Lords Sitting of 4 July 2000

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

CPA Conference: Government Representation
Lord Ponsonby of Shulbrede Lord Ponsonby of Shulbrede asked Her Majesty's Government:
What part the Government and the Prime Minister will play in the meetings of the Commonwealth Parliamentary Association to be held in London and Edinburgh in September.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): My Lords, as is customary, a Minister will lead the UK delegation at the Commonwealth Parliamentary Association's annual conference in September. My honourable friend the Parliamentary Under-Secretary of State at the Department for International Development, Mr Foulkes, will take on this role. In addition, my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs will attend the opening ceremony and give a speech at the opening plenary session.
Lord Ponsonby of Shulbrede: My Lords, I thank my noble friend for that Answer. I am pleased to hear that so many government Ministers will be represented at the conference. What are my noble friend's hopes for the high level group of Ministers which will meet at the conference? What aspirations does she have for this series of meetings?
Baroness Scotland of Asthal: My Lords, we very much welcome the important CPA meeting which is an opportunity for parliamentarians from the Commonwealth to come together to discuss issues of real importance. At the Commonwealth Heads of Government meeting in Durban Ministers agreed to establish a high level group to review the role of the Commonwealth and advise how best it could respond to the challenges of the new century. The group has not yet met but the first official level meeting is planned for late July in Pretoria, South Africa. The Permanent Under-Secretary of State, Sir John Kerr, will represent the UK at that meeting. It is hoped that the Heads of Government will meet in September in New York.
Lord Howell of Guildford: My Lords, does the noble Baroness agree that the Commonwealth today should increasingly be regarded as a valuable resource and a network to serve both global and British interests? Does she accept—this is not a party point—that when the Foreign Secretary came to office his mission statement, which gave high priority to the
1380
Commonwealth, raised a number of expectations? Does she think that those expectations have been fulfilled? Can she say precisely whether more or fewer people are now employed in the Commonwealth section of the Foreign Office than was the case three years ago?
Baroness Scotland of Asthal: My Lords, the noble Lord is right to highlight the mission statement made in 1997 by my right honourable friend. He gave a commitment to strengthen the Commonwealth and to improve the prosperity of its members and co-operation between them. Her Majesty's Government have delivered on that promise and have done much to strengthen it. I cannot give the precise numbers of people working in the various sections of the Foreign Office. However, since 1997 our ability to work with our Commonwealth partners has been strengthened and we have gained much from that. It is an initiative that we intend to continue to pursue with increasing vigour.
Baroness Williams of Crosby: My Lords, given that the Commonwealth is a unique association of both developed and developing countries, will the Minister consider suggesting to the Commonwealth Secretariat that it might be useful to provide some of the legal and expert assistance that developing countries desperately need in their negotiations with the World Trade Organisation? Will she consider suggesting that that might be one of the most useful roles that the Commonwealth could fulfil in the first decade of the new century?
Baroness Scotland of Asthal: My Lords, I certainly join with the noble Baroness in highlighting the need for legal and expert assistance. At the Heads of Government meeting it is hoped that there will be a review of the role that should properly be played by the Commonwealth in the next century. We hope that officials will take that matter forward in South Africa and that it will be pursued in September. I assure the noble Baroness that our endeavours will be focused on ensuring that the best opportunities are reaped from the association with the Commonwealth.
Lord Wallace of Saltaire: My Lords, I am delighted to hear that the Prime Minister and the Foreign Secretary will attend the Commonwealth parliamentary meeting. Can we be assured that diaries will have room to enable meetings to take place with representatives of other governments and to make necessary ministerial visits? The noble Baroness will be well aware that the Foreign Minister had to cancel his visit to Warsaw the other weekend, as I believe that she went instead. The Prime Minister has cancelled two visits to Warsaw in the past year. I understand that there is a queue of Prime Ministers from applicant countries of eastern Europe who await an opportunity to visit London to talk to our Prime Minister. There is a general sense, particularly in the east European countries, that British Ministers do not have time in

1381
their diaries to allocate to this important aspect of British foreign policy. Will the Minister give us encouragement on that matter?
Baroness Scotland of Asthal: My Lords, Her Majesty's Government have taken every opportunity to see Heads of Government. The noble Lord will know that a huge amount of work has been carried out recently in the international sphere because of the security issues that have been uppermost in people's minds. I assure the noble Lord that the Government will continue to make every effort to meet Heads of Government as we understand that it is a priority.
Lord Avebury: My Lords, will there be any discussion at the CPA meeting or in the margins on compliance with the Harare Declaration? Have the Government any new proposals on mechanisms to ensure that Commonwealth countries will observe its terms once they have signed up to it?
Baroness Scotland of Asthal: My Lords, I hope that the whole House will understand the nature of a CPA conference. It provides an opportunity for parliamentarians throughout the Commonwealth to come together to discuss matters which are of importance to them in relation to their regions and for the regions to come together to discuss those issues. We hope that good, positive lines that can be followed thereafter will come out of the conference. But its most important role is as a vehicle which enables Commonwealth parliamentarians to come together to discuss and consider how best to help one another.

Pathologists
2.42 p.m.
Baroness Sharpies Baroness Sharpies asked Her Majesty's Government:
How they propose to alleviate the shortage of pathologists in the National Health Service.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, we are taking action to alleviate the shortage of pathologists across the workforce. We are continuing to invest in more higher specialist trainees. In addition, the medical workforce planning review, launched in April this year, will look at the staffing needs of different care groups to meet the needs of patients.
Baroness Sharpies: My Lords, I thank the noble Lord for that Answer. However, can he tell us the shortfall? As it takes a qualified doctor another five years to become a pathologist, is not this shortfall of great concern?
Lord Hunt of Kings Heath: My Lords, there is no doubt that pathologists have an extremely valuable role to play in the National Health Service. There have been concerns in relation to shortages, especially in
1382
relation to histopathologists. We are dealing with this as rapidly as we can. We shall increase the number of specialist registrar training places from 888 at the moment to 1,300 by 2006; that includes 40 extra specialist registrar training posts this year. That will go a long way towards dealing with the shortages. We shall keep the matter under annual review.
Lord Taylor of Blackburn: My Lords, is my noble friend aware that we are dealing in a very competitive area, in which salaries in the private sector are far higher than those in the National Health Service? With all the good will in the world, unless an adjustment is made to that particular salary scale it will be extremely difficult to fill many of the vacancies.
Lord Hunt of Kings Heath: My Lords, my noble friend raises a number of issues. Clearly consultant pathologists receive the same salary as other consultants in the health service; they are also eligible for discretionary points. So far as concerns the pay levels of staff generally, I believe that, through the pay body recommendations and other awards that have been given to staff, we have fully recognised their value. For example, we have taken into account the recommendations of the pay review bodies, and have thus ensured that the amounts recommended have been paid in full. That is in contrast to the staging system with which the previous government so disenchanted members of staff. We have to do much better in terms of the support that we give to staff, including professional development and other support measures.
Lord Clement-Jones: My Lords, the Minister referred to the number of training places that are being created—and, of course, they are welcome but, as his own consultation document, A Health Service of all the talents: Developing the NHS workforce, acknowledged, the rule whereby 50 per cent of the cost of those training places must be borne by the trusts is one of the key problems in manpower planning at the moment. What can the Minister say about that? What has been the result of the consultations, which were due to finish in mid-June?
Lord Hunt of Kings Heath: My Lords, in essence, a national levy provides 50 per cent of the basic salary costs for senior house officers and specialist registrars. NHS trusts have to find the remainder of the costs. I recognise that this is a particular issue and that there have been concerns that some trusts were not prepared to fund the extra number of specialist registrar places. I am glad to say that trusts have indicated that they wish to take up the 40 extra places which will be coming on-stream this year. We shall, of course, keep the situation under review. We have made it clear to NHS trusts that we expect them to invest in these posts.
Baroness Trumpington: My Lords, forensic pathology plays a very important part in dealing with crime. Is there a shortage of forensic pathologists?

1383
Does that impact on the National Health Service? I should declare an interest as an honorary Fellow of the Royal College of Pathologists—why I do not know, except that I feel it may have designs on the two kippers that I call my lungs.
Lord Hunt of Kings Heath: My Lords, the royal college has certainly chosen well. The main shortage is in relation to histopathologists, whose role is to examine human tissues and undertake post mortems. I am not aware of the statistics in relation to forensic pathologists but I shall be happy to look into the matter further. My understanding is that the key problem is in relation to histopathologists, where we wish to see a large increase in the number of specialist registrar posts.
Lord Turnberg: My Lords, does my noble friend agree that the major problem concerns recruitment into histopathology? There are currently more than 100 unfilled histopathology posts in the UK, which is 10 per cent of the total. The problem goes back to recruitment into the training grade posts and the funding issue to which my noble friend referred. Does the Minister agree that the Government should focus their efforts on enhancing recruitment into the specialty and on ensuring that the trusts fund those posts?
Lord Hunt of Kings Heath: My Lords, I do not disagree with any of the points raised by my noble friend. Certainly the increase in the number of specialist registrar training places is based on the assumption that they will be funded by NHS trusts—which I fully expect them to be. That will mean that more people will be coming through in the future to fill consultant posts. Equally, I accept that we need to attract medical students into considering pathology as a suitable specialism for them to enter. We are working well with the Royal College of Pathologists. We need to work together to show medical students the attractions of the pathology profession. I believe that pathologists have a very important role to play in the NHS.
Earl Howe: My Lords, last year the Government announced a £10 million capital fund for modernising pathology services in the NHS. Can the Minister say whether all that money has been allocated and whether he thinks that £10 million is adequate?
Lord Hunt of Kings Heath: My Lords, we need to invest in pathology services. At the moment the National Health Service has a high level of pathology services, but there has been under-investment. Certainly in the future we need to look at ways to ensure that resources are made available in order to develop those services and to ensure that the quality of the kit and the actual facilities are of a high standard. In terms of future investment, within the national plan
1384
we are in the process of developing proposals for services. Inevitably we shall be looking at pathology developments within that.
Baroness Sharpies: My Lords, the noble Lord did not answer me when I asked him about the shortfall.
Lord Hunt of Kings Heath: My Lords, I do not have specific figures for a shortfall. Those are issues which fall to be dealt with locally. But I have said that I believe that the increase in the number of specialist registrar training places will enable us to overcome many of the problems that undoubtedly are occurring at the moment.

Agency Nurses: Percentages
2.51 p.m.
Baroness Masham of Ilton Baroness Masham of Ilton asked Her Majesty's Government:
What percentage of nurses employed in London hospitals are agency nurses.
Lord Hunt of Kings Heath: My Lords, no data are collected on the number of agency staff working in London at any one time. But the Government have already indicated in their response to the Health Select Committee that the NHS needs to reduce its dependency on temporary staffing. We are ensuring that it takes action to do so.
Baroness Masham of Ilton: My Lords, I thank the Minister for that rather inadequate reply. Does he agree with me that sometimes agency nurses with inadequate training are placed on highly specialised wards? Does he further agree with me that this puts patients in a vulnerable position? The nurses feel inadequate. When will sisters come back to work on the wards to give this much needed instruction?
Lord Hunt of Kings Heath: My Lords, sisters play a vital role in leadership in wards. The Government are determined to give as much support as they possibly can to their work. I fully accept the noble Baroness's point. We must ensure that when agency nurses are placed in ward situations they are suitably qualified and are able to accept the responsibility placed on them. Part of the work that we are undertaking, both at national level and in London, is to ensure that we develop good practice so that trusts use agency nurses appropriately where they have to be used, and to ensure that we have other mechanisms by which trusts—perhaps through nurse banks, sharing services between different trusts—can reduce the need for agency nurses.
Lord Campbell of Alloway: My Lords, may I respectfully direct the Minister to the Question and ask him whether he would be good enough to answer it and refrain from bamboozling this House with verbiage?
Lord Hunt of Kings Heath: My Lords, I think that I did answer the Question. I said that no data have been

1385
collected on the number of agency staff working in London at any time. The issue is a serious one. An analysis of the amount of money spent by NHS trusts on agency staff indicates that in London it varies as a percentage of employee costs from between 2 per cent and 15 per cent, with an average of around 9 per cent. It is the Government's contention that while there will always be a need for agency nurses, that figure is too high and we need to reduce our dependency; hence the work both in London and nationally to deal with the problem.
Lord Morris of Castle Morris: My Lords, can my noble friend kindly explain why an efficiently run National Health Service needs to use any agency nurses except in cases of dire emergency? Could it be the result of bad planning in the past?
Lord Hunt of Kings Heath: My Lords, the party opposite has a good deal to answer for. It has a good deal to answer for as regards its decision in the 1990s to reduce the number of nurse training places. Noble Lords will know that we have reversed that trend and increased dramatically the number of nurse training places. In answer to my noble friend I would say that there will always be a need for some agency staff—to cover increased demand for staff when it is uncertain how many staff one needs, periods of high activity and to cover holiday periods and sickness. I would say also that when nurses return to work as nurses, which we want to encourage, there is some evidence that many of them prefer to return through agency nursing programmes. The way to tackle this issue is: first, to increase our efforts to recruit more nurses—and that is happening—secondly, to increase the number of nurse-training places—and that is happening—and, thirdly, to increase the use of nurse banks—and that is happening. In combination, I think that we can reduce the number of agency nurses.
Lord Clement-Jones: My Lords, the Minister referred to the success of the nursing recruitment drives. The fact is that in the past year the cost of agency nurses has increased on a national basis from £264 million to £344 million. It was recently reported that we are recruiting nurses from as far afield as China. Surely the Minister cannot claim that that is a success.
Lord Hunt of Kings Heath: My Lords, the national nurse recruitment campaign has been successful. For instance, nearly 14,000 qualified nurses and midwives have approached their local education consortia for information about either becoming nurses or returning to nursing and 3,845 nurses and midwives have already returned to employment in the NHS in England. A further 2,000 are preparing to join them after completing refresher training. With regard to the recruitment of overseas nurses, the health service has always recruited nurses from overseas. That has been beneficial both to the UK and to those countries. It has
1386
enabled links to be maintained. It helps our health exports. It is done on an ethical basis. I see no problem with that.
Lord Roberts of Conwy: My Lords, with regard to returning nurses, is it not a fact that when nurses leave the NHS and return at a later stage they take up their jobs at a lower salary than when they left? Would it not be extremely helpful in terms of keeping up NHS nurse numbers if that problem was looked at?
Lord Hunt of Kings Heath: My Lords, I know that it is an issue which has been raised. It has also been raised in relation to nurses who, for instance, have perhaps left the NHS, gone to work abroad for some time and enhanced their experience and leadership skills but have then found it difficult when they came back to the NHS to be employed at their old grade. This is an issue which needs to be tackled both by individual trusts and by the various strategies we have in relation to nurse pay and conditions. There is no doubt that the quality of our nursing workforce is very high. We must reward them for that.

NHS: Planning for Single Currency
2.59 p.m.
Baroness Knight of Collingtree Baroness Knight of Collingtree asked Her Majesty's Government:
What instructions they have given to National Health Service hospitals to make funds available for preparations for Britain to join the euro.
Lord Hunt of Kings Heath: My Lords, as set out in the Government's second outline national changeover plan, the NHS is carrying out a measure of preplanning for the possibility of UK entry into the single currency. All parts of the public sector, including the NHS, need to plan for the possibility of UK entry to ensure that any changeover, if it takes place, takes place in a smooth and cost-effective way.
Baroness Knight of Collingtree: My Lords, is the Minister aware of the extreme concern being expressed by the trusts on this matter? Can he tell the House exactly how much money hospitals will have to contribute for this purpose? What proportion of that money are the Government providing? Does he not agree that a diminution of funds must inevitably mean a lessening of patient care? How on earth, anyway, will patients benefit from our joining the euro? Is not the NHS in enough trouble without adding this burden on top?
Lord Hunt of Kings Heath: My Lords, the NHS is not in trouble. It has just had an injection of a record amount of resources which will enable it to grow by one-third over four years. The noble Baroness referred to the concern expressed by trusts. It is difficult to find any issue in the NHS about which one individual trust is not deeply concerned. All that has happened is that each NHS organisation has been asked to consider and

1387
prepare plans in order for it to evaluate what it would take to embrace the changeover if that were to happen. With regard to expenditure, we would expect that task, which has to be completed by every organisation by the end of September, to be carried out by staff already working in the organisation.
Lord Marsh: My Lords, does the noble Lord accept that many people will be slightly puzzled by what is going on? What conceivable implication can membership of the euro have for good or ill for the National Health Service? It is simply another currency that might be carried by patients coming from France, Germany, China or anywhere else. I ask my question purely out of interest.
Lord Hunt of Kings Heath: My Lords, if at any stage it was decided that this country should enter the euro, that would have an impact on the National Health Service, particularly during a transitional period.
Noble Lords: How?
Lord Hunt of Kings Heath: In a number of ways, my Lords. For instance, on day one of entry into the EMU, if that were to happen, the NHS could expect to receive euro invoices. That might have to be covered by multi-currency financial systems. That would then require training for NHS finance staff. It might involve the organisation in dual pricing during the transitional period. That would have an impact on similar organisations. It is sensible that the NHS should be reflecting at the moment on what it would have to do if changeover occurred.
Lord Tomlinson: My Lords, is this not—
Lord Shore of Stepney: My Lords, perhaps I may—
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, there seems to be some competitive calling for both my noble friend Lord Tomlinson and my noble friend Lord Shore. Perhaps we may hear them both if they ask brief questions.
Lord Tomlinson: My Lords, is this not a simple question of sensible forward planning by a sensible public service? Do not the suppliers of the National Health Service already submit some of their invoices in euros? Are there not some circumstances in which we require to be paid in euros? Is not such a preparation a necessary basis on which people can carry out sensible planning and have a sensible choice in a referendum when it comes?
Lord Hunt of Kings Heath: My Lords, that is certainly a helpful intervention. We want a National Health Service that plans for the future. If this country decides to join a single currency it is important that the NHS is well prepared for it. The exercise that is taking
1388
place at the moment is to ensure that the NHS fully understands the implications so that if and when entry into the euro occurs it is able to do so.

Business
Lord Carter: My Lords, at a convenient moment after 3.30 p.m. my noble friend the Leader of the House will, with the leave of the House, repeat a Statement which is being made in another place on the Civil List. That will be followed by my noble friend Lord Bassam of Brighton who will, again with the leave of the House, repeat a Statement on football hooliganism.

Regulation of Investigatory Powers Bill
The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the amendments for the Report stage be marshalled and considered in the following order:
Clauses 1 to 29,
Schedule 1,
Clauses 30 to 47,
Schedule 2,
Clauses 48 to 63,
Schedule 3,
Clauses 64 to 80,
Schedules 4 and 5,
Clause 81.—(Lord Bassam of Brighton.)
On Question, Motion agreed to.

Government Resources and Accounts Bill
3.6 p.m.
Report received.
Clause 5 [Resource accounts: preparation]:
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 1:
Page 3, line 17, at end insert—
("( ) For the avoidance of doubt, any money paid by a government department to the New Millennium Experience Company shall be included in that department's accounts prepared under this section subject to the provisions of this Act.").
The noble Baroness said: My Lords, the Government will be aware of public concern about the funding of the Millennium Dome. The Dome is run by the New Millennium Experience Company. It became a non-departmental public body in 1997 when its shares were transferred to a government Minister. That is currently the noble and learned Lord, Lord Falconer of Thoroton, who is the sole shareholder of the NMEC. The company also remains a company under the Companies Act.
Over the past three years the finances of the Dome have been marked by a lack of transparency. My amendment tries to shine a little light on the

1389
relationship between the Government and the NMEC. A detailed analysis is for another day's debate and I am delighted that my noble friend Lord Lamont has a Dinner Hour debate on Wednesday 12th July on this very subject.
My amendment would make sure that every government department that had financial dealings of any kind with the NMEC would have to show those dealings in its accounts. One might ask why I am so cynical that I suspect that the accounts would not be transparent. The answer is that over the past year or so I have watched a drip-feed of money going to the Millennium Dome. Lottery funds are the public's money. Concern has been expressed about the manner and timing of those transfers of money.
Yesterday I looked at the website of the Department for Culture, Media and Sport. That still states that the NMEC,
"has an overall cash budget of £758 million to meet the costs of all aspects of the project".
That statement ignores the fact that so many extra amounts of lottery cash have been lent or given to the Dome—I am not sure which in many cases—over and above what was originally intended to be the investment—a good investment—from the lottery.
Earlier this year, the new chief executive, M. Gerbeau, denied claims that he was going to ask the Millennium Commission for another bail-out sum of £20 million. That statement was made in the middle of April. However, one month later M. Gerbeau asked the commission for £29 million and, of course, he received the money. When giving evidence to the Select Committee last week, M. Gerbeau admitted that on the very day that the grant of money was made, in practice the Dome was on the verge of bankruptcy.
Noble Lords will be aware, following exchanges on a Private Notice Question in this House at the time, that the Millennium Commission made that grant of money only after seeking and obtaining from the Government a letter of direction. The reason for obtaining such a letter of direction was in order that the Millennium Commission could cover its own back because it believed that it was making a grant of funding that would not demonstrate value for money for the public. It is therefore reassuring to know, at least as a result of that event, that those matters will be subject to reference to the National Audit Office.
Last week, M. Gerbeau again said that he would not approach the Millennium Commission for further funding. Should we believe his statement? I certainly hope that that is the case, but I should like to ask a question: what will happen if the Dome requires more money to help get it through the operating period covered by the summer and towards the end of the year? I ask that question because M. Gerbeau has given assurances that the Dome will not close down until the end of the year. Where would M. Gerbeau go for additional moneys?
These issues provide the basis for my amendment. I should like to establish whether plans are in place for the Dome's finances to be shored up using other
1390
resources that might lie within the control or influence of the Government. Can the Minister give an assurance that, if I were to withdraw my amendment, any money subsequently given, lent or in any way made available to the Dome by any government department for any period will then be recorded on the balance sheets of the government department concerned in a clear and transparent manner? I beg to move.
Lord Higgins: My Lords, I support the amendment. My noble friend Lady Anelay of St Johns has set out clearly the issues which concern her. Of course, both my noble friend and the Minister who is to reply have been deeply involved in issues surrounding the Dome for a considerable time.
In subsequent amendments we shall turn to the question of how the finances of non-departmental public bodies should be treated. However, the Dome is a specific case on which I think it is appropriate to focus at this point, not only for the reasons given by my noble friend but also because the question of whether such bodies should be audited by the National Audit Office is extremely important. No doubt the Minister will be able to confirm immediately whether the organisation concerned with the Dome will be audited by the National Audit Office as regards both financial propriety and value for money.
As far as concerns propriety, in the light of the remarks made by my noble friend and of the evidence submitted to the Select Committee to which she referred, it appears that the organisation may be in danger of finding itself trading in a condition of insolvency. Perhaps the Minister can tell the House whether that will be the case. It is important to ensure that the assets and liabilities of the organisation are set out clearly by the government department which has responsibility, at least to a certain extent, for its operation.
As to value for money, it is important to establish whether the National Audit Office will be able to look into the affairs of the Dome with that in mind. Inquiries based on value for money objectives were established some 20 years ago in the National Audit Office. Those inquiries are of great value. It is always a matter of concern if a letter of direction has to be issued to a particular body. If I understand correctly, the letter was issued on the grounds that further investment would not—I repeat, would not—represent value for money.
I hope that the Minister will be able to reassure us on all these points. I think that my noble friend was right to draw the attention of the House to this matter in the context of the Bill as a whole.
Baroness Oppenheim-Barnes: My Lords, I, too, support the amendment moved by my noble friend, which I describe as the "throwing good money after bad" amendment. In it my noble friend seeks to ensure that the shambles which has taken place in the past cannot continue without a great deal more accountability than has been seen to be the case so far as concerns the tragedy of the Dome.

