclyde. If the noble Lord,
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Lord Strathclyde, did not know that those were the provisions, how was it that his noble friend Lord Kingsland knew that that was the position? Indeed, that is what he said as he introduced the Bill. What a hopeless and completely mischievous response by someone who, until he made such a response, I would have thought knew a lot better.
As the noble Lord, Lord Goodhart, said in his speech, there is a tremendous sense of déj àvu about this debate. The arguments deployed in favour of this Bill by the noble Lord, Lord Kingsland, have not changed in the intervening five months since we first heard them during the course of the passage of the Act—
Lord Kingsland: My Lords, I am at least grateful for having been exhibited as a man of principle.
Lord Falconer of Thoroton: My Lords, that is what I would expect of the noble Lord, Lord Kingsland.
This is the Second Reading of the Bill and therefore it is not for us to go into detailed textual criticisms of the measure. However, there are some flaws that are so fundamental that I believe they should influence our views even at this stage.
We had three main reasons for rejecting these measures when they came before us last time, and none of those has changed, except to become stronger and more relevant. First, and most importantly, they are unnecessary. Secondly, the proposals are not in a number of details—I have referred to these—the same as those of the Government. Thirdly, they do not begin to address the real complexities of what they are trying to achieve.
I hope that I may once again set out the background of the Government's commitments—which have been made repeatedly and publicly—against which this Bill should be judged. They are the commitments which we are already fulfilling. First, there are our commitments about the overall shape and structure of this House over the lifetime of the transitional House. We have pledged not to seek more than broad parity with the main Opposition party. We still have 34 fewer Peers than they do. We have pledged that there shall be creations for other parties proportionate to their share of the vote at the previous general election. All of that has been made clear and the only person who appears to have missed those commitments is the noble Lord, Lord Strathclyde. Therefore, in the previous round, the Liberal Democrats were offered more than twice as many new creations as the Conservatives and a 17 per cent increase in their membership compared with an 11 per cent increase in the Government's. We have pledged not to interfere in the recommendations of the other political parties except on the grounds of national security. Your Lordships have a 11 recently seen the effect of that pledge in action.
Most significantly for the purposes of this debate, we have pledged to set up an appointments commission to take on the job of producing names for non-political Peers, and to vet all peerages for propriety. We undertook that this body would be

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established in accordance with the rules of the Commissioner for Public Appointments; that means through an open recruitment process. Again, all of that has been made clear and has been made public in an entirely appropriate way.
Lord Strathclyde: Not in Parliament!
Lord Falconer of Thoroton: My Lords, it was in a White Paper. I understand that the point that is now being made by the noble Lord, Lord Strathclyde, from a sedentary position, supported by the noble Baroness, Lady Blatch, is not that he did not know about the relevant matters but that they were not made in a statement to Parliament.
The Government are proceeding with the appointment of a non-statutory commission. Noble Lords will be aware of the extensive public exercise which we undertook in order to identify and invite a wide range of names for consideration as members of the commission. We recruited in January a specialist recruitment agency to help with the process. This has been criticised. The Government think that that is money well spent to ensure that the widest possible field of candidates is considered. It demonstrates our commitment to the process of open recruitment. We advertised publicly in the national, regional and ethnic press last February. A distinguished panel of people, including a Member of your Lordships' House, is sitting with the Cabinet Secretary to identify names for the Prime Minister's consideration. The appointments process is making good progress. The Prime Minister will announce his decision on the membership of the commission when he is ready to do so. He still hopes that this will be around Easter, as planned; but the important thing is to get the right people for the job. I think we would all agree on that.
The noble Viscount, Lord Bledisloe, who, sadly, has had to leave, asked me a number of specific questions about the work of the Government's appointments commission of which he was good enough to give me notice in a letter of 12th April. Many of these questions were echoed by the noble and gallant Lord, Lord Craig of Radley. As I have already said, I confirm that it is the Government's intention that during the lifetime of the transitional House the non-political Peers will form a fairly constant percentage of the House. That percentage is around its present level. Effectively, therefore, the quota, as the noble and gallant Lord put it, has already been fixed and there is no need for either the Government or anyone else to do so in the future.
