Lords Sitting of 5 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.

The Lord Bishop of Chelmsford
John Freeman, Lord Bishop of Chelmsford—Was (in the usual manner) introduced between the Lord Bishop of Blackburn and the Lord Bishop of Wakefield.

Australia: Centenary
2.40 p.m.
Lord Morris of Manchester Lord Morris of Manchester asked Her Majesty's Government:
What arrangements have been made to mark the visit to London of Australia's Prime Minister John Howard and his delegation to celebrate the 100th anniversary of the passing of the Commonwealth of Australia Constitution Act.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): My Lords, John Howard has a full programme of meetings in London, including calls on my right honourable friends the Prime Minister, the Foreign Secretary and the Chancellor. My right honourable friend the Prime Minister will speak at a parliamentary ceremony in the Royal Gallery tomorrow, hosted by the Lord Chancellor and Madam Speaker, which celebrates the centenary of the passage through Parliament of the Commonwealth of Australia Constitution Act. The week will also include a Guildhall banquet hosted by the Lord Mayor of London and a service for Australia at Westminster Abbey. I should like to take this opportunity to acknowledge my noble friend's role as founder chairman and now president of the ANZAC Group of Peers and MPs.
Lord Morris of Manchester: My Lords, I am most grateful to my noble friend for her reply. Is this not a timely moment to recall the statesmanship of those—Australian and British parliamentarians alike—who created the 1900 Act, heralding as it did a century of excelling friendship between the two countries: one that aligned us side by side in war; that has given us cherished and enduring cultural, sporting and other ties; and that makes Australia still the second highest investor in Britain and us the second highest investor in Australia? Notwithstanding the privations inflicted on us by Australia's test cricketers and the "Wallabies"—not to mention Wimbledon—long may it continue!
Baroness Scotland of Asthal: My Lords, I welcome my noble friend's words. Our relationship with
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Australia goes from strength to strength and we hope that it will continue to do so in the next one hundred years. Our ties with Australia are wide ranging. I hope that the House will forgive me if I brush quickly past our sporting ties, not least after the result at Wimbledon on Monday. As my noble friend has pointed out, we are staunch allies and Australia has been a supporter of NATO's policies in the former Yugoslavia. It is our business to value partners, and we do so most warmly today.
Viscount Slim: My Lords, I declare a longstanding interest in Australia. Even today I work for a British company which is very active in Australia. I had the honour of fighting alongside Australians in a couple of campaigns and I have the highest regard for them. I am a member of the Returned Services League of Australia. It is a great organisation which could give any British government advice on how to care for veterans. In that context, does the Minister accept the great sacrifices made by Australians in two world wars? Do the two governments have any plans to erect a memorial or to do something to commemorate this in the coming years in our city of London?
Baroness Scotland of Asthal: My Lords, we are acutely aware of the service given by Australians in the two world wars and in many other wars. During the Gallipoli campaign they suffered thousands of casualties. The Minister for the Armed Forces, John Spellar, travelled to the Gallipoli peninsula in April to commemorate the 85th anniversary of ANZAC day and the sacrifices made by Australian, British and other troops. I was at the commemoration at the Cenotaph in London. I was also with John Howard when he laid a wreath to the war dead at the Cenotaph this morning. I was deeply moved on both occasions.
I am able to say that last night John Howard announced that the Australian Government will build a war memorial in London. The Prime Minister and Her Majesty's Government warmly welcome that initiative. I should also like to pay tribute to the distinguished service of the father of the noble Viscount, Lord Slim, the late first Viscount Slim, who was a valiant commander-in-chief of the allied land forces in South-East Asia, which included Australian troops, and who was described by the late Lord Mountbatten as the finest general the Second World War produced. The noble Viscount, Lord Slim, himself should be mentioned for his successful term and for his contribution in that regard. I do so most warmly.
Baroness Gardner of Parkes: My Lords, as an Australian whose father stood for the very first ever federal senate elections, perhaps I may ask the Minister whether she is aware that Miss Margaret Parkes—the 75 year-old great granddaughter of Clarinda and Sir Henry Parkes, who was always known as the Father of Federation—has flown here specifically to join in the celebrations this week?
Baroness Scotland of Asthal: My Lords, I welcome most warmly the news that she is here. We celebrate

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that fact. It is fitting that a great granddaughter should be present today to help us celebrate this great occasion of the 100th birthday. I welcome her most warmly.
Lord Avebury: My Lords, I join in the congratulations to the Australian people on this anniversary. Will the noble Baroness convey to Mr Howard, on behalf of the people of this country, our warmest thanks for the role which they played in liberating East Timor and for the outstanding leadership displayed by General Cosgrove when he commanded the forces there?
Baroness Scotland of Asthal: My Lords, I am very happy to say that that message will be conveyed. It has already been expressed, but it certainly bears repetition.
Lord Harrison: My Lords, I should like to declare an interest as my father held an Australian passport. Has the Minister any further details regarding the centenary gift proposed for Australia which she declared in her oral Answer to the House on 17th January and her Written Answer on 29th February?
Baroness Scotland of Asthal: My Lords, Her Majesty's Government are marking the centenary in Australia with a substantial contribution—about half the total cost—to a monument in Canberra. The gift recognises the relationship between the people of Australia and Britain and commemorates our shared belief in the rule of law, freedom of speech and assembly as well as the sovereignty of Parliament embodied by Magna Carta. A design team has been chosen by open competition. The centrepiece is a commemorative pavilion. We very much look forward to its construction.
Lord Howell of Guildford: My Lords, the noble Baroness has outlined a very encouraging programme and a fitting celebration of an Act passed 100 years ago under a Conservative government, whose Prime Minister was Lord Salisbury. Does she agree that, looking to the future, relations between Britain and Australia are getting closer and closer, particularly in hard economic and commercial terms and in terms of investment flows between the two countries? Does she further agree that Australia is now part of the great Oceania, South-East Asia, Asia Pacific market which in few years' time may be richer and bigger than that of the entire European Union? Does she conclude from that that some of our foreign policy energies and the energies of her department—which sometimes seem to get bogged down in quarrels and difficulties nearer home with our nearer and sometimes less friendly neighbours—could be better deployed in building up and strengthening our ties with one of our loyalist, best and longest-standing friends?
Baroness Scotland of Asthal: My Lords, I can reassure the noble Lord that we have always valued
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that relationship, that we have tended it carefully, nurtured it and it is now in full flower. I should also like to remind the noble Lord that, although he was right in saying that the Act was passed during the period of office of another government, the inspiration for it came from my noble friend Lord Morris who sits on these Benches; and the then government showed good sense in taking it over and making it their very own.
Lord Moore of Wolvercote: My Lords, does the Minister agree that it is most appropriate that we should be celebrating the centenary of the Commonwealth of Australia when Australia has only recently voted to keep the Queen as Queen of Australia?
Baroness Scotland of Asthal: My Lords, there are many reasons to celebrate. I warmly join the noble Lord in saying that we have much to celebrate on this occasion.

Farmers and Growers: Fair Markets
2.50 p.m.
Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer asked Her Majesty's Government:
What initiatives they have taken to help British farmers and growers to obtain a local market and a fair return for their produce.
Lord Carter: My Lords, British farmers and growers produce a tremendous variety of products. Individual farm businesses are best placed to know their own products and markets, but the Government can and do help by providing a wide range of financial and other assistance to help farmers and growers become more competitive and develop their marketing skills. Anyone who was at the Royal Show this week could not fail to be impressed by the number of marketing initiatives, both government-backed and from individual farmers or groups of farmers, which are now being introduced.
Baroness Miller of Chilthorne Domer: My Lords, I thank the noble Lord for that reply. I agree that a number of initiatives are being introduced. The NFU farm assurance scheme and the National Dairy Council white stuff campaign are much to be welcomed. However, does the noble Lord accept that there is a long way to go in terms of joined-up government in this area? I have in mind the Food Standards Agency report National Diet and Nutrition Survey which shows our children on a diet of fizzy drinks, sweets and biscuits. Very low in their diet is milk, cheese and fruit. Could not all government departments, starting with the Department for Education and the Department of Health, do far more to forge a link between local producers and local

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consumers so that healthy habits in terms of eating and an appreciation of the true quality of food produced in Britain are encouraged throughout our society?
Lord Carter: My Lords, the noble Baroness is entirely right. The nutritional value of the food we eat is extremely important and should be a part of our education system. The noble Baroness referred to the local situation. Farmers' markets are an interesting initiative. There was one in Bath in 1997. There are now 200, compared with 2,500 in the USA. In addition, the ministry and the Countryside Agency have assisted in the setting up of the National Association of Farmers' Markets. Those are local initiatives which relate the production of local produce to the consumer. It is to be hoped that the Department of Health and other departments will have their part to play in educating children and adults about the value of healthy eating.
The Lord Bishop of Durham: My Lords, I welcome the Government's encouragement of local farmers' markets. But is the noble Lord aware that the markets of hill farmers in the Pennines in northern England have a minimal impact in terms of the total economy? Is he further aware of the desperate plight of the farmers of the Yorkshire, Durham and Northumberland dales? Have the Government any plans other than farmers' markets which might offer a way out of the desperate plight in which many hill farmers find themselves at the moment?
Lord Carter: My Lords, we are entirely aware of the problem. It is as much a problem of the commodity market as it is of the system. We have done a good deal since the action plan was introduced under the initiative of my right honourable friend the Prime Minister. We have removed the weight limit on the over-30 months scheme for cattle; we have scrapped the dairy hygiene inspection charges, which will help the small dairy farmer; we have put an additional £4 million into the redundant building grant scheme, which will help the small upland farmer; and we have introduced a number of other initiatives. But at the end of the day there is no avoiding the fact that farming is facing a major change. We have put in a good deal of money through the various schemes introduced by my right honourable friend Jack Cunningham, when he was Minister, and Nick Brown. They have introduced money into the uplands. It is not enough—I agree with that—but we have made a start. We are aware of the problem.
Baroness Pitkeathley: My Lords, what progress has been made on reducing misleading labelling on food, an issue which is of great concern to many families?
Lord Carter: My Lords, like every other member of the European Union, we are constrained by the European regulations and by the rules of the WTO. Labelling must not be misleading. But there is nothing to prevent the voluntary labelling of the country of
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origin so long as the information does not mislead the consumer. The Food Standards Agency is reviewing the whole situation with regard to labelling. It has taken that forward at EU level. That is the response to the better food labelling initiative launched in January by my noble friend Lady Hayman. It is worth pointing out to those who believe that this all comes from Europe that the Trade Descriptions Act 1968 states that the place of origin is the place in which a product last underwent a substantial change. So the problems of labelling are not all down to Europe.
Baroness O'Cathain: My Lords, I am sure that we all welcome the noble Lord's comments about the growth in farmers' markets. But can he confirm or deny that there is great concern among those taking part in the farmers' markets that EC regulations are likely to stop that development in terms of demanding that there should be refrigeration equipment in the streets when farmers are trying to sell local produce?
Lord Carter: My Lords, the ministry is at present discussing the problem with Europe. Our understanding is that we should be able to produce a system which will allow the farmers' markets to produce. One can see farmers' markets all over Europe. We want a system that allows these local initiatives to flourish.
Baroness Gould of Potternewton: My Lords, perhaps I may return to the theme of the noble Baroness, Lady Miller of Chilthorne Domer—healthy eating. I try to purchase organic food whenever possible. Can my noble friend say what is the uptake of the organic farming scheme?
Lord Carter: My Lords, I have extremely good news. In 1998–99, £1 million was allocated in grants. That was following on from the previous government's scheme. In 1999–2000, £11 million was allocated; £12 million has been allocated for 2000ߝ2001; and £140 million is allocated in the rural development plan for 2001–2007. In April 1999, there were 60,000 hectares in the organic farming scheme. There are now 160,000 hectares. That is a threefold growth in one season. We have reacted to the demand for organic farming; and it is working.
Baroness Trumpington: My Lords, the noble Lord will have noted the word "growers" in the Question. Does that include horticulture? Is the noble Lord aware that horticulture receives no grants? What do the Government intend to do to help that hard-pressed side of agriculture?
Lord Carter: My Lords, I always think that the horticultural industry is an excellent example of the free market working without subsidy, which I am sure noble Lords on the Benches opposite would support. There is the assured produce scheme. It is producing standards which will improve the saleability and the marketing of horticultural produce. That is the best

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way to go. The Government will not be introducing a subsidy. The horticultural industry has to relate to the market.