1391
On this occasion, can the Minister take the opportunity to dissociate himself and the Government from the statement made yesterday by Mr Ayling who, when looking for another scapegoat, declared that the whole problem lay in the fact that the public had let the Dome down by not visiting it sufficiently?
3.15 p.m.
Lord McIntosh of Haringey: My Lords, I admire the ingenuity of the noble Baroness, Lady Anelay, in using this Bill in order to try to introduce a debate on the finances of the Dome. I admire, too, the ingenuity of the noble Lord, Lord Higgins, in using the amendment to anticipate matters which I believe should be more properly debated in later amendments. The House will forgive me if I reply to the amendment rather than to the speeches.
I can assure the noble Baroness, Lady Anelay, that all moneys paid out by a government department will be included in its accounts and subject to audit by the Comptroller and Auditor General.
Because the first accounts under this clause will be for 2001–02 at the earliest, it is likely that most payments concerned with the New Millennium Experience will be accounted for under the current system of cash-based appropriation accounts rather than under the resource-based system introduced by the Bill. To the extent that any payments relating to this matter are relevant to accounts prepared under this clause, then they will be included in those accounts. However, I do not believe that it is necessary or appropriate to refer specifically to this issue on the face of the Bill.
The only remark that I should like to make in addition to that explanation, in response to the questions put to me by the noble Lord, Lord Higgins, concerning the role of the Comptroller and Auditor General—this point might not arise naturally out of our debates on later amendments—is that I understand that the National Audit Office has already announced that it will be carrying out a value for money study into the Dome.
Baroness Anelay of St Johns: My Lords, I thank the Minister for his reply, even if he believes that he was replying only to the amendment rather than to the speeches made in support of it. Perhaps I may assure him that, in framing my speech, I did so very much with the public interest in mind, which also forms the basis of my amendment. I am grateful, too, for the support of my noble friends.
However, I am concerned that the Minister states that the Bill already allows for the fact that there will be clarity as regards the accounts for moneys "paid out"—I believe that the Minister used those words. Perhaps I may remind the Minister that I am concerned also with moneys made available to the Dome and then repaid during the year. This matter is one to which I shall return in greater detail on another day. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins Lord Higgins moved Amendment No. 2:
Page 3, line 19, leave out ("Treasury") and insert ("Financial Reporting Advisory Board").
The noble Lord said: My Lords, in moving the amendment I shall speak also to a long series of amendments grouped with it. I hope that noble Lords will allow me to make a few opening remarks because the amendments cover an important part of the Bill.
Perhaps I may express my thanks to the noble Lord, Lord McIntosh, for the two letters that he has written to me following our discussions in Grand Committee. Against the background of the provisions set out in the Bill, the Government have announced that the noble Lord, Lord Sharman, is to chair a group which will look into various aspects of the Government's financial affairs. That is very welcome, as was the letter from the noble Lord, Lord McIntosh, in which lie drew attention to a Written Answer he gave a few days ago concerning the membership of the steering group to review the audit and accounting arrangements for central government. I agree with what the noble Lord said in his letter; namely, that the group will comprise a highly distinguished membership. We shall not see the "usual suspects", but rather a number of people who have vast experience in this area and on whose judgment one can reasonably rely.
The list, in alphabetical order, begins with the Comptroller and Auditor General and ends with Mr Alan Williams, a member of the Public Accounts Committee in another place. I mention Mr Williams because he was my peer for some 20 years. I assure the House that he is a man of the utmost integrity and reliability. This matter is important, and the Government have done well in their selection, although I understand that there will be additions to the list and that the terms of reference have not yet been considered.
The fact that this initiative has been taken should not in any way inhibit your Lordships from expressing views on the various amendments on the Marshalled List. Many of the arguments in favour of them are simply overwhelming. Should further thought be necessary in the light of the study group findings, we can rely on further legislation to put the matter right. In a sense, the Bill is a missed opportunity. There have been only two or three Bills of this kind in the past century. Time having been found for the Bill, to discover that other matters still need to be considered is unfortunate.
Another point on which I am not entirely clear relates to the proposals for the new investigation. What is the relationship between the so-called steering group to which I have referred and the group chaired by the noble Lord, Lord Sharman? There is presently some confusion. Will the steering group be concerned simply with such matters as terms of reference, or will it be concerned with the content of what is eventually reported to Parliament?
I turn now to the second letter that the Minister was kind enough to write to me, relating specifically to the amendments. There is a problem in that it is difficult to group the amendments in any way other than that

1393
chosen; namely, to include the whole lot, regardless of the content. I see that the Minister agrees. I have made several attempts over the past 48 hours to find a tidier method, but I fear that it is not possible; therefore, my remarks will inevitably be rather discursive. The grouping is unfortunate because the individual amendments cover a considerable number of clauses and extend across the Bill. So, again, the way in which we are discussing these matters is not simple.
Problems arise both in regard to the government amendments and my own. Instead of dividing the issue of who should set accountancy standards from the content of the accounts, all the provisions are contained in single amendments, making it impossible to split them; it is equally impossible to group them in any way other than altogether. I fear that my amendments, especially those that are consequential, are not appropriate at certain points in the Bill.
Essentially, there are three points to deal with. First, who sets the standards on which government accounts should be based? Secondly, what form should the accounts take? Thirdly, and most importantly, should the standards and bases of the accounts be set by the Treasury or by some independent body? It will probably be most convenient if I speak to the government amendments and my amendments to them, rather than to my own amendments, since much of the ground covered is the same.
My amendments refer to the financial resources advisory committee and suggest that throughout the Bill it should be that body, rather than the Treasury, which should determine the accounting basis to be used by the Government. Much the same ground is covered by the government amendments, in particular Amendments Nos. 7, 21 and 26. Amendment No. 7 covers both points. The first part of the amendment states that the Treasury shall,
"have regard to any relevant guidance issued by the Accounting Standards Board Limited or any other body prescribed".
The second part suggests that there should be a statement of financial position, a cash flow statement, and so on. The two aspects are taken together.
On the question of who should set the accounts, I suggest in my amendments that it should be the financial resources advisory committee, whereas the Government say that it should be the accounting standards board. I do not necessarily have any problem with that. The Government refer again in Amendment No. 21 to the accountancy standards board. Finally, in Amendment No. 26, they change tack and suggest that a body shall be set up—which I understand is to be the FRAB, although it is not mentioned in terms—to advise on certain aspects of the accounts. As regards the first two amendments, it is appropriate that the body should be the accounting standards board limited; and so far as concerns further advice, in the third amendment it is the FRAB. So there is no great problem with that.
I turn to the second aspect of the government amendments; namely, the content of the accounts. The Government suggest that it should include a statement
1394
of financial performance, a statement of financial position, and a cash flow statement. That is a concession on the part of the Government since we discussed the matter in Grand Committee. At that stage, the noble Lord, Lord McIntosh, was inclined to argue that this provision need not appear on the face of the Bill, so the change is to be welcomed. What I am not clear about is to what extent the government proposals are in reality coextensive with the suggestion that I make in the corresponding amendments from this side of the House. For example, does a statement of financial position mean a balance sheet; and, if it does not, why does the provision not say so?
This is a matter of particular concern. One of the major changes that will take place as a result of a movement to resource accounting is that for the first time there will be what amounts to a balance sheet for individual government departments and indeed for the whole of government accounts. This is a substantial advance and is to be welcomed. However, as one of my other amendments points out, it is important that there should be a balance sheet and that it should include contingent liabilities as well as other liabilities. The relevance of that is particularly appropriate in the area of social security, for which I have responsibility, especially in regard to pensions in the Department of Social Security accounts. It would be helpful if we could be clear that the Government's amendments on the matter and my own are coextensive.
The Minister's letter spells out what he has in mind. I imagine that he will say much the same in response to this debate. But the crucial matter is in the amendments that I have tabled to the government amendments, in particular my Amendment No. 22 to government Amendment No. 21, and my Amendment No. 27 to government Amendment No. 26.
The amendments propose that, in taking action under the Bill, the Government should accept whatever is proposed by the Accounting Standards Board and the FRAB. We are very concerned that the Government, in particular the Treasury, should not determine the form of the accounts. I have already quoted the example of the working families' tax credit which is treated as a tax reduction rather than an increase in public expenditure. The Government should not decide the way in which their accounts are presented; otherwise, there is far too much scope for presenting the figures in a way that is not in accordance with the underlying reality.
We on this side of the House strongly believe that, if this is the way in which the Government wish to deal with the matter, these two bodies should determine the accounting standards, in particular the adjustments to be made, because government accounts cannot be exactly the same as a company's accounts. At the end of the day, those bodies rather than the Treasury should be the final arbiter of the form and shape of the government accounts. It would be very strange if individual companies in this country could determine for themselves the accounting standards. Unless these amendments are accepted, essentially that is the position in which the Government will find themselves. I beg to move.
3.30 p.m.
Baroness Sharp of Guildford: My Lords, we very much welcome the amendments tabled by the Government since the debate on this matter in Committee. We believe that the Government have moved a considerable way. As the noble Lord, Lord Higgins, made clear, at root is a real issue of substance; namely, whether the Treasury should itself set the guidelines. We on these Benches believe that the amendments tabled by the Minister now make it clear that, although the Treasury will still issue directives to departments—that is appropriate because it is to departments that directives are issued—they will be subject to standards laid down by the Accounting Standards Board. The Financial Reporting Advisory Board will review those standards and provide advice upon them. In his letter the Minister spelt out precisely the way in which that would be constituted. The deliberations of the board will be reported on and those reports will be made public by being laid before the House of Commons. In all these respects the Government have moved a considerable way in the direction that we indicated in Committee and, in that sense, we are prepared to accept the amendments.
Earl Attlee: My Lords, I should like to speak to my Amendment No. 3 in this group. I am not absolutely sure that I understood everything that my noble friend said. However, when considering public policy, of which NATS is a good example, ideas frequently hit the buffers of Treasury rules. Furthermore, noble Lords will recall my recent Unstarred Question regarding MoD policy to make certain TA personnel redundant and the payback period. Even the noble Baroness, Lady Symons, found the Treasury rules somewhat peculiar. In the case that I raised, redundancy payments were termed "transfer payments". Such payments are not relevant to the calculation of a payback period or the economic case for any particular policy. The noble Lord, Lord Richard, who I see in his place, also took part in the debate. While he implied that he did not understand my Question, he also found the Minister's reliance on Treasury rules bizarre. No one suggested that the Minister was wrong.
My amendment is not party political. Ministers of either party frequently find themselves frustrated by Treasury rules. Can the Minister help the House by shedding light on those rules? For example, are they published anywhere; if so, under whose authority? Finally and generally, is there any way in which Ministers, advisers and opposition spokesmen can check their policies in advance against the Treasury rules without first consulting the Treasury?
Lord McIntosh of Haringey: My Lords, I am grateful to all noble Lords who have spoken, in particular the noble Lord, Lord Higgins, for his acceptance that in practice it is impossible to divide up the issues that are dealt with by these amendments. I shall introduce the government amendments. I shall go on to say a word about the opposition amendments to
1396
those amendments and then deal with the other opposition amendments which follow from Amendment No. 2.
There are four government amendments in this group. The first three, Amendments Nos. 7, 21 and 29, are in the same form. Amendment No. 7 is perhaps the most important because it relates to resource accounts as we have been debating them in practice. Amendment No. 21 relates to "Whole of government accounts" in Clause 9. The noble Lord, Lord Higgins, has chosen to table amendments to Amendment No. 21 rather than to Amendment No. 7, but I do not think that it matters; the principle is the same in either case. Amendment No. 29 in Schedule 1 relates to "Whole of Government of Wales accounts". However, it has the same wording as Amendments Nos. 7 and 21. Following that, I shall say a word about Amendment No. 26 which introduces the advisory board.
The Bill already provides that resource accounts and whole of government accounts will be prepared in accordance with generally accepted accounting practice and will need to show a true and fair view. The Government believed that these rigorous conditions were sufficient to ensure that the accounts would be produced in accordance with best professional practice and to the highest standard. However, having listened to what was said in Committee, we have tabled amendments—I am grateful to the noble Baroness, Lady Sharp, for her acknowledgement—further to clarify the basis on which these accounts will be prepared.
Government Amendment No. 7 lays down in more detail than we have hitherto provided the financial statements that must be prepared for resource accounts. Rather than do this by reference to current accounting requirements, as proposed by the Opposition in Committee, the amendment relates to the fundamental financial statements as defined by the Accounting Standards Board in its Statement of Principles for Financial Reporting. I confirm to the noble Lord, Lord Higgins, that that includes the preparation and publication of a balance sheet. We hope that it satisfies the concerns in this area which were expressed in Committee while at the same time being sufficiently "future proof" to enable resource accounts to adapt to changes in financial reporting requirements as and when necessary. It would not make sense for us to require primary legislation of this kind every time the ASB changed the description of the accounts or its own name. For example, if that body became the standards board for accounting we would have to introduce a Bill to allow for that.
We must be able to adapt resource accounts to changes in the financial reporting requirements as and when necessary. This amendment makes it clear that the Treasury will have regard to the guidance issued by the Accounting Standards Board, or any of its successors, while ensuring that the resource accounts show a true and fair view and comply with generally accepted accounting practice. Amendments Nos. 21 and 29 apply similar requirements to whole of government accounts. Amendments Nos. 22 and 23 tabled by the Opposition would apply to any of the

1397
three amendments to which I have just spoken. Amendment No. 22 would require us to accept, rather than have regard to, guidance issued by the Accounting Standards Board.
As I said, there will be occasions when, due to the particular nature of central government accounts, we will have to adapt standard practice, and the Government have said so. I believe everybody has agreed in previous debate that that is necessary. So placing a duty to follow the Accounting Standards Board guidance in all cases is not appropriate. It could in certain circumstances conflict with the overriding requirement that accounts show a true and fair view. Normally, of course, following relevant accounting standards is essential to meet the requirements of a true and fair view, but it is an accepted part of accounting practice that if a particular body in complying fully with a standard prevents a true and fair view from being shown, the standard should be departed from in order to ensure that the true and fair view is preserved. That is known as the true and fair override.
Amendment No. 22 would require additional words to be added to the descriptor of Section 256 of the Companies Act.
3.45 p.m.
Lord Higgins: I apologise for interrupting the noble Lord, but I am having difficulty in understanding precisely what he is saying.
Presumably, the point about standards changing can be taken into account if the legislation states that the Treasury shall accept whatever changes are proposed. That would be a dynamic approach. Regarding the point about true and fair view, clearly it would be the case that the Accounting Standards Board would also take that into account.
I have some difficulty in understanding why the noble Lord believes that to be too inflexible to be practicable.
Lord McIntosh of Haringey: My Lords, it is because the Accounting Standards Board itself uses the word "guidance" for the way in which it expects people to conform to the standard which it applies. I believe the noble Lord, Lord Higgins, with his great experience of government, will recognise that it is normal that regard is had to guidance and that guidance is not accepted as such. I will give an explanation at a later stage as to why acceptance is less appropriate.
Regarding the other part of Amendment No. 23, which relates to Section 256 of the Companies Act, "Accounting Standards" is the formal side-heading of that section of the Companies Act and it would not be appropriate to change it in this House.
A reference has been included to Section 256 of the Companies Act to ensure that if the Accounting Standards Board is replaced in the future by a new accounting standards-setting body then regard would automatically be had to the standards issued by that new body.
1398
I now turn to government Amendment No. 26, which is concerned with the Financial Reporting Advisory Board. The existing provisions of the Bill, further reinforced by the government amendments just referred to, would ensure that resource accounts will be prepared in accordance with best practice and in accordance with the guidance issued by the Accounting Standards Board or its successor.
However, it has always been made clear that there will be occasions where, because of the particular requirements of central government accounts, it will be necessary to adapt standard accounting practice.
The Financial Reporting Advisory Board was set up in 1996 to provide advice on accounting matters generally, but in particular to advise on appropriate accounting treatments in areas where some adaptation of standard practice was required.
It is believed that the current arrangements for the FRAB are working well and that the FRAB is recognised to be independent. Indeed, nobody in this House has suggested anything to the contrary.
An excellent illustration of how the process currently works is the FRAB's newly published report on the 1999/2000 edition of the Resource Accounting Manual. It reports on all the matters considered by the board during the year, together with a commentary on key issues, and the outcome of the board's deliberations. All matters of ongoing concern to the board are also documented.
However, to address the concerns which have been expressed about the way the board works and to reinforce the independence of the process, the Government have brought forward Amendment No. 26 which would place the following duties on the Treasury.
The Treasury, before determining the accounting policies for resource accounts and whole of government accounts, would be required to consult with a group of persons—which is, of course, currently the Financial Reporting Advisory Board—who appear to it appropriate to advise on financial reporting principles and standards.
The Treasury must consult with the Comptroller and Auditor General in determining the composition of the group. Of course that has been done with the FRAB, although in practice the Treasury would also consult with a wider range of other interested parties.
The group would be required to prepare an annual report of its activities, which must be laid before the House of Commons.
The requirements ensure that the Treasury must seek independent expert advice on accounting matters. Furthermore, by requiring the group to report to the House of Commons, the Government will also ensure that where the Treasury does not accept that advice the disagreement would be brought to the attention of Parliament. It is important to ensure that on the face of the Bill, rather than that there should be an acceptance of guidance as proposed in the amendments.

1399
Opposition Amendment No. 27 is an amendment to Amendment No. 26 and would require the Treasury to accept any recommendations made by the group. It is much too prescriptive. It would turn what is an advisory body into the standard-setter. The amendment requires the group to prepare a report which will be laid before the House of Commons, ensuring that disagreement and the reasons for it are in the public domain.
There has been a good deal of give and take between the Treasury and the board, and an example of that can be found in the new report at paragraphs 2.7 and 2.8 regarding the treatment of non-operational heritage assets. The board believes, as a matter of accounting principle, that all these assets should be valued and should appear on departmental balance sheets. But the Treasury, in consultation with the National Audit Office, has argued that the case for doing that is unproven as the cost of obtaining reliable valuations may outweigh the benefits of including such assets on the balance sheet. Imagine if the Victoria and Albert Museum were told to obtain valuations for all of the many thousands of items in its possession. The board therefore accepts that the current treatment of these assets should remain for the present.
The Government believe, as the noble Baroness, Lady Sharp, indicated in Grand Committee, that the Government's amendments cover the essence of the points made in very useful debate, and do not need further amendment.
I turn now to other opposition amendments. The most important of those are Amendments Nos. 5 and 20, which would require balance sheets in both resource accounts and the whole of government accounts. It is to he hoped that the Opposition will accept that Amendments Nos. 7, 21 and 29 go further than these proposals by requiring a statement of financial position, including a balance sheet and a cash flow statement.
Furthermore, the Opposition proposals specify that contingent liability should be included in balance sheets. That, of course, would contravene the ASB's financial reporting standard 12, which makes it clear that contingent liability should not be recognised in the financial statements but should be disclosed in the notes to the account. The Government have adopted the requirements of FRS No. 12 in the Resource Accounting Manual.
Amendment No. 28 attempts to place the Financial Reporting Advisory Board on a statutory basis. It is entirely unclear what the effect of that would be. The clause states nothing about who the members should be; who should appoint the members; how it should go about its work; or to whom it should report. It is believed that the clear duties which the Government have placed on the Treasury in Amendment No. 26, and the transparency of those duties, will ensure that in the accounting policy setting that is in contrast with Amendment No. 28.
The many amendments which replace the Treasury with the FRAB would also give rise to some illogical effects. Amendments Nos. 15 and 16 would make the
1400
FRAB itself responsible for preparing the whole of government accounts and determining which bodies should be included in those accounts, as well as determining the accounting standards to be followed. That is strange since the objection to the Bill is that it allows the Treasury both to set the rules and to prepare the accounts. Again, the amendments have not been offered to Clause 10, so the FRAB would prepare the accounts but it would be for the Treasury to determine what information should be included in the accounts, and it would be for the Treasury to collect the information. That is not logical.
Finally, perhaps I may comment on whether the ASB or the FRAB should set the standards. That is the crux of the matter. The noble Lord, Lord Higgins, said that we have mixed up the two issues. That is not the case. The presumption is that the Accounting Standards Board standards will apply to the Government's accounts unless they do not apply to the public sector as there are good public expenditure control reasons for adopting a different treatment. All matters dealt within the Resource Accounting Manual must be reviewed by the Financial Reporting Advisory Board. Our Amendment No. 26 makes those powers transparent and will require the board to report on the manual's compliance with generally accepted accounting practice and the steps to be taken to address any departures.
That also answers the question posed by the noble Earl, Lord Attlee. What he calls "Treasury rules" are the Resource Accounting Manual. That substantial document is published annually and he is welcome to have a copy in order to study it in advance of his contribution to our debates on the Transport Bill.
I believe that the government amendments address the essential issues debated in Grand Committee. I believe that they are preferable to the Opposition's amendments and I commend them to the House.
Lord Higgins: My Lords, I thank the Minister for his helpful reply. As I indicated earlier, his letters on the subject were most useful. His comments on the form the accounts should take will require careful study. I take his point about contingent liabilities being in the notes to the accounts rather than on the balance sheet. However, as regards pensions, we may well find that the notes to the accounts cover an amount far greater than almost any other item in the whole of government expenditure. We shall need to scrutinise that most carefully.
In my opening remarks I conceded that there were certain deficiencies in my amendments and thought it better to deal with the Government's amendments and my amendments to them. I do not accept the Minister's point about the inflexibility of an arrangement in which the ASB and the FRAB fulfil the functions he mentioned but the Government cannot automatically accept their recommendations.
As the Minister rightly said, the crux of the matter is who, at the end of the day, determines what the standards should be. The Government's amendments seem to us to give them and the Treasury in particular

1401
too much flexibility. Our experience of the presentation of government accounts shows that they may give a misleading impression of what is happening. I give the classic example of the working families' tax credit.
For that reason, while I do not propose to move the main group of amendments, at an appropriate moment I shall ask my noble friends to support me in the Lobby in taking the feeling of the House as regards my Amendment No. 22 as an amendment to Amendment No. 21. In the meantime, I beg leave to withdraw Amendment No. 2.
Amendment, by leave, withdrawn.
[Amendments Nos. 3 to 6 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 7:
Page 3, line 29, at end insert—
("( ) For the purpose of subsection (3)(a) and (b) the Treasury shall in particular—

(a) have regard to any relevant guidance issued by the Accounting Standards Board Limited or any other body prescribed for the purposes of section 256 of the Companies Act 1985 (accounting standards), and

(b) require resource accounts to include, subject to paragraph (a), a statement of financial performance, a statement of financial position and a cash flow statement.").

On Question, amendment agreed to.
Clause 7 [Other departmental accounts]:
[Amendments Nos. 8 and 9 not moved.]

The Civil List
3.54 p.m.
Baroness Jay of Paddington: My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
"With permission, I should like to make a Statement on the Civil List which supports Her Majesty the Queen in carrying out her official duties as head of state.
"The Civil List Act 1972, requires the royal trustees—my right honourable friend the Chancellor, the Queen's Treasurer and I—to report at least once every 10 years on the royal finances and to make recommendations to the Government for future Civil List arrangements. The current 10-year period ends later this year. We have therefore reviewed the current arrangements and are today laying a report before the House.
"It proposes that the amount of the Civil List should remain exactly the same over the next decade as it has over the preceding one. It also proposes that the Civil List should take on some costs of the monarchy currently met from other sources.
"The report also sets out not only expenditure on the Civil List but on the monarchy more widely. This includes the grants-in-aid for the royal palaces
1402
and travel and spending undertaken by government departments. The report records the very substantial savings of 55 per cent in real terms over the past 10 years on spending on the monarchy generally.
"The annual figure for the Civil List was set by the previous government at £7.9 million in 1990. With Her Majesty the Queen's agreement, and following consultation with the right honourable gentleman the Leader of the Opposition, the Government propose that the annual payment should remain at £7.9 million for the next 10-year period. By the year 2010 therefore the cost of the Queen's Civil List will have remained at exactly the same level for 20 years.
"In addition, there will be costs transferred from public spending of other departments which will now be met by the Queen's Civil List. All in all, this will represent a substantial saving as a result of lower inflation and the efficiency of the way in which the Queen's expenses have been managed.
"The principal additions to Civil List expenditure will be pension contributions to be paid to the Consolidated Fund and some of the running costs of the royal palaces which are currently funded within the Property Services grant-in-aid. In total, around £25 million of extra spending over the next 10 years will be transferred to Civil List expenditure from other sources.
"By expanding the costs for which the Royal Household is directly responsible, we will contribute to the continuing drive for efficiency to which I know they are committed.
"We are able to make these proposals for two reasons. First, the Royal Household has achieved very substantial efficiencies in the Civil List over the past decade, amounting to some 10 per cent in real terms. Indeed, the actual increase in expenditure over the decade has been held below inflation.
"In addition, when the figure of £7.9 million was set 10 years ago, it allowed for an inflation rate of 7.5 per cent per annum, in line with the average annual inflation of the 1980s. Inflation has turned out much lower than was allowed for. As a result of these factors, a surplus of £35 million on the Civil List has accumulated, including interest of around £12 million.
"Under the Civil List Act 1972, Civil List provision may be increased by order but it may not be reduced. However, the Act also provides that any surplus at the end of one Civil List period is carried forward to meet official expenditure in later years. This is what will now happen.
"We expect, nevertheless, that there will be a prudent balance at the end of the period, amounting to around one year's spending at that time. That will enable unforeseen eventualities to be met, should any arise. If not, the surplus will be available to fund Civil List spending during the current reign from 2011 onwards.
"The Queen, supported by other members of the Royal Family, carries out a wide range of duties on behalf of the nation as head of state. The