Most of the noble Viscount's other questions—and those of the noble and gallant Lord, Lord Craig of Radley—were directed to the appointments commission itself. He asked whether there would continue to be any purely honorary life peerages in the future. The Government have said that once the appointments commission is up and running all nonpolitical peerages will in future be recommended by the appointments commission. It will be up to that body whether, in any particular round, it wishes to recommend someone who traditionally might have
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hoped for a peerage by virtue of his or her professional position. The existence of such candidates is, by their nature, likely to be known well in advance. Some people may, of course, decide to make a contribution to the work of the House which would qualify them anyway for the definition of a "working Peer". The distinction is not necessarily clear cut. I believe that that was recognised in the speech of the noble and gallant Lord, Lord Craig of Radley.
The same applies to those who may covertly have marked political sympathies. It will be up to the commission to decide how it wants to probe such questions and what notice to take of them. The Prime Minister will continue to determine the number of nominations he will seek from the commission, but in the context of the proportions that I have indicated.
Finally, the noble Lord and the noble and gallant Lord asked why the Convenor of the Cross-Bench Peers was not being asked to nominate a member of the appointments commission. The Government decided that the independent interest would best be represented by those recruited directly by open competition. Political interests, of course, can only be represented by those nominated by their parties.
As I have said, the Bill is unnecessary, irrelevant and a complication. By the time that this Bill could complete its passage, even through your Lordships' House, the appointments commission will be well established. This Bill would add nothing to the situation. Instead, if it ever became law, it would be an unnecessary complication. It would mean inflexibility, confusion and would add no practical strength to the commission's status.
It is claimed that these are the Government's own proposals and therefore we should have no objection to legislating for them. That is what the noble Lord, Lord Kingsland, said. There is a world of difference between the language that is suitable for a White Paper—which is where the noble Lord, Lord Kingsland, has mostly quarried for his Bill—and that which is needed for a Bill. The White Paper proposals are not drawn up as a statutory blueprint; they cannot just be lifted verbatim and put into statute. Legislation needs to cater for all foreseeable circumstances. A non-statutory arrangement can lay out broad principles. If specific circumstances arise which have not obviously been catered for, it is probably possible to devise a satisfactory solution from those broad principles. That cannot be done with legislation. In many respects, that is the way in which our constitution has always advanced in the past.
There are gaps in these provisions. For example, they contain no commencement date or transitional provisions. Yet, by the time the proposals made in the Bill of the noble Lord, Lord Kingsland, could become law, the interim appointments commission will be well established. What is to happen to it? The Bill would require it to be disbanded and the commission envisaged by the Bill put in its place. This is likely to be a mess, to put it mildly, and a waste of resources. The whole recruitment exercise would have to be done again. Meanwhile, for a period of perhaps three

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months, there would be no commission at all—no means of vetting political Peers and no means of nominating Cross-Bench Peers. The knock-on effects, as the new commission settles down, could last longer.
So the consequences of the Bill proposed by the noble Lord, Lord Kingsland, would not be to strengthen the position of the present appointments commission but to undermine it. If it looked as though it was going to be replaced shortly, no one would take it seriously. It might he argued that, in practice, the existing commission would continue seamlessly into the statutory one, with the simple addition of a Cross-Bench nominee, but no one can possibly guarantee that.
The Bill requires the Speaker of the other place and the Chairman of Committees to join the Prime Minister in choosing the members. I am somewhat surprised that your Lordships are prepared to contemplate the idea that the Speaker of the other place should have a role, albeit at second hand, in selecting the Members of this House.
Lord Strathclyde: Better than the Prime Minister at first hand.
Lord Falconer of Thoroton: My Lords, I am sorry. I thought I heard the noble Lord, Lord Strathclyde, say something from a sedentary position.
Lord Strathclyde: My Lords, I said, sotto voce, "Better than the Prime Minister at first hand".
Lord Falconer of Thoroton: My Lords, I thought that we had established that that was not the noble Lord's complaint. I thought his complaint was about whether or not it was statutory. I am not quite clear where the Opposition now stand on this issue.
How can we possibly say at this stage that they will endorse his choices? But what is the point of treating them as a simple rubber stamp? What about the position of the chairman, separately recruited but now to be subject to the election of his or her fellow members? Would a seamless transition in any case be consistent with the requirements of the proposed subsection (2)(a)?