River Danube
2.58 p.m.
Lord Hylton Lord Hylton asked Her Majesty's Government:
When the work of clearing the Danube at Novi Sad, funded by the European Union, will be completed; and whether temporary arrangements can be made for transferring freight around the obstructions.
Baroness Scotland of Asthal: My Lords, the target date for the opening of a fully navigable channel at Novi Sad is spring 2001. Some vessels already navigate along canals and Danube tributaries which bypass Novi Sad.
Lord Hylton: My Lords, I very much welcome the noble Baroness's reply if only because of the very serious losses that the obstructions have caused to the economies of countries such as Romania and Bulgaria. Did I hear the noble Baroness correctly in saying that some transhipment of goods is at the moment possible?
Baroness Scotland of Asthal: My Lords, the noble Lord is quite right: a certain amount of transhipment is possible. Obviously larger vessels encounter the greatest difficulties, but smaller vessels are able to get through. The situation is improving. We hope that the clearing of the Danube, a task which is now being pursued with some energy, will greatly help matters in the area.
Lord Grenfell: My Lords, I, too, am grateful to my noble friend for that reassuring information. Additional to the issue of the navigability of the Danube is the continuing plight of the 350,000 citizens of Novi Sad, who are forced to use a single very inadequate pontoon bridge in order to get about the city. That bridge is all that now stands in place of the three major bridges that were destroyed. Will my noble friend bear in mind the ironic fact that the region of Vojvodina, in which the city of Novi Sad lies, is governed by political parties which have long been bitterly opposed to Milosevic, as indeed are the people of Novi Sad? Those people have been asking for how much longer they will have to pay such a high price for the policies of a man whom they intensely dislike.
Baroness Scotland of Asthal: My Lords, I understand the sentiments expressed by my noble friend. We hope that the people of Serbia will come to the right decision as regards what is in their best interests. We also hope that the clearance of the Danube will do much to make matters a little easier for the people of Novi Sad.
Baroness Williams of Crosby: My Lords, can the Minister tell the House, first, why the canals situated mainly inside the Federal Republic of Yugoslavia are subject to such very high tolls and charges, thus making it much more difficult to bypass Novi Sad? Secondly, as regards a broader issue, can she indicate how rapidly the development of the Balkan economic stability pact is progressing, of which, obviously, the Danube river system is an absolutely crucial element?
Baroness Scotland of Asthal: My Lords, I cannot give the noble Baroness a specific answer in relation to her first question. I hope that she will allow me to write to her on that matter. As regards the Balkan economic stability pact, that pact is now yielding a great deal of beneficial help and assistance. As a result, considerable support has already been made available both bilaterally and multilaterally for the countries of the region. This has been intensified since the end of the NATO air campaign. The UK is an active supporter of the Stability Pact for South-East Europe, which has the potential to bring many benefits to the region and to act as a clearing house both for existing sources of assistance and for new ideas and initiatives. The UK continues to provide considerable support through the bilateral assistance programme. The Department for International Development's country programmes for Rumania and Bulgaria have been enlarged since the end of the conflict. Some £6 million has been made available for Rumania, along with £4 million for Bulgaria. We continue to provide bilateral assistance to Hungary of the order of £2·5 million per annum. We are a major contributor to the EU programme for all the accession countries. Matters are progressing as swiftly as we could reasonably anticipate at this point.
Lord Berkeley: My Lords, can my noble friend explain to the House why it is taking so long to clear a few bridges out of a river? Speaking as a civil engineer, I can confirm that the European civil engineering industry would be quite capable of undertaking this task far more quickly than the timetable that has been indicated—and could probably also build a new bridge. Is this a political problem or is this a matter of lack of resources?
Baroness Scotland of Asthal: My Lords, I can confirm that neither of the two suggestions made by my noble friend have been the source of the problem in the area. I wish that the noble Lord was right; namely, that the clearing of the Danube would be as easy as he suggests. However, it has been a difficult process, although we have made great strides forward. Her Majesty's Government have been at the forefront of those pressing for progress and ensuring that the job is done. Furthermore, the European Union has committed 22 million euros to the initiative. We hope that the work will be completed as speedily as possible. We understand the urgency and thus we are trying to push forward the agenda as quickly as possible.

Tackling Hooliganism
3.3 p.m.
Lord Dixon-Smith asked Lord Dixon-Smith asked Her Majesty's Government:
Whether the issuing of on-the-spot fines to drunken hooligans by police officers would be consistent with the European Convention on Human Rights.
The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton): My Lords, on-the-spot fines are not currently available as a penalty for a criminal offence in England and Wales. The Government take very seriously the problems posed by drunken hooligans and are considering whether it will be necessary to introduce new methods to deal with this type of behaviour. Any new measures would of course need to comply with the European Convention on Human Rights.
Lord Dixon-Smith: My Lords, I am grateful to the Minister for that response, which takes us forward a little. Can he tell the House whether his right honourable friend the Prime Minister had taken the trouble to obtain advice from lawyers—although I appreciate that we cannot ask what that advice might have been—before he made his rather startling announcement last weekend? More importantly, did the Prime Minister take advice from the police service, who would have the responsibility for administering such a scheme?
Lord Bassam of Brighton: My Lords, I think that it is now well known that on Monday afternoon my right honourable friend the Prime Minister spent some two hours in the company of seven chief constables taking their careful advice. What this matter has demonstrated is that the Prime Minister, along with the Government as a whole, is committed to finding ways to deal with the outlandish behaviour of louts and yobs—the kind of behaviour we all find so objectionable—outside public houses and other public places on Friday and Saturday nights. Any government should take those issues seriously. We are determined to tackle that kind of horrible behaviour because it does nothing for our town and city centres and harms our communities.
Lord Dubs: My Lords, does my noble friend agree that we must not lose sight of the human rights of ordinary people who wish to go about their business on Saturday nights and not be impeded by people who are drunk or who are football hooligans? Does he further agree that most people would prefer to have in place a government who put forward plenty of new ideas in an effort to tackle these problems, rather than simply settle for a government who during 18 years of power did nothing?
Lord Bassam of Brighton: My Lords, the simple and short answer to my noble friend is, yes, of course I
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agree. We know that we must put this situation right by tackling loutish and yobbish behaviour. That is why yesterday the Government proposed new measures to tackle football hooliganism. I believe that those measures have received wide public support. Furthermore, I hope that all parties in your Lordships' House will also support such moves.
Lord McNally: My Lords, has the Minister read the opinion of retired Chief Superintendent Tom Swendell of the Hertfordshire police force? He states that:
"Policing is an activity for the streets. There are far too many feet under desks. When the administrative culture becomes bigger than the operational commitment, that's a road to disaster".
Is not that the kind of advice that the Home Secretary should be taking, instead of listening to advice that results in what we are seeing at the moment; namely, a gimmick a day from a Home Secretary who for three years aped Michael Howard and now quite clearly has lost the plot?
Lord Bassam of Brighton: My Lords. I cannot agree that my right honourable friend the Home Secretary has lost the plot. The fact that the Home Secretary and the Prime Minister are determined to deal with the kind of behaviour that has been discussed many times recently in your Lordships' House speaks volumes about the Government's serious commitment to dealing with public disorder. We all need to care about these issues and I should be extremely disappointed if the noble Lord, Lord McNally, did not care as well.
Lord Cope of Berkeley: My Lords, it appears that the plot being followed here is that the number of serving policemen should fall while the number of crimes committed should rise. That is what is happening at the moment. So far as concerns on-the-spot fines, did the Minister note that the Home Secretary has promised to introduce legislation as soon as possible; namely, to bring forward measures to the House of Commons on Monday? Can the Minister tell the House whether it will be for the individual policeman to decide on the level of the fine to be imposed on the spot, as would be done in a court in accordance with the seriousness of the offence?
Lord Bassam of Brighton: My Lords, I find it rather hard to take the noble Lord entirely seriously. He was a member of a government who presided over a rate of recorded violent crime increasing by 168 per cent. Furthermore, he was a member of a government who saw crimes of robbery increase by 405 per cent. As I said, I find it extremely difficult to take the noble Lord seriously when discussing these matters. We shall pursue all feasible means to bring down the amount of loutish behaviour occurring in our town and city centres. Furthermore, I expect noble Lords opposite to give the Government their support.
Lord Richard: My Lords, is my noble friend aware that I am slightly mystified this afternoon? I hope that he will be able to help me. I read in this morning's press that the Conservative Opposition supported in principle the introduction of these measures. Is that the case? If it is, can my noble friend explain the behaviour of noble Lords opposite this afternoon?
Lord Bassam of Brighton: My Lords, I believe that we are all puzzled from time to time by the words and actions of noble Lords opposite. I was extremely puzzled when I read an account which stated that, on the one hand, Ann Widdecombe would support our measures to deal with football hooliganism but, on the other hand, comments were made by other members of the same political party to the effect that they were not sure whether they supported these moves and were concerned about issues of civil liberties. As a government we need to lead the charge in this area. We should protect the civil rights and civil liberties of those who wish to go about their business peaceably.
Lord Marsh: My Lords, will the noble Lord accept that we are in great danger of losing the plot? There is no shortage of legislation against offences of the kind that he outlined, but it is not being implemented. We do not need new laws; we need existing laws to be implemented by whatever measures are necessary to allow that.
Lord Bassam of Brighton: My Lords, I take the noble Lord's remarks as a serious contribution to the debate. However, we must consider the fact that every Friday and Saturday night those who are drunk and disorderly in our town and city centres take up valuable police time in terms of processing after arrests have taken place. There is merit in examining in more detail a fixed penalty system. The idea was given some measure of support by leading and senior police officers earlier this week.

Royal Parks (Trading) Bill
3.10 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
House in Committee accordingly.
[THE CHAIRMAN OF COMMITTEES in the Chair.]
Clauses 1 to 6 agreed to.
Lord Cocks of Hartcliffe Lord Cocks of Hartcliffe moved the amendment:
After Clause 6, insert the following new clause—

(".(1) The Secretary of State shall review and prepare a report On Review of Act. the operation of this Act.