1403
arrangements that I have announced will provide proper support for Her Majesty in that role. They also reflect the principles which Parliament has embodied in legislation, and which I am happy to reaffirm. They support continuing improvements in efficiency by ensuring that financial and management responsibility go hand in hand. And they are in keeping with the honour and dignity of the Crown, the importance of the role carried out for the nation and the high regard and affection in which the Queen and Royal Family are held".
My Lords, that concludes the Statement.
3.58 p.m.
Lord Strathclyde: My Lords, I am immensely grateful to the noble Baroness the Leader of the House for repeating the Statement made by the Prime Minister in another place. I assure her that we welcome and support the stability which the arrangement she has announced will provide for the Queen and the Royal Household. I am sure that I speak for the whole House in expressing loyal admiration for the way in which Her Majesty continues to contribute so generously to the overall costs of the monarchy and for the way in which the running expenses of the monarchy have been contained. It has been done so well that may be the Treasury should invite those responsible in the Royal Household to give advice to the Government.
The institution of the monarchy is of inestimable value to this country. No one has given such sterling service to the nation as Her Majesty over almost 50 years including all the other hardworking members of the Royal Family, not least Her Majesty Queen Elizabeth the Queen Mother, whom we have particularly in mind this year.
One only has to contemplate the expense of heads of state in other countries to realise the value for money that we get from our Royal Family, even if that narrow mercenary consideration were all that mattered which, of course, is not the case. If one must look at the cold figures of the balance sheet only, will the noble Baroness agree with me that the monarchy and all the traditions that surround it attract huge sums to this country from overseas visitors?
I have only one question of substance. The deal that was struck in 1991 was on the basis of an average inflation figure which was not reached. If the figure for inflation increases over the course of the next few years, will the figure given in the Statement be reviewed?
Finally, in welcoming the Statement I invite the noble Baroness, as Leader of the House, and on behalf of this House, to agree with me that a hereditary monarchy is a binding thread that has run through the history of our country for well over a thousand years and that it is our firm and common cross-party resolve that it should continue to do so?
4.1 p.m.
Lord Rodgers of Quarry Bank: My Lords, on behalf of these Benches I also welcome the repetition of the
1404
Statement by the noble Baroness the Leader of the House. I welcome what appears to be a sensible outcome to the latest review by the royal trustees. However, I mention in passing that the report to which the Statement refers was not available in the Printed Paper Office at 3.45 this afternoon. It would be helpful to all Members of the House if such a report could have been available at the time the Statement was taken.
Apart from the outcome, I too welcome the substantial overall savings on the monarchy in the past 10 years, which reflect our reasonable expectations in today's world. By that I mean that there should be proper support for the Royal Family in the performance of its constitutional duties, but without extravagance.
I also welcome—I believe that everyone will have learnt from it—that there is much greater transparency and openness as regards royal finances although there may still be some way to go. At one time there was great reluctance to reveal more than the very minimum of the royal finances. I believe that everyone has benefited, including the Royal Family. If anything, this openness has strengthened the monarchy by showing a much greater willingness to discuss the realities.
Some of the figures are not entirely clear to me—that is why I would have enjoyed reading the report—especially as regards the consequences of lower inflation. The noble Lord, Lord Strathclyde, referred very properly to inflation over the next 10 years. I thought he referred to any variance from the figure that has been assumed. The fault may be mine, but I cannot find in the Statement any indication of the assumptions about the rate of inflation which have gone into this particular agreement. If the understanding of the rate of inflation on the previous occasion, based on the figure for the 1980s, was indicated here of 7.5 per cent, there must be an equivalent figure based on the rate of inflation in the 1990s. Perhaps the noble Baroness will confirm that that is the case and say what the figure has been.
Finally, as I understand from the wording of the Statement, were there to be a succession to the throne in the next 10 years of this present agreement, the Civil List would then be open to further renewal. Can the noble Baroness confirm that that is the case?
4.4 p.m.
Baroness Jay of Paddington: My Lords, I am grateful to both noble Lords for their positive response to the Statement. I believe they said that it was a sensible agreement. The noble Lord, Lord Strathclyde, referred to the stability which the Statement created. I believe that those sentiments are accepted and agreed around the House. I am sure that noble Lords are aware that the right honourable gentleman the Leader of the Opposition was, as I mentioned in the Statement, a party to the understandings contained in the agreement. One assumes that the basic understandings were accepted by his party.
The noble Lord, Lord Rodgers, made an important point about transparency. One of the interesting factors about the way in which the Civil List, relations

1405
and the financial basis reached with the monarchy have developed in this country is that if one makes international comparisons, particularly European ones, one realises that we now have the most transparent system that can compare with any other. That is a great tribute to Her Majesty the Queen and those who serve her in that capacity.
A question was raised about the inflation rate over the next 10 years. As I understand it, the projected inflation rate on which the figures have been agreed is approximately 2.5 per cent. That is the rate at which the figures have been compiled. I imagine that if there were some great disparity between that projection and reality, the figures could be revisited as the Statement and agreement are not set in concrete. That is not precisely set out in the terms of the agreement.
I apologise greatly to the noble Lord, Lord Rodgers, for the absence of the fuller report in the Printed Paper Office. I shall look into the matter. If there are any further questions or points that the noble Lord wishes to raise when he has had the opportunity to examine the report, I am sure that I shall be able to answer them in correspondence.
I reaffirm to the noble Lord, Lord Strathclyde, that the Government accept the enormous value and importance of the hereditary monarchy. I had the opportunity to make that point at several stages during the passage of the House of Lords Bill last year. In response to some amendments that came from the other side of the House suggesting that perhaps the abolition of the hereditary right to sit and vote in your Lordships' House could be equated in principle with concern about the right of the monarchy, I believe that I made clear on the Government's behalf, as I have always done, that the value of the monarchy expressed in the Statement is very well understood. If one uses the time-honoured Bagehot definition of the difference between the efficient and the dignified parts of the constitution, we understand very well that Her Majesty the Queen fulfils the dignified part in an absolutely first-class way.
4.7 p.m.
Lord Molyneaux of Killead: My Lords, can the noble Baroness indicate whether the freeze will also apply to the Queen's annual gift to the Treasury which amounted to £130 million in the last financial year? In response to the plea for transparency from the noble Lord, Lord Rodgers, should not that latter figure be given equal prominence with the £7.9 million granted in the Civil List, given that the Treasury and the taxpayer are doing rather well out of the monarchy?
Baroness Jay of Paddington: My Lords, I am not entirely sure to what the noble Lord, Lord Molyneaux, refers when he speaks about Her Majesty's gift. Is he referring to her voluntary taxation payments?
Lord Molyneaux of Killead: My Lords, no. It is the income from the Crown estates.
Baroness Jay of Paddington: My Lords, I imagine that, together with all the understandings agreed in
1406
this particular area, it would have been subject to the same kind of review as the Civil List itself. I cannot reply positively to the noble Lord as to whether that particular item has been frozen. If I have any further information I shall let the noble Lord know.
Lord Dean of Harptree: My Lords, can the noble Baroness give the House any information as regards the future financing of pension arrangements for those employed by the Royal Household? I gather that there may be some changes pending in that regard.
Baroness Jay of Paddington: My Lords, yes. I believe that that is one of the matters that will be transferred to the Civil List. Originally pensions were paid in a different way, as I am sure the noble Lord is aware. It is one of the extra matters that the Civil List will now include.

Football Hooliganism
4.9 p.m.
Lord Bassam of Brighton: My Lords, with the leave of the House, I wish to repeat a Statement made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"In my Statement to the House on 19th June about the disorder perpetrated by England supporters in Charleroi and Brussels, I said that we would consider urgently whether further measures should be introduced so as to improve the effectiveness of court orders against those convicted of football-related offences, and introduce powers in respect of unconvicted football hooligans against whom there was other good evidence.
"I should now like to tell the House about the conclusions of the review which we have undertaken following events in Belgium and the legislative and other proposals which I shall be commending to the House.
"The House and the country know all too well of the events in Charleroi and Brussels which shamed our national game and our national reputation, and which resulted in the arrest of over 900 British nationals, in the deportation of 464 of those, and in a very small number facing trial.
"For some years, the widely accepted view has been that football hooliganism abroad is perpetrated by a relatively small minority of known football troublemakers. Measures discussed and approved by the House over a 15-year period have been predicated largely on that assumption. However, the blunt truth, which has become very clear from events last month, is this. Football hooliganism abroad is no longer confined to that small minority of known troublemakers. There is now strong evidence of a larger number of England supporters getting involved in violence and disorder, and few of them are known in advance to the police nationally as football-related offenders.

1407
"As I told the House on 19th June, the policing operation for Euro 2000 against known football hooligans was largely successful. Of the 1,000 such known offenders on the lists provided by NCIS to both the Belgian and Dutch authorities, our information is that most either did not travel or were denied entry to the host countries. Only 30 were arrested, detained or deported in either country.
"However, of the 965 who were arrested in Belgium and Holland, 409 had previous convictions, including for violence.
"Against that background, the House will, I believe, appreciate the need for measures to be drawn more widely than has been proposed in the past. I have specific legislative proposals, but this is an issue which runs wider than legislation alone and requires the active co-operation of all involved in football at every level in England.
"First, I turn to legislation. The legislation which I propose has four key elements. First, we propose to combine the domestic and international football banning orders which are made by a court following a conviction for a football-related offence. Currently we have about 400 domestic bans in force but only 101 international bans. Those 101 are the only people who currently can be prevented from leaving the country to attend matches abroad. In future, everyone who receives a banning order will be subject to both domestic and international bans.
"Secondly, we propose that, save in exceptional circumstances, everyone who receives such a ban will have to surrender their passport while major overseas games are on. Courts currently have discretion to impose such a condition when they impose an international football banning order. In future, that will be the norm for the new combined orders.
"Thirdly, there is the proposal for civil process, similar to that for the anti-social behaviour order, for a football banning order. That was included in our consultation paper published in the autumn of 1998 and has been actively supported by honourable Members on all sides. Under such a process, the police could propose a football banning order to the courts where they believe that that would help to prevent violence or disorder in connection with football matches. However, I believe that the order should now be more widely available than hitherto proposed. Under the new scheme, it would not therefore be necessary that the person in question should have been convicted of a football-related offence or, indeed, of any offence, although plainly any convictions for violence would be very relevant evidence. The police would need to have evidence sufficient to convince the court on the balance of probabilities that the test was met. That evidence could come from abroad and it might date from before the proposed new law comes into force.
"Fourthly, I propose that there should a new power for the police effectively to prevent a person from leaving the country where they believe there may he grounds for making a banning order. There
1408
would be a power of arrest, and breach of that direction would be a criminal offence. There would be a hearing in the magistrates' court. When the police make such a direction, the person concerned will be summonsed to the court to decide whether a banning order should be made. The value of this power will be that when people arrive at a port or airport and they give grounds for suspicion that they are out to cause trouble, the police will be able to make quick inquiries. They will then be able to prevent embarkation at short notice where it would not be possible to go through the procedure of applying for a banning order from the court before the person left the country.
"Those, then, are the main legislative measures that we seek, although the legislation will include other minor measures. I am satisfied that they are compliant with the European Convention on Human Rights.
"Let me now deal with the time-scale for this legislation. I have already had constructive discussions with the Official Opposition and the Liberal Democrats, and I am grateful for their co-operation. The Official Opposition are already on record as saying that they will support any moves in Parliament to restrict English football hooliganism. The next international game for England will be against France on 2nd September. Plainly, it will be preferable if the legislation can be put in good order to be on the statute book by the time the House rises at the end of this month.
"However, I well recognise that all Members of this House and of the other place take their responsibilities for scrutinising legislation very seriously. Three of the four key measures proposed have been well aired in principle in the past. The fourth has not. In any event, the effectiveness of legislation comes down to its detail. In order to combine speed with careful scrutiny, I therefore propose to proceed as follows.
"A draft Bill will be published in the Vote Office for all honourable Members, hopefully by the end of this week. I shall discuss its detail with the Opposition parties and hold an all-party meeting for honourable Members and Peers with a view on the Bill early next week. We shall also consult outside interests and take account of the conclusions of this process in the version of the Bill presented to the House. All this will of course be discussed through the usual channels as soon as possible to see whether there is scope for the Bill to have a very speedy passage, even possibly before the Recess.
"Legislation is only part of the answer to the wider problem. I strongly welcome the Football Association's commitment to seek life bans from home grounds for any England fan convicted of hooligan behaviour, or against whom there is hard evidence of such behaviour, at Euro 2000 or in the future. I hope very much that the clubs will support the FA in this initiative.
"But there is much more that can and must he done to confront the culture out of which hooliganism grows. I met representatives of the

1409
Football Association last week. They themselves recognise the need to take a hard look at ticketing, travel and stewarding arrangements, more effective action against displays of racism at matches and closer co-operation with supporters' groups, all with the aim of making support for the England team abroad more attractive to families and to decent supporters who are currently kept away by the threat of hooliganism. I have asked my noble friend Lord Bassam to chair a working group which will involve a wide range of partners from the football world who are committed to making changes for the better in these important areas.
"I hope that what I have said will demonstrate to the House our determination to use all the means at our disposal to get rid once and for all of the obnoxious taint of football hooliganism. The Government will give a lead. But only if we can succeed as a nation in changing the culture that gives rise to football violence shall we be able to claim that the problem has been truly solved".
My Lords, that concludes the Statement.
4.18 p.m.
Lord Cope of Berkeley: My Lords, first, I thank the Minister for repeating the Statement of his right honourable friend the Home Secretary. However, as the Minister is personally responsible for this area of policy in the Home Office, I assumed that to some extent the Home Secretary was repeating the words and policies suggested by the noble Lord.
With regard to recent history, can the Minister tell us why those who were forcibly repatriated to this country were not charged with offences in Belgium and Holland? Indeed, was any judicial process in Belgium and Holland involved in the deportation of these individuals?
We continue to support measures to remove passports from hooligans with domestic and international banning orders. Such measures were proposed by my right honourable friend Sir Norman Fowler in 1998 when he was shadow Home Secretary, but the Government have left them on the shelf until now.
The proposed Bill will go further, allowing arrest and an initial travel ban on the word of a police inspector, subsequently to be confirmed by a court. We shall look carefully at the draft Bill—and at the real Bill, when it appears—but we shall not stand in the way of its passage through the House, although, as the Minister said, the timings will need to be discussed through the usual channels.
Does the Minister realise that the urgency of the legislation is the consequence of the Government's delay on the issue? Parliament has been awash with Home Office Bills throughout the year, with even more ideas being proposed by the Prime Minister on a Friday and withdrawn on the following Monday, as we have seen this week. Can we expect the Bill to be called the Dangerous Fans Bill?
1410
What previous offences other than violence or football-related offences will be regarded as relevant by police inspectors or magistrates? Will offences related to squatting be included?
4.21 p.m.
Lord McNally: My Lords, after the Statement on 19th June, I recall noble Lords on all sides warning against knee-jerk reactions. The review has taken two weeks, which must be a record for a Home Office review. The Minister must accept that there is a certain cynicism about the motives and the timing of the announcement.
Our main claim in recent years has been that we have eradicated violence from our major domestic internationals, so I do not believe that we should be dragooned into a deadline for the friendly against France or the World Cup game against Germany. As the noble Lord, Lord Cope, said, the history of knee-jerk legislation is not good. I suspect that the Dangerous Yobs Act may join the Dangerous Dogs Act in the lexicon of bad legislation passed in haste unless we are very careful.
The Liberal Democrats would have preferred a more measured look at the legislation, perhaps with some pre-legislative scrutiny. As a second best, we welcome the Minister's commitment to consult both opposition parties and, perhaps as importantly, outside interests. Will the Home Office put in the Libraries of both Houses all the submissions that are received?
The Liberal Democrats have already given their support to some of the proposals. For example, the extension of domestic football banning orders to international orders and vice versa seems to be common sense. However, we make no apology for telling the Government that we cannot give them blanket approval until we see the details of the legislation.
I remember the scene in "A Man for All Seasons" when Richard Rich is proposing rapid-fire solutions and Thomas More asks him where we will shelter when the wind of tyranny blows and we have chopped down all the safeguards to our liberty. When the Government seek to take away the civil liberties of the least appealing of our citizens, Parliament should be on its guard.
We welcome the recognition that any legislation is only part of the answer. I welcome the establishment of the working group under the Minister. As we know from his other activities in the House, he has plenty of time in his diary. When will the membership be announced and when will the group hope to report? Will it consider holding public hearings?
The legislation will make sense only if it is accompanied by other measures that put it in context. We should look at best practice at home and abroad. We should look at the relationship between alcohol and violence to see if further restrictions are needed. We may have to consider a total ban on away ticket

1411
sales for certain fixtures at home and abroad. We must step up the campaign against yobbery and its ugly twin sister, racism.
I welcome the acknowledgement that the issue runs wider than legislation alone and requires the active co-operation of all those involved in football at every level. However, football is not the only issue. We must address the context in which the culture of yobbery has grown. The Prime Minister should not invite icons of the yob culture across the threshold of No. 10 and the media should not turn every sporting fixture into a rerun of World War II. Players have to take responsibility for their behaviour on and off the field and the clubs must show greater social responsibility. The media in general have to consider the appropriateness of television programmes and other coverage that gives implicit approval to the yob and his attitudes. We need to take measures to ensure that the vast wealth now flowing into the game feeds down to the often very deprived communities that sustain it.
Watching Euro 2000 made us realise why soccer is called the beautiful game. What makes me so angry is that that beautiful game is being stolen from us by yob culture at one end and corporate greed at the other. It is the job of Parliament to set a framework that combats both.
4.27 p.m.
Lord Bassam of Brighton: My Lords, I welcome the welcomes from both previous speakers and look forward to the active support of both opposition parties in our endeavour to bring the legislation before Parliament and ensure an active process of scrutiny with good debates. We want to settle this legislative matter once and for all.
The noble Lord, Lord Cope, asked about deportations and the judicial process. In only a handful of cases was there any attempt to process through the judicial system those who were arrested and deported. We were sad about that. I am sure that it is widely accepted that, where there is evidence, people should be brought before the courts, charged properly and, if the evidence stands up, convicted. Before Euro 2000, we gave every encouragement to both jurisdictions to approach matters in that way.
The noble Lord also pointed out, not entirely unfairly, that our urgency is a product of events before Euro 2000. It would have been preferable for some of the legislation to have been in place beforehand, but I am not convinced that the earlier proposals would have been as extensive in their effect as many believe that they could have been. There would still have been problems in Charleroi and Brussels, because the legislation would have needed to be in place three or four years ago for it to have an effect in picking up and identifying those who were likely to cause trouble in the streets.
We are right to take a broader view. In the past we have taken the convenient view that football hooligans are a small, mindless minority. Sadly, there is something sick about our culture that has developed this yobbery, which is more widespread than perhaps
1412
we believed in the past. We have to deal with the consequences of that. We have to look at our culture and at the law. As the noble Lord, Lord McNally, said, we in public service have to take a lead. We should all share the responsibility for doing that.
In his welcome for the formation of the working group, the noble Lord, Lord McNally, asked one or two specific questions. It is our intention to be speedy. We hope to set it up within the next week or so. We want to report in the autumn or earlier, if and when appropriate. I certainly want to look more widely than the legislation. I want to involve the clubs. I certainly want to involve those in the rest of the industry. By that I include the media, which also have a responsibility. We must work closely with the football authorities which have a profound responsibility. We need to look at a range of issues: ticketing arrangements, travel, sponsorship, the involvement of clubs in the community, tackling racism and looking at good practice and best practice in clubs. I am particularly impressed by the activities of Charlton Athletic with their anti-racist strategy. I should like to look at that. I should also like to ensure that we take from the best practice that is available in Europe in terms of powers, and so forth. If there is something to be learnt from the Germans, we should learn it.
I promise your Lordships' House that I shall cast my eye widely. We have the beginnings of active and positive support from the Football Association and those involved in the football business. They realise that we must take more steps finally to put our house in order.
There are positive aspects. Here, the domestic game is more broad based in terms of support. It is more multicultural and multiracial. It has become an entertainment and a sport which has a broad-based family backing. I believe that has something to do with the way in which it has been successfully rebranded. Sadly, that is not the case for the international game and for those who travel abroad. It is that to which we must turn our attention in a dramatic way. It must be tackled or the problems will continue.
The legislation can do much. However, we must do more to attack the culture which has given rise to the sad, demeaning and degrading events which took place in other countries and capitals.
4.33 p.m.
Lord Windlesham: My Lords, I share the expressions of public revulsion to which the Minister referred regarding the behaviour of some football supporters and agree that it is entirely proper for the Government to respond to threats to public order. However, does the Minister accept that it is sometimes only too easy to go one step too far?
The fourth category of these proposals is entirely novel and raises fundamental issues of civil rights. It affects those who have no previous conviction and are not subject to any existing banning order, and it depends on the word of a police officer. One question is bound to come up, which I shall put to the Minister now. Will the suspects—for that is what they will be—

1413
have a right to legal advice and representation, as currently exists under the Police and Criminal Evidence Act, when they are questioned by the police?
These issues—there are many more—will require careful consideration in this House. We are three weeks away from the Summer Recess. The Bill must be allowed sufficient time for thorough examination. There should be no question of trying to put it through all its stages in one day.
Noble Lords: Hear hear!
Lord Bassam of Brighton: My Lords, I understand the concern expressed by the noble Lord. He is right to talk about people's civil liberties. He well understands, perhaps better than me, that we have the Human Rights Act on the statute book. That is an important check in these matters.
The noble Lord asked specifically whether legal advice and representation facilities will be made available. It would be a strange England if that were not the case. I do not believe there is anything in our proposals which will prevent suspects having access to legal advice and, no doubt, legal representation in court.
However, I make the point which I have made before: that we are the decent, law-abiding majority. I believe that we must support the civil rights and freedoms of those who want to go to football matches and enjoy them in peace. Those are the concerns which are paramount in my mind. Yes, of course it is right that we make adequate provision for people's rights and for people to be fully represented in court. However, if we do not have provisions such as those set out in the third and fourth limb of our legislative proposals, we shall never begin to get to grips with the widespread yobbery that we saw on the streets of Charleroi and Brussels and which brought shame upon our nation.
We need broad-based support for the measures. Yes, we will consult. As was made plain in the Statement, the Home Secretary and myself are more than happy to meet and talk with Members of your Lordships' House and Members of another place, and more widely than that, to try to build a consensus so that the legislation becomes effective and popular. I believe that the legislation will go a long way towards changing the attitude and atmosphere at football matches abroad. We owe that to our country.
Lord Dubs: My Lords, perhaps I may ask two questions. First, does the Home Office have information as to the identity of the 900 British nationals arrested in Belgium? Presumably, they are the sort of people who will be banned in future. Am I right in thinking that? Secondly, are the bans intended to apply only to England's international team matches or would they also apply to major club fixtures abroad?
Lord Bassam of Brighton: My Lords, the short answer to both those questions is "yes". We do have
1414
information about the identity of the 900 people arrested. It is for that reason that I can say to the noble Lord that some 400 had previous convictions, of which not all, but a large number, were for crimes of violence.
Yes, it is our intention that the legislation will help our clubs taking part in European competitions. From my point of view, that is one of the reasons for the urgency. Coming pretty swiftly is another European football season. English and Welsh clubs could be taking part in between 30 and 40 matches in European competitions. The legislation is needed not just for English international matches but to improve the quality of support that the clubs receive when they travel abroad.
Lord Phillips of Sudbury: My Lords, is it not the case that had the Belgian and Dutch authorities used their own laws, most of the 900 people could have been dealt with in the proper way? They presumably have laws equivalent to our law of affray.
Is it also not the case that the Government are attempting to pervert the categorisation of civil offences and criminal offences by pretending that the offences to which the Minister referred—he mentioned suspects, police evidence, banning orders and confiscation of passports—can be dealt with under civil process? Is not the truth that by such perversion, the Government are trying to allow the lower civil test to convict for what is, in all other senses, a criminal conviction? Is that not legislative hooliganism?
Lord Bassam of Brighton: My Lords, I do not believe that the country will see it as legislative hooliganism, but as legislation designed to tackle and get to the root of football hooliganism. That is its purpose. As regards the first point raised by the noble Lord, it may well be the case that many of the 900 arrested could have been charged with offences similar to our offence of affray. However, that is a matter for the Belgian jurisdiction. They chose not to take that route. By and large it seems that they were content to describe them as "administrative arrests" believing, rightly, that they were in the best position to judge whether those people should be taken off the streets for being involved, in some way or other, in disorderly events. That was their choice. That was the way in which they chose to operate. It would be wrong of us to criticise their arrangements for dealing with disorder. They were faced with a difficult situation.
Perhaps we would have dealt with it differently in public order terms. That is because we have a different culture and approach in policing techniques. But the Belgians were faced with an extremely difficult situation. I believe that these measures are proportionate. The anti-social behaviour order introducing a civil process, which in a sense we are seeking to replicate in the third of our legislative proposals, includes a lower burden of proof as the noble Lord rightly says. Nevertheless, it is appropriate for the nature of the offence and should give the public

1415
not only in this country but also in other countries the measure of confidence and protection they rightly deserve.
Lord Borrie: My Lords, can the Minister assist the House a little further in relation to the urgency he described for this legislation? Noble Lords on both Front Benches said in effect that we can legislate in haste and repent at leisure because it is difficult to get the detail right. We are dealing with a difficult borderline between, on the one hand, the freedom of the individual (including the freedom to travel abroad) and on the other the public interest in restraining hooliganism and illegal acts. Does my noble friend believe that within a matter of weeks we can deal with the problems referred to earlier today in a Bill which may be short but which raises extremely complex questions? It is said that three or four important football matches are coming up in the autumn. But does that justify our seeking to bring about legislation which will be with us for a long time and which cannot readily be altered in practice without adequate consideration?
Lord Bassam of Brighton: My Lords, I understand the points made by my noble friend. However, we have been down this route before. Legislation over the past 15 years has looked at hooligan-related and football-related problems. Indeed, the outcome of the Home Office consultation in 1998 was to support the idea of taking away the passports of known and suspected hooligans. So there has been a great deal of discussion and debate on this matter in the past.
Of course, we need as much time as possible to look at the detail and the implications underlying various parts of the legislation. And my noble friend is right to remind us of the possibility of making legislation in haste and regretting it at leisure. But I am sure that with your Lordships' expertise in this field we shall be able to consider all the civil rights and civil liberty issues in sufficient detail because it is a well-trodden route. We owe it to the public to demonstrate that we have a grip on this area of public policy. We all have that responsibility.
A complex European football season lies ahead. It does not only involve the game against France on 2nd September; the World Cup begins with games against Germany. So it is important that we address these issues seriously and put in place measures which will be effective in the longer term.
Lord Palmer: My Lords, will this proposed legislation apply to soccer fans in Scotland?
Lord Carlisle of Bucklow: My Lords, I accept entirely everything said by my noble friend Lord Windlesham in relation to the seriousness of football hooliganism. However, do I understand the Minister to suggest that this new power will enable a police officer at an airport to remove the passport of an individual who has no previous convictions of any kind, and prevent him travelling merely on a "suspicion" (to use the Minister's word) that that
1416
person may be intending to make trouble? If so, that is surely a fundamental shift in power in this country and one which will need the greatest scrutiny by this House.
Lord Bassam of Brighton: My Lords, the noble Lord explains the fourth proposal in a customarily robust way. Of course we must subject all these proposals to the closest scrutiny. But I put my faith and confidence in the police to do an effective job. They will be in a position to undertake quick and timely inquiries. We have good access to data. That data was used extensively during the course of Euro 2000 to good effect. And a judicial process lies behind all that, as is right and proper. But we owe it to the public to take these strong and effective measures. I make no apology for that.
Lord Merlyn-Rees: My Lords, can I ask the Minister about something that happened in Brussels? Apparently 450 British citizens were "deported" from Brussels by the Belgian Army, the Belgian air force and the police. Not all of them were involved in violence. They are now back in this country. They cannot travel back to Belgium. Do they have a right of appeal?
We hear constantly that we work together with our Belgian friends in Europe. Can they simply decide something in that way? I know of one case only. A man was minding his own business. He was carted off by the Belgian air force and his passport was stamped. He cannot now go back and work there. That must be wrong. If there is friendship in Europe, then in friendship we should ensure that that person at least has the right of appeal.
Lord Bassam of Brighton: My Lords, I appreciate the comments of my noble friend. It is a matter of public record that the Belgian police commander acknowledged that a number of those arrested and deported were, in his terms, "innocent persons". They were picked up as part of a wider-ranging police operation. With the best will in the world, that is likely to be the case in some circumstances, however regrettable and unfortunate it is. Clearly, in those cases we should make effective representation so that people's right to travel is unfettered and they are right to bring those cases to our attention. If my noble friend has a specific case in mind I shall be happy actively to pursue it.
Lord Mackie of Benshie: My Lords, should not the Minister look a little closer to home for remedies? The Scots are a warlike race. They are fond of drink. Around 20 years ago they behaved so badly in Spain that the Spanish police collected whole loads of them and pushed them onto aircraft, whether they had travelled by car or any other means, and sent them home. Today, for some reason, the Scottish football supporters are among the best behaved in Europe. I am not being funny in saying that. The Government