What about one of the further embellishments of the requirements—which is not taken from the Government's own proposals—that all members of the commission should be "members of the Privy Council"? When pressed as to why that was, even the noble Lord, Lord Kingsland, put his arguments with his tongue in his cheek. To say that they are the only people in the world for whom ambition is vanquished seemed, if I may say so, somewhat humorous. The noble Lord, Lord Goodhart, clearly demonstrated—perhaps "fatuity" is an unfair word—that it was not a sensible suggestion.
Lord Kingsland: My Lords, if the noble and learned Lord takes the trouble to read Hansard—he may or may not—he will see that I did not put it quite like that.
Lord Falconer of Thoroton: But almost.
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The natural reading of that is that they, the members of the commission, must be members of the Privy Council before appointment. How would that be factored into a situation where existing members of the commission may not be Privy Counsellors? Further, what would be the consequences of a failure by the commission to make the appointments required by subsection (4)? What happens if the Prime Minister breaches the requirements of subsection (5)? Or what happens if any of the people who are to make appointments under subsections (8) and (9) fail to do so? Can the commission not be established at all? Where are the teeth in the Bill? How can it be enforced?
The answer is that it cannot be, as it stands, and it is inherently difficult to see how it ever, could be. We cannot prevent the Prime Minister advising the Queen, since she must seek the advice of her Ministers. We cannot force him to advise her in a particular way. The Prime Minister's commitments in this area do all that is necessary. To the extent that the objective of this Bill, as it was the objective of the amendment to the House of Lords Act, is to ensure that the Government do establish an appointments commission, then it is completely redundant.
Some noble Lords—indeed, it would appear to be the only point being made by the noble Lord, Lord Strathclyde—have spoken in support of the Bill on the grounds that provision of this kind ought to be statutory. That brings me to the argument that the provision is unnecessary on legal grounds. As we have explained many times before, it is quite normal to set up this kind of body as a non-departmental public body without statutory backing. That does not affect either its standing or its effectiveness and it provides that degree of flexibility which is appropriate for the beginning of such a body.
Nor, I would submit, would it affect the commission's continued existence. A body such as we are setting up will rapidly become an accepted part of the political landscape. Look at the Committee on Standards in Public Life. It is a body which the noble Lord, Lord Strathclyde, obviously does not like. I do not know why. It is impossible to imagine our public life without it, yet its only right to existence is the statement in another place of the then Prime Minister, the right honourable Member for Huntingdon, that he proposed to appoint it. It would be impossible for any Prime Minister now to disband that committee without replacing it with something stronger. The same will rapidly become true of the House of Lords appointments commission. It does not need statutory backing to secure its continued existence.
Many of those who have pressed the case for a statutory commission seem to have been motivated by the desire to take the Prime Minister out of the process. That appeared to be, in one or other moments of the noble Lord's speech, his point. The two things are, of course, quite separate. It is quite possible to have a statutory process which accords a central place to the Prime Minister. Conversely, the Government's own proposals already take the Prime

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Minister out of the process so far as it is proper to do so without a complete change in the relationship between membership of this House and the monarchy. The latter, I admit, would require statutory provision, and provision which the Bill before us does not adequately make.
At the end of the day, it is the sovereign who awards peerages. Generally, legislation does not trespass into the delicate area of relations between the sovereign and her Ministers. This is not an issue which can be addressed simply by the introduction of amendments to the Bill presently before us. The Bill would almost certainly require to be completely rewritten. The implications of statutory provision in this area are such that it should not be embarked on as a by-product of a provision which is only temporary, as this one would be. Is a statutory commission to be answerable to anyone for its recommendations for the award of honours? By convention, the Prime Minister is not.
Your Lordships might argue that all these points could be addressed once the Bill went into Committee. I am suggesting that there are too many of them for it to be worth while even embarking on the exercise. What is the point of going to all that trouble to make statutory provision for an arrangement that will be only temporary—which, as I have said, is not necessary in order to see an appointments commission established and which would interrupt the work of the appointments commission that the Government are already setting up. Even if they were addressed, the shadow that would be cast over the existing commission would continue to exist.