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(2) In reviewing the operation of this Act the Secretary of State shall consult persons appearing to him to represent the users of royal parks and such other persons as he considers appropriate.

(3) The report shall contain details of-

(a) the number of-

(i) prosecutions, and

(ii) convictions, for park trading offences;

(b) the effect of this Act on trading within royal parks; and

(c) the cost of enforcing the law relating to park trading offences.

(4) The Secretary of State shall lay the report before each House of Parliament no later than eighteen months after the day on which this Act is passed.")

The noble Lord said: I do not wish to detain the Committee and shall therefore be brief. I have tabled the amendment with a view to protecting the monarchy. It proposes the insertion of a new clause asking for a report on the workings of the Bill when it becomes law.
We are all aware of the grotesque abuses that presently take place as regards unlicensed traders, and which must be curbed. I believe that the experience of implementing this legislation in the Royal Parks will be of great use to other areas in the country that suffer the same problem. Therefore, it is important that a report should be submitted to Parliament within a period of approximately 18 months on how the measure is working and how lessons can be learnt from it which can be applied to other parts of the country.
Why do I seek to publicise the matter in this way? There have been a large number of constitutional changes which we have not even had time to digest. Yet Members of the Committee will recently have received a further communication from Charter 88 with the rather pretentious title Unlocking Democracy, outlining a whole set of further demands. I do not believe that these people will give up even if these demands are satisfied.
I raise the matter because the body of the report contains a very sour paragraph about the monarchy, written in a distasteful manner. Only yesterday in another place, during the Statement on the Civil List, the first Back-Bencher on the government side to speak was the Member for Cannock Chase, who drew attention to the fact that it was not possible to reduce the amount of money paid to the Crown and called this into question.
These are sinister portents. The Member for Cannock Chase is a member of the Constitution Unit council. He is also chairman of the All-Party Constitution and Citizenship Group. An examination of the group's details indicates, under the heading "Benefits from outside sources", that,
"Administrative support is provided by Charter 88".
We are faced with what in vulgar parlance—I would not dream of using the expression in this place—
Lord Strabolgi: What has this to do with the Bill, which is about controlling itinerant traders in St James's Park and other parks?
Lord Cocks of Hartcliffe: I hope to satisfy my noble friend with my dénouement—that is one of the shreds of my French vocabulary!

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I believe that we are again being bounced into further constitutional change. But this time, I believe that the monarchy will be one of the targets for attack. Therefore, to come to my noble friend's point, it is important that it is not possible to use as future ammunition the idea that, while everyone else has to put up with illegal traders and nothing is done about it, in the case of the Royal Parks a special Bill was rushed through Parliament with a guillotine Motion in another place. The production of a report on the workings of the legislation will be helpful to other parts of the country where a similar problem arises. That is the thinking behind my amendment. Instead of being attacked as élitist, the passage of this legislation could be seen as a public service. I beg to move.
Baroness Anelay of St Johns: Briefly, I accept—
Lord Strabolgi: Before the Front Bench?
Baroness Anelay of St Johns: I was not intending to pre-empt the noble Lord. As this is Committee, I merely intended to give a response. However, I always give way to the noble Lord, Lord Strabolgi.
Lord Strabolgi: I am sorry to have to disagree with my noble friend. I served under him in the 1974–79 government and he was a very fine Chief Whip. I was puzzled about the amendment and his reason for tabling it. I am afraid that most of his speech has not illuminated me.
St James's Park, the main park where there is a problem, was laid out by John Nash in the early years of the 19th century on behalf of George IV. But that was almost the last connection with the monarchy and the Royal Family, which seems to be exercising my noble friend.
At present, the Royal Parks are administered by the Royal Parks Agency, which comes under the Department of the Environment. The Bill is necessary in order to control the itinerant traders who have proliferated in St James's Park in recent times. Almost 20 can now be counted. They are unlicensed. They sell hot food, mostly sausages cooked in cheap and bad fat, which makes a dreadful smell and pollutes the most beautiful of all the parks. Indeed, St James's is probably one of the most beautiful parks in the world. Not only are the smells unpleasant; the food itself is dangerous and unhealthy. It is sometimes bought by unsuspecting tourists who, I am afraid, may suffer from it.
The Bill closes a loophole in the legislation. At present, Westminster City Council has the right to control such traders in the streets around the park, but it has no control over the park itself. The council can impose a fine, but it is derisory. Most of the traders are controlled by one small company. They are often refugees and others who have entered the country illegally.
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My noble friend's amendment is unnecessary. All Acts are reviewed from time to time. Subsection (3)(a) of the proposed new clause states that,
"the report shall contain details of … the number of prosecutions and convictions".
If there are any convictions, it will surely mean that the legislation was necessary. If there are none, I hope that the noble Lord will not come forward and say that it should be rescinded. It is probable that the Government could themselves issue a report after a certain period to see how the legislation was working. I hope that my noble friend will withdraw his amendment.
Baroness Anelay of St Johns: I appreciate the good intentions which lie behind the amendment moved by the noble Lord, Lord Cocks. Although he did not speak at Second Reading, I am aware that he was present throughout and listened to the debate. Therefore, he will be aware that I and the noble Lord, Lord Strabolgi, are keen to close a loophole whereby currently it is impossible for people who push trolleys around the Royal Parks, as opposed to the owners, to be prosecuted as a result of the case of Kol Curri last May.
I made it clear during Second Reading that I wished the Bill a fair wind. I hope that the Government are able to provide a response to the request of the noble Lord without the need for anything to be put on the face of the Bill. We on this Front Bench cannot support an amendment that requires the Bill to return to the Commons, thus lengthening the time taken before the Bill becomes law. As an individual, I have given my word to the Friends of the Royal Parks Forum that I shall do all in my power, within the rules of the House, to give the Bill a fair wind. I seek to keep my word in all cases. Like the noble Lord, Lord Strabolgi, I hope that the noble Lord, Lord Cocks, will be minded to withdraw his amendment.
Lord McIntosh of Haringey: I am sure that my noble friend Lord Cocks will understand if I respond to the amendment rather than to those parts of his speech which did not refer to it. I assure my noble friend that these are not unprecedented powers. The powers proposed under the Bill are already available to the City of Westminster under the City of Westminster Act 1999. One of the reasons that matters have become worse in the Royal Parks is that illegal traders have moved there from Westminster, where the controls are stricter.
The Government want to review the operation of the legislation after it has been in operation for, say, 18 months to assess both its effectiveness in the Royal Parks and any impact outside them. I am happy to give my noble friend an assurance now that such a report will be prepared and that its conclusions will be announced to both Houses. My noble friend may wish to table a Question in the House when the time comes. In the meantime, I hope that my noble friend will see fit to withdraw his amendment.
Lord Cocks of Hartcliffe: In response to my noble friend Lord Strabolgi, I did not like his reference to

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serving under me. I always thought that he served with me as part of a great team. I thank the noble Baroness for her observations and completely understand her position. I also thank the Minister for giving me the assurance that I seek. The position is most satisfactory, and I am sure that it will assist people in other parts of the country who face the same problem. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 7 and 8 agreed to.
House resumed: Bill reported without amendment; Report received.

Utilities Bill
3.23 p.m.
Report received.
Clause 8 [Payments by licence holders relating to new arrangements]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 1:
Page 5, line 37, at end insert (", or of preparations for").
The noble Lord said: My Lords, in rising to move Amendment No. 1, I should like to speak also to Amendment No. 2. Both amendments concern Clause 8 which gives the authority powers to modify payment conditions in licences so that the ongoing costs of the authority and council can be recovered. It has always been our intention that any expenses incurred by the Secretary of State in setting up the authority or council should also be recoverable from licence holders. This category of expenses is identified in Clause 8(3) of the Bill. Amendment No. 1 puts beyond doubt that the authority's ability to modify payment conditions in Clause 8(4) encompasses the powers to make modifications so that any costs incurred by the Secretary of State can be recovered.
The second amendment helps to ensure a smooth transition from the old to the new funding arrangements. For this to happen new payment conditions need to be in place from the date of the establishment of the new bodies. The difficulty is that Clause 8(6) requires the authority to consult licensees before modifying licences. Clearly, until the authority exists it is unable to carry out the consultation itself. If new licence conditions are to be in place from the outset, provision must be made to permit the directors general or the Secretary of State, or both, to carry out the necessary consultation. The amendment makes the necessary provision for early consultation. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 2:
Page 6, line 2, at end insert—
("() Any consultation undertaken by the Director General of Gas Supply, the Director General of Electricity Supply or the Secretary of State before the commencement of subsection (6) shall be as effective for the purposes of that subsection as if undertaken by the Authority after that time.").
On Question, amendment agreed to.
Clause 9 [Objectives and duties under 1986 Act]:
Lord Ezra Lord Ezra moved Amendment No. 3:
Page 6, line 20, after ("of") insert ("existing and future").
The noble Lord said: My Lords, with Amendment No. 3 I should like to speak also to Amendments Nos. 6, 7 and 10. At Committee stage I moved Amendment No. 31 to insert in Clauses 9 and 13, which set out the objectives and duties under the Gas and Electricity Acts, a reference to sustainable development. In that I was supported by my noble friend Lady Sharp of Guildford and the noble Lords, Lord Beaumont of Whitley and Lord Hardy of Wath. The Minister gave his reasons why this should not appear on the face of the Bill, even though sustainability is one of the objectives of government policy. As an alternative, I propose that the reference to existing and future consumers in subsection (6) appears in subsection (1) so as to give it added prominence. I hope that this small drafting amendment, which goes some way to achieve my objective, is acceptable. I beg to move.
Lord Renton: My Lords, with great respect to the noble Lord, I do not believe that Amendment No. 3 is necessary. When one uses the word "consumers" as it appears here it means any consumers at any time. I do not believe that "existing and future" is at all necessary.
Lord McIntosh of Haringey: My Lords, I regret to say that I disagree with both noble Lords. The Bill already makes reference to existing and future consumers at lines 25 and 26 on page 7 and lines 36 and 37 on page 10. That is deliberate and explicit, because we support the point made by the noble Lord, Lord Ezra. The Government want sustainable development to be a serious consideration in the protection of consumers, which means that it is right to say explicitly that we are concerned about present as well as future generations.
Our difficulty lies with the effect of the amendment. I understand the desire to emphasise that the authority and the Secretary of State have a duty to existing as well as future consumers. It is an important principle and one which we have been careful to make clear on the face of the Bill.
The reference to future consumers removes any doubt that steps can be taken to promote energy efficiency, providing a long-term benefit to consumers in terms of lower monthly bills that offsets any marginal increase in unit price. It enables the promotion of renewables technology that will help ensure continuity of supply in years to come as fossil