1417
should look at that situation instead of some of the extraordinary measures they seem to be contemplating.
Lord Bassam of Brighton: My Lords, I attended the England-Scotland fixture at Wembley. I was looking at the police operation and was usefully deployed between the English fans on one side of a channel and the Scottish fans on the other. The Scottish fans seemed to be very merry, but were certainly entertaining. I still do not understand why all evening they sang the song, "Doh a deer, a female deer". They kept going for half an hour after the game and I was very amused as a consequence.
The noble Lord is right. There are many Scottish supporters and in some sports alcohol is actively consumed with little public disorder as a consequence. It is a reflection perhaps of different cultures and that is something we should bear in mind. But we also need to address this issue. We need to campaign on the issue and to inform the public. We need to tell the public that the sort of unruly behaviour that we have witnessed in the past few weeks by some English fans and supporters—an extensive and large number—is something that we cannot and should not tolerate in a civilised society, and something that we should take all reasonable measures to counter.
Lord Tebbit: My Lords, did I construe correctly from what the Minister said that, upon the word of a Belgian police officer, a British subject may, without trial or further process of law, be deprived of his right to travel to international football matches? Is that really what the Government propose?
Lord Bassam of Brighton: My Lords, I did not say "on the word of a Belgian police officer", but I was making reference to a British police officer at a port of embarkation. I think the noble Lord missed the point I made earlier in response to the noble Lord, Lord Carlisle.
Lord Tebbit: My Lords, I think the noble Lord has missed the point. A Belgian police officer, on his word alone, has sent British citizens back to this country, and the noble Lord is saying that that is sufficient evidence for them to be deprived of their passports at the time of football matches in future. That is quite extraordinary, if that is indeed the case.
Lord Bassam of Brighton: My Lords, no, I hope that is not the impression I have left with the House: it is not the impression I was intending to leave. I think I referred, in response to an earlier question, to people being identified as needing deportation during the recent disturbances. Clearly, that deportation evidence will have a bearing on their future ability to travel to football matches, but it will not be the sole determinant.
Lord Bruce of Donington: My Lords, the House will be greatly relieved to hear that there are going to be
1418
further consultations before the legislation referred to by the noble Lord comes before the House, particularly in the light of the very important civil liberties issues that have been raised in the course of these exchanges this afternoon.
However, is the noble Lord aware that the events which he has described and which we all know from the press do not happen in a vacuum? They occur within the general climate of opinion that exists at the time. I think the noble Lord will be aware, as will be many of your Lordships, of the great deterioration that has taken place in public morale over the past 20 years or more. He will be aware that there has been a toleration by perhaps the majority of us—of course I am not accusing any of your Lordships—of the deterioration of standards of conduct in other spheres of public life which at one time would have aroused instantaneous social objection voiced in a number of ways by the press, the media and so on.
Are we quite sure, therefore, that it is safe at this stage to assume that we ourselves are free from blame for tolerating for so long a climate of opinion within which these kinds of events—and there are many others—have occurred? Has there not been a deterioration in good manners? Has there not been a growth of intolerance over the past 20 years among the population as a whole? We bear a responsibility for this and it would be a sorry day if, in bringing forward legislation aimed at curbing miscreants and if necessary providing punishment, that should be made an excuse for doing nothing further to bring forward changes to a form of society which in many profound respects is contemptible within a civilised country.
Lord Bassam of Brighton: My Lords, I think that perhaps there has been a deterioration in standards of behaviour but perhaps that simply reinforces the point that we, as legislators, have a duty to try to reverse that tide. I make no apology for the Government's intolerance of poor behaviour, yobbishness and loutishness. I think this legislation might well do some good in beginning to redress the balance. In that regard, I trust that the Government will enjoy the full support of your Lordships' House.

Government Resources and Accounts Bill
4.53 p.m.
Consideration of amendments on Report resumed after Clause 7.
Lord Higgins Lord Higgins moved Amendment No. 10:
After Clause 7, insert the following new clause—
NON-DEPARTMENTAL PUBLIC BODIES' ACCOUNTS: AUDIT
(" —(1) Subject to subsection (7), this section applies to any non-departmental public body, unless otherwise provided by any order made under subsection (8).
(2) On the prescribed date for each non-departmental public body to which this section applies, subsections (3) to (6) shall have effect in relation to that body.
(3) Every non-departmental public body shall prepare accounts in respect of each financial year and shall send them to the Comptroller and Auditor General.
(4) The Comptroller and Auditor General shall examine accounts sent to him under this section with a view to satisfying himself—

(a) that the accounts present a true and fair view, and

(b) that any public money provided to the body has been expended for the purposes for which the money was paid.

(5) Where the Comptroller and Auditor General has conducted an examination of accounts under subsection (4) he shall—

(a) certify them and issue a report,

(b) send the certified accounts and the report to the Treasury, and

(c) if he is not satisfied of the matters set out in subsection (4)(a) and (b), report to the House of Commons.

(6) The Treasury shall lay accounts and reports received under subsection (5)(b) before the House of Commons.
(7) Subsections (3) to (6) do not apply to any body to the extent (but only to the extent) that any of its accounts are or become subject to audit—

(a) by the Auditor General for Scotland, or

(b) by the Auditor General for Wales.

(8) The appropriate Minister may by order designate a non-departmental public body as one in relation to which this section does not apply for so long as the designation remains in force.
(9) An order under subsection (8) shall be made by statutory instrument, and shall not be made unless a draft of the instrument has been laid before and approved by resolution of both Houses of Parliament.
(10) In this section—
"the appropriate Minister" means, as regards any non-departmental public body, a minister in the department which is responsible for that body;
"non-departmental public body" means a body—

(a) which is not a government department or comprised within a government department,

(b) which exercises public functions of a governmental nature which might otherwise fall to be exercised by central government, and

(c) an officer of which has been designated by a government department as its accounting officer in respect of the preparation of its accounts,.

but does not include any such body which is a company registered under the Companies Act 1985; and
"prescribed date" means, as regards each non-departmental public body, the first day of the first full financial year of that body commencing after the expiry of the term of appointment of the person who is the auditor of the body when this section comes into force.").
The noble Lord said: My Lords, this amendment, which stands in my name and that of my noble friend Lord Bridgeman, is concerned with the audit of non-departmental public bodies, which of course play a very important role in the Government's structure and which in addition have a large sum of public money allocated to them. We have debated this matter previously in the Grand Committee and I have considered very carefully the points made by the Government. This amendment seeks to take them into account.
I hope very much indeed that it is possible to persuade the Government to accept this amendment. The reality of the situation is that the present structure with regard to the audit of non-departmental public bodies is a mess. To a large extent, I think this has been recognised by the Government because, since they came into office in 1997, they have arranged for all the new non-departmental public bodies to be audited by the National Audit Office.
At Committee stage the Minister argued that we should not rule out the use of private sector auditors for these non-departmental public bodies. We have sought to accommodate that point in our amendment by enabling the Government, if they do not think it appropriate in some circumstances for the National Audit Office to audit a particular non-departmental public body, to arrange for that to be done but subject to approval by way of statutory instrument. I hope that goes some way towards meeting the point.
We have also suggested that the existing arrangements which are in operation for non-National Audit Office audits to be done by private outside auditors should be phased out gradually as the contracts come up for renewal. Overall, it seems to me that the Government themselves have accepted the situation and that by and large they have argued that there ought to be transparency and that the most appropriate way to ensure transparency for such bodies is for the National Audit Office to audit them. This is true not only as far as concerns propriety but also value for money.
The noble Lord, Lord McIntosh, said in Committee that we would in some sense be nationalising the accountancy profession—he smiles: he clearly accepts that he was overstating his case, but I am only teasing him! In that case there is no division of opinion between us and the Government should clearly accept the amendment as drafted, which seeks to take into account the serious points that the Minister was making.
The fact is that the Government should not be able to pick and choose as to who audits particular non-departmental public bodies, using public money, and the assumption should be that they will all be audited by the National Audit Office. I hope the Government will feel able to accept the amendment, having discussed the matter in Grand Committee and as we have sought to accommodate the serious points made by the Government. I beg to move.
Baroness Sharp of Guildford: My Lords, on these Benches we find this a very difficult issue. We discussed it at very considerable length in Grand Committee. At the centre of the debate, as the noble Lord, Lord Higgins, has made clear, is the issue of parliamentary scrutiny of the spending functions of the executive and the emergence in the course of the past 30 years or so of a large number of non-departmental public bodies. These bodies have escaped public audit although—and here we accept the point that has been made several times by the

1421
Government—they do not escape audit altogether. They are audited according to appropriate standards by private accountancy firms.
Equally, it is also quite clear that the Government themselves have not conceded anything at all on this issue, whereas in tabling their amendment the Opposition have sought to accommodate the issues raised by the Government in discussion in Grand Committee. What we see in the new amendment tabled here is an attempt to define non-departmental public bodies. These bodies, and those that are exempted under the Companies Act, are excluded from these provisions. Also, perhaps most importantly, Ministers are provided with an opt-out clause, subject to an affirmative resolution.
The issue then is what should and should not fall within the purview of public scrutiny. I think it is that issue which is the substance of the Sharman report. Indeed, when we did discuss it in Grand Committee one of the main objections raised by the Government to the amendment which had been put forward at that stage was that it was going to be covered by the Sharman report.
If we accept this amendment, we effectively preempt that report. Indeed in some respects with the "softening" of the amendment as it now stands, and with the "opt-out clauses" given to the Government, the amendment could be less far-reaching in its effect than the Sharman report itself.
The case for legislating now is that it provides an insurance policy. The Government claim that they do not need to legislate in order to implement the Sharman report. However, many government reports have been left to gather dust on departmental shelves. We do not want that to happen with the Sharman report. As I say, the Minister has said that there will be no need to legislate in order to implement the Sharman report. I should like to hear the Minister make a clear statement that the Government intend to take the Sharman report seriously; that they will not let it gather dust on the shelves in the Treasury; and that it will be fully implemented. If the Minister can assure me that this will be the case, it seems to me that we have no need to accept the amendment. As I say, to some extent it pre-empts the Sharman report and its effects may be rather "softer" than those of the report.
I shall listen carefully to the Minister's response to the amendment to determine how these Benches will react to it.
5 p.m.
Lord McIntosh of Haringey: My Lords, as the noble Baroness, Lady Sharp, made clear, I acknowledge that the noble Lord, Lord Higgins, has moved away from the more rigid position of the amendments on this subject that he tabled in Grand Committee, for which I am grateful. I am also grateful that he has accepted the argument that I put to him on that occasion; namely, that the policy of "one size fits all" does not work in the situation we are discussing.
1422
I turn to the matter which the noble Baroness, Lady Sharp, identified as being the most important issue; namely, that of public scrutiny. I believe that there is a degree of misunderstanding about the relationship between responsibility for audit and the matter of public scrutiny. It is completely wrong to imply that, if the Comptroller and Auditor General does not audit certain non-departmental public bodies, Parliament does not have any oversight of those bodies. Ministers are accountable to Parliament for all such bodies and the accounts of all these bodies are laid before Parliament regardless of who carries out the audit.
It is not even true that the C&AG has no oversight of NDPBs which he does not audit. He has inspection rights at all executive NDPBs. He is therefore able to investigate matters of concern even where he is not the appointed auditor. He has in fact produced a number of reports on NDPBs for which he is not the auditor. The existence of these inspection rights means that he can carry out value for money studies—which, after all, is the real parliamentary scrutiny to which the noble Baroness, Lady Sharp, refers—at all NDPBs under the National Audit Act 1983. He has produced many such reports for Parliament.
As has been acknowledged, more generally, this Government have demonstrated their confidence in the work of the C&AG by appointing him auditor of those NDPBs created since the previous election.
Nevertheless, the Government may have good reasons—without implying any disrespect to Sir John Bourn or to his office—for not appointing him the auditor in certain circumstances. We need to take account of the clear practical advantages that departments have identified in appointing commercial auditors for some of those bodies. Our existing provisions in the Bill allow for this. Clause 23(6) and (7) provide for the Treasury to propose an order for the C&AG to be made the auditor of any NDPB where statute currently rules out his appointment. I am surprised that the proposers of this amendment do not appear to have taken account of that.
However, before proposing to Parliament that the C&AG should be appointed auditor of any particular NDPBs, the Government will need to take account of the outcome of the Sharman review. I very much appreciate the strength of the remarks of the noble Baroness, Lady Sharp, in that respect. The noble Lord, Lord Sharman, will examine a number of key issues, including the concerns of departments, which are responsible to Parliament for overseeing NDPBs.
Lord Higgins: My Lords, I am grateful to the Minister for giving way. I hope that he will clarify a point that I raised earlier with regard to the exact relationship between the Sharman group and the so-called "steering group"?
Lord McIntosh of Haringey: My Lords, the steering group is there to steer. I believe that the relationship will be worked out as the distinguished membership of these two bodies settle into their work. As they are at the stage of determining their terms of reference, I do not think that it would be appropriate for me to

1423
anticipate the way in which it will work out on the ground. Certainly it is not a matter which will be mentioned in statute.
I return to the issue of the status of the Sharman report and the concerns which the noble Baroness, Lady Sharp, has expressed. She was right to draw attention to the rule whereby if one does not like the Findings of inquiries of this kind one ensures that nothing is done to implement those findings. The normal rule is that one does not set up an inquiry of this kind unless one knows what its findings will be! I am afraid that we have broken that rule in this case in that we shall have to take the report on audit and accountability extremely seriously. By setting up a review headed by such an independent person as the noble Lord, Lord Sharman, and by ensuring that the steering group for the project is made up of highly distinguished parliamentarians and internationally renowned experts in the field of audit and accounts, we have broken this firm rule. We genuinely do not know what conclusions will be reached.
Therefore I cannot say that we shall accept every recommendation that the noble Lord, Lord Sharman, makes. However, it is in the Government's interest as much as Parliament's that we have strong, independent audit of public bodies and public expenditure. It will therefore be in the Government's interest to see implemented the proposals of the noble Lord, Lord Sharman, for improved audit, whatever they may be. I am sure that the members of the steering group would not let us get away with anything less.
As the Chief Secretary made clear, and as the noble Lord, Lord Higgins, reminded us, arrangements for audit and accountability in central government are in disarray. The noble Lord, Lord Higgins, used the words "a mess"; the Chief Secretary used the words "a hotchpotch". The Government welcome the inquiry of the noble Lord, Lord Sharman, as an opportunity to bring some coherence into this area. We are pleased to acknowledge that the Bill has acted as a catalyst for the Government in setting up the review. However, as I have already said, it is as much in the Government's interest as anyone else's to ensure that the review succeeds and has a major positive impact. The Government consider that the review will set the basis for future arrangements in audit and accountability—a basis that will satisfy the needs of both government and Parliament.
I turn now to the amendment—
Lord Shaw of Northstead: My Lords, I am most grateful to the Minister for giving way. I have not entered into the earlier discussions but my point arises from something he said today. Will he confirm that there is a completely different responsibility as between that of the Government on the one hand and that of the C&AG on the other? The C&AG is directly responsible to Parliament itself and to the Public Accounts Committee, on which I sat for a number of years.
Where a separate auditor has been appointed to a NDPB, did I understand the Minister to say that the C&AG would none the less have an automatic right,
1424
without seeking permission from the Treasury, to investigate any matter that he felt needed to be investigated from his special point of view in those organisations that have a separate audit?
Lord McIntosh of Haringey: My Lords, the simple answer is "Yes" but I had better repeat what I said a few minutes ago to ensure that I do not in any way depart from a script. I am sure that the noble Lord, Lord Shaw, will understand that point.
It is wrong to imply that, if the C&AG does not audit certain non-departmental public bodies. Parliament does not have any oversight of those, bodies. Ministers are accountable to Parliament for all such bodies and the accounts of all these bodies are laid before Parliament regardless of who carries out the audit. It is not even true that the C&AG has no oversight of NDPBs which he does not audit. He has inspection rights—I think that is the point that the noble Lord, Lord Shaw, made—at all executive NDPBs. He is able to investigate matters of concern even where he is not the appointed auditor—and, as I said, he has done so in practice on many occasions.
The differences between us in regard to this amendment are very considerably practical. First, the noble Lord, Lord Higgins, wants the Bill to refer to, and to define, "non-departmental public bodies". He has taken the point that his previous term, "public service agencies", was too vague and is bravely trying to define these bodies on the face of the Bill. But his definition would still be as problematic as the term "public service agencies" because there are simply too many potential variations in non-departmental public bodies to capture in a single, legally sound definition. It is for good reason that there has never been an attempt by any government to define "non-departmental public bodies" in statute.
The third characteristic of the definition that the noble Lord proposes—that the body has an accounting officer designated by a government department—would mean that the Government could thwart the intention by not appointing an accounting officer. There is also a recipe for confusion in the combination of, on the one hand, an imperfect definition of these bodies and, on the other, the fact that the amendment automatically makes the C&AG the auditor of the bodies within the definition. Legal challenges could arise from those who think that a body which is not included should be included, or from those who think that a body which is included should not be included.
One has to compare these difficulties with the practical approach that we have taken in Clause 23(7)(a). With our approach, the Treasury is given the power to designate bodies to be audited by the C&AG on a case by case basis. It has to have regard to one of two conditions stipulated in the Bill: that the bodies must be exercising functions of a public nature; or must be,
"entirely or substantially funded from public money".

1425
Most important from Parliament's point of view is the fact that the Treasury must consult the C&AG before making any designation. Surely that is a more practical approach and more equitable between Parliament and the executive.
Of course, if Sharman was to recommend that there should be a widespread take-over of audit by the C&AG—and he may do that—it can be done in an orderly way without having to be done all at once. My charge of nationalisation was teasing, but there is an element of reality behind it.
My final point is that the amendment would make the Treasury and not the sponsoring department responsible for laying the accounts of those bodies before Parliament. That is odd because it would dilute the accountability of the sponsoring department for these bodies—which is the opposite of what I think is right.
Perhaps I may recap on what the Government have provided for in the Bill. Subsections (6) and (7) of Clause 23 give the Treasury an order-making power to enable the C&AG to be appointed the auditor of those NDPBs which he does not audit at present, including those which he is currently barred in statute from auditing—apart, that is, from NDPBs established as companies. Any designation to this effect by the Treasury will need to be approved by affirmative resolution of both Houses of Parliament. In addition, the Treasury is required to consult the C&AG before proposing a designation to Parliament. The Government's order-making provision takes full account of the interests of both Parliament and department. It has the advantage of not pre-empting the outcome of the Sharman review, which is expected towards the end of this year.
I am sorry, but despite the blandishments of the noble Lord, Lord Higgins, I cannot accept the amendment.
5.15 p.m.
Lord Higgins: My Lords, we can agree on one point: that is, that the Chief Secretary's description of the present situation as a "hotchpotch" is probably more accurate than my description of it as a "mess". The reality of the situation is that the present bodies which are not audited by the Comptroller and Auditor General are an odd assortment.
Having said that, my personal feeling is that the argument about Sharman is something of a red herring. I do not think that one needs a deep study to take the argument that, by and large, one size should fit all. In that context, I think that the point made by my noble friend Lord Shaw is important. One needs to consider whether there is a distinction between Ministers reporting to Parliament when an audit has been carried out by an outside body, and Ministers reporting to Parliament in the context of the direct approach of the National Audit Office to the Public Accounts Committee.
1426
I wish to consider very carefully what the Minister said. I feel that there is still a strong argument for taking a view on this matter in the Bill rather than waiting for Sharman—even if, as the noble Baroness suggested in her contribution from the Liberal Democrat Benches, the Sharman report may eventually gather dust. There is a case for clarifying the situation and we shall come back to it at Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins Lord Higgins moved Amendment No. 11:
After Clause 7, insert the following new clause—
PERFORMANCE STATEMENTS
(" .—(1) This section applies to any government department which is required to prepare resource accounts under section 5.
(2) A department to which this section applies in any financial year shall prepare a performance statement in respect of that year analysing the performance of the department in using the resources to which the accounts relate in achieving its objectives for that financial year.
(3) A department shall send its performance statement to the Comptroller and Auditor General with the resource accounts sent to him under section 5, or at such other time as the Comptroller and Auditor General may specify in respect of that statement.
(4) The Comptroller and Auditor General may examine any performance statement which he receives from a department under subsection (2) and may report on it to the House of Commons.
(5) Subsection (4) shall not entitle the Comptroller and Auditor General to question the merits of the policy objectives of a department to which the performance statement relates.").
The noble Lord said: Amendment No. 11 is concerned with the issue of performance statements. This is a point which has been very close to my heart over a number of years, given my previous role as chairman of the Liaison Committee, which has the task of co-ordinating the work of select committees, and also as chairman of the Treasury Committee. It has been a very long battle indeed to try to improve the performance statements which are available to Parliament, and in particular to ensure that those statements are valid. This amendment seeks to ensure that performance statements are made and are valid.
The present Public Accounts Committee and its predecessors going back to the time when the system was revised at the initiative of Mr Norman St JohnStevas (as he then was) have long held the view that performance reporting should be on a statutory basis and independently validated by the National Audit Office, in particular under the auspices of the Comptroller and Auditor General.
In discussing this matter in Grand Committee the Government stated that they were already committed to reporting annually to Parliament and the public on out-turn against targets. The reality is, however, that those statements are not audited, and it raises questions about the reliability of such unaudited accounts. Indeed, I gather that the Chief Secretary has agreed with the PAC that performance measures should be legitimate, credible and objective. For those principles to be achieved, a degree of independent validation is important. In various committee reports we have seen doubt cast on the validity or relevance of

1427
particular figures. That is of course true so far as concerns some of the performance figures of the National Health Service in particular.
The Government argue that this is either unnecessary or premature. That does not appear to be the case. Under the 1983 Act—with which I was much involved—the National Audit Office gave the C&AG statutory powers to undertake value-for-money studies, and these have been developed alongside performance indicators. But it seems to me that the situation needs to be carried forward and that we have an opportunity to do so in this Bill.
It is of course the case that similar statutory performance measures are appropriate elsewhere, particularly in the field of local government. It is not clear why they should be appropriate for local government but not for national government.
At an earlier stage the Minister argued that the new statistics commission would provide independent assurance on performance data and that to involve the C&AG would lead to duplication. I do not believe that that is so. The statistics commission and the C&AG play different roles. As I understand it, the statistics commission is concerned with the integrity of issues relating to national statistics, which is a very different thing from individual departmental statements.
Perhaps the Minister can confirm that the statistics commission will not be concerned with performance measures in individual departmental reports which are then normally examined by the departmentally related Select Committees. The amendment would move the matter forward. It would alleviate pressures which have been building up over many years. The amendment would ensure that the accounts take into consideration not only inputs, which are what most government accounts tend to deal with, but also the extent to which they achieve their outputs. That is very important. I hope that the Minister can accept the amendment. I beg to move.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord, Lord Higgins, for explaining the amendment. His understanding of it agrees with mine.
Perhaps I may speak about what we have been doing with regard to public service agreements. PSAs have been a revolutionary step in transparency and accountability. For the first time, in March this year, the British Government published a full statement in each department's annual report of performance against a detailed set of measurable and specific targets—every one of the targets set as a result of the 1998 Comprehensive Spending Review. This innovation, which has come to fruition since the amendment was first proposed—it has been in the pipeline since the targets were published—goes further than the amendment in making information on government performance widely and regularly available.
I am glad to say that in most cases the Government are on course. But the reports published in March are full and fair. Where information was not good, this
1428
was reported. Where slippage is concerned, we owned up to it and have explained why it happened. Where a target had fallen due for completion within the reporting period, and had not been met, the reasons were stated and the remedial action in train was set out. This is a step further in openness and accountability to Parliament and the public than any previous government have been brave and confident enough to undertake. But the Government recognise that this performance reporting revolution needs to be supported by good quality information from robust measurement systems. It is in our interest, and the interests of Parliament and the public service staff, to avoid cynicism and doubt about the information we publish.
The amendment proposed seems to aim at two of the objectives that the Government have been keen to promote through the PSA process: annual reporting of information; and the quality of that information. But it misses the mark on both counts. First, putting on a statutory basis the full and open reporting we already have in place would add nothing except rigidity, which would be counter-productive, into the system. PSA targets are only rarely tied to a financial year, as the noble Lord, Lord Higgins, will recall. As everyone who has taken part in government or public life will know, one cannot measure what happens in a department by what happens in a financial year. Sometimes it will be shorter and sometimes it will be longer. Much more useful than a statement linked inflexibly to a financial year is the practice we have now of reporting progress in a reporting period, and the proper reporting period, giving fuller commentary on success and slippage, even when the target deadline falls outside the period.
Secondly, treating the PSA targets like a financial audit, which is what the amendment in effect does, misses the point on information quality too. The NAO does not presently have the expertise to perform an information quality-checking function. The new statistics commission—I acknowledge, as the noble Lord, Lord Higgins said, that it does a different job—has been set up with the express purpose of commenting on departmental systems and commissioning audits in areas of concern. It should be given a chance to get established before other forms of validation are introduced.
That is not to say that we are opposed to the idea of external validation of performance information. Far from it. Indeed, I hope I have said that we recognise the benefits for the credibility of information that an external validator could bring. That is why we have created the statistics commission and used the NAO to audit the assumptions behind fiscal forecasts. These are both instances of our commitment to finding the right external process to validate a system where it is well bedded in and there is a convincing argument for bringing in an external body. Ministers have already said that we have an open mind. In principle we are willing to see the performance information systems being subject to external validation.