Moreover, if the Bill were to reach the other place, and if it were to find time there, we should be advising our honourable and right honourable friends to vote against it. Your Lordships therefore risk wasting a great deal of time for no purpose. As we have established in lively debate, all that the noble Lord is asking for is statutory backing. I hope that I have satisfied your Lordships that there is no need for statutory backing to achieve precisely the purposes that the noble Lord requires. I earnestly suggest that, as a man of principle, the noble Lord, Lord Kingsland, will think that this is not a sensible way to spend the time of the House; namely, going through a Bill that achieves next to nothing and simply detains the House.
Lord Ampthill: My Lords, before the noble and learned Lord sits down, as a Cross-Bencher who has not taken part in the debate perhaps I may ask him a question. He dismissed in a few words the idea that the noble and gallant Lord the Convenor of the Cross-Benches should play a part. Cross-Benchers find that somewhat hard to understand when the parties are to be represented. As the noble and learned Lord spoke so briefly on the subject, will he give a reason?
Lord Falconer of Thoroton: My Lords, I apologise for perhaps not going into the matter enough. The
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political parties have a role in the process because they are in effect directly nominating people to be Members of this House. The Cross-Benchers are not nominating people to be Members of the House; it is for the appointments commission to do that under the new arrangements. The independent element on the appointments commission is not to come from the Cross-Benches in this House. It is to come from the members of the commission, appointed on an independent basis. On that basis, it seems much more appropriate that it is the members of the commission, appointed as independent members, who should sit on the commission rather than someone appointed by the Convenor of the Cross-Benches. That is the thinking behind not having the Convenor of the Cross-Benches as someone who nominates a member of the appointments commission. He is in a different position from the members of the main parties, who would send people directly, subject of course to their being vetted for propriety by the appointments commission.
Lord Ampthill: My Lords, I apologise to the House for intervening again; it is Friday afternoon and it is getting late. But Cross-Benchers are feeling a little sensitive at this juncture that others are to have a go at deciding who joins our Benches, whereas those others are able to take care of themselves. I cannot see the great harm that would arise from either the Convenor or his representative being part of this process.
Lord Falconer of Thoroton: My lords, ten minutes to four on a Friday afternoon is not the time to deal with this matter. We have both put our points of view clearly.
3.48 p.m.
Lord Kingsland: My Lords, I have listened with great interest to the noble and learned Lord's speech, as he would have expected. Having heard his reasons, which were legion, for rejecting a statutory appointments commission at the transitional stage, I look forward eagerly to hearing his reasons for appointing a statutory appointments commission at stage two.
I have been asked many questions during the debate and I am keen to give all of them a detailed reply. However, since I hope your Lordships will give the Bill a Second Reading, the opportunity to do so will wait, I trust, until the Committee stage.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Pneumoconiosis etc. (Workers' Compensation) (Payment of Claims) (Amendment) Regulations 2000
3.49 p.m.
Lord Bach: My Lords, on behalf of my noble friend Lord Whitty, I beg to move the Motion standing in

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his name on the Order Paper. These regulations are made under the Pneumoconiosis etc. (Workers' Compensation) Act 1979. Their purpose is to increase by 2.5 per cent the amount of compensation paid under the Act to those who first satisfy all the conditions of entitlement on or after 1st June 2000.
The 1979 Act, which was introduced by the previous Labour government, provides for lump sum payments to be made to sufferers from certain dust-related diseases, or, when the sufferers have died, to their dependents, where there is no realistic chance of success through the courts. All noble Lords recognise that no amount of money will ever compensate individuals and families for their suffering and loss. These regulations, however, allow us to ensure that the compensation provided for in the original Act maintains its value.
The purpose of the regulations is to increase by 2.5 per cent the amounts of compensation paid. The human rights aspects of these regulations have been considered and I am confident that they comply with the Human Rights Act. As was said by my colleague the Minister in another place, I am grateful to the Opposition because, although I am ready to speak for longer, they have indicated that they are prepared to accept the Motion.
Moved, That the draft regulations laid before the House on 20th March be approved [14th Report from the Joint Committee].—(Lord Bach.)
The Earl of Courtown: My Lords, I thank the Minister for describing the regulations, with which we on these Benches are in complete agreement. Perhaps the Minister will spend a few moments explaining the increase this year compared with the time when the matter last came before the House.