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fuel reserves dwindle. And it helps explain why it is in the interests of consumers that energy companies are able to attract the capital they need to maintain the infrastructure for which they are responsible. But this principle is already clearly stated in Clauses 9 and 13 in the subsections which Amendments Nos. 6 and 10 would remove. Those amendments would add nothing of substance. They simply move the reference to "existing and future" to the place in which the term "consumers" first appears.
What these amendments would do, however, is to cast doubt over whether the broad definition of consumer applies to all the other references to "consumers" in Clauses 9 and 13. Not counting the subsections containing the definition, the term "consumer" appears no fewer than four times in each of the two clauses. What meaning is to be given to that term on the six occasions on which, by these amendments, the words "existing and future" are not to be inserted?
The amendments would leave this in doubt. The definition of "consumers" which they remove is clear: that the broad construction should apply to each and every use of that term in Clauses 9 and 13. The definition thereby provides a consistency within those clauses that would be lost if the proposed amendments were made. There is also the question of preserving consistency with the similar definition of "consumers" in Clause 17 which applies to the clauses setting out the functions of the new consumer council. One does not give prominence to something by putting it earlier in a clause. One gives effect to it by having a definition section which by parliamentary convention comes towards the end of a clause.
3.30 p.m.
Lord Ezra: My Lords, if the Minister had not answered the noble Lord, Lord Renton, I would have done so now by saying that if the word "consumers" had the meaning the noble Lord gave it, the Government would not have introduced the definition in the later part of the Bill.
I regret that the proposed change has not been accepted. However, I am glad that again we have had firm assurance from Government that they subscribe fully to the principle of sustainability. They consider that they have done that by the wording in the Bill. I do not, therefore, insist on my amendment. I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Lord Ezra Lord Ezra moved Amendment No. 4:
Page 6, line 35, at end insert ("; and
(c) the need to promote energy efficiency").
The noble Lord said: My Lords, in Committee I drew attention to the importance of energy efficiency and endeavoured to give it more prominence in the Bill. The proposed amendment was not accepted by the Minister. I now propose a different amendment. It seeks also to give greater prominence to energy efficiency by making it a major consideration of the Secretary of State and the authority in furthering that
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principal objective. I hope that the noble Lord will he able to accept the amendment in this revised form. I beg to move.
Lord Borrie: My Lords, I am sure that all noble Lords will agree with the noble Lord, Lord Ezra, about the importance of creating energy efficiency. In his lifetime and through his many activities the noble Lord has sought to do just that.
However, we are dealing with the principal objective of the new authority. I believe that one should keep the principal objectives basic and simple. It is not helpful to add to the basic objective set out in the clause as drafted. Clauses 70 and 99 provide adequately for requirements for energy efficiency targets under statutory regulation. I should have thought that that provision would meet the noble Lord's wishes.
Lord McIntosh of Haringey: My Lords, we had a useful debate on the positioning of the authority's duty to promote energy efficiency. My noble friend Lord Borrie recalls it well. I am sorry that I was not able to persuade the noble Lord, Lord Ezra, at that time of the appropriateness of leaving that duty subject to the principal objective to protect the interests of consumers.
As I said then, regulation is intended to mimic the effects of competition by putting downward pressure on costs and by creating incentives to improve, efficiency and the quality of service to consumers. It is, right, therefore, that the authority's general duties should have an economic focus—that is what this Bill is about—one which is primarily concerned with the price and quality of service offered to consumers. That is why the authority's principal objective is to protect the interests of consumers.
But we recognise the importance of encouraging energy efficiency. That is why, subject to the duty to further the principal objective, the authority is given a duty to promote efficiency in the use of gas and electricity. Let me dwell for a moment on what that duty entails. The authority has no choice as to whether it should comply. It must exercise its statutory functions in the manner it considers best calculated to promote the efficient use of energy. To that extent it is the same as the duty to further the principal objective. The only difference is that in the event of a conflict between energy efficiency and the interests of consumers, the interests of consumers present and future, as we have agreed, should prevail.
But how often will the interests of consumers conflict with any sensible measure to promote energy efficiency? The interests of consumers include the interests of future consumers. Measures to promote energy efficiency are in the longer-term interests of consumers as they result in decreased energy consumption and, consequently, lower monthly bills. For that reason, it seems unlikely that a measure to promote energy efficiency could ever be resisted on the ground that it conflicted with the duty to further the principal objective. If a measure were so costly or ineffective as to be contrary to both the long and short-term interests of consumers, it seems right that the

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interests of consumers should prevail. No matter which way one looks at it, the duty to promote energy efficiency is best left where it is.
There are also difficulties with the amendment proposed by the noble Lord. They would require the authority to further its principal objective,
"having regard to the need to promote energy efficiency".
My difficulty with the amendments is that I am uncertain where the "need" to promote energy efficiency comes from. It can be contrasted with the straightforward duty to promote the efficient use of gas and electricity, as required by Clauses 9 and 13.
It is true that there is a requirement to have regard to the need to secure that all reasonable demands for gas and electricity are met and that licence holders are able to finance the activities which are the subject of statutory obligations. But these obligations are very different from the promotion of energy efficiency. They stem from the regulators' primary duties under existing legislation—the "demand duty" and "finance duty". They form key aspects of the interests of consumers which must be satisfied if those interests are to be protected. The use of the word "need" in the formulation of these obligations reflects a statutory recognition of the unique status of these aspects of the interests of consumers. It is not an appropriate formulation for an obligation to promote energy efficiency which, important though it is, cannot be said to have the same fundamental status in defining the interests of consumers.
I do not wish to say more about any deficiencies in the wording of the amendment. I prefer to rest my argument against the amendment on the points I made at the beginning. I ask the noble Lord, Lord Ezra, to draw comfort from the strength of the wording of the duty to promote efficiency in the use of gas and electricity and not to press the amendments.
Lord Ezra: My Lords, I thank the Minister and the noble Lord, Lord Borrie, for their comments. The essential difference between the noble Lord and myself is that I regard energy efficiency as an intrinsic and essential part of the interests of the consumers. I do not see that it should be "subject to" the interest of consumers; it is a part of it.
In the latter stages of debates in Committee we dealt with the problem of fuel poverty. In this country, 4 million to 5 million people live in houses so poorly equipped and so inefficient in energy usage that they suffer seriously. We have proportionately a higher mortality rate in winter than any other country in western Europe. I should have thought that the issue is an essential part of the interests of consumers. I do not understand why it is made "subject to" those interests.
However, I take comfort from the other provisions of the Bill, as the Minister asked. I accept that the Government consider energy efficiency important but regret that they are not prepared to give the intrinsic
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status I should have preferred. In the light of the assurances we have received, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 5:
Page 7, line 21, at end insert—
("(c) to safeguard the interests of consumers by securing a diverse and viable long-term energy supply:").
The noble and learned Lord said: My Lords, in moving Amendment No. 5 I shall speak also to Amendment No. 9 and immediately own up to an unfortunate glitch that has occurred. It was our intention that the amendments should be identical but for reasons I do not understand the word "viable" has disappeared from the second one. I believe that the Minister understands that our intention was that they should be identical. The amendments are supported by my noble friend Lord Jenkin of Roding who, unfortunately, cannot be here today. I hope that they will also be supported by the noble Lord, Lord Ezra.
I am bound to declare an interest as the joint vice chairman of the All Party Group on the Offshore Oil and Gas Industry and as a former non-executive director of Elf Exploration, which is now to be subsumed into the newly merged Total Fina Elf,
In Committee, my noble friend Lord Jenkin raised concerns about the impact of downstream regulation on the upstream industry, which could in turn affect the viability and diversity of the energy market, and the implication which that could have for consumers and a competitive energy market. He sought to discover the Government's view as to why the regulators should not also be advised to secure diverse and viable energy sources as that would clearly be in the interests of present and future consumers.
In reply, the noble Lord, Lord McIntosh, indicated that the responsibility for securing a diverse and viable energy market was for government. I agree with that—indeed, I applaud it and hope that it will continue to be the Government's position. But I want to make a couple of points.
First, if that is the broad policy of government—and I hope that he is not unintentionally fettering that wide policy-discretion of the Secretary of State—I am a little surprised by the provisions of new Clause 9. The clause states that it is the principal objective not only of the gas and electricity markets authority but also of the Secretary of State to carry out its functions. It would be helpful to have the Minister's reassurance, if nothing else, that in framing the provision in that way there is no unintended fettering of that wide discretion.
However, a further point remains to be addressed. Why should it not be a requirement that the utilities regulator has a similar obligation, as that would clearly support the principal duty imposed upon him in protecting the consumers' interests? That would be consistent with all that the Government seek to secure.
The Minister went on to say that the underpinning of security and diversity would be provided by a competitive market. I believe that in broad measure that is an accurate assessment. However, that will be

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the case only if the regulation of the downstream market does not, perhaps unintentionally, create barriers to investment and activity in the upstream sector. I believe that if the Government want to secure that objective, which we share, any barriers to investment upstream should be held to a minimum. In such circumstances, it would seem appropriate that as the regulator looks to his regulation of the downstream sector of the industry he should understand what might be the consequences of that regulation on the upstream.
In Committee, the Minister went on to make a reasonable observation that the future energy policy of this country will increasingly be conducted in the context of global and European markets. I am clear that the United Kingdom has been at the forefront of liberalisation in the context of the energy market in Europe. That began in the previous government and I acknowledge that it has successfully been continued under this Government. However, while some member states have been less than enthusiastic in participating in what the United Kingdom would regard as appropriate, it is clear that the Commission's ambitions for a single energy market in Europe are to be achieved by supporting security of supply across Europe. That is a commendable objective.
The amendments, by directly linking the interests of consumers to a diverse and viable energy market, will support the Government's ambitions for the United Kingdom energy market and support the EU's position for securing the supply of energy sources. They do not seek to support one energy source over another, but it should be remembered that our indigenous offshore oil and gas industry can, despite some people's fears, continue to play an important part in our energy market while also supporting thousands of jobs in some of the remoter parts of Scotland and elsewhere in the United Kingdom. It is the largest offshore industry in Europe and while it has reached a mature stage of development it is still of the view that more recoverable reserves remain to be produced than the 26 billion barrels of oil equivalent produced to date. The industry estimates that by 2010 some 57 per cent of the 3 million barrels of oil equivalent produced per day will be provided by gas.
The achievement of that offshore vision and objective by the industry would seem to have direct benefits for consumers. In those circumstances, it is particularly desirable that in every respect the regulator understands what can be achieved for the country as a whole. Our amendments would place an obligation of GEMA to safeguard the interests of consumers by ensuring that the energy market is both diverse and viable. It is a commonsense obligation and, as it supports the Government's declared objectives, I hope that it will be acceptable to them. It would introduce transparency and clarity to the role and remit of the regulator in protecting consumer interests. I beg to move.
3.45 p.m.
Lord Dormand of Easington: My Lords, will the noble and learned Lord deal with a point that puzzles
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me? He made a persuasive speech about diversity, but I should have thought that an essential component would be coal. However, the noble and learned Lord did not mention coal once. He mentioned oil and gas, but not coal. I draw his attention to the fact that his government virtually closed down the coal industry, leaving only 15 pits in the country. There is no doubt that some people prefer coal as a fuel, but is the noble and learned Lord saying that coal is not necessary or that it is of such minor significance that it need not be dealt with?
Lord Ezra: My Lords, we return to the interests of consumers. I fail to see why in the Bill, whose main objective is to serve the interests of consumers, we should not try to give a good definition of those interests. They must comprehend a diverse and viable long-term energy supply. To have to be dependent in due course on only one source of energy would be dangerous and no one would welcome it.
In Committee, we were told that market forces will provide the solution. I do not agree entirely. The Bill is itself a demonstration of the extent to which the Government feel that they must intervene for other reasons against market forces. They are intervening seriously to ensure the development of renewables. That intervention is necessary because it would not happen under market forces. They are also committed to supporting combined heat and power to a greater extent than would be the case under market forces.
Perhaps I may turn to coal. We hope that, in an amendment which I shall move later and which I hope will receive widespread support, clean-coal technology will fit into the diversity of supply. Therefore, I should be very disappointed if, yet again, the noble Lord were to tell us that this is clearly part of government policy and that there is no need to state it. I believe that this is such an essential element in the interests of consumers that it should be stated. Therefore, I very much hope that, on reflection, the noble Lord will be prepared to accept the amendment.
Lord Renton: My Lords, on this occasion I am pleased to be in agreement with the noble Lord, Lord Ezra, and I gladly support the amendment moved by my noble and learned friend to which the noble Lord, Lord Ezra, added his name.
I was not intending to add to what my noble and learned friend Lord Fraser of Carmyllie has already said. However, in spite of his knowledge and experience of fuel matters, I feel that the noble Lord. Lord Dormand of Easington, did not have his finger on the point when he referred to Clause 1. It seems to me that Clause 1 is so unspecific that it does not deal with the very necessary argument put forward in Amendments Nos. 5 and 9. As noble Lords may realise, I am all against unnecessary detail being added to any Bill. However, I believe that in Amendments Nos. 5 and 9 some foresight is being shown which should be expressed in the Bill. Therefore, I gladly support those amendments.
Lord McIntosh of Haringey: My Lords, we had a useful and full debate on the issue of security of supply