1429
However, the system has not yet been given a chance to bed down, nor has any worked-through and convincing proposal been made. The blunt instrument contained in the amendment is unsuited to the circumstances. There are several stages we need to go through before we introduce an external validator into this process. The statistics commission needs to be allowed time to find its feet. It will have an important role in quality assuring national statistics, which will be used to support many PSA targets.
The review of the noble Lord, Lord Sharman—and I am sorry to repeat the argument again, but it is still valid here—has a remit to look at these issues, among others. We need to give validation serious consideration and not prejudge that review. Many different things are meant by validation. There are many different kinds of information and systems that could be validated. Exactly the same form of quality assurance may not be appropriate for every part of government, nor all at the same time. I say this with some feeling as someone who spent a good deal of his business life in the monitoring and evaluation of public policy and who published a number of papers on the subject. Many PSA targets depend on information collected by local agents or bodies outside the public sector—bodies like my company in the past. The Treasury has been leading a group of experts, involving the NAO and Audit Commission, in working up a performance information strategy which is looking at many of these issues. That group is considering a number of options. It is not yet clear to the Government that the NAO will always be the best answer.
Finally, many departments are relatively new to the process of systematic gathering and reporting of performance information. It is sensible to give them a little time to refine their systems and improve them before deciding whether and how to check them externally. I argue therefore that it is premature to introduce a statutory requirement in that area. The Government have shown themselves open in principle and in practice. We have made a radical first step in transparency. But this is a dynamic area. The Government are willing to move towards external validation, but only on the basis of a thorough examination of the needs of departments, Parliament and the public.
Lord Higgins: My Lords, I have listened carefully to what the Minister said. I recognise the progress which has been made and to which he has referred. Having said that, I still have considerable doubts about the position of the statistics commission. The NAO has a particular relationship with Parliament and to Select Committees in general. However, taking into account everything that the Minister has said, I think that the amendment is not premature. I believe that there is a case for putting it into operation at this stage. I beg leave to ascertain the opinion of the House.
5.27 p.m.
On Question, Whether the said amendment (No. 11) shall be agreed to?
Their Lordships divided: Contents, 99; Not-Contents, 176.

Division No. 1

CONTENTS

Anelay of St Johns, B.

Hylton-Foster, B.

Astor of Hever, L.

Jopling, L.

Attlee, E.

Kelvedon, L.

Belstead, L.

Knight of Collingtree, B.

Biffen, L.

Lane of Horsell, L.

Blackwell, L.

Liverpool, E.

Blaker, L.

Mackay of Ardbrecknish, L

Blatch, B.

Marlesford, L.

Boardman, L.

Mayhew of Twysden, L.

Bowness, L.

Miller of Hendon, B.

Brabazon of Tara, L.

Monro of Langholm, L.

Bridgeman, V.

Montagu of Beaulieu, L.

Brittan of Spennithorne, L.

Mowbray and Stourton, L.

Brougham and Vaux, L.

Moynihan, L.

Burnham, L. [Teller]

Murton of Lindisfarne, L.

Byford, B.

Northbrook, L.

Campbell of Alloway, L.

Norton of Louth, L.

Carlisle of Bucklow, L.

O'Cathain, B.

Chadlington, L.

Onslow of Woking, L.

Clark of Kempston, L.

Oppenheim-Barnes, B.

Park of Monmouth, B.

Coe, L.

Peel, E.

Colwyn, L.

Platt of Writtle, B.

Cope of Berkeley, L.

Plummer of St. Marylebone, L.

Courtown, E.

Rees, L.

Crickhowell, L.

Renfrew of Kaimsthorn, L.

Cuckney, L.

Renton, L.

Dean of Harptree, L.

Roberts of Conwy, L.

Dixon-Smith, L.

Ryder of Wensum, L.

Eden of Winton, L.

Sanderson of Bowden, L.

Elliott of Morpeth, L.

Seccombe, B.

Ferrers, E.

Sharples, B.

Flather, B.

Shaw of Northstead, L.

Fookes, B.

Skelmersdale, L.

Fraser of Carmyllie, L.

Stewartby, L.

Gardner of Parkes, B.

Stodart of Leaston, L.

Geddes, L.

Strathclyde, L.

Gilmour of Craigmillar, L.

Swinfen, L.

Glentoran, L.

Taylor of Warwick, L.

Goschen, V.

Tebbit, L.

Hanham, B.

Thatcher, B.

Hayhoe, L.

Thomas of Gwydir, L.

Henley, L. [Teller]

Trefgarne, L.

Higgins, L.

Trumpington, B.

Hodgson of Astley Abbotts, L.

Vivian, L.

Hogg, B.

Waddington, L.

Howe, E.

Wade of Chorlton, L.

Howe of Aberavon, L.

Wilcox, B.

Howell of Guildford, L.

Windlesham, L.

Hunt of Wirral, L.

Young, B.

NOT-CONTENTS

Acton, L.

Bach, L.

Addington, L.

Barker, B.

Allenby of Megiddo, V.

Barnett, L.

Alli, L.

Bassam of Brighton, L.

Amos, B.

Beaumont of Whitley, L.

Ampthill, L.

Bernstein of Craigweil, L

Andrews, B.

Billingham, B.

Archer of Sandwell, L.

Blackstone, B.

Ashley of Stoke, L.

Blease, L.

Ashton of Upholland, B.

Borrie, L.

Avebury, L.

Bragg, L.

1431

Brennan, L.

Lovell-Davis, L.

Brett, L.

McCarthy, L.

Brooke of Alverthorpe, L.

Macdonald of Tradeston, L.

Brookman, L.

McIntosh of Haringey, L. [Teller]

Brooks of Tremorfa, L.

Bruce of Donington, L.

McIntosh of Hudnall, B.

Burlison, L,

MacKenzie of Culkein, L.

Carter, L. [Teller]

Mackenzie of Framwellgate, L

Chandos, V.

Mackie of Benshie, L.

Christopher, L.

McNally, L.

Clarke of Hampstead, L.

Marsh, L.

Clement-Jones, L.

Mason of Barnsley, L.

Cocks of Hartcliffe, L.

Massey of Darwen, B.

Craig of Radley, L.

Merlyn-Rees, L.

Crawley, B.

Milner of Leeds, L.

Currie of Marylebone, L.

Mishcon, L.

David, B.

Mitchell, L.

Davies of Coity, L.

Molloy, L.

Davies of Oldham, L.

Morris of Castle Morris, L.

Dean of Thornton-le-Fylde, B.

Morris of Manchester, L.

Desai, L.

Nicol, B.

Dholakia, L.

Palmer, L.

Diamond, L.

Parekh, L.

Dixon, L.

Patel, L.

Donoughue, L.

Patel of Blackburn, L.

Dormand of Easington, L.

Paul, L.

Dubs, L.

Peston, L.

Elder, L.

Phillips of Sudbury, L.

Evans of Parkside, L.

Plant of Highfield, L.

Evans of Temple Guiting, L.

Ponsonby of Shulbrede, L.

Evans of Watford, L.

Prys-Davies, L.

Falconer of Thoroton, L.

Puttnam, L.

Falkland, V.

Ramsay of Cartvale, B.

Farrington of Ribbleton, B.

Razzall, L.

Faulkner of Worcester, L.

Rea, L.

Filkin, L.

Redesdale, L.

Fitt, L.

Rees-Mogg, L.

Gale, B.

Rendell of Babergh, B.

Geraint, L.

Rennard, L.

Gibson of Market Rasen, B.

Richard, L.

Gladwin of Clee, L.

Rodgers of Quarry Bank, L.

Goldsmith, L.

Roper, L.

Goodhart, L.

Sainsbury of Turville, L.

Gordon of Strathblane, L.

Sawyer, L.

Gould of Potternewton, B.

Scotland of Asthal, B.

Grabiner, L.

Serota, B.

Graham of Edmonton, L.

Sharp of Guildford, B.

Grenfell, L.

Shepherd, L.

Hardy of Wath, L.

Sheppard of Liverpool, L.

Harris of Haringey, L.

Shore of Stepney, L.

Harrison, L.

Shutt of Greetland, L.

Hayman, B.

Simon, V.

Hilton of Eggardon, B.

Smith of Clifton, L.

Hogg of Cumbernauld, L.

Smith of Gilmorehill, B.

Hollis of Heigham, B.

Smith of Leigh, L.

Howells of St. Davids, B.

Stoddart of Swindon, L.

Howie of Troon, L.

Stone of Blackheath, L.

Hoyle, L.

Symons of Vernham Dean, B.

Hughes of Woodside, L.

Taverne, L.

Hunt of Kings Heath, L.

Taylor of Blackburn, L.

Islwyn, L.

Thomas of Walliswood, B.

Janner of Braunstone, L.

Thornton, B.

Jay of Paddington, B. (Lord Privy Seal)

Tomlinson, L.

Tordoff, L.

Jeger, B.

Turnberg, L.

Jenkins of Hillhead, L.

Uddin, B.

Jenkins of Putney, L.

Varley, L.

Judd, L.

Walker of Doncaster, L.

King of West Bromwich, L.

Wallace of Saltaire, L.

Laird, L.

Walpole, L.

Lea of Crondall, L.

Watson of Richmond, L.

Lester of Herne Hill, L.

Wedderburn of Charlton, L.

Lipsey, L.

Whitaker, B.

Lockwood, B.

Whitty, L.

Lofthouse of Pontefract, L.

Wilkins, B.

Longford, E.

Williams of Crosby, B.

1432

Williams of Elvel, L.

Winston, L.

Williams of Mostyn, L.

Woolmer of Leeds, L

Resolved in the negative, and amendment disagreed to accordingly.
5.38 p.m.
Clause 8 [Comptroller and Auditor General: access to information]:
Viscount Bridgeman Viscount Bridgeman moved Amendment No. 12:
Page 5, line 25, leave out ("relating to") and insert ("relevant to his examination of").
The noble Viscount said: My Lords, we have brought forward a fresh amendment because we believe that the right of access remains a fundamental issue for the Comptroller and Auditor General. That arises because of the major changes which have taken place in the way the Government now operate. The Bill as drafted confines the powers of the C&AG to access within the walls the government departments as if the machinery of government was the same as in 1866 when departments provided most of the services. But nowadays a wide variety of different bodies deliver public services, some of which the C&AG does not audit. Audit arrangements have not kept pace with the changes in the structure of government. As a result, Parliament's ability to scrutinise the use of public funds has been reduced.
The C&AG's independence is diminished by his reliance on negotiating his way into a number of bodies to provide the assurance to which Parliament is entitled. That is costly in time. One might also say that it is not consistent with the standing of the office. The noble Baroness, Lady Sharp of Guildford, cited instances where negotiations with the Housing Corporation and with Camelot dragged on for years. I could add to those similar protracted discussions with the Royal Palaces and with training and enterprise companies. I believe that there could be cases where the institutions concerned refuse to cooperate. In those circumstances, Parliament would be the loser.
By accepting that the C&AG, where he does not have statutory rights, then has to negotiate, the Minister has also accepted that, on occasions, he needs rights of access to private contractors. That has not deterred firms from coming forward to provide services for government or to negotiate PFI deals. However, negotiated rights on an individual basis require time-consuming discussions between the NAO and the relevant departments. As I have already said, they undermine the independence of the C&AG.
In Grand Committee we tabled an amendment which was supported by the Liberal Democrats. It sought to bring up to date the access rights of the C&AG. I hope that the Minister will agree that a fair summary of the Government's objections to the amendment appeared to be that it would significantly increase the access rights of the C&AG, thus allowing him to follow public money wherever it goes and that, as a result, he would duplicate the work of other bodies and would be a burden on private sector firms. The

1433
Minister went on to say that extended access for the C&AG might deter contractors from competing for PFI work—a point that I have already discounted.
I shall consider those arguments, but I should like, first, to make the point that, in our view, our previous amendment would not have extended the powers of the C&AG as much as the Minister said. He stated that the original amendment would have had the effect of giving the C&AG access to the books and records of private sector firms on the same basis as that of the Inland Revenue. However, the C&AG already has access to the records collected by the Inland Revenue because he is the auditor for the Revenue. His staff already see individual records on a confidential basis. Although those powers are rarely used—something in the order of half of 1 per cent of visits undertaken by the Inland Revenue are accompanied by the C&AG—they are available to him.
The Government have also said that giving the C&AG wider statutory powers would allow him to follow public money wherever it went. Even our original amendment would not have conferred the same powers in the United Kingdom as those possessed by the staff of the Luxembourg-based Court of Auditors or as the Audit Commission and Accounts Commission in Scotland enjoy when auditing local government accounts. Such rights of access have not brought local government to a standstill or impeded imaginative partnerships within the private sector. The Government appear to accept that the Audit Commission and the European Court of Auditors require strong statutory powers, but apparently are not happy for those powers to be matched by Parliament's own auditor.
Perhaps I may explain what the new Amendment No. 13 seeks to achieve. In so doing, perhaps I may also take account of the Minister's concerns. The amendment as tabled would confine the C&AG to statutory access to documents held or controlled by government bodies as well as documents to which those bodies have or can obtain access. It would thus give access to the same documents and information as central government bodies secure for themselves—and no more. That would enable the C&AG to undertake an independent check that government bodies are fulfilling their responsibilities to account for the proper use of taxpayers' funds entrusted to them. It gives statutory access where, in many cases, negotiated access already exists. This will help to cut back on the need for time-consuming negotiations.
It also gives statutory form to guidance already issued by the Treasury which states that the C&AG must have access to the records of PFI contractors. Placing it on the statute will ensure that clauses are not missed out of contracts by accident.
Perhaps I may briefly summarise what the amendment will not do. It will not give greater access to information and documents than accounting officers have in accounting to Parliament for the use they have made of public money. It will not allow the C&AG or his staff to go on fishing trips. The statutory right will cover only the examination of the
1434
department's accounts and will cover only documents relevant to this examination. I refer to the word "relevant" in Amendment No. 12.
The amendment will ensure that the C&AG is not provided with statutory access to the records of local government. It will not provide access to subcontractors or other bodies at a distance from local government. This addresses the Minister's comment concerning the additional burden on small businesses. Lastly, it will not allow the C&AG to follow public money wherever it goes, however desirable noble Lords and Members of another place think that power would be.
In short, powers of access will not be increased; they are simply placed on a firmer footing. Public money is not followed to small employers unless they contract with government bodies. It will not impose a regulatory burden. The C&AG will draw on the work of other bodies wherever needed, as he does already.
I should like to make one further important point. In its ninth report, the Public Accounts Committee expressed concern that it is unsatisfactory that departments regularly secure greater powers of access to service deliverers than are secured for Parliament's watchdog, the C&AG. I suggest that this amendment will address that concern.
It has been suggested that it is not appropriate for the C&AG to have the same right of access as departments because the Government have a larger range of responsibilities than has the C&AG. We believe that that argument is difficult to sustain. In some quarters it could be held strongly that the C&AG's responsibility to Parliament in itself demands all the rights of access it needs to perform its work effectively. This proposition suggests a kind of pecking order for degrees of rights of access.
If concern is felt at the additional cost to public funds of granting the C&AG these limited wider powers, I am sure that he, like everyone else, is constrained by his resources, for which he is held accountable to a parliamentary commission. It is not in the C&AG's interest to do unnecessary work, but he must have the powers necessary to carry out his work professionally and in the modern context of government. I beg to move.
5.45 p.m.
Baroness Sharp of Guildford: My Lords, as the noble Viscount, Lord Bridgeman, has already said, in Grand Committee we on these Benches supported similar amendments tabled by the official Opposition. We continue to support them. We feel that an issue of principle is at stake here. The Comptroller and Auditor General has audit responsibility, but at present he does not have all the powers necessary to fulfil that responsibility. We think that it is important that he should be given those powers.

1435
Furthermore, we think that the Opposition has made a considerable attempt to redraft the earlier amendment so as to take account of the objections raised by the Government on this issue. For that reason, we are inclined to offer our support.
Lord McIntosh of Haringey: My Lords, I hope that I shall be able to remove the noble Baroness's inclination, because the amendments before the House do not achieve what the noble Viscount, Lord Bridgeman, seems to think that they will achieve. He believes that they will address the concerns we expressed on the previous proposed new clause, but I have to say that they do no such thing. The amendments will still increase the statutory rights of access of the Comptroller and Auditor General far beyond what is reasonable.
Perhaps I may deal principally with Amendment No. 13, which is the most substantive in this group of amendments. The amendment would give the C&AG rights of access to documents,
"which are held or controlled by a government department".
That is perfectly reasonable. The Bill already contains those words in Clause 8(2)(a). However, the amendment goes on to say that it would give the C&AG rights of access to documents,
"which are held or controlled by a non-departmental body".
That is where we start to have problems, because the provision again raises the problems which flow from trying to define non-departmental public bodies (NDPBs) on the face of the Bill, and to which I have already referred in connection with the amendment on the audit of NDPBs. Perhaps I may emphasis that NDPBs are an enormously varied group of bodies. There are too many potential variations of NDPBs to capture within a single legally sound definition. For that reason, they have never been defined in statute.
Of most concern, however, is the final part of the amendment. It would give the C&AG a right of access to documents,
"to which a government department or a relevant non-departmental public body has, or can obtain, access".
This provision would allow the C&AG a much greater degree of access than at present, and far more than is necessary. First, he would have unrestricted access to all bodies, public or private, which are funded by, or are contractors to, departments and NDPBs. The amendment would give him access to bodies such as housing associations, which are private sector bodies supervised and part funded by the Housing Corporation, or to train operating companies, which are private sector companies supervised and part funded by the rail regulators, which are government departments, leading to a burdensome overlap of scrutiny and duplication of regulatory functions. Audit and regulation must be kept separate.
To the extent that a department itself has or can obtain access to its suppliers' documents, the amendment would provide access to every such supplier even if they only provided paper clips or cleaned the windows.
1436
The amendment would also give the C&AG access to virtually every body receiving public money—including in theory those many individuals in receipt of social payments to the extent that the funding department has access.
Most alarmingly, the amendment would allow the C&AG access to the books and records of private sector firms on the same basis as the Inland Revenue in examining whether tax credits have been properly calculated or as Customs and Excise in relation to VAT. Such access would be both a duplication of oversight and unnecessarily intrusive.
The noble Viscount, Lord Bridgeman, thought that an argument in favour of the amendment was that the C&AG has access under certain circumstances, rarely used, to Inland Revenue records. Indeed, that is the case. But the amendment provides for him to have separate access to all those people who are at present vulnerable to access by the Inland Revenue and Customs and Excise.
I remind the House that at the beginning of this year, when these concerns were first raised, Accountancy Age published an article on 27th January recording the deep reservation on the part of business as regards allowing the National Audit Office to audit firms and companies handling the working families' tax credit. The British Chambers of Commerce and the Federation of Small Businesses have said that the measure would only increase the burden of red tape on small and medium-sized firms. These amendments still do that. I shudder to think what my noble friend Lord Haskins and the Better Regulation Task Force would think about the amendment if it were put forward by the Government, let alone, most extraordinarily, by the Conservative Opposition.
Moreover, there is no evidence that the C&AG needs these powers. Let us consider the facts. The C&AG has now audited the first set of "dry run" resource accounts and, although he qualified a number of accounts, he did not qualify one on the grounds of insufficient access. He has also recommended to the PAC that the move to resource accounts and budgeting should go ahead. Would he have done so if he had had serious doubts about his ability under present powers to carry out the audit?
During the PAC's hearing on 7th June on the introduction of resource accounting and budgeting, the Comptroller and Auditor General, Sir John Bourn, said in response to Question 47, that,
"the operation of the new system does not depend on the extension of the Comptroller and Auditor General's powers".
Those words indicate that a significant extension of the Comptroller and Auditor General's access (which I assume is what the amendment means) is not actually needed for the practical purpose of auditing department accounts, which is what Clause 8 of the Bill is concerned with.
I have technical criticisms of the amendments with which I shall not weary the House. The amendments are defective. The wording in the Bill that would be changed by the amendments has been in legislation since 1866, and it seems rather strange to change it

1437
now, nearly a century and a half later. But the fundamental point is that the Bill as it stands allows the C&AG to continue to deliver his very high standard of audit. He does not need these sweeping and intrusive new powers of access in order to audit department accounts. I cannot accept the amendments, and I cannot believe that the Conservative Party, above all, will wish to press them.
Viscount Bridgeman: My Lords, I find that reply disappointing. The suggestion that the structure of government has not changed since 1866 leaves me slightly perplexed. We shall study the Minister's remarks carefully, but we shall look at them most critically. That said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 13 and 14 not moved.]
Clause 9 [Preparation]:
[Amendments Nos. 15 to 20 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 21:
Page 6, line 11, at end insert—
("( ) For the purpose of subsection (4)(a) and (b) the Treasury shall in particular—

(a) have regard to any relevant guidance issued by the Accounting Standards Board Limited or any other body prescribed for the purposes of section 256 of the Companies Act 1985 (accounting standards), and

(b) ensure that the accounts include, subject to paragraph (a), a statement of financial performance, a statement of financial position and a cash flow statement.").

The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 2. I beg to move.
Lord Higgins Lord Higgins moved, as an amendment to Amendment No. 21, Amendment No. 22:
Line 4, leave out ("have regard to") and insert ("accept").
The noble Lord said: My Lords, I beg to move, and seek the opinion of the House.
5.55 p.m.
On Question, Whether Amendment No. 22, as an amendment to Amendment No. 21, shall be agreed to?
Their Lordships divided: Contents, 94; Not-Contents, 165.

Division No. 2

CONTENTS

Allenby of Megiddo, V.

Bridgeman, V.

Alton of Liverpool, L.

Brittan of Spennithorne, L

Anelay of St Johns, B.

Brougham and Vaux, L.

Astor of Hever, L.

Burnham, L. [Teller]

Attlee, E.

Byford, B.

Belstead, L.

Campbell of Alloway, L.

Biffen, L.

Carlisle of Bucklow, L.

Blaker, L.

Chadlington, L.

Boardman, L.

Clark of Kempston, L.

Bowness, L.

Colwyn, L.

Brabazon of Tara, L.

Cope of Berkeley, L.

1438

Courtown, E.

Mowbray and Stourton, L.

Craig of Radley, L.

Moynihan, L.

Crickhowell, L.

Murton of Lindisfarne, L.

Cuckney, L.

Northbrook, L.

Dean of Harptree, L.

Norton of Louth, L.

Dixon-Smith, L.

O'Cathain, B.

Elliott of Morpeth, L.

Onslow of Woking, L.

Feldman, L.

Oppenheim-Barnes, B.

Ferrers, E.

Palmer, L.

Fookes, B.

Park of Monmouth, B.

Fraser of Carmyllie, L.

Peel, E.

Gardner of Parkes, B.

Platt of Writtle, B.

Geddes, L.

Plummer of St. Marylebone, L

Gilmour of Craigmillar, L.

Renton, L.

Glentoran, L.

Roberts of Conwy, L.

Goschen, V.

Sanderson of Bowden, L.

Hanham, B.

Sharples, B.

Hayhoe, L.

Shaw of Northstead, L.

Henley, L. [Teller]

Skelmersdale, L.

Higgins, L.

Stewartby, L.

Hodgson of Astley Abbotts, L.

Stodart of Leaston, L.

Hogg, B.

Strathclyde, L.

Howe, E.

Swinfen, L.

Howe of Aberavon, L.

Tebbit, L.

Hunt of Wirral, L.

Thatcher, B.

Jopling, L.

Thomas of Gwydir, L.

Kelvedon, L.

Trefgarne, L.

Knight of Collingtree, B.

Trumpington, B.

Lane of Horsell, L.

Vivian, L.

Lucas, L.

Waddington, L.

Mackay of Ardbrecknish, L.

Wade of Chorlton, L.

Marlesford, L.

Walker of Worcester, L.

Masham of Ilton, B.

Weatherill, L.

Mayhew of Twysden, L.

Wilcox, B.

Monro of Langholm, L.

Windlesham, L.

Montagu of Beaulieu, L.

Young, B.

NOT-CONTENTS

Acton, L.

Desai, L.

Addington, L.

Dholakia, L.

Alli, L.

Diamond, L.

Amos, B.

Dixon, L.

Andrews, B.

Donoughue, L.

Archer of Sandwell, L.

Dormand of Easington, L.

Ashley of Stoke, L.

Dubs, L.

Ashton of Upholland, B.

Elder, L.

Avebury, L.

Evans of Parkside, L.

Bach, L.

Evans of Temple Guiting, L.

Barker, B.

Evans of Watford, L.

Barnett, L.

Falconer of Thoroton, L.