Lord Bach: My Lords, as I understand it, the increase is in line with inflation, in precisely the same way as before. That is exactly how the regulations have worked in the past and are intended to work. Perhaps the noble Earl did not hear me clearly. It is essential that year by year those who have suffered, or whose dependents have suffered, do not suffer further because of inflation. That is the precise reason why the figure chosen on this occasion is as it is.
On Question, Motion agreed to.

Access to Justice Act 1999 (Destination of Appeals) Order 2000
3.53 p.m.
Lord Bachrose to move, That the draft order laid before the House on 22nd March be approved [14th Report from the Joint Committee].
The noble Lord said: My Lords, the Access to Justice Act 1999 (Destination of Appeals) Order 2000 is made under Section 56(1) of the Access to Justice Act 1999. The order makes amendments to existing routes of appeal. In his report Review of the Court of Appeal (Civil Division) published in September 1997,
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Sir Jeffery Bowman made recommendations for the same principles of proportionality and efficiency inherent in the civil justice reforms generally, to be applied equally to the workings of the civil appeals system.
Appeals affect three sets of rights. First, they affect the rights of the party who wishes to appeal. They also affect the rights of the other party who holds a judgment in his favour and wishes to resist the appeal. Finally, they affect the interests of other court users and the public interest in the Finality of litigation. An effective appeals system needs to balance these rights by ensuring that appeals are dealt with in ways that are proportionate to the grounds of complaint and the subject matter of the dispute. So far as is practical, it should also ensure that uncertainty and delay are reduced to a minimum. At some stage there must come an end to litigation. The question ever is: when and how? A fundamental part of the drive for proportionality is the need for appeals to be heard at the level most appropriate to the nature of the case. This order implements that sensible objective.
It is proposed to bring it into force at the same time as new rules for civil appeals which are to be introduced on 2nd May. The new rules strip away the existing confusing patchwork of appeal provisions and replace them with a common procedure.
This order does not apply to appeals in family proceedings. They are the subject of a separate consultation exercise which will end in late April. Amendments to family routes of appeal will then be considered in light of that exercise.
I turn to the changes the order will introduce. The changes were proposed in a consultation paper published in July 1998. The proposed routes of appeal were described, as noble Lords will well remember, during the passage through Parliament of the Access to Justice Bill and were set out in the Explanatory Notes to the Act. The order reflects those proposals. It provides, in Articles 2 and 3, for the following routes of appeal: from a decision of a district judge to a circuit judge; from a decision of a master, registrar or district judge of the High Court to a High Court judge; and from certain decisions of a circuit judge to a High Court judge.
The first two routes of appeal reflect existing practice set out in rules of court. These rules will be revoked from 2nd May by the Civil Procedure (Amendment) Rules 2000. It is necessary, therefore, to provide for these in this order. The third route of appeal mentioned is new, and provides the proportionality within the appeals structure which will ensure that appeals are heard at the correct level. Appeals that are heard at too high a level result in greater expense for the parties and more delay, which affects both the parties and other cases which ought to be heard by that appeal court.
The introduction of a new route of appeal from the circuit Bench to the High Court Bench means that some appeals, previously disposed of by the Court of Appeal, will in future be dealt with by the High

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Court. This is in line with the recommendations of the Bowman report which found the Court of Appeal was being asked to consider numerous appeals which were not of sufficient weight or complexity to merit the attention of some of our most senior judges.
So as not immediately to overload the High Court, some appeals from the county court will continue to be heard by the Court of Appeal. This is as a result of Article 4. The article provides that final decisions in multi-track cases and certain specialist proceedings are to be appealed to the Court of Appeal irrespective of the court of first instance. Although the majority of these cases will be determined either by a High Court judge or a circuit judge, the article will also embrace decisions of district judges and Masters of the High Court: for example, where the parties consent to a master or district judge hearing a multi-track case. The flexibility provided by the use of an order-making power will enable the Lord Chancellor to keep under review the appropriateness of such appeals to the Court of Appeal, and to make any further necessary changes.
Other provisions of the Access to Justice Act continue to ensure that those cases which merit the attention of the Court of Appeal will continue to receive it, irrespective of the designated route of appeal. These are set out at Section 57 of the Access to Justice Act. That section provides that the Master of the Rolls or a court may direct that an appeal that would otherwise lie to a county court or High Court should be heard instead by the Court of Appeal.