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in Committee. I am sorry that I do not seem to have convinced the House that security of supply is properly dealt with in the framework of the Bill as it currently stands. As I said then, the Bill is concerned with the economic regulation of gas and electricity. It is not an energy or an energy policy Bill. I am glad to have the explicit recognition of that point by the noble and learned Lord, Lord Fraser.
Before I proceed, perhaps I may say that, because that is the case, we are in no way fettering the freedom of the Secretary of State and, as Clauses 9 and 13 are amendments to the Gas Act and Electricity Act, they are in the context of the Long Title of those Acts. They are part of utilities regulation, whereas the discretion of the Secretary of State to maintain security of supply goes much wider than that and is not in any way fettered by the provisions in this Bill.
However, security of supply is indeed the responsibility of government as a whole. In order to achieve it, the Government must exercise a wide range of policy instruments. Relevant issues range from securing properly functioning utilities markets (which is the subject of this Bill), to the management of the UK continental shelf, to securing stability and access to overseas sources of energy, and of course, to the diversity of supply to which my noble friend Lord Dormand referred. It has always been our policy that there should be diversity of supply, on or under land, of domestic sources and not only of the offshore interests to which the noble and learned Lord, Lord Fraser, referred.
The bulk of these issues falls far outside the scope of utilities legislation. However, I am perfectly willing to acknowledge that one element is to establish appropriate economic regulation of the gas and electricity utilities. That is why the Bill makes it absolutely clear that the principal objective to protect the interests of consumers applies to both existing and future consumers. That is why there is a duty to secure that all reasonable demands for electricity and, so far as it is economical to do so, for gas are met. In the context of utilities legislation, that is security of supply. Therefore, the hierarchy of duties in the Bill already contains all the duties, relevant to the purpose of this legislation, which are necessary for security of supply.
As I said in Committee, it follows that amendments such as this are a distraction and would serve to confuse rather than enhance the framework of obligations and duties under the legislation. The noble and learned Lord, Lord Fraser, said that in Committee I answered that market forces would provide the solution. No, my Lords; I know the place of market forces and they are certainly important in many aspects of the Bill. However, I did not say that market forces could be relied on to preserve security of supply. Market forces play their part—an enormously important part—as a complement to the regulation of the utilities industries, but certainly the wider responsibilities of the Government are a recognition of the benefits and of the limits of market forces.
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I do not believe that the amendments will add to the Bill and I seriously consider that they will confuse the orders which we give to the utility industry and its regulators.
Lord Fraser of Carmyllie: My Lords, first, perhaps I may say to the noble Lord, Lord Dormand, that I hoped that he would understand that he should support what we are promoting. I may have given insufficient emphasis to it, but I made the point that these amendments do not seek to support one energy source over another. Perhaps I did not expressly use the word "coal". However, I certainly recognise the great importance of coal as an energy source within the United Kingdom. We are not saying that the oil and gas aspects of energy are in any way supreme. All sources should come under the duty that we wish to see imposed on GEMA.
I am not entirely persuaded by the noble Lord, Lord McIntosh. It seems to me that the point comes to this, and the noble Lord, Lord Ezra, made it well. If, downstream, one imposes a number of regulations on the industry, it would seem almost inevitable that by so regulating one is affecting decisions taken upstream. We seek to ensure only that when the regulator takes perfectly proper decisions relating to the downstream activity in the oil, gas or electricity world, he should have regard to what their impact might be on vitally important UK investment decisions offshore. That is all that we wanted to achieve. We certainly did not want him to extend his regulatory remit upstream. We wished simply for there to be a clearer understanding on that point.
The noble Lord, Lord McIntosh, said that the Minister of the day will have regard to just those considerations. I suppose that I am reassured to know that. But I still have some difficulty in grasping why he does not wish the regulator downstream to understand more clearly the possible impact of the regulatory decisions that he takes. However, I imagine that we shall be bashing our heads against the government wall for a very long time, and I do not propose to press the amendment now. With the leave of the House, I seek to withdraw Amendment No. 5.
Amendment, by leave, withdrawn.
[Amendment No. 6 not moved.]
Clause 13 [Objectives and duties under 1989 Act]:
[Amendments Nos. 7 to 10 not moved.]
Clause 18 [Acquisition and review of information]:
4 p.m.
Lord Ezra Lord Ezra moved Amendment No. 11:
Page 14, line 7, at end insert—
("(8) Nothing in this section shall inhibit the appointment of lay members to committees.").
The noble Lord said: My Lords, the amendment relates to the consumers council. My Amendment No. 67 in Committee was about the appointment of lay members in the regional organisation of the proposed consumers council. We were advised that

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the council was shortly to respond to the consultation on its organisation. That response has now appeared. On page 11, the report says that:
"there was considerable support for the role played by lay representatives of customers".
However, it does not say how that will be done. I wonder whether the Minister is in a position to enlighten us. I beg to move.
Lord McIntosh of Haringey: My Lords, the Government fully accept that lay members of committees—that is, individuals who are not employed by or otherwise connected with the council—can have a valuable role in broadening the range of experience and expertise on which the council can draw. They can have a useful role in assisting the council in its work on behalf of consumers. I declare my past interest as the husband of the former chairman of the national Gas Consumers Council in the late 1970s. We have taken care in Clause 18 and the relevant paragraphs of Schedule 2 to give the council all the powers that it needs to be able to set up committees with lay members. That answers the strict wording of the amendment, but I know that the aim of the noble Lord, Lord Ezra, was to get me to say a bit more about our intentions rather than to press the amendment.
The Government's view is that it is primarily for the council to decide how many committees it needs and the role that they should play. I shall explain how the council intends to develop its plans.
The Department of Trade and Industry has already identified the chairman designate of the new council, Ann Robinson. When the full council has been appointed—the target date is November this year—I understand that she envisages that one of its first priorities will be to consider the establishment of committees.
There are a number of important issues to be resolved, with decisions to be taken on how many committees there should be and the precise role that they should play on behalf of the council, so that their input complements rather than overlaps with the work of the full-time staff in the regional offices. Decisions are needed on what sort of people should be appointed to committees and the links between committees and the work of other local organisations. The committees will certainly contain lay persons. That is important, so that the council has access to a wider range of experience and expertise.
I understand that Ann Robinson favours the appointment of individuals with a professional interest in addressing and dealing with consumer-related issues. That might include individuals from trading standards offices, citizens advice bureaux, trade and commerce bodies, and caring and charitable agencies. That would have the benefit of making the exchange of information and links between the council and local organisations more effective.
Those will be matters for the council when it has been appointed, but it is worth stressing that the council's plan for the committees will be subject to
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proper public scrutiny, as Ann Robinson intends to draw up and consult on the council's proposals for committees before the end of this year. The noble Lord, Lord Ezra, and others will have a full opportunity to comment and offer suggestions on the plans. At that stage, assuming that the council is appointed in November, it will have some practical experience of how its regional office teams are operating—I have already answered a Written Question saying that there will be seven regional offices—and will be in a better position to identify the most suitable role for committees and their lay members.
I hope that that reassures the noble Lord and that he will not feel it necessary to press the amendment.
Baroness Oppenheim-Barnes: My Lords, I am greatly impressed by the Minister's modesty about his wife, who was a very distinguished chairman. I do not think that anyone has yet paid tribute to the outgoing gas and electricity consumer councils, which have been blessed with very special leadership. I am very grateful to both of them.
I am suspicious of professional consumers. Ordinary consumers know best and I am concerned that they should have access. Their views as consumers, rather than as professionals, should be taken into account. Their access should be given due consideration.
Lord McIntosh of Haringey: My Lords, I am grateful for that intervention. The chairmen of the existing consumer councils are still in post. I am sure that it will be appropriate to pay tribute to their services when their term of office comes to an end.
I take the noble Baroness's point about the direct representation of consumers rather than professional representatives. I am sure that Ann Robinson will pay attention to that. Perhaps the noble Baroness would like to take part in the consultation. She is well qualified to express her views.
Lord Fraser of Carmyllie: My Lords, I should like to raise one issue that arises from the Minister's answer. I am grateful to him for including me in the circulation of the Parliamentary Answer that he mentioned, which said where the offices will be set up around the country. As I understand it, one of the offices is to be in Cardiff. The natural assumption is that it will cover only Wales. Concern has been expressed that it might serve a wider area. Is that the case?
Lord McIntosh of Haringey: The intention is that the Bournemouth office will cover the South West.
Lord Ezra: My Lords, as the Minister said, the purpose of the amendment was to elicit information. I am most obliged to him for the information that he has provided, particularly on adequate lay membership of the councils. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 20 [Provision of information to consumers]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 12:
Page 16, line 1, leave out from first (""complaints"") to ("to") in line 4 and insert ("means complaints made directly").
The noble Baroness said: My Lords, Clause 20 requires the council to publish statistical information about customer complaints, including those made directly to licence holders or anyone carrying on activity on their behalf. It will be difficult for the council to achieve accurate, consistent and comparable counts of complaints received by companies, particularly telephone complaints, as there is ample scope for legitimate differences of interpretation on what constitutes an inquiry or a request for action or information and what might be regarded as a complaint.
For example, does the first call that a consumer makes to an electricity company advising that the power has failed constitute a complaint? If the consumer called back after four hours to say that nothing had been done, that would be a complaint, but what if they called back after 10 minutes? The amendment would restrict the obligation to the publication and analysis of complaints received by the authority and the council, as that will provide the only robust and equitable means of comparison of the customer service performance of different companies. I beg to move.
Lord Borrie: My Lords, I find the amendment unhelpful. It would deprive consumers of statistical information about a small number—or perhaps even a large number—of consumer complaints. The consumer council which will come into existence will no doubt receive many complaints and will have its own ways of devising what is a complaint and what are the differences between a complaint on the one hand and a request for information on the other. But electricity and gas suppliers and distributors will also have their own ways of doing that. If they need guidance, no doubt the new consumer council can give them guidance in order to achieve across the country some measure of accord on how to distinguish consumer complaints from requests for information.
However, if you cut out of the statistics complaints that have gone to the electricity distributor or supplier and not to the consumer council, then we in this House, the general public and consumers generally will have a deficient and defective piece of information as regards how many complaints, and the details and types of complaints and so on, are being made.
I recognise the difficulty which the noble Baroness, Lady Buscombe, has mentioned but it seems to me a difficulty of distinguishing between complaints and information which can be resolved by agreement between the companies and with guidance from the consumer council.
Lord Renton: My Lords, up to a point, one must acknowledge that the public, as the noble Lord said, should have the right to make complaints. But surely it is necessary for us to consider to whom the complaint
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should be made, bearing in mind that the responsibility for registering those complaints will lie upon the council.
As the Bill stands, complaints can be made to various other bodies, including,
"electricity suppliers and electricity distributors (or anyone carrying on activities on their behalf".
How on earth is the council to be able to make a correct, comprehensive and formal report unless complaints are made to it?
It may be that the answer is for the Bill to be amended on Third Reading to ensure that if complaints are not made directly to the council but must be registered by the council, the people to whom the complaints are made should have a duty to report them to the council. Therefore, I believe that my noble friend has done a valuable service in drawing attention to this problem. It may well be that between now and Third Reading, the Government should reconsider the whole question.
Lord McIntosh of Haringey: My Lords, Clause 20 places the new consumer council under a duty to publish statistical information about complaints made by consumers against certain consumer-facing utility companies. I say immediately that the Bill provides what the noble Lord, Lord Renton, seeks; namely, that in order to collect those statistics and to publish that statistical information, the council has a right to demand information from the consumer-facing utility companies. So no amendment will be necessary on Third Reading.
As with the other provisions of Clause 20, the intention is to give the council the role of providing information that consumers need to make informed decisions about their gas and electricity suppliers. It is also intended to provide a spur to companies to maintain and improve levels of performance.
For the purposes of the duty to publish complaints statistics, the term "complaints" is defined to include complaints made to the companies concerned. The amendment would specifically remove that part of "complaints". I accept that to demand that information from the companies would put pressure on them to improve their performance. That is why we have included such complaints within the scope of this duty. But just because a restricted disclosure of complaints statistics would go part way towards helping consumers to form judgments is no reason to deprive consumers of the full picture. I believe that excluding complaints made direct to companies would seriously reduce the effectiveness of the provisions of Clause 20.
I am sure that the noble Baroness, Lady Oppenheim-Barnes, will agree that the whole pattern of consumer protection means that the complaints are made first to the company of which the complaint is made, whether it is a gas, electricity or bus company. You try to get the company to put it right first before you go to the consumer council.