Bassam of Brighton, L.

Falkland, V.

Beaumont of Whitley, L.

Farrington of Ribbleton, B.

Bernstein of Craigweil, L.

Faulkner of Worcester, L.

Billingham, B.

Filkin, L.

Blackstone, B.

Fitt, L.

Blease, L.

Gale, B.

Borrie, L.

Geraint, L.

Bragg, L.

Gibson of Market Rasen, B.

Brennan, L.

Gladwin of Clee, L.

Brett, L.

Goldsmith, L.

Brooke of Alverthorpe, L.

Goodhart, L.

Brookman, L.

Gordon of Strathblane, L.

Brooks of Tremorfa, L.

Gould of Potternewton, B.

Burlison, L.

Grabiner, L.

Carter, L.[Teller]

Graham of Edmonton, L.

Chandos, V.

Grenfell, L.

Christopher, L.

Hardy of Wath, L.

Clarke of Hampstead, L.

Harris of Haringey, L.

Cocks of Hartcliffe, L.

Harrison, L.

Crawley, B.

Hayman, B.

Currie of Marylebone, L.

Hilton of Eggardon, B.

David, B.

Hollis of Heigham, B.

Davies of Coity, L.

Howells of St. Davids, B.

Davies of Oldham, L.

Howie of Troon, L.

Dean of Thornton-le-Fylde, B.

Hoyle, L.

1439

Hughes of Woodside, L.

Prys-Davies, L.

Hunt of Kings Heath, L.

Puttnam, L.

Irvine of Lairg, L. (Lord Chancellor)

Ramsay of Cartvale, B.

Razzall, L.

Islwyn, L.

Rea, L.

Janner of Braunstone, L.

Rendell of Babergh, B.

Jay of Paddington, B. (Lord Privy Seal)

Rennard, L.

Richard, L.

Jeger, B.

Rodgers of Quarry Bank, L

Jenkins of Putney, L.

Roper, L.

Judd, L.

Sainsbury of Turville, L.

King of West Bromwich, L.

Sawyer, L.

Laird, L.

Scotland of Asthal, B.

Lea of Crondall, L.

Serota, B.

Lester of Herne Hill, L.

Sharp of Guildford, B.

Lipsey, L.

Shepherd, L.

Lockwood, B.

Sheppard of Liverpool, L.

Lofthouse of Pontefract, L.

Shutt of Greetland, L.

Longford, E.

Simon, V.

Lovell-Davis, L.

Smith of Clifton, L.

McCarthy, L.

Smith of Gilmorehill, B.

Macdonald of Tradeston, L.

Smith of Leigh, L.

McIntosh of Haringey, L. [Teller]

Stoddart of Swindon, L.

Stone of Blackheath, L.

McIntosh of Hudnall, B.

Symons of Vernham Dean,B

MacKenzie of Culkein, L.

Taverne, L.

Mackenzie of Framwellgate, L.

Taylor of Blackburn, L.

Mackie of Benshie, L.

Thomas of Walliswood, B.

Mason of Barnsley, L.

Thornton, B.

Massey of Darwen, B.

Tomlinson, L.

Merlyn-Rees, L.

Tordoff, L.

Milner of Leeds, L.

Turnberg, L.

Mitchell, L.

Uddin, B.

Molloy, L.

Varley, L.

Morris of Castle Morris, L.

Walker of Doncaster, L.

Morris of Manchester, L.

Wallace of Saltaire, L.

Nicol, B.

Walpole, L.

Northover, B.

Watson of Richmond, L.

Parekh, L.

Wedderburn of Charlton, L

Patel, L.

Whitaker, B.

Patel of Blackburn, L.

Whitty, L.

Paul, L.

Wilkins, B.

Peston, L.

Williams of Crosby, B.

Phillips of Sudbury, L.

Williams of Elvel, L.

Pitkeathley, B.

Williams of Mostyn, L.

Plant of Highfield, L.

Winston, L.

Ponsonby of Shulbrede, L.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.6 p.m.
[Amendment No. 23, as an amendment to Amendment No. 21, not moved.]
On Question, Amendment No. 21 agreed to.
Clause 15 [Finance]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 24:
Leave out Clause 15 and insert the following new clause—
FINANCE
(".—(1) If it appears to the Secretary of State to be expedient in consequence of any of the matters specified in subsection (2), he may by order amend, repeal or make provision similar to any of the following provisions of the Government of Wales Act 1998—

(a) section 81 (statements by Secretary of State),

(b) section 85 (expenditure by National Assembly), and

(c) section 86 (statements by National Assembly).

(2) The matters mentioned in subsection (1) are—

(a) any provision of this Act,

(b) a change in the accounting methods used by the National Assembly,

(c) a change in the procedures of the House of Commons relating to public money, and

(d) a change in the form of Appropriation Acts.

(3) An order under this section—

(a) shall be made by statutory instrument,

(b) may include incidental or transitional provision, and

(c) shall not be made unless a draft has been laid before, and approved by resolution of, each House of Parliament.

(4) The Secretary of State—

(a) shall consult the National Assembly before making an order under this section which relates to section 81 of the Government of Wales Act 1998, and

(b) shall not make an order under this section which relates to section 85 or 86 of that Act unless a draft has been laid before, and approved by resolution of, the National Assembly.").

The noble Lord said: My Lords, this amendment substitutes a new clause for the existing Clause 15. It empowers the Secretary of State, which in practice means the Secretary of State for Wales, to make changes to Sections 81, 85 and 86 of the Government of Wales Act in consequence of the accounts and budget of the UK Government changing from a cash to a resources basis. The intention is that the accounts and budget of the National Assembly will, at the same time, also move to a resources basis. The power will enable the Secretary of State to make appropriate changes to those provisions in the Government of Wales Act to ensure that the National Assembly's budgetary processes can be changed to a resources basis.
The power is exercisable by order and will be made by statutory instrument. Before the Secretary of State can exercise the power he needs to consult the National Assembly in so far as he is changing Section 81, which provides for the Secretary of State to make a statement of his estimated payment for each financial year. He will be required to obtain the Assembly's agreement before he can change Sections 85 and 86, which deal respectively with expenditure by the National Assembly and its statement of proposed expenditure for each financial year. In addition, to ensure that proper parliamentary scrutiny of this power is maintained the Secretary of State will be required to lay a draft of any order before both Houses of Parliament for their approval.
We believe that this is a necessary power whose limits have been clearly defined and is subject to a high level of parliamentary scrutiny and National Assembly involvement. I am pleased to say that in its 23rd report the Select Committee on Delegated Powers and Deregulation was satisfied that the order-making power was appropriate. I beg to move
Lord Higgins Lord Higgins: My Lords, we had noted the views of the Select Committee on Delegated Powers and Deregulation in relation to this amendment. I ask the

1441
following simple question. Can the National Assembly for Wales do anything about this if it does not like something?
Lord McIntosh of Haringey: My Lords, it can do two different things. Any amendments to Section 81 require that the National Assembly be consulted. It could happen after consultation. Amendments to Sections 85 and 86 of the Government of Wales Act require the consent of the Assembly. Section 81 is concerned with the way in which the Secretary of State for Wales reports on financial matters, whereas the other provisions require the consent of the Assembly.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 25:
After Clause 19, insert the following new clause—
INVESTMENT BY DEVOLVED ADMINISTRATIONS
(".—(1) Any of the following may incur expenditure for the purpose of investing in the body mentioned in section 16—

(a) the Scottish Ministers,

(b) the Northern Ireland departments, and

(c) the National Assembly for Wales.

(2) Subsection (1)—

(a) shall have effect notwithstanding an enactment which restricts the activities of a person or body mentioned in that subsection to matters relating to a particular Part or area of the United Kingdom, and

(b) shall not be construed as preventing or restricting any action which a person or body has power to take without reliance on that subsection.

(3) The power under subsection (1) may be used only for the purpose of—

(a) the acquisition from the Treasury of shares of a kind which are required by the body's articles of association to be issued to the Treasury (and which may be transferred by the Treasury), and

(b) such other forms of investment (whether by the acquisition of assets, securities, rights or otherwise) as the Treasury may specify by order.

(4) An order under subsection (3)(b)—

(a) may relate generally to persons and bodies mentioned in subsection (1) or to one or more specified persons or bodies,

(b) may make different provision for different purposes,

(c) shall he made by statutory instrument, and

(d) shall be subject to annulment in pursuance of a resolution of either House of Parliament.").

The noble Lord said: My Lords, the Government are introducing this new clause to provide the devolved administrations in Scotland, Wales and Northern Ireland with the opportunity to invest in Partnerships UK. Clause 16 currently authorises the Treasury to incur expenditure for the purposes of the establishment of this body, investment in it and the making of other financial provision for it. The additional legislative provision is needed to permit the devolved authorities to invest in Partnerships UK plc because it will carry on business throughout the United Kingdom and, therefore, to an extent, beyond the legislative and executive competence of each devolved authority. Such
1442
investment by the devolved administrations will therefore be completely in keeping with the UK-wide coverage of the new company.
The Government have consulted the relevant authorities in the devolved administrations. They have all welcomed the opportunity that the new clause will provide. I hope that will be welcomed in this House also. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 26:
After Clause 22, insert the following new clause—
ADVISORY BOARD
(".—(1) Before—

(a) issuing directions under section 5(2), or

(b) determining the form and content of accounts under section 9,

the Treasury shall consult a group of persons who appear to the Treasury to be appropriate to advise on financial reporting principles and standards.
(2) Before selecting a group for the purpose of subsection (1) the Treasury shall consult the Comptroller and Auditor General.
(3) Where a group is consulted under subsection (1) in a particular year, the Treasury shall arrange for the group to prepare a report for that year—

(a) summarising the activities of the group for the purpose of the consultation, and

(b) dealing with such other matters as the group consider appropriate.

(4) Where a report is prepared under subsection (3), the Treasury shall arrange for it to be laid before the House of Commons.").
The noble Lord said: My Lords, I beg to move.
[Amendment No. 27, as an amendment to Amendment No. 26, not moved.]
On Question, Amendment No. 26 agreed to.
[Amendment No. 28 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 29:
Page 19, line 21, at end insert—
("( ) For the purpose of subsection (5)(a) and (b) the Treasury shall in particular—

(a) have regard to any relevant guidance issued by the Accounting Standards Board Limited or any other body prescribed for the purposes of section 256 of the Companies Act 1985 (accounting standards), and

(b) require the accounts to include, subject to paragraph (a), a statement of financial performance, a statement of financial position and a cash flow statement.").

On Question, amendment agreed to.

Terrorism Bill
6.13 p.m.
Read a third time.
Clause 1 [Terrorism: interpretation]:
Lord Goodhart Lord Goodhart moved Amendment No. 1:
Page 1, line 7, after ("of") insert ("criminal").
The noble Lord said: My Lords, in moving Amendment No. 1, I shall speak also to Amendments Nos. 2 to 8.
The present definition of terrorism contained in Clause 1 of the Bill was introduced on Report. On that occasion, the view was taken that the Government's then amendment was an improvement on the original version of the Bill which had arrived from the other place, but that time was required to think about it to see whether it could be improved still further. Challenge was therefore not made to the amendment at Report stage. However, notice was given that several amendments would be tabled to improve the definition further if it were thought possible and appropriate. The conclusion has been reached that the amendment could be significantly improved, and therefore amendments have been put down in order to do that.
The main defect in the present definition of "terrorism" as now in the Bill is that it brings action,
"to influence the government",
into the definition even if the action involves no threat to the public. It is believed that that is too wide a definition, even in the case of a democratic government, and much more so in the case of oppressive and undemocratic governments.
The aim of a definition must be to include within it everything we want and to exclude everything we do not want. That has proved particularly troublesome in the case of the definition of terrorism, and it is clear that an ideal definition on which there could be complete consensus will not be reached. But it is believed that the amendments put down on the Marshalled List tighten up the definition and bring it closer to the ideal.
The key amendment in the group is Amendment No. 4. It removes any reference to influencing the government from the definition of terrorism. It makes the intimidation of the public or a section of the public an essential element in terrorism.
There is, however, one major exception, and that is covered by subsection (3) of Clause 1, as amended, as we propose, by Amendment No. 6. It is believed that any organisation which adopts murder as a method of operation, and does so for political, religious or ideological purposes, should be regarded as a terrorist organisation even if the public are not the targets of the killing. Therefore, it is believed that a campaign of assassination against members of a government is a terrorist campaign, even if that government are oppressive, and even if the campaign involves no threat to members of the public.
Subsection (3) as now drafted excludes any necessity to show an intention to influence a government or intimidate the public where the action in question involves firearms or explosives, but it is not believed that assassination by gun or bomb is worse than assassination by, for example, poison or strangling. On the other hand, it is not believed that the use of explosives, where there is no threat to life—for example, by blowing up television or radio
1444
transmission towers when care has been taken to ensure there is no danger to individuals—is worse than other forms of terrorism.
Amendment No. 6 therefore widens subsection (3) by extending it to all methods of killing, but narrows subsection (3) by limiting it only to killing. It is believed that that makes subsection (3) better targeted than it is at present.
Amendment No. 3 deals with one problem which was raised during the course of my discussion with the Home Secretary last week when seeking to reach agreement on the issue. The Home Secretary stated that removing reference to "influencing" the Government was not enough because a terrorist group could blackmail the government, for example, for the purpose of obtaining the release of a member of its organisation held in a prison by threatening to poison the water supply. It may be that the Government, in order to avoid public panic, keeps that threat secret. It is suggested therefore that the terrorist threat cannot be said to intimidate the public because the public do not know.
That appeared to be a fair point. Amendment No. 3 therefore now deals with the problem by stating that a threat which is directed against the public can be terrorism even though the public do not know about it and are therefore not intimidated by the threat.
Amendment Nos. 2 and 8 are consequential.
Amendment Nos. 1 and 7 raise a different plight. It is possible to envisage some types of strike action, for example, which could cause a serious risk to health or to the safety of the public, or a section of the public. It is not thought that anything of that kind has actually happened in this country, but on occasions in the past the country has been quite close to it. One does not need to go as far back as the General Strike in 1926, but one could go back, for instance, to the miners' strike in 1973 and 1974. However, it is not thought that most people would have regarded the National Union of Mineworkers at that time as potentially a terrorist organisation, or Arthur Scargill as a terrorist, still less Joe Gormley.
It is proposed by Amendments Nos. 1 and 7 to limit the action covered by Clause 1 to criminal action only. It is believed that these amendments tighten up the definition of terrorism. It is believed that they simplify the definition by excluding the need to include any reference to governments. They restrict the definition of terrorism to the basic meaning; either a threat to the public or a section of the public, or an assassination campaign. It is also believed that these amendments do that without presenting any damage to the effectiveness of the Bill in fighting terrorism, internal or external, which is, of course, an objective with which my colleagues and I are in full support. I beg to move.
Lord Cope of Berkeley: My Lords, this interesting group of amendments is directed towards the definition of terrorism. Having discussed the definition throughout the various stages of the Bill, it

1445
has been greatly improved. However, that does not mean that it is perfect and some interesting suggestions are incorporated in these amendments.
Amendment No. 6 limits subsection (3) to:
"The use or threat of action … intended to cause death",
as opposed to,
"The use or threat of action … which involves the use of firearms or explosives".
I can think of many instances involving the destruction of property without any intention to cause death—and sometimes on a large scale with warnings given and so forth. They have occurred in Northern Ireland and here in Great Britain.
Sometimes such incidents resulted in deaths or serious injury against the apparent wishes of the terrorists because the warning was not sufficiently precise, or it was not acted on sufficiently quickly, or there was some other mischance. After such an incident, terrorists have sometimes claimed that they did not intend the deaths; they merely intended to damage the building. They have said, for example, that it was the fault of the police that someone was killed in the process. Therefore, I am not sure that the use of the words "intended to cause death" are sufficient, but it is in the drafting of the Liberal Democrat amendment.
There is a wider point as to whether the bombing of a building, electrical or telephone cables, a railway and so forth should be regarded automatically as a terrorist event for the purposes of subsection (3). As regards terrorists, there are a number of motives for attacking a building without intending to cause injury or death. One of them is the preservation of rackets. There are some elaborate rackets in parts of Northern Ireland. For example, in some areas there are no conventional public houses, only clubs run by those linked to terrorist organisations. If a proprietor of an ordinary pub built a new one and threatened the monopoly of the rackets he would, to say the least, risk the premises being bombed. That has happened in the past.
Other incidents have involved a deliberate attack on employment—for example, the destruction of factories and so forth—so as to put off investment and damage the economy of Northern Ireland in particular. Those are just as much terrorist actions and have been part of co-ordinated campaigns from both sides of the political and religious divide in Northern Ireland. Nevertheless, the incidents were not intended to cause death or serious injury. Therefore, from that point of view I am nervous about Amendment No. 6.
Lord Goodhart: My Lords, I am grateful to the noble Lord for giving way. Would he accept that even the existing drafting of subsection (3) would not apply to, for instance, soaking the premises with petrol and then setting light to it, which would be just as effective a way of destroying the would-be pub as explosives?
Lord Cope of Berkeley: My Lords, yes. The noble Lord earlier put his finger on one of the difficulties of subsection (3); that it is limited to firearms and explosives when there are other ways of killing people
1446
and of damaging property. All that draws attention to the fact that the definition is not yet perfect and not that the wording in Amendment No. 6 is to be preferred to the wording in the Bill.
I believe that it is important to leave in the words which Amendments Nos. 3 and 4 propose to leave out. There have been many attacks on government, mostly assassinations and so forth. One can think of several Members of Parliament, former colleagues, who have been assassinated. In addition, the Downing Street bomb and such like were not directed against the public but against government. However, presumably they would be covered by subsection (3) whether or not Amendment No. 6 were agreed to. Some of the threats designed by terrorists in other countries have been designed to influence the government rather than to intimidate the public or a section of them. Logically, either of those events appears to be terrorism.
The noble Lord, Lord Beaumont, has tabled an interesting amendment to which reference has not yet been made. It provides that suicide or attempted suicide is not to be treated as terrorism if other people are not endangered. I am looking forward to hearing the noble Lord speak to that interesting amendment and to hearing the Minister's response.
Lord Beaumont of Whitley: My Lords, there is a long and valuable tradition of non-violent civil disobedience in this country. The Green Party and many others regard it as most important that the legislation does not chip away at that tradition. It is part of the complex of thought which has since 1660 preserved the country from revolution.
Non-violent civil disobedience often entails the protestor risking his or her life and, particularly since suicide ceased to be a crime in this country, the action is not and should not be a crime, let alone terrorism. Therefore, I suggest that we should amend the Bill accordingly.
There are two complicating issues. One is where the person's action in committing suicide endangers other people's lives. One might call it the "Emily Davison case", although no one, not even the horse, was seriously damaged except Emily herself. Only one jockey was hurt but no one was seriously damaged. Unfortunately, Emily Davison was not too efficient, having already tried to commit suicide at least twice and having been arrested once for stoning an innocent Baptist minister whom she mistook for Lloyd George.
The second issue relates to what one might call the "Swampy case", where the protester may be thought to cause danger to other people because he tempts them to rescue him. An amendment tabled on Third Reading is no occasion for discussing the ethical nuances raised by that point. However, if I did so, I would hope that the noble Lord, Lord Sheppard of Liverpool, would possibly join in the discussion because it seems to me to be of strong theological interest.
This amendment is very simple. It removes the possibility of an action which causes one's own death being classed as terrorism. On the face of it that seems

1447
to be one of the silliest things that one can come across. The amendment will be an improvement to the Bill and I hope that the Government will accept it.
6.30 p.m.
Lord Monson: My Lords, I have reservations about some of the amendments in the group, but I strongly support Amendment No. 5, to which I have added my name. I am very glad to be able to support the noble Lord, Lord Beaumont of Whitley, in this matter, as I did at an earlier stage. I am certain that it was never the Government's intention to deem someone to be a terrorist merely because they threatened to commit suicide, whether by hunger strike or otherwise, in order to try to influence a government. Yet that would be the unintended consequence of leaving the Bill unamended.
Amendment No. 5, as drafted, provides that anyone who threatened to commit suicide in such a manner that others might be killed or injured in the process would not benefit from this exemption, and rightly so. No encouragement should be given to someone who threatened to throw himself from a skyscraper and land on innocent pedestrians passing below. This amendment is tightly drawn and modest, yet I believe it is important from the point of view of principle. If the Government were to accept Amendment No. 4 by removing any reference to influencing a government, Amendment No. 5 would probably be unnecessary. If they do not agree to the removal of Amendment No. 4, I suggest that it most certainly will be necessary.
Lord Desai: My Lords, as regards Amendment No. 5 there is a tradition on the Indian sub-continent of people fasting unto death. Sooner or later it will happen here. I believe that the amendment of the noble Lords, Lord Beaumont and Lord Monson, covers the case that someone may threaten to fast unto death. That may be a foolish act, but it is not a terrorist one.
Lord Bassam of Brighton: My Lords, at this early stage I would like to pay tribute to all who have contributed in no small way to helping the Government in their task of improving the quality of the definitional clause in this legislation. In particular, I thank the noble and learned Lord, Lord Lloyd of Berwick, for his help and guidance. I also thank those on all sides of the House who have led in these debates on terrorism. It has been very constructive. The purpose of the contributions has been almost at all times to try to improve the quality of the definition, which is very important and key to the legislation.
I believe it was recognised by all sides at Report stage that the amendments tabled by the Government on the definition of terrorism were important improvements and reflected the earlier debates. They ensured that interference with computer systems was covered by the definition. They introduced a requirement that either an intention to intimidate the public or influence the Government must be present except in cases involving firearms or explosives.
1448
Although I am sure that it is abundantly clear to Members of this House, perhaps I may place on record that for a threat or action to be caught by the definition of terrorism, each of the elements in Clause 1(1) must be satisfied except, as we shall discuss further, where firearms or explosives are involved. In that case it is not necessary for the threat or action to be designed to influence a government or intimidate the public.
By contrast, in Clause 1(2), only one of the five types of action set out in paragraphs (a) to (e) needs to occur. The difference between the cumulative effect of the requirement in subsection (1) and the disjunctive effect of the requirement in subsection (2) is indicated by the presence of the word "and" at the end of subsection (1)(b) and the word "or" at the end of subsection (2)(d).
As I say, we believe that the amendments we made at Report significantly improved the definition of terrorism, which is so crucial to the Bill as a whole, and plugged some important gaps. The question before us is whether further amendment is needed as proposed by the noble Lords, Lord Goodhart, and Lord Beaumont.
I would like first to turn my attention to the amendments of the noble Lord, Lord Goodhart. Before dealing with the substantive concerns we have about them it is worth mentioning a more technical point which relates to Amendment No. 7. We do not believe that the phrase,
"action of a kind which, if carried out in…the United Kingdom, would be an offence"
is sufficiently tight for easy application by the police and others. Should the approach in the amendment be adopted—we do not think it should—we would prefer something along the lines of Section 9(4) of the Prevention of Terrorism Act, which refers to action which,
"constitutes or would constitute an offence".
Turning to our more substantive concerns about these amendments, they introduce two additional concepts into the definition. The underlying issues have been debated before your Lordships' House and in another place. We have looked at them again in the run-up to this debate. However, we cannot agree to the amendments. We believe that they could unnecessarily hamper the police and others involved in combating terrorism.
I turn now to Amendments Nos. 1 and 7. The first provides that only "criminal" action or its threat, may be caught by the definition. We continue to believe that such an approach might create unacceptable difficulties for the security forces and that in some, albeit rare, situations it might mean that the powers under the Bill were not available in circumstances where they should be.
Moreover, that leads to our second concern. We can conceive of rare cases where terrorist action might not be criminal or it might not be immediately clear that it was criminal. I cited examples at earlier stages of the passage of the Bill. For instance, an employee may advance a political cause and may deliberately omit to update a vital computer programme or omit to put a

1449
cleansing agent in a sewerage system, with the result that the health of a section of the public was severely put at risk. In our view that could be terrorism in certain circumstances. In that situation, we believe that it would be quite appropriate for the police to use their powers under the Bill to disrupt or investigate the incident.
I acknowledge that such situations would be rare, but not so rare that it would be acceptable to discount them in framing legislation. That is particularly the case now that we have explicitly included computer-related terrorism within our definition. Given the speed at which the abuse, as well as the use of information technology is developing, it is not beyond the bounds of possibility that the first one was aware of a new way of disrupting or interfering with a computer system would be via a terrorist attack. In such circumstances the criminal law, quite understandably, might not cover the area. The result would, or could be, that the police might not have the powers available to investigate an incident in precisely the kind of circumstances in which your Lordships have made it very clear that such provision should be available.
Lord Avebury: My Lords, can the Minister explain to me whether a person who commits the action he described, such as deliberately omitting to update a program on a computer or something else of a similar nature, would be committing an offence under the computer misuse Act?
Lord Bassam of Brighton: My Lords, it may or may not be. The important point to remember here is that it may be a form of action which has been deliberately embarked on and designed to disrupt public life or cause harm or injury. The motives that lie behind the action could well constitute a terrorist offence. In the circumstances we believe it is right and proportionate to include it in the Bill. It is for that reason that we have included a computer offence within the definition.
We have also made it clear on many occasions that our definition of terrorism is not intended to catch lawfully organised industrial action in connection with a legitimate trade dispute. It is worth putting that on record. I do not believe it likely that the courts would stretch the definition of a political cause as some have suggested.
Moreover, unions which operate in essential services usually go to considerable lengths to seek to avoid serious risk to life, health and safety as a result of the way in which they pursue industrial disputes. Therefore, in our view their actions would be doubly unlikely to fall within our definition.
Finally, in the very remote event that industrial action might be held to fall within our definition, I believe that in principle it would be wrong for us to elevate industrial action over other forms of politically, religiously or ideologically motivated concerted protest which endangers life or creates a serious risk to public health and safety by providing, for example, an explicit exemption.
1450
I have already explained the difficulties that we have identified in introducing the concept of "criminal" into the definition and I believe that the noble Lord's prime concern has been met adequately by other means. I hope that in the circumstances he will not press his amendment.
I now turn my attention to Amendments Nos. 2 to 4, 6 and 8. We are concerned that these amendments narrow significantly and unacceptably the scope of the definition of terrorism by providing that, except in cases where the action is intended to cause death, it must be designed either to intimidate the public or be directed against the public. That is in contrast to our provision added at Report stage which provides that an action must be designed to influence the government or intimidate the public, except where firearms or explosives are involved.
As I understand it, the heart of the noble Lord's concern with this part of our definition is its potential application to conflicts and struggles abroad, particularly where there is concern that democratic principles are not fully at work and where there might be a deal of sympathy with those who want to take action, even violent action, to influence the government. The example most often quoted is, of course, South Africa in bygone years. A more current example might be the ongoing struggles in and between parts of the former Yugoslavia. The noble Lord's amendment seeks to provide that such action would not be caught by the definition, provided that it was not directed at the public or designed to intimidate the public, or provided that it was intended to cause death. That would exclude the application of the definition to some, although perhaps in reality not much, of the serious violence in those contexts.
I believe that we have discussed these concerns at almost every stage of the passage of this Bill. We have always recognised the sensitivities that surround what is often characterised as the "one man's freedom fighter is another man's terrorist" issue. As I have already mentioned, in response to those concerns we introduced amendments on Report which provided for Attorney-General level consent to prosecution for international terrorist cases. We believe that that is the right way to deal with the issue and I believe that that was the view of the noble Lord, too. At col. 1439 of the Second Reading debate he said:
"I do not think that the problem can be solved by a clever definition of terrorism".
He went on to say:
"The only realistic safeguard is the need to obtain leave to start the prosecution".—[Official Report, 6/4/00; col. 1439.]
We agree.
Moreover, we have grave concerns about the implications for responding to terrorist incidents more generally if the noble Lord's amendments are agreed to. The effect of the amendments would be that the powers and offences under the Bill would not be available to the police unless it was clear that attacks, including even bomb attacks, were designed to intimidate the public or were directed against the public or intended to cause death.