Article 5 makes it clear that, irrespective of the above routes, an appeal from any decision which was itself made on appeal to a county court or High Court must be made to the Court of Appeal, thus providing that the stricter test for second appeals in Section 55 of the Access to Justice Act will apply. This should ensure that, save in wholly exceptional circumstances, there should be only one appeal.
Articles 7 and 8 make consequential amendments to Section 16 of the Supreme Court Act 1981 and Section 77 of the County Courts Act 1984. These sections set out general provisions for appeals from the High Court and county courts. The order, however, is subject to any other enactment that provides a different route of appeal.
In accordance with Section 56(4) of the Act, the Lord Chancellor has consulted with the four judicial heads of division: the Lord Chief Justice, the Master of the Rolls, the President of the Family Division and the Vice-Chancellor. They are all content with the order.
Finally, let me make it plain that it is the Lord Chancellor's view that the order is compatible with the European Convention on Human Rights. I commend the order to the House.
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Moved, That the draft order laid before the House on 22nd March be approved [14th Report from the Joint Committee].—(Lord Bach.)
Lord Goodhart: My Lords, as the noble Lord the Minister knows, my colleagues and I on these Benches disagreed with many parts of the Access to Justice Bill. However, we fully supported the parts that dealt with the appellate procedure, and certainly in so far as the order implements those provisions we entirely support it.
There is no doubt that the Court of Appeal is currently seriously overloaded and that many cases that go to it simply do not justify its time. I believe that historically appeals from the county court used to go not to the Court of Appeal, but to a divisional court of the High Court, so in a sense this is returning to earlier practice. Perhaps the noble Lord will confirm my assumption that what is envisaged is that the appeal will go to a single judge of the High Court and not to a divisional court.
My only other point concerns Article 5. Where an appeal has gone from a district judge to a circuit judge in the county court, I am not clear why any further appeal should go to the Court of Appeal rather than to the High Court. Is it because only the Court of Appeal has the power to refuse on the grounds that the circumstances are not exceptional, or is there some other reason? If there is not, I cannot see why the order should not be strengthened by providing that the second appeal, if there is to be one, should go to the High Court rather than the Court of Appeal.
Subject to that, we are entirely happy to support the order.
Lord Kingsland: My Lords, the Opposition are also happy to support the order. As the noble Lord, Lord Goodhart, said, an important part of the Access to Justice Bill was to alter the basis on which appeals were entertained: but, as he also said, it was one of the least controversial parts of the Bill.
I note that the noble Lord, Lord Bach, stated that the noble and learned Lord the Lord Chancellor has certified that the order is in conformity with the European Convention on Human Rights. As he also said, the opportunity to appeal must be proportionate to the grounds of complaint. No doubt if the Government have got the question of conforming with the convention wrong, somebody will make an appropriate challenge.
At the time of the adoption of the order increasing the number of High Court judges, I asked the noble Lord, Lord Bach, whether there were any signs of similar pressures on the Court of Appeal that might lead the Government to increase that court's membership. Would it be fair to say that this order is an alternative way of dealing with such pressures?
Lord Bach: My Lords, I am very grateful to both noble Lords for their general support for the order, support which is not entirely unexpected. I shall try briefly to answer the questions that they properly raised.

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My reply to one of the questions asked by the noble Lord, Lord Goodhart, is that the appeal will be to a single High Court judge, sitting on his own or her own.
As regards a second appeal going only to the Court of Appeal, and not via a High Court judge, appeals are now limited to two levels of appeal. Section 55 of the Act introduces a stricter test for permission, and second appeals will be restricted to those that merit the attention of the Court of Appeal. That is why the order is phrased as it is.
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I turn to the concerns expressed by the noble Lord, Lord Kingsland. The order deals with appeals going to the correct level, not with judicial resources. I wrote to the noble Lord about the position of, the Court of Appeal. I do not have the letter in front of me and I suspect that he does not either. However, the comments he made today will be noted and if there is more up-to-date information I shall ensure that he has it. He should not link this order with that issue. I commend the order to the House.
On Question, Motion agreed to.
House adjourned at five minutes past four o'clock.