1503
As to how those complaints are registered, which appears to be the concern of the noble Baroness, Lady Buscombe, there are innumerable examples in both the private and public sectors of distinguishing between complaints which should be registered and which should go on to be recorded as evidence of poor performance and those which are simply routine. When a phone call comes in, you do not immediately say, "Is it an inquiry or a complaint?" You register who is making the call, the time of the call, whether a call has been made before and what the call is about. In other words, it is analysed. As a market research consultant, I have taken part in providing an analysis form which enables people who want to register customer complaints, whether in the private or public sector, to do so effectively.
It is not easy to do that, but it is certainly not impossible. To cut it out altogether would really be to take away a very important role of the consumer council, which is to provide a complete analysis of the interface between electricity and gas companies and their customers. I hope that the noble Baroness, Lady Buscombe, will not press the amendment.
4.15 p.m.
Lord Renton: My Lords, before the noble Lord sits down, perhaps he will elaborate on what he said. I accept that complaints made to the various companies which he has mentioned should be borne in mind. But is it really fair on the council to have to register complaints if the companies are under no obligation to report them to the council?
Lord McIntosh of Haringey: My Lords, companies are under an obligation to report them and they are under an obligation to report them in the form which the council requires.
Baroness Buscombe: My Lords, I am extremely disappointed by the Minister's response to the amendment. The industry feels strongly that restricting publication and analysis of complaints to those received by the authority and the council would provide the only robust and equitable means of comparison between companies in terms of their customer service performance.
Indeed, I quote from a letter addressed to the Utilities Bill team at the Department of Trade and Industry from representatives of the Electricity Association following the Committee stage. It states:
"Even against the assumption that the new Council will publish guidelines as to how a complaint is to be defined and recorded, there is still ample scope for interpretation between an enquiry or request for action/information and what might be regarded as a complaint. This is particularly so if telephone complaints are to be included, as they probably will be, given the growing numbers of customers who are using the telephone".
I am surprised also by the response of the noble Lord, Lord Borrie. The letter goes on to state:
"If companies are receiving significant numbers of initial complaints, but resolving issues quickly so that complaints are not being referred to OFGEM or the Council, surely that is to their credit! If they are generally offering a low standard of service, as the Minister suggests, that will very quickly be demonstrated
1504
through a whole raft of indices including Guaranteed and Overall Standards of Service, performance monitoring of Codes of Practice and Quality of Supply data. Even in the complaints arena alone, no poorly performing company will be able to 'firefight' to the extent necessary to ensure that all first time complaints are satisfactorily resolved quickly enough to avoid references to the Council. Customers can of course vote with their feet, as increasing numbers are now doing, and leave the offending supplier. Competition is a powerful deterrent to poor service".
I am not happy and I should like to test the opinion of the House.
4.18 p.m.
On Question, Whether the said amendment (No. 12) shall be agreed to?
Their Lordships divided: Contents, 87; Not-Contents, 154.

Division No. 1

CONTENTS

Ackner, L.

Knight of Collingtree, B.

Anelay of St Johns, B.

Lucas, L.

Arran, E.

Lyell, L.

Astor of Hever, L. [Teller]

McColl of Dulwich, L.

Attlee, E.

Miller of Hendon, B.

Blatch, B.

Montrose, D.

Boardman, L.

Mowbray and Stourton, L

Brabazon of Tara, L.

Murton of Lindisfarne, L.

Brigstocke, B.

Northbrook, L.

Brougham and Vaux, L.

Norton of Louth, L.

Burnham, L. [Teller]

O'Cathain, B.

Buscombe, B.

Onslow of Woking, L.

Byford, B.

Oppenheim-Barnes, B.

Caithness, E.

Oxfuird, V.

Campbell of Alloway, L.

Palmer, L.

Campbell of Croy, L.

Park of Monmouth, B.

Carlisle of Bucklow, L.

Patten, L.

Chalfont, L.

Perry of Southwark, B.

Clark of Kempston, L.

Pilkington of Oxenford, L.

Coe, L.

Prior, L.

Cope of Berkeley, L.

Rawlings, B.

Cuckney, L.

Reay, L.

Rees, L.

Dean of Harptree, L.

Renton, L.

Denham, L.

Ryder of Wensum, L.

Dixon-Smith, L.

Sanderson of Bowden, L.

Dundee, E.

Seccombe, B.

Eden of Winton, L.

Sharples, B.

Elles, B.

Shaw of Northstead, L.

Elliott of Morpeth, L.

Skelmersdale, L.

Elton, L.

Stewartby, L.

Flather, B.

Stodart of Leaston, L.

Fraser of Carmyllie, L.

Strathclyde, L.

Glentoran, L.

Swinfen, L.

Gray of Contin, L.

Taylor of Warwick, L.

Hanham, B.

Tebbit, L.

Haslam, L.

Thomas of Gwydir, L.

Hayhoe, L.

Tombs, L.

Henley, L.

Trefgarne, L.

Higgins, L.

Vivian, L.

Home, E.

Waddington, L.

Hooper, B.

Wade of Chorlton, L.

Jellicoe, E.

Weatherill, L.

Kimball, L.

Young, B.

NOT-CONTENTS

Acton, L.

Andrews, B.

Addington, L.

Archer of Sandwell, L.

Amos, B.

Bach, L.

Ampthill, L.

Barker, B.

1505

Barnett, L.

Lea of Crondall, L.

Bassam of Brighton, L.

Lester of Herne Hill, L.

Beaumont of Whitley, L.

Lockwood, B.

Berkeley, L.

Lofthouse of Pontefract, L.

Billingham, B.

Macdonald of Tradeston, L.

Blackstone, B.

McIntosh of Haringey, L. [Teller]

Blease, L.

Borrie, L.

MacKenzie of Culkein, L.

Bragg, L.

McNally, L.

Brennan, L.

Mar and Kellie, E.

Brett, L.

Marsh, L.

Brooke of Alverthorpe, L.

Masham of Ilton, B.

Brooks of Tremorfa, L.

Mason of Barnsley, L.

Bruce of Donington, L.

Massey of Darwen, B.

Burlison, L.

Merlyn-Rees, L.

Carter, L. [Teller]

Miller of Chilthorne Domer, B

Chandos, V.

Mishcon, L.

Christopher, L.

Molloy, L.

Clarke of Hampstead, L.

Morris of Castle Morris, L.

Cledwyn of Penrhos, L.

Morris of Manchester, L.

Clement-Jones, L.

Nicol, B.

Clinton-Davis, L.

Orme, L.

Cocks of Hartcliffe, L.

Parekh, L.

Crawley, B.

Patel of Blackburn, L.

Currie of Marylebone, L.

Paul, L.

Dahrendorf, L.

Peston, L.

David, B.

Plant of Highfield, L.

Davies of Coity, L.

Prys-Davies, L.

Davies of Oldham, L.

Ramsay of Cartvale, B.

Desai, L.

Randall of St. Budeaux, L.

Dholakia, L.

Redesdale, L.

Dixon, L.

Rendell of Babergh, B.

Donoughue, L.

Rennard, L.

Dormand of Easington, L.

Rodgers of Quarry Bank, L.

Dubs, L.

Roper, L.

Elder, L.

Russell, E.

Evans of Parkside, L.

Evans of Temple Guiting, L.

Sainsbury of Turville, L.

Ezra, L.

Scotland of Asthal, B.

Falkland, V.

Serota, B.

Farrington of Ribbleton, B.

Sharman, L.

Faulkner of Worcester, L.

Sharp of Guildford, B.

Filkin, L.

Shepherd, L.

Gale, B.

Sheppard of Liverpool, L.

Gavron, L.

Shutt of Greetland, L.

Geraint, L.

Simon, V.

Gibson of Market Rasen, B.

Smith of Clifton, L.

Gilbert, L.

Smith of Leigh, L.

Gladwin of Clee, L.

Stoddart of Swindon, L.

Goldsmith, L.

Stone of Blackheath, L.

Goodhart, L.

Strabolgi, L.

Gould of Potternewton, B.

Symons of Vernham Dean, B.

Graham of Edmonton, L.

Grenfell, L.

Tenby, V.