1451
In our view, that simply will not do. Although it is common ground between us that most terrorist attacks are designed to intimidate the public, and we accept that other actions might be caught by the noble Lord's additional limb of "actions directed against the public", we believe that that still leaves a worrying gap. As the noble Lord well knows and intends, the gap particularly concerns serious damage to property.
Situations that might not be covered by his definition include attacks on government buildings and other symbolic targets where a warning has been given. Therefore, it cannot be argued that there is an intention to cause death. However, the same might be true in non-property-related situations; for example, in the kidnapping of a diplomat or politician, to take up the point of the noble Lord, Lord Cope. The fact that the disapplication applies only where there is an intention to cause death means that the definition might not apply even in circumstances where the terrorists were clearly reckless as to whether death or serious injury might be caused. I do not believe that it is remotely acceptable that under the Bill the police might not have the powers available to them in circumstances such as those. And I cannot believe that noble Lords will consider it acceptable either.
Finally, I should mention that the "influencing a government" limb of the definition is not a new idea of the Government's recent invention. The Prevention of Violence (Temporary Provisions) Act 1939 contained it. Now that terrorism is international and combating terrorism requires international co-operation, it is right that we should recognise as terrorism acts aimed at the governments of other countries as well as our own. Moreover, the noble and learned Lord, Lord Lloyd, recommended in his report that such a limb should be included.
We believe that such an element is a vital partner to the "intimidating the public" limb, on which I believe we are all generally agreed. From the outset, we have underlined that we believe the undermining of democratic processes to be at the heart of the definition of terrorism. If experience suggests, as we have demonstrated that it does, that terrorists undertake actions which are designed to influence the government but which do not intimidate the public or are not directed against the public, it must be right that such actions are also caught by the definition. For those reasons, we cannot support the amendments.
I now turn to Amendment No. 5 in the name of the noble Lord, Lord Beaumont. I can address this amendment more briefly and perhaps more positively. On Report we agreed that we should consider whether there should be an explicit exemption from the definition of terrorism where the only life endangered was one's own. On balance, we decided that it would be beneficial to adopt such an approach. On that basis, I am happy to signal that the Government support the noble Lord's amendment.
I hope that I have made the Government's position plain and clear. I encourage the noble Lord, Lord Goodhart, to withdraw his amendments. I am most
1452
grateful to all noble Lords who have contributed to this debate for helping us to reshape the definitional clause.
6.45 p.m.
Lord Goodhart: My Lords, I am of course disappointed that the Government have not seen fit to accept the amendments proposed by us or to move in any sense towards them. It seems to me that the amendments which we have proposed, and in particular Amendments Nos. 3, 4 and 6, represent a substantial improvement on the definition in the Bill as it stands. I believe that it would be pointless for me to re-argue the points as to why we believe that. They were explained by me earlier. In view of the absence of support from other parts of the House, I feel that no useful purpose would be served by pressing the amendments to a vote. Therefore, I beg leave to withdraw Amendment No. 1.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 to 4 not moved.]
Lord Beaumont of Whitley Lord Beaumont of Whitley moved Amendment No. 5:
Page 1, line 16, at end insert ("other than that of the person committing the action").
The noble Lord said: My Lords, I thank the Government for their usual common sense in accepting this amendment. I also thank other noble Lords around the Chamber who supported me in this matter. I believe that it is a very sensible and worthwhile, but only small, amendment, and I am grateful to the House. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 6 to 8 not moved.]
Clause 12 [Support]:
[Amendments Nos. 9 and 10 not moved.]
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 11:
Page 7, line 24, at end insert—
("(3A) Where a person is charged with an offence under subsection (2)(c) in respect of a private meeting it is a defence for him to prove that he had no reasonable cause to believe that the address mentioned in subsection (2)(c) would support a proscribed organisation or further its activities.").
The noble Lord said: My Lords, Amendments Nos. 11 to 13 take a slightly different approach from Amendments Nos. 9 and 10, which were tabled by the noble Lord, Lord Goodhart, but not moved. I do not propose to say a great deal about the amendments, but I shall explain why we preferred ours to the noble Lord's.
Whereas the noble Lord's amendments rely on a public interest test, we propose a statutory defence for someone charged with an offence under Clause 12(2)(c) in respect of a private meeting, that he had no reasonable cause to believe that the address would support a proscribed organisation or further activities.
That provides sufficient protection for arranging genuinely benign meetings while still ensuring that subsection (2)(c) will serve its basic purpose. Our main intention is unchanged. It will remain an offence, as it is under existing legislation, to arrange or manage—or to assist in the arrangement or management of—a meeting that it is known will be addressed by a person who belongs, or professes to belong, to a proscribed organisation. However, we agree that in certain cases there should be a statutory defence. Amendment No. 14 will ensure that anyone seeking to rely on that defence will have to satisfy an evidential burden only, as is the case with various other provisions in the Bill.
I trust that with that explanation, your Lordships' House will agree to our amendments. I am most grateful to the noble Lord, Lord Goodhart, for not having moved his amendments. I suspect that he recognised that ours were preferable. I beg to move.
Lord Goodhart: My Lords, I was happy not to move my amendments because I recognise that the government amendments achieve the same substantial point. We are grateful to the Government for having taken on board the point about Clause 12(2)(c) as originally drafted and taken reasonable steps to narrow it. I am disappointed about the definition that we discussed a few minutes ago, but I am grateful to the Government for the number of amendments that they have made, which have significantly improved the Bill.
The amendments on the burden of proof have been a particularly substantial improvement to the Bill. They should avoid any problems under the Human Rights Act 1998. I am therefore happy to support the amendments.
Lord Monson: My Lords, I was thrown by the fact that the noble Lord, Lord Goodhart, did not move his amendments. At first glance, it might seem that government Amendments Nos. 11 to 14 achieve much the same as Amendments Nos. 9 and 10, but in a slightly different way. However, unfortunately—I hesitate to quarrel with the legal expertise of the noble Lord, Lord Goodhart—they do not quite achieve the same effect.
I have no problem with the Government outlawing the furthering of activities of a proscribed organisation, but the government amendments go further than that because they prevent anybody who addresses a meeting from supporting such an organisation during their speech. Even in a wholly private meeting, it will not be possible for robust arguments to take place between apologists for terrorism and those who strongly oppose it.
On Report, it was significant that the noble Viscount, Lord Brookeborough, supported a similar Liberal Democrat amendment. He knows more about terrorism first hand than most of the rest of us in the House put together. If I understood him correctly, the essence of his argument was that jaw-jaw is better than war-war. To convince terrorists of the wickedness and
1454
folly of their ways through argument is difficult, but it is not necessarily impossible. Conversion and repentance can occur. One thinks of Sean O'Callaghan on the republican side and one or two names on the loyalist side. The conversion in the latter cases might not have been quite so total, but it was still significant.
It is obviously too late to pursue the issue now that the amendment has not been moved, but the government amendments do not go far enough in permitting an interchange of views, none of which would further terrorism but which might allow terrorists to be argued out of their stance. However, as it is too late to go any further, that is all that I need to say.
Lord Goodhart: My Lords, before the noble Lord sits down, I should explain that I was not envisaging debates to try to change the minds of terrorists, which would be unlikely to be fruitful. The problem was that Clause 12(2)(c) as drafted would cover meetings for the purpose of negotiation with a view to settling terrorist activities. That problem is dealt with by the government amendments.
Lord Monson: My Lords, I am grateful to the noble Lord for that explanation. I agree that that is a valuable advance. One thinks of negotiations that have taken place between terrorists and governments, which might have been caught by the Bill as it stood.
It is unlikely that terrorists can be converted through debate, but it does happen now and again. If the noble Viscount, Lord Brookeborough, had not spoken so strongly in favour of the Liberal Democrat amendment last time, I might not have spoken up. He knows what he is talking about and it is a pity that we cannot go any further on the issue, but so be it.
Lord Avebury: My Lords, with respect, the definition in the amendment that my noble friend Lord Goodhart did not move is preferable in some ways to that of the Government.
When a government and an armed opposition movement that has been in combat with them are brought together for conflict resolution, there is no means of knowing in advance whether the people representing the armed opposition will attempt during the conciliation meeting to argue the merits of their case or support the proscribed organisation in any other way.
I shall give the Minister a recent practical example. The Henry Dunant centre in Geneva brought together representatives of the government of Indonesia and the armed opposition in Aceh, the GAM. As a result, both parties were persuaded to sign what was called a humanitarian force. The fact that it did not work very well is neither here nor there for the merits of the argument.
The parties sat down to make an agreement that would allow the deployment of humanitarian relief efforts for the people of Aceh and a break in the armed opposition by the GAM and the armed action by the forces of the government of Indonesia against the so-called terrorists.

1455
The Henry Dunant centre had no means of knowing what either side would say and—this is particularly relevant in the context of the amendments—whether those representing the GAM would make remarks that could be taken as supporting that proscribed organisation or furthering its activities. My noble friend's amendment provided for an exception that such a meeting was in the public interest. The Aceh agreement was clearly in the public interest because it provided, at least for a short period, for the fighting to stop and humanitarian assistance to be delivered to the people.
The Government's wording puts an enormous burden on the organisers of such meetings to satisfy themselves in advance of what is going to be said by those who represent an armed opposition.
7 p.m.
Lord Glentoran: My Lords, I have to say that to some extent I agree with the noble Lord, Lord Avebury. I believe that there is a serious place and use for benign meetings of the type he described. However, I hope that the Minister will be able to encourage us by telling us that, inclusive of the government amendment, there will still be space in the Bill for such meetings, which undoubtedly are extremely useful in trying to solve any form of terrorist problem.
I was pleased that the noble Lord, Lord Goodhart, withdrew his amendment. It required a lot of thought in balancing one thing with another. I was really only worried about one aspect; that is, the use of the phrase, "the public interest". I was concerned about the definition. Going back to Northern Ireland, I can think of times when PIRA protagonists might well have held public meetings within republican areas of Belfast. They could have argued that, because they were promoting Sinn Fein objectives as a terrorist organisation, their meetings were in the public interest of those people within whose area they were living and working and whose cause they believed they were promoting. The same could be said for loyalists in east Belfast. I am sure the same could apply elsewhere in the world on different occasions.
In short, that was the only reason that I was against the amendment tabled by the noble Lord, Lord Goodhart, and prefer the government amendment. As I have said, I support most of the remarks of the noble Lord, Lord Avebury, which contained a great deal of wisdom. I hope that within the Bill it will still be possible—my reading of it is that it will be—without breaking the law, to organise benign meetings, as we have referred to them today, between terrorists, security people and probably not mainline politicians but with the support of the government of the day. I support the government amendment.
Lord Desai: My Lords, Perhaps I may mention, briefly, that I had many reservations about Clause 12(2)(c), and other matters, which I raised in
1456
Committee and on Report. I am grateful to the Government for amending Clause 12 so that my academic friends will now be protected.
Lord Bassam of Brighton: My Lords, it is always difficult speaking to amendments that have not been moved, but I suspect that I should.
Perhaps I may start where the noble Lord, Lord Glentoran, left off. His encouragement to the Government was to ensure that genuinely benign meetings were able to take place. We believe that our amendment is preferable. It protects that position and enables such meetings to take place. We provide a statutory defence in the clauses we have drafted, which is important. I am sure there is confidence on all sides of your Lordships' House that that will be the case. It certainly would not be our intention to endanger such meetings. In many circumstances, that would be counter-productive.
Our great difficulty with the drafting of the amendment tabled by the noble Lord, Lord Goodhart, concerned the key issue of the public interest. It is an interesting test. However, I seriously question whether it is the right way to go about it. A number of questions have to be asked; for instance: who is to say whether a meeting is in the public interest; in what circumstances? Moreover, who is to say whether it is reasonable to believe that the meeting is in the public interest? Such a defence would probably lead to lengthy legal argument. Our concern was that such a defence would drive a big hole through Clause 12(2)(c). It may be the case that some would like to see a big hole driven through it, but I do not think that would be right. To use a good old-fashioned term, we have tried to strike a balance. I believe we have it about right.
I hear what was said by the noble Lord, Lord Avebury, and understand the point at which he is driving. However, I believe on balance we have got it right. For those reasons, I believe that our amendments should receive the support of your Lordships' House this evening. I am encouraged that the noble Lord, Lord Goodhart, has withdrawn his amendment in favour of ours.
On Question, amendment agreed to.
Lord Bassam Lord Bassam moved Amendments Nos. 12 and 13:
Page 7, line 25, leave out ("and (3)") and insert ("to(3A)").
Page 7, line 26, at end insert—
(", and
(b) a meeting is private if the public are not admitted").
On Question, amendments agreed to.
Clause 118 [Defences]:
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 14:
Page 55, line 38, after ("sections") insert ("12(3A),").
On Question, amendment agreed to.
Schedule 7 [Port and Border Controls]:
Lord Bach Lord Bach moved Amendment No. 15:
Page 110, line 28. leave out ("knowingly") and insert ("wilfully").
The noble Lord said: My Lords, in moving Amendment No. 15, I shall speak also to Amendment No. 16. The amendments address the issue of the provision of passenger information to which we have returned at virtually every stage of the passage of the Bill through your Lordships' House.
On Report we took up one of the suggestions made in Committee to the effect that information should be provided "as soon as is reasonably practicable". Since then we have considered the further representations made on Report which focused on the offence provision for non-compliance with a duty under the ports provisions of the Bill. As we explained then, we did not think that the statutory defence approach did the trick, as it appeared to provide a carte blanche for less than co-operative carriers to ignore altogether requests to collect information.
We propose instead that the threshold for the noncompliance to bite be raised from "knowingly" to "wilfully". So, if a carrier makes every effort to collect the requested information but it is simply not possible for some reason, even within a reasonable timescale, the courts could take the view that no offence had been committed.
We believe that the amendments are a helpful addition to the Bill in that they underline our commitment to the provision of reasonable as well as effective passenger information provisions under the Bill. I beg to move.
Lord Cope of Berkeley: My Lords, this is a small but useful improvement to the Bill.
Lord Brabazon of Tara: My Lords, I echo the words of my noble friend Lord Cope. The noble Lord, Lord Bach, said that this issue had been raised at every stage. I speak as a paid-up member of what the noble Lord described at one stage as the "transport lobby", and I am proud to do so.
It was worthwhile raising this at every stage because we have gained not only some useful amendments to the Bill, but words in the speeches of the Minister which are encouraging. I thank the Minister for having produced the amendment. I hope I can assure him that the transport industries will do their very best to comply with the legislation. I am glad to see that one of the Ministers for transport has just entered the Chamber because, no doubt, he will also take this view. We will do our best to co-operate. I hope that the legislation succeeds.
Lord Greenway: My Lords, I associate myself with the remarks of both noble Lords who have spoken. This small step forward will be welcomed by those in the ferry industry who may be affected by the Bill.
Lord Bach: My Lords, the expression, "small but useful" is exactly right. I congratulate the body, which
1458
I have never before called the "transport lobby"—but if the noble Lord insists—on the hard work it has done along with everyone else in seeing the Bill through its stages.
On Question, amendment agreed to.
Lord Bach Lord Bach moved Amendment No. 16:
Page 110, line 30, leave out ("knowingly") and insert ("wilfully").
On Question, amendment agreed to.
Lord Bassam of Brighton: My Lords, I beg to move that this Bill do now pass.
I shall say just a few formal words because they need to be put on record. At Second Reading I predicted that our discussions on the Bill would benefit greatly from the wealth of experience in your Lordships' House. I am happy to report that that prediction was entirely correct. We have been able to draw on the specific understanding of a number of Members of your Lordships' House covering the workings of government from a ministerial perspective, hands-on knowledge of the difficulties faced in Northern Ireland and the civil liberties lawyers who are rightly concerned to ensure that the ECHR legislation is properly understood in the context of this Bill.
While it is always dangerous to single out individuals, it would be wrong of me to let the moment pass without recording particularly my debt of gratitude to the noble and learned Lord, Lord Lloyd of Berwick. His inquiry into legislation against terrorism provided us with an important series of insights and also a framework around which to ensure that we get the Bill right.
The general principles underlying the Terrorism Bill received support from all sides of the Chamber. It is important that the House has been united in its determination that everything must be done to tackle the evil of terrorism. I am extremely grateful to all of those who contributed, from all sides. It improved the quality of legislation. It has also been the House at its best in terms of scrutinising the quality of legislation. In that regard the Government and the public should feel well served.
Moved, That the Bill do now pass.—(Lord Bassam of Brighton.)
Lord Cope of Berkeley: My Lords, I rise briefly to echo what the Minister said, both in the thanks to the Members of your Lordships' House who have taken part, and in particular to the noble and learned Lord, Lord Lloyd of Berwick. I thank also Mr John Rowe QC and his predecessors who produced annual reports on terrorism which have also been drawn on in the preparation of this legislation.
This is a better Bill than when it started its passage through your Lordships' House. But I echo strongly what the Minister said about the joint determination of all those in this House and in another place, and throughout the country, to fight terrorism in whatever form it occurs. Terrorism attacks democracy. It

1459
attempts to subvert everything for which this Parliament stands. I am pleased to support the Motion that the Bill do now pass.
Lord Goodhart: My Lords, I add my thanks to those expressed by the noble Lord, Lord Cope of Berkeley. It seemed to me that the work done by the noble and learned Lord, Lord Lloyd of Berwick, was extremely important and has had fruitful results. On behalf of my party I too express condemnation of terrorism in its manifold forms and a recognition that it is now something that cannot be regarded as confined to one country. At the same time, it is clear that no civilised government can afford to override the civil rights of those suspected of terrorism in a desire, however justifiable, to prevent or restrict it. I am therefore grateful to the Government for taking on board a number of the points we made on those issues.
On Question, Bill passed, and returned to the Commons with amendments.

Diabetes: Fitness to Drive
7.13 p.m.
Lord Harrison Lord Harrison rose to ask Her Majesty's Government whether the review of driving licence regulations, which currently prevent insulin-treated diabetics from driving vehicles over 3.5 tonnes and many passenger carrying vehicles, will examine the merits of individual assessment of fitness to drive, taking into account the practices of other European Union States.
The noble Lord said: My Lords, diabetes is a nasty, vicious and brutal disease which strikes indiscriminately and inopportunely. The recent loss of our good colleague in another place, Bernie Grant, testifies to that fact. It is also a disease which the majority of diabetics contend with well and go on to live long, useful and fulfilling lives.
In opening this debate I must declare myself a lifelong member of Diabetes UK (formerly the British Diabetic Association) whose recent successful publicity campaign highlighted the fact that as many as 1 million people in the United Kingdom are suffering from diabetes, although as yet they remain undiagnosed. However, the Question this evening concerns a great injustice against diagnosed diabetics, some of whom, through no fault of their own, find their livelihood threatened by a driving ban based on a misunderstanding about what it means to be a person with diabetes.
Since 1991, new applicants on insulin or existing drivers moving to insulin have been barred from driving large goods vehicles and large passenger-carrying vehicles, although so-called "grandfather rights" exist for those drivers licensed to drive such vehicles before that date. In 1998 the Government's stringent implementation of the second EC Driving Licence Directive, took away insulin users' entitlement to commercial licences to drive other vehicles such as mini-buses and smaller lorries weighing between 3.5
1460
and 7.5 tonnes. Your Lordships may wish to be reminded that licences to drive those vehicles are known collectively as Group 2 licences.
The Science and Technology Select Committee of the other place examined this matter and published its report in March of this year. The committee cast doubt over the evidence used to justify the blanket ban and variously described current regulations as "illogical", "arbitrary" and "inconsistent". My noble friend Lord Whitty himself conceded in evidence to the committee that the UK's restrictive position on renewing driving licences for employment purposes for people with diabetes is based on "inaccurate" information.
It is unsurprising then that the said committee called for a review of the current regulations and a feasibility study on implementing individual assessment of fitness to drive. My hope is that the Government will act on those recommendations sooner rather than later because a large number of people face a threat to their livelihoods while the current system remains in place. For example, last month I met a council worker from Kilmarnock who lost his entitlement to drive his road sweeping vehicle, which is over 7.5 tonnes, despite the fact that it is driven at an average of five miles an hour and that his diabetes is acknowledged as being "well controlled". Many other examples of those whose jobs have been threatened or lost were given as evidence to the Select Committee. I understand that the Diabetes UK CareLine continues to take calls from worried drivers on a daily basis.
I said in my opening remarks that those policies are based on a poor understanding of diabetes. The misunderstanding at the root of the blanket ban appears to be that diabetes affects all people in the same way and therefore equally impairs their ability to drive. That is very wrong. Some people are not in good control of their diabetes. They may be unable to spot the warning signs of hypoglycaemia, which include hunger, sweating, tremor or faintness. Others may have poor eyesight or nerve damage as a result of their diabetes. Of course, many of those people should not be on the road at all. However, many insulin users are in good control of their diabetes; have never suffered a hypoglycaemic episode at the wheel and have an exemplary road safety record. Those people, too, are subject to the blanket restriction of Group 2 licences. Why are those low-risk cases treated the same as the high-risk cases?
The broad brush approach is unjust. It fails to take into account the individual. If it were a fair approach, it would be much better to remove licences from males under the age of 25 because statistically they are far more likely to have road accidents. Clearly that is absurd. But it reminds us of the general principle of human rights: that people should be treated as individuals and not discriminated against for being part of a group. People with insulin-treated diabetes should be tested individually and the decision to issue a licence should be based on an individual's ability to pass stringent annual health checks by a diabetes specialist. My own diabetes specialists feel that this is quite capable of being done.
Some of your Lordships may be aware that I served as a Member of the European Parliament for a number of years until 1999. During that time I engaged in a great deal of correspondence on this matter in which the United Kingdom Government claimed that their position was arrived at as a result of European legislation and that they were unable to make substantial changes to the current position because the UK is bound by European directives. My understanding was then, and is now, somewhat different. EC Directive 91/439 does indeed state that people with diabetes requiring insulin treatment can be issued Group 2 licences "only in very exceptional cases".
Beyond this, however, it is up to member states to decide how best to implement the directive. Several countries, including Germany, Denmark, the Netherlands and Belgium, have a case-by-case medical procedure in place. The UK imposes a blanket restriction, having decided that there were no individual cases that can be regarded as sufficiently exceptional for concessions to be allowed. I must say it seems rather absurd to decide that exceptional cases do not exist without even examining the individual cases.
I find it difficult to understand why the DETR continues to argue that individual assessment is unacceptable under the directive when the Commission appears to be unconcerned about the other countries taking this route. Of 20 infringement proceedings currently pending for various presumed infringements of that EC directive, I understand that none—I repeat none—relates to the diabetes clauses of the directive.
It appears that the Select Committee is unconvinced both by the Government's interpretation of European law and by the medical evidence which forms a basis for that law as it applies to people with diabetes. The most comprehensive independent review of the available evidence to date—an independent study made by Dr Ken McLeod of the University of Exeter—concluded that road safety,
"cannot be justifiably achieved by restricting the driving privileges of those who have consistently been exonerated from claims that they pose a significantly greater risk than the general driving population".
The Government must have a very good reason if they want to continue to endanger people's livelihoods and to compromise their driving rights. The reasons that I have heard Ministers give to date can be summarised in two parts: first, that a blanket approach is important for road safety; and, secondly, that the European Commission would prevent the United Kingdom from applying individual assessment, since this would in any event contradict European law. It now appears that both assertions are highly questionable. In the light of this, perhaps I may urge the Minister to look afresh at individual assessment as the basis of a safety-conscious licensing policy that replaces a discriminatory blanket ban.
I am very grateful to my noble friend Lord Whitty for being here today to answer the debate. I understand that a meeting has already been arranged with colleagues from Diabetes UK later this month. I am also grateful to my noble friend the Minister for his very helpful reply to my recent Starred Question in this House.
In all this, road safety for all our citizens is paramount, but in observing this desideratum let us not penalise the human rights of a small but important group of our people, through a lack of sense and sensibility.
7.24 p.m.
Lord Addington: My Lords, I am sure we should all thank the noble Lord, Lord Harrison, for drawing our attention to this important subject. Let me go immediately to what I think is the main thrust of his argument; namely, individual assessment. Every time we start to deal with something with a blanket ban, we must ask why we have a blanket ban and what it is trying to achieve. If it is trying to achieve greater road safety, why are we trying to single out one group which does not appear to represent a greater risk than other groups?
I was also rather confused by the idea that unless you know exactly who will be at risk within a certain group, you should not do anything except in a very individually focused way. The individuals in this group are so diverse as to make it virtually impossible for them to be called one section. That was the main thrust of what was said. As to the category involved, in my non-transport oriented, naive way, I thought that a vehicle of 3 tonnes might be every bit as dangerous as one of 3.6 tonnes. So there is an area on the borderline, and one is left wondering again what we are trying to achieve by this ban.
If people who have diabetes are thought to be dangerous drivers, why are we not paying attention to their driving licence as a whole? If an out-of-control car strikes a large lorry or a small truck it can cause the same amount of destruction on the road as a small truck striking a car. There does not seem to be any rhyme or reason in this situation.
Also, we have the restriction of "grandfather rights". I have never been terribly keen on those, as a matter of principle, but if they exist why take them away from somebody who has no record? However you look at this matter, it seems to come back to one question: do we consider the individual as the point of contact? If we are going to do this we need to have an assessment, and preferably an independent assessment.
A Member of your Lordships' House, who cannot be here tonight, pointed out that an elderly relative of his had damaged a number of cars recently and seemed to have various ailments. His doctor told a relative: "Oh, I have known him for years and I have many worse on my books". Surely we should have an independent assessment if an assessment is to take place, rather than one done by the family doctor. I hope that at the end of our debate the Minister will say