Hardy of Wath, L.

Thomas of Walliswood, B.

Harris of Greenwich, L.

Thornton, B.

Harrison, L.

Tomlinson, L.

Healey, L.

Tordoff, L.

Hogg of Cumbernauld, L.

Turner of Camden, B.

Hollis of Heigham, B.

Uddin, B.

Holme of Cheltenham, L.

Varley, L.

Hooson, L.

Howells of St. Davids, B.

Wallace of Saltaire, L.

Howie of Troon, L.

Warner, L.

Hoyle, L.

Warwick of Undercliffe, B.

Hughes of Woodside, L.

Wedderburn of Charlton, L.

Hunt of Chesterton, L.

Whitaker, B.

Irvine of Lairg, L. (Lord Chancellor)

Whitty, L.

Islwyn, L.

Wigoder, L.

Janner of Braunstone, L.

Wilkins, B.

Jenkins of Hillhead, L.

Williams of Crosby, B.

Jenkins of Putney, L.

Williams of Elvel, L.

Kins of West Bromwich, L.

Williams of Mostyn, L.

Laird, L.

Williamson of Horton, L.

Layard, L.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.30 p.m.
Clause 22 [Complaints]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 13:
Page 16, line 39, leave out ("of gas").
The noble Lord said: My Lords, in moving Amendment No. 13, I shall speak also to Amendments Nos. 14 to 19, 65, 76, 82 to 87, 90 and 98. These are for the most part minor drafting amendments which adjust the terminology used to refer to persons authorised by a licence or exemption in a number of clauses in the Bill, and introduce more consistency between gas and electricity provisions.
Amendments Nos. 82 to 87 to Clause 98 are additionally intended to make clear that, in any scheme introduced to help disadvantaged gas customers, adjustments may be made to the charges of authorised gas shippers as well as of suppliers and transporters. We were advised by the regulator that without such amendments a scheme could be more difficult to operate effectively. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 14 to 18:

Page 16, line 44, leave out ("authorised person") and insert ("person authorised by a licence or exemption").

Page 18, leave out lines 12 to 14.

Page 18, line 23, leave out ("of electricity").

Page 18, line 28, leave out ("authorised person") and insert ("person authorised by a licence or exemption").

Page 19, leave out lines 43 to 45.

On Question, amendments agreed to.
Clause 23 [Investigations by the Council]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 19:
Page 21, leave out lines 29 and 30.
On Question, amendment agreed to.
Clause 24 [Provision of information to the Council]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 20:
Page 23, line 13, at end insert—
("(5) Nothing in this section authorises the Council to direct the Authority to supply information which is subject to the restrictions on disclosure contained in section 55 of the Competition Act 1998 nor authorises the Authority to comply with such a direction.").
The noble Baroness said: My Lords, in moving Amendment No. 20, I shall speak also to Amendment No. 21. Section 55 of the Competition Act 1998 restricts the disclosure by the competition authorities of information obtained under that Act regarding the affairs of any individual or business to "designated persons" in the performance of "relevant functions". Typically, those are other regulators exercising their sectoral regulatory powers. If the council, which is not within that pool of designated persons, was able to obtain information which it would not otherwise be

1507
entitled to via the exercise by the authority of its competition powers, it would mean that information could be disclosed without being subject to the safeguards provided under the Competition Act. It would also undermine existing arrangements for the separation of the regulator's Competition Act powers and sectoral powers. Amendment No. 20 prohibits the council from seeking, and the authority from disclosing, information protected by Section 55 of the Competition Act.
Turning to Amendment No. 21, Clause 27 gives the Secretary of State the power to specify by regulations the types of information which need not be supplied to the council. The extent to which certain categories of sensitive information, such as trade secrets and legally privileged communications, will be protected will therefore be determined only after the Bill receives Royal Assent. While the Government consulted on their proposals for regulations before the Bill was published, those proposals were only in outline and there is no obligation to consult on the form of the regulations themselves. Amendment No. 21 provides transparency in the exercise of the Secretary of State's power by requiring him to consult interested parties before making any regulations under this clause. I beg to move.
Lord McIntosh of Haringey: My Lords, perhaps I may deal with Amendments Nos. 20 and 21 in turn because they are not quite the same.
As noble Lords will be aware, in March the Government published a consultation document on categories of information which the authority and the licensees should be entitled to withhold from the consumer council. Information obtained by the authority other than from licensees under the powers it has as gas and electricity regulator was in the second of the classes in the document. Information obtained under the Competition Act 1998 is a subset of that group.
There are a significant number of Acts under which information could be obtained where that information might subsequently pass to the authority. I see no good reason to single out the Competition Act 1998 for explicit treatment here. In any case, for reasons I am about to give, I do not believe information will reach the council anyway. Under the regulations which we are to make, and on which we consulted, information such as information to which Section 55 of the Competition Act applies will be information which the authority is not obliged to pass to the council under Clause 24 of the Bill. The question, therefore, is whether it could do so.
The Bill does not add the consumer council to those bodies to whom Competition Act information, if I may call it that, may be passed under exceptions to the prohibition in that Act on disclosing such information. The prohibition on disclosure of information in this Bill expressly provides in Clause 104(11) that information obtained by the authority in the exercise of its concurrent competition functions is subject to the Competition Act prohibition on disclosure, and
1508
not to the one in the Bill. I hope that that reassures the noble Baroness, Lady Buscombe, that Amendment No. 20 is unnecessary.
Amendment No. 21 would add a requirement to consult the authority, the council and licensees' representatives on regulations under Clause 27. Clause 27 contains two regulation-making powers: in subsection (1), a power to set out the sorts of information the authority and licensees need not supply to the council, or the council supply to the authority; and in subsection (3), a power to appoint an adjudicator to determine disputes about whether information requested by the council or the authority can be withheld.
Taking the regulations under subsection (1) first, we have already sought views on what the regulations under Clause 27(1) should contain. We are now analysing representations received and will announce our future intentions in due course. In this case, therefore, the requirement is unnecessary and if there were to be subsequent amendments we would consult on those as well.
The House may recall that when we introduced subsection (3) of Clause 27 I noted that the information commissioner is a possible adjudicator under regulations. She is the front-runner, as a result of representations from various quarters in recent months. If we proceed to make regulations appointing her, I am not sure what more there would be to consult about. An express obligation to consult might oblige us to delay introducing regulations in order to comply with the duty and I do not believe there would be any benefit from that.
In those circumstances, without in any way being antagonistic to the thinking behind the amendments, I hope they will not be pressed.
Baroness Buscombe: My Lords, I thank the Minister for his full reply in regard to both amendments. I shall read what he had to say with care, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 21 not moved.]
Clause 30 [Licences authorising supply etc. of electricity]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 22:
Page 28, line 27, leave out ("or condition").
The noble Lord said: My Lords, in moving Amendment No. 22, I shall speak also to Amendments Nos. 23, 33, 34, 68, 79, 94, 97, 121, 122, 123 and 127. This group contains amendments which all relate in some way to the licences and licensing provisions of the Bill.
Amendment No. 22 needs to be considered together with Amendments Nos. 121, 122 and 123. The Government and Ofgem, with which we are working closely on the development of new standard conditions of licences, had it in mind to provide that in future provisions in licences as to licence revocation would be conditions. At present they are terms of the licence.

1509
The distinction between "terms" and "conditions" may not be self-evident but it may help if I say that terms of a licence may not be amended without the consent of the individual licenceholder whereas the legislation sets out procedures whereby licence conditions may be modified without such consent.
As well as moving the revocation provisions from one part of the licence to another, we also wanted to take the opportunity when determining standard licence conditions to update the revocation provisions themselves. We have recently completed a major consultation on all the draft standard licence conditions. It has become apparent that the industry is very uneasy about the proposal to move the revocation provisions, but, by and large, is supportive of the substance of the changes we wish to make to the provisions themselves. I might add, by way of an aside, that this is principally a matter for electricity licenceholders as the changes we propose, in the main, would bring electricity licences into line with gas licences.
In recognition of the response we have received, we now propose that revocation provisions remain licence terms; in other words, they may not be amended without the consent of the individual licenceholder. Amendment No. 22 reflects this by removing from Section 6 of the Electricity Act, as amended by Clause 30, a reference to conditions of a licence in the context of the revocation provisions of a licence.
But we still need a vehicle for making the changes to the provisions themselves. We have identified the licensing scheme as the most appropriate vehicle for making these changes. Amendments Nos. 121, 122 and 123 give the Secretary of State the power he needs to make these changes when the licensing schemes which Schedule 7 provides for are made.
Amendment No. 23 to Clause 43 and Amendment No. 79 to Clause 88 correct omissions from the Bill. They would ensure that when the Competition Commission considers a reference made to it in connection with a proposal to create a new licensable activity, it would have regard to the same matters as the authority would have regard to in carrying out its functions. The current drafting is incomplete.
The remainder of the amendments in this group are minor and technical and in one or two cases consequential. In the main, they are aimed at correcting or improving the existing drafting of the Bill and raise no issues of substance. I beg to move.
Lord Fraser of Carmyllie: My Lords, I am grateful to the Minister for that full explanation, although I shall want to read carefully what he has said. I had thought that the Minister would bring forward a further amendment, which, unless I have missed it, he has not included. I am concerned about the following matter. As I understand the scheme of things, it will be for the Secretary of State to set the standard conditions. He may talk to GEMA and reach a view as to what is appropriate but he will set the standard conditions. There are certain circumstances in which GEMA might ask the competition authorities to report on a
1510
matter. That is clearly a desirable provision. However, as I understand the position, under Clause 35 it is open to the authority to modify the standard conditions.
I ask the Minister to consider the following circumstance. Let us consider a standard condition that has been modified by the authority. At some subsequent time the authority takes the view that that modified standard condition has been breached. In those circumstances the authority looks to its powers under what is now Clause 59. As I understand the position, having discovered a breach of a condition in those circumstances, the authority could impose an unlimited fine. In such circumstances where the authority is, as it were, the legislating body in that it can modify the standard conditions, it is the authority that conducts the investigation and acts as jury in determining whether there has been a breach and as a judge in imposing an unlimited fine.
I hope that the Minister will reassure me that in those circumstances, notwithstanding the statement that he made on the first draft of the Bill that reached your Lordships' House, he continues to have no unease that the matter that I have mentioned does not in any way breach the European Convention on Human Rights. I believe that some unease should be felt at a situation where a single authority performs all those different functions. Those functions can only be separated out when the authority decides to refer the matter to the Competition Commission; it is not a matter that that body can address itself. I am uneasy about that situation. I would welcome hearing the Minister say yet again that he is confident that there is no prospect of breaching the European convention in these circumstances.
4.45 p.m.
Lord McIntosh of Haringey: My Lords, the noble and learned Lord, Lord Fraser, is entitled to make the points that he has made. However, he makes them in the context of a series of amendments which should reduce his fears, at least in respect of revocation provisions of a licence. We shall take out what was originally proposed as being conditions of a licence which could, as the noble and learned Lord said, be changed under certain circumstances without consent and make them terms which cannot be changed without consent. To that extent, any change which is being made now gives me greater confidence in asserting—as I did at the beginning of our discussions—that the Bill is compatible with the European Convention on Human Rights.
Lord Fraser of Carmyllie: My Lords, before the Minister sits down, I hope I may add that I am not surprised that he says he has greater confidence in making that assertion now. What I am trying to ascertain is whether he has complete confidence in making it.
Lord McIntosh of Haringey: My Lords, I make these statements, as always, on legal advice and that advice has not changed.