1463
that we will start to look at these cases on their individual merits with an assessment of individual risk. That is all we are asking for.
The noble Lord, Lord Harrison, pointed out that there are legal approaches to the problem. Certainly there is an argument to be made. Surely we can make sure that we have a coherent approach which pays attention to the rights, and liabilities, of the individual. We are not saying that a person who is at risk behind the wheel, or at least a potentially higher risk than other people, should be given any special treatment because they happen to come within a certain group. We are simply saying that they should have an assessment, which should be regularly updated. I think that is most advisable.
I can think of many drivers who do not have diabetes but who would not in any way suffer from updating their driving skills. If we could do this, surely we would not hurt anyone and we might expand the opportunity for employment to a slightly different group. We could also get rid of an anomaly.
7.28 p.m.
Lord Gladwin of Clee: My Lords, I too should like to thank my noble friend Lord Harrison for introducing this subject and allowing this discussion in your Lordships' House tonight. To begin with, I must declare an interest. I am a diabetic—sorry, I am not really supposed to say that! I am a person with diabetes. I am also a trustee of Diabetes UK, which is still probably better known as the British Diabetic Association, or BDA. I still have trouble with the new name so I hope your Lordships will forgive me if I lapse into calling it BDA.
Diabetes UK has about 200,000 members. It is the charity for people with diabetes and their carers. A major problem which concerns the association and its members is that under discussion tonight; namely, the arbitrary and discriminatory prohibition which prevents people whose diabetes is being treated with insulin from earning a living driving goods vehicles and some passenger carrying vehicles. This blanket ban—as has been said, that is what it is, particularly as regards people newly diagnosed with diabetes who require insulin treatment—is not based upon scientific evidence or upon any risk assessment. We have the ban because, according to the House of Commons Select Committee report, the Ministry incorrectly told the honorary advisory panel that other European Union member states were applying a ban. Fortunately the blanket ban, in effect, is being re-examined by the advisory panel.
That brings me to the main point that I wish to make tonight. Diabetes UK welcomed the announcement in May that there would be a review of licence regulations and has offered to help. It has access to much scientific and medical experience from highly qualified people.
1464
I remind the House of some of the recommendations of the Commons Select Committee on Science and Technology. First, it recommended that the Government examine the merits of Diabetes UK's proposals for individual assessment. Secondly, it recommended that the Government and Diabetes UK jointly identify an insulin-treated diabetic—even the committee got the terminology wrong—to attend meetings of the advisory panel. Thirdly, it recommended that the advisory panel should meet annually with Diabetes UK.
The report states that,
"to enhance public confidence, the panel's proceedings need to 'De more open; and consultation with interested organisations like Diabetes UK needs to improve".
Diabetes UK has much to offer the department in carrying forward the review. My noble friend the Minister undertook to meet officers of the charity following the Government's response to the Select Committee report, which was published two months ago. My notes inform me that I should seek an assurance from the Minister that he will meet them before the Summer Recess. However, I am delighted to say that yesterday he agreed to meet them on 27th July.
As my noble friend has said, people's livelihoods, now and in the future, are being affected by this arbitrary and discriminatory blanket ban. I welcome the review but let us get it right. In his evidence to the Commons Select Committee my noble friend conceded that mistakes have been made in the past. I fear that if DETR officials take forward this review in isolation from the views and expertise of those affected by this matter, any revised regulations may turn out to be as arbitrary and unfair as the current regime.
I cannot overstate the urgency of this issue. Today in hospital outpatient clinics up and down the country diabetologists are telling professional drivers either that they have diabetes which needs to be treated with insulin injections, or that the current method of treating their diabetes through diet and tablets is not working and therefore they must resort to insulin injections. If drivers follow that advice—they would be wise to do so—they automatically lose their licence to drive heavy goods vehicles and usually their employment. This is why individual assessment is so vital.
In conclusion, I ask my noble friend when he anticipates that the review will be completed and when—we hope—revised regulations will be introduced.
7.34 p.m.
Lord Blease: My Lords, at noon today I missed by a few moments the deadline for adding my name to the list of speakers for the debate. I was involved in other business in the House at the time.
I compliment and support the noble Lord, Lord Harrison, on the informed and constructive way in which he has presented the urgent need for a review of the regulations in regard to insulin dependent diabetic drivers driving vehicles of over 3.5 tonnes. I draw to the attention of the House the fact that, while the

1465
vehicle licensing agency in Northern Ireland constitutes a separate organisation, the regulations are the same as for the rest of the United Kingdom. I thank noble Lords for giving me the opportunity to make that point.
7.35 p.m.
Baroness Thomas of Walliswood: My Lords, I apologise to the House and to the noble Lord, Lord Harrison, for being absent during the first couple of minutes of his speech. I was in the Princes Chamber and had not realised that the business of the House had changed. I am sorry not to have been present and to have been rude to Members of this House.
This is a difficult subject but an important one for those affected by it. The noble Lord, Lord Harrison, pointed out the different relevant characteristics of different diabetes sufferers. As a mother of two young women with a mild seizure condition I understand the range of disability which can be covered by any one condition. I support the noble Lord's views on that matter. He is right to emphasise that some people are being prohibited from earning a living through the approach that is currently taken in this country to the issuing of drivers' licences.
My noble friend Lord Addington rightly emphasised the human rights aspect of this matter. That is important. I sympathise with the points the noble Lord, Lord Gladwin of Clee, made with regard to the correct terminology. As one gets older, one has to revise one's terminology in almost every context. I hope that I shall not fall into any trap today in that regard.
I believe that there is a general feeling that something should be done to change the present situation. On the other hand, one must still bear in mind safety considerations, both as regards people with diabetes and other road users. The case for modifying the UK interpretation of the European regulations seems clear. Prior to 1991, insulin-treated diabetics were not prevented from driving heavier vehicles. However, after 1991, those people were barred from driving HGVs but, as my noble friend Lord Addington said, existing licence holders were allowed to retain that right under so-called "grandfather rights".
Since 1997, on the other hand, the directive on the scope of Group II licences has been interpreted in a way that has resulted in a large number of potential drivers losing the right to drive any vehicle over 3.5 tonnes. Yet it seems that there is no statistical basis for saying that drivers with insulin-treated diabetes are more accident-prone than others. The Science and Technology Committee agreed that the driving licence regulations are illogical and inconsistent and that there is little evidence to support the current policy. On the other hand, some persons with diabetes who held a commercial Group II licence prior to 1997 may still be able to get such licences renewed for vehicles between 3.5 and 7.5 tonnes. Diabetes UK provides the information diabetics need to get through that process.
1466
People with diabetes, unlike those with other conditions, are not individually assessed, although it is said that EU regulations provide for that. The noble Lord, Lord Harrison, gave us chapter and verse on that subject. On the other hand, diabetics, like other people with a licence to drive vehicles of up to 3.5 tonnes, can drive a minibus of under that weight with 16 people aboard so long as it is not a paid activity. This seems inconsistent with other regulations on heavy vehicles and safety on the road and all the other matters that are brought into this argument.
This curious jumble of prohibitions and permissions seems to justify the Science and Technology Committee's strictures about illogicality and the lack of statistical justification for the present situation. The case for a change of approach seems clear and the Government's willingness to reconsider the current position is most welcome.
A problem for all of us is the lack of evidence of risk. My first question to the Minister is whether he has any statistical evidence which shows either that people with diabetes are more likely to be involved in an accident or which shows that they are not any more likely to be involved in an accident.
The case in justification of the present situation has not been heard today. However, I know that some people with experience of diabetes in their family would oppose any extension of access to a driving licence. They justify that approach on the basis of the ever present danger of a hypoglycaemic attack and the degenerative effect of the condition upon eyesight and muscular and nervous control.
One can understand the force of that approach—which is based on knowledge of the condition and of those who suffer from it, and upon the concern for safety—but the existing criteria by which some insulin-treated diabetics can get licences for driving vehicles from 3.5 tonnes to 7.5 tonnes already include an absence of serious attacks while driving over a 12 months' period; regular self-monitoring of sugar levels; and an examination by a specialist hospital consultant, who will want blood glucose records for the past 12 months. My second question therefore is: why cannot all sufferers from diabetes who apply for a driver's licence be subject to that process? The licence could then be given or withheld according to how the process comes out.
The Government are reviewing this whole matter following the report of the Science and Technology Committee in another place, but the points made by other noble Lords are well worth re-emphasising. First, will the review involve people who are themselves suffering from diabetes or their representatives? The possibility of it coming to a conclusion after a period of months and then coming slap up against the views and experience of people who are suffering from the condition or of their representative is serious; it would damage the good impression that has been made by the Government's willingness to review the whole situation.

1467
There is also the issue of the advisory panel and the fact that no persons with diabetes attend the panel, even as observers. My last question to the Minister concerns those two points. In particular, will he take up the recommendation of the committee that observer status on the advisory panel should be awarded to persons with diabetes?
7.43 p.m.
Earl Attlee: My Lords, I thank the noble Lord, Lord Harrison, for introducing this timely debate. The noble Lord has described the problem lucidly and accurately; I shall not repeat his arguments. I do not disagree with anything that noble Lords have said tonight; I hope that the Minister will not change that situation.
The noble Lord, Lord Harrison, raised this subject on 3rd May by way of a Starred Question. The Minister said encouraging things on that occasion, but I accused him of allowing for the gold plating of EU regulations. I say that because I recall a very similar problem with EU eyesight regulations. EU regulations on eyesight were naturally tightened up, but, as a result of the changes, UK drivers would lose their existing entitlements to vocational driving licences but other EU drivers would not. During that campaign I raised an argument by means of PQs which suggested that a Dutchman with a standard of eyesight that would disqualify him from a UK licence could still drive in the UK.
We face exactly the same problem here. A Dutchman could pass a Dutch medical assessment and then drive in the UK; but a UK driver with exactly the same medical condition would not be able to have a UK. driving licence at all. During the debate on the Starred Question, the Minister pointed out that the Dutch driver would have had to pass the medical assessment programme. That is exactly what we are asking for.
The noble Lord, Lord Addington, in his excellent speech, asked why it was okay to drive a 3 tonne vehicle but not a 3.6 tonne vehicle. I am sure that the Minister will point out from his brief that driving commercial vehicles involves hard work, an unpredictable work pattern and, in particular, an unpredictable eating pattern. However, if the Minister follows that line he will have forgotten that people with diabetes well understand their condition and will obviously avoid a driving job that is unsuitable. Surely a sales person with diabetes, working under considerable pressure, poses just as great a risk even if he is driving only a car.
Can the Minister confirm the assertion of his noble friend Lord Harrison that he will shortly have a meeting with the Diabetes Association?
Perhaps I, too, may take the opportunity to congratulate the select committee in another place on its useful, measured report, a matter referred to by other noble Lords. It has proved very useful in informing our debate. I am sure that the Minister will take careful note of its conclusions. The Minister has responded positively already to many of the select committee's observations.
1468
We on these Benches believe that the safety of all road users must be paramount. I am certain that no noble Lord will disagree with that. However, it is important to remember that EU directives are not written in tablets of stone. If necessary—I emphasise "necessary"—Ministers should be prepared to ask the EU to look into a matter again. The noble Lord, Lord Harrison, raised some interesting issues that may give the Minister food for thought in regard to the point about going back to the EU. We must remember that the key point is the interpretation of the EU regulations. At the moment the Minister is applying a blanket ban, whereas other countries use a discretion.
We need to recognise the difference between being taken ill at the wheel—which would mean pulling over onto the hard shoulder or a safe place and recognising that one is in trouble with a diabetes condition—and actually having an accident. The House will be very interested to hear from the Minister how many accidents have been caused by a motorist coming to grief through diabetes; not a diabetic having an accident—I hate to use the word "diabetic".
We on these Benches believe that a blanket ban is unfair. We must have an independent medical assessment panel. Of course there are obvious dangers in using a GP's report in isolation, although information from a GP will be valuable. The noble Lord, Lord Addington, drew attention to the difficulties that the GP himself would have in making the final recommendation.
The Minister may point out that there is a slight but measurable risk in going down the route of the medical assessment programme—he may be right—but there are greater risks in driving; there are risks through drink, drugs and poor anger control, or road rage. Thinking out loud, perhaps we could offset any slight increase in risk of accident by requiring insulin-dependent diabetics to have an advanced driving certificate. We know that advanced drivers have fewer accidents after their training. Therefore they can enjoy preferential insurance rates. Perhaps I may suggest we could end up with a situation where an insulin-dependent diabetic could have the same overall risk by being an advanced driver. I appreciate that it might require EU agreement before implementation. What is the view of the Minister on reducing risk by increasing the standards of driving?
I appreciate that the Minister might not be able to give a full answer today, but of course I will have the opportunity to raise this matter in greater detail during the passage of the Transport Bill.
Finally, I turn to minibuses. Minibuses can he driven by volunteer non-professional drivers who are insulin-dependent. That matter was raised by the noble Baroness, Lady Thomas of Walliswood. It was raised in the select committee report. It is a serious problem because passengers in a minibus are frequently vulnerable passengers and may not be in a position to make an informed decision about the risk they are taking. They may be unaware that the driver of the minibus is an insulin-dependent diabetic. If we are to allow insulin-dependent diabetic drivers to volunteer to

1469
drive minibuses, perhaps we ought to take the precaution of insisting that the minibus is double-manned. Therefore if the driver feels the onset of a diabetic episode, someone could take over; otherwise he may be in the very difficult position of being 50 miles from home, late at night and unable to stop although he is feeling the onset of a diabetic episode.
Many excellent points have been made tonight. I hope the Minister will be positive in his response.
7.51 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, I thank my noble friend Lord Harrison for raising this issue again. It is an ongoing concern, as was pointed out by the Select Committee of another place, and one which concerns many people up and down the country who suffer from diabetes. It is one which has therefore caused my department and the DVLA—and no doubt the DVLA in Northern Ireland—some concern as to whether the present regime is fair.
In practice we are moving along the lines, or very similar lines, that my noble friend suggests. We have started to work on the possibility of individual assessment of fitness to drive. However, we need more information on that. We are seeking information from other member states, from the European Union and the European Commission. Not all of that is as clear or in the single direction that my noble friend and others have implied. But it is clear that we need to examine the position in other member states and then look at our own regime in the light of that.
However, I think that one can be too simplistic about this because we are under a number of constraints. The noble Baroness, Lady Thomas, and my noble friend Lord Harrison have suggested that we are over-interpreting—that may also be behind the reference to gold-plating of the noble Earl, Lord Attlee—the European directive. The European directive, which in one sense, has stood for some time, refers explicitly to:
"Only in very exceptional cases may driving licences be issued to or renewed for drivers suffering from diabetes mellitus and requiring insulin treatment, and then only where justified by authorised medical opinion and subject to regular check ups".
Regrettably there is no definition of "very exceptional cases" in this or other countries. We are in touch with the Commission to see whether a more common approach to this could be adopted. The Medical Advisory Panel in this country is also reconsidering its previous interpretation for this. Nevertheless, it is clear that "very exceptional cases" requires some definition and some understanding. It does not therefore allow a blanket restriction.
That does not apply to all people suffering from diabetes. Drivers whose diabetes is treated with tablets or diet only are allowed to hold a licence to drive large goods vehicles and passenger carrying vehicles in any case. The difference between them and insulin-dependent diabetics is the risk of a sudden disabling
1470
attack of hypoglycaemia, which can result in impaired awareness or unconsciousness. The noble Baroness, Lady Thomas, and the noble Earl, Lord Attlee, asked about the statistical basis for the assessment of higher risk. The statistical basis is not available. There is not an effective and robust analysis of the level of risk involved. However, there are a significant number of incidents reported over the years by the police and others attending accidents which indicate that there are accidents due to drivers losing control while suffering from hypoglycaemic attacks.
We recognise the inadequacy of the statistical base for that and the base that has been adopted across Europe and indeed many other countries. We have therefore initiated a programme of research recently which will help to establish the risks and to assess more accurately which drivers pose an unacceptable risk to road safety and which do not. At the moment there is not a robust base on which to make that judgment.
Earl Attlee: My Lords, I am grateful to the Minister for giving way. I am grateful, too, for his frankness. It would be helpful to noble Lords if he could give us some idea of the number of incidents, otherwise we cannot work out whether we are right or wrong.
Lord Whitty: My Lords, I cannot say. That information does not exist in the statistical form in which the noble Earl requests it. It is based on a number of accident reports. Accident reports, of course, are only extant if there has been an injury or there has been a serious incident. It is difficult to devise a methodology to achieve those statistics. However, the research programme that we have now initiated should help us down that road.
The main concern relates to light goods vehicles. There are around 100,000 insulin-treated drivers in Great Britain, and indeed a few more in Northern Ireland no doubt, as the noble Lord, Lord Blease, indicated. Most of those drivers are licensed to drive cars and motorcycles. Their licences are normally issued for three years, although in a few cases depending on the driver's health they may be issued for shorter periods. They need to satisfy the eyesight standard and to have good diabetes control. For the vast majority of drivers it is a relatively clear regime.
For drivers of larger vehicles, the situation is somewhat more complex. Because of the higher degree of risk to others involved in driving larger lorries and buses, the potentially serious threat to road safety has been recognised in effectively excluding new drivers in that category. The noble Baroness, Lady Thomas, referred to the statutory bar for a licence for large lorries and buses being in place since 1991 but not before that. Prior to that it had been recommended by the advisory panel that drivers with insulin-treated diabetes should not hold such licences. That did not have the force of law until that point. The change of law in 1991 institutionalised that recommendation. There were some who retained their rights through grandfather rights, but it was not the case that everyone was granted that licence prior to that point.

1471
The key point where unfairness arises concerns those vehicles of more than 3.5 tonnes, as the noble Lord, Lord Addington, indicated. It is important to understand the complexity of this issue, because many of the reasons for the present regulatory position have little direct relationship to the situation with regard to diabetes. Before the introduction of a second EC directive in 1997, all car drivers were automatically granted entitlement to drive minibuses with up to 16 passenger seats and small lorries. From January 1998, drivers who already held entitlement to drive small lorries and minibuses would be required to reapply when their licence expired, demonstrating that they met the higher health standards required of drivers of larger vehicles.
For the majority of drivers, that meant that they could retain their entitlement without taking any further action until their licences expired at the age of 70, but for those drivers who, because of a medical condition, had been issued only with short period licences, that change in the law resulted in their loss of entitlement to drive minibuses or small lorries. Drivers with insulin-treated diabetes were among that group.
Those who drove for a living were understandably anxious that their livelihood would be threatened. In 1998, my predecessor, my noble friend Lady Hayman, in the light of representations, agreed, on advice from the Medical Advisory Panel, that exceptional arrangements should be made in respect of those employed to drive small lorries. That did not extend to the drivers of minibuses because the panel advised that no such easement should be made. But drivers of small lorries who wished to retain that entitlement have to fulfil certain criteria, including the requirement for the driver to have notified the DVLA by the end of 1997.
Inevitably, there were some insulin-treated drivers who could not meet the criteria and therefore lost their entitlement to drive small vehicles. In some cases that affected their employment. That is the area of unfairness, or apparent unfairness, but it affects a relatively small section of insulin-treated diabetes drivers on the road.
There have been applications for exemption on the basis of the employment rules. Around 12 per cent of drivers who apply are refused. Of those, about 75 per cent are refused because of other medical conditions. Therefore, there are relatively small numbers of refusals. That does not include those who look at the employment criteria and do not apply. There were around 1,100 requests for application forms and 500 were returned. At most, around 500 drivers looked at the employment criteria and decided not to apply.
We are talking about relatively small numbers of people. Nevertheless, it was quite right that the Science and Technology Committee should have identified the apparent inconsistency and illogicality in this matter and the poor statistical base for this action. We have accepted the vast majority of the committee's report. We have taken positive action on virtually all of the recommendations. We had discussions with Diabetes UK when the report was published. I can confirm that we will be meeting again. We have indicated that we
1472
are prepared to look at the possibility of introducing a system of individual assessment for fitness to drive. The Medical Advisory Panel has also indicated its willingness to look again at present arrangements. As a starting point, the panel will look at the practices in other member states. Action is already under way on the vast majority of the recommendations.
My noble friend Lord Harrison and others said that other countries use individual assessment. The information we have so far indicates that that is not entirely the case. In some senses the concession made in 1998 is a blanket concession whereas others have to go through an individual assessment in all cases to drive this class of vehicle. We have detailed information on Belgium, Norway, Sweden and Denmark. Drivers there are permitted to drive large lorries provided the condition is stable. In Sweden, buses are excluded but drivers are permitted to drive heavy goods vehicles. It is not clear precisely how the medical assessment operates. Although it may well be true that a Dutch driver could get through an individual medical assessment and drive in this country whereas a British driver might not, it is also true that, because of the general exemption, a British driver, going through the British system of being exempt or being allowed to have the licence because of the regular and recent employment criteria, might be able to drive whereas a similar driver in Holland might not.
That is the essence of national interpretation of European directives. It is that rather than an issue of gold plating. I notice that the noble Lord, Lord Pearson of Rannoch, has entered the Chamber at this point! It is by no means clear—I believe that Diabetes UK would accept this—that if we had a system of individual assessment, more people would be entitled to drive than under the present system. However, I accept the point made by the Select Committee and Diabetes UK that it would be a fairer system. We are looking at the possibility of adopting such a system. We are looking, too, at other EU countries' practice in that area.
The noble Earl, Lord Attlee, and the noble Baroness, Lady Thomas, referred to volunteer minibus drivers. There is no very direct relationship with diabetes but it raises an anomaly to which the Select Committee referred. During the negotiations on the directive in 1998–99 we successfully achieved a concession to protect the interests of the voluntary sector. The UK is the only member state to have introduced this exemption. The concession provides that all drivers who have held a category B licence far two years can still drive a minibus with up to 16 passengers provided that it is used solely for social purposes, there is no hire or reward and the vehicle weighs no more than 3.5 tonnes or 4.25 tonnes if inclusive of special equipment for disabled passengers. That leads to the anomaly that insulin-treated diabetics who no longer have a Dl minimum entitlement may nevertheless continue to drive minibuses under those conditions. If we were to correct that anomaly, it would not necessarily be to the benefit of insulin-treated diabetic drivers.

1473
The noble Earl referred to the possibility of approaching the matter in an entirely different way. He proposed that those subject to an insulin-treated diabetes regime should take an advanced driving test. That is not quite the point. We need research to establish the risk. There is no indication that those people are worse drivers and therefore need to acquire higher driving skills. The point is: what is the risk element of an attack of hypoglycaemia?
Earl Attlee: My Lords, I was not suggesting that someone who is an insulin-dependent diabetic suffers from poor driving. My point is that we need to set against the increased risk of having a diabetic attack the lower risk of having an accident caused by the normal perils of the road.
Lord Whitty: My Lords, it is nevertheless an assessment of skill rather than an assessment of likelihood of a problem.I said that I will be meeting Diabetes UK shortly. I said that we are looking at the
1474
possibility of individual medical assessment. My officials will work closely with Diabetes UK. We will continue that process. We are also in contact with the advisory panel. The noble Baroness, Lady Thomas, referred to the membership of the panel. The suggestions of the Select Committee in that regard are being considered because, with regard to other advisory panels, it is more difficult to decide how lay members should be appointed. Indeed, we are looking at the totality of the membership of our medical panels.
Noble Lords may be assured that the Government are doing their utmost to try to ensure that a higher level of fairness is put into the system, compatible with observing the requirements of road safety. We wish also to ensure that better research is undertaken to underpin the regulations and that those regulations are seen by all concerned to be fairer than has been the case in the past.
House adjourned at ten minutes past eight o'clock.