1511
The noble and learned Lord makes a legitimate point which deserves a response; namely, that certain standard conditions can be modified without consent. Under certain circumstances a breach of conditions could invoke penalties. I do not call them offences as I do not want to reopen the debate that we had on the then Financial Services and Markets Bill. However, they are penalties.
If the noble and learned Lord is present when we debate Amendment No. 38 and the amendment with which it is grouped, he will hear what we think of unlimited penalties. I shall not weary the House by replying at length to the issue that he raised. However, I shall write to the noble and learned Lord before Third Reading and copy the letter to all other noble Lords who have taken part in the debate.
We go to extraordinary lengths to set out in the legislation procedures under which licence conditions may be modified without consent. I shall set all that out in the letter and reaffirm my confidence that I have done the right thing in making the declaration that I have.
On Question, amendment agreed to.
Clause 43 [Altering activities requiring electricity licence]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 23:
Page 46, line 46, at end insert ("; and
() any advice given by the Health and Safety Commission or the Secretary of State under section 3C (advice about health and safety in relation to electricity)").
On Question, amendment agreed to.
Clause 46 [Power to recover expenditure]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 24:
Page 51, leave out lines 42 to 45 and insert—
("(b) a person ("the initial contributor") has made a payment to the distributor in respect of those expenses, the line or plant having been provided for the purpose of making a connection to any premises or distribution system as required by that person."").
The noble Lord said: My Lords, in moving Amendment No. 24 I wish to speak also to Amendment No. 25. Both amendments relate to the matter of electricity connections. Amendment No. 24 is perhaps rather obscure at first sight. Indeed, it amends a rather obscure part of the Bill and of the Electricity Act.
When someone requires a connection, they are required to pay for it. But the position need not always be as straightforward as it might appear. I seek to illustrate that point. Suppose that a cottage is built a mile from the nearest electricity distribution line. The owner of the cottage (or, under the Act as it will be amended by this Bill, a supplier acting with that person's consent) would have to pay for a wire to be brought from the nearest distribution line to the meter point in the cottage. Other equipment, such as transformers, might be needed. That is likely to be a significant expense.
Suppose that a couple of years later someone else builds a cottage a hundred yards from the first one and requires an electricity connection. The distribution company will almost certainly make a connection to the second cottage using the wire that was laid to the first cottage. In this case, it is only fair that the person requiring the subsequent connection should bear an appropriate proportion of the cost of the initial connection and that the person who had the initial connection should have his costs abated accordingly. Otherwise, the second person would be free-riding on the first person. I am tempted to call those persons "A" and "B" but I have got away without doing that so far.
This situation is catered for in Section 19 of the Act. That section is being amended by Clause 46 to reflect the separation of supply and distribution. However, the present drafting of the clause inadvertently limits the scope of the provision to the circumstances where the first person requiring the connection—who is called the "initial contributor" in the Bill—is the owner or occupier of the premises connected.
Section 16(1)(a)(i) and (ii) as inserted into the 1989 Act by Clause 44 provides that the person requiring a connection may be either, on the one hand, the owner or occupier of premises or the owner of a distribution system, or, on the other hand, a supplier acting with the consent of such a person.
This amendment widens the scope of Section 19 to include the case where the initial contributor is such a supplier.
Amendment No. 25 is rather more significant. I remind the House of the debate that we had on Amendments Nos. 190 and 191 tabled by the noble Lord, Lord Kingsland, and the noble Baroness, Lady Buscombe. When I rejected those amendments I said that the Government nevertheless accepted the importance of ensuring that the provisions of Clauses 44 to 48, as they now are, supported the making of terms covering all the matters which should properly be covered in the case of making and maintaining a connection even in the largest and most complex cases.
After further consideration, and as I promised last time, after further discussion with the industry, we concluded that the existing provisions did not quite achieve the effect that we wanted. This amendment is the result. It permits a distributor to require a person requiring a connection to accept any terms which it is reasonable in all the circumstances for that person to accept.
Ostensibly, that is a very wide power. But it needs to be borne in mind that this provision comes within the scope of Section 23 of the Electricity Act 1989, as amended by this Bill. Under that section, in the event of a dispute as to the terms offered by a distributor for the making and maintaining of a connection, either party may refer the matter to an authority for determination. So in the end the matter of whether it is reasonable in all the circumstances for a person to be required to accept a particular term is likely to become a matter for determination by the authority where the term is novel or unusually burdensome.
In the vast majority of connections cases, the terms are likely to be straightforward and to relate to the specific matters described in Section 16A. Only in the larger and more complex cases are the distributors likely to have to rely on the extra scope provided by this amendment.
There is one other aspect to this amendment to which I know the industry attaches especial importance and about which I should say a few words. The existing provisions of Clause 48 provide that a distributor may require a person requiring a connection to accept such terms limiting the distributor's liability for economic loss arising from negligence, as it is reasonable in all the circumstances for that person to accept.
It has been suggested that the existence of the present provision relating to the restriction of liability for economic loss resulting from negligence may impact on the wider-ranging provision which we are proposing to introduce alongside it. The suggestion is that the interpretation of the new provision may be constrained by the present provision and be considered as not extending to cover terms limiting liability in cases other than those covered by the existing provision.
I wish to be quite clear that that is not our intention. For that reason the amendment adds to the beginning of the existing provision, which now becomes paragraph 21(c), the words,
"without prejudice to the generality of paragraph (b)".
In other words, distributors are free to try to persuade customers to accept terms relating to the limitation of liability which extend beyond those covered by the existing provision. If the customer considers that what is being proposed is unreasonable, he may refer the matter to the authority for determination under Section 23.
As I indicated, we have worked with the industry to make sure that the connection provisions of the Bill achieve what the Government wish and at the same time achieve the effects which the industry considers important. This is a difficult and complex part of the legislation, but I am confident that we have now got it right. I express my gratitude to the industry for the contribution which it has made. I beg to move.
Baroness Buscombe: My Lords, perhaps I may express our support for Amendment No. 25 and thank the Minister for his very helpful clarification of this matter concerning connections. As he stated, it is in response to the amendments which we debated in Committee. I am aware that he has been in consultation with the industry between Committee stage and today. We are very grateful for that. I thank the Minister.
On Question, amendment agreed to.
Clause 48 [Additional terms of connection]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 25:
Page 52, line 32, leave out from ("29;") to first ("any") in line 33 and insert—
("(b) any terms which it is reasonable in all the circumstances for that person to be required to accept; and
(c) without prejudice to the generality of paragraph (b),").
On Question, amendment agreed to.
Clause 50 [General duties of electricity distributors]:
Lord Ezra Lord Ezra moved Amendment No. 26:
Page 53, line 15, at end insert—
("() to facilitate the achievement of the Government's national renewable energy targets, including small-scale renewable generation through net metering"").
The noble Lord said: My Lords, in moving this amendment in my name and that of the noble Lord, Lord Beaumont, I shall also speak to Amendment No. 27 in the name of my noble friend Lady Sharp and myself.
Amendment No. 26 proposes adding to the general duties of licence holders under Clause 50 on page 53 of the Bill to the effect that they should,
"facilitate the achievement of the Government's national renewable energy targets, including small-scale renewable generation through net metering".
We debated these issues at some length at Committee stage. We sought to persuade the Government to introduce on the face of the Bill their precise renewable targets. However, the Government objected to that. It was felt that that was not the right place, even though the Government reaffirmed their determination that the targets should be achieved.
This amendment refers to that objective in more general terms, but at the same time seeks to emphasise the importance of achieving the Government's renewable targets. They are going to be very difficult targets to achieve. The more emphasis that is given to them the better. This seems to us to be the right place to do that. Therefore, I hope that with this more general wording the Government will be able to accept the amendment.
I turn now to Amendment No. 27, which deals with the problem of embedded generation. That is also a subject that we discussed at some length. It was agreed on all sides that embedded generation, which is local generation feeding into a local electricity distribution system, should be encouraged.
On 20th June there was an adjournment debate in another place on combined heat and power. In the course of that debate the Parliamentary Under-Secretary for the DETR, Mr Chris Mullin, said,
"We want to ensure that CHP and other embedded generation is treated on the same basis as conventional generation. We also want to ensure that it has fair access to the wider networks at fair prices".—[Official Report, Commons, 20/6/00; col. 318.]
The amendment proposed follows precisely Mr Mullin's words and therefore I take it that it will be acceptable to the noble Lord. I beg to move.
Lord Beaumont of Whitley: My Lords, I would not like the fact that my name is attached to Amendment

1515
No. 26 but not to Amendment No. 27 to imply in any way that I do not support the noble Lord, Lord Ezra, and the noble Baroness, Lady Sharp, in their amendment. Both amendments are extremely important. It is always the Government's response that they do not want to add extra matter to the face of a Bill. It seems to me that in outlining the duty of an electricity distributor, which is what is done here, it is very important that at least the points outlined in Amendments Nos. 26 and 27 be added. There appears to be no doubt whatsoever that in suggesting these amendments we are suggesting that something should be put on the face of the Bill of which the Government approve and would like to see happen. The best way to do that is to put it on the face of the Bill so that any electricity distributor, looking at the Bill, knows that these measures are among his priorities. I very much support both amendments.
Baroness Sharp of Guildford: My Lords, I support both the amendment put forward by the noble Lord, Lord Beaumont, and my noble friend Lord Ezra and speak to Amendment No. 27 which is in my name and that of the noble Lord, Lord Ezra. I would like to say a word about the issue of embedded generation. It is clear, and there is a clear admission, that the new electricity generating arrangements disadvantage small generators of electricity yet, as we debated earlier, when we consider the interests of consumers it is not only current consumers but future ones with whom we are concerned. We know that unless we make a serious attempt to meet renewable targets future generations of consumers are going to be at a disadvantage. It is vitally important that we make a real effort to meet the targets.
Embedded generation, small-scale combined heat and power (CHP), small-scale solar panels, effective voltaics and so on, are all forms of energy generation which have great advantages. But they require encouragement. If we do not encourage them now we shall fail to develop the technology on a scale sufficient to enable it to be taken up by consumers. One of the great advantages of embedded generation is that electricity is generated close to its users; it does not incur the costs and losses of transmission. It is extremely important that there should be in the Bill powers and incentives to encourage this small-scale generation capacity so that future generations of consumers may benefit from it.
5 p.m.
Lord Currie of Marylebone: My Lords, in speaking to these two amendments I declare an interest as a member of the management board of Ofgem and a director of the solar energy group. I certainly support the objectives of the two amendments—we wish to promote embedded generation and renewables—but I have difficulties with them. The term "fair" in Amendment No. 27 is very subjective and open to widely differing interpretations. If one substituted more precise terms—such as "reasonable access" instead of "fair access" and "cost reflective prices"
1516
rather than "fair prices"—the amendment would be unnecessary because other aspects of the Bill cover the essential points.
Amendment No. 26 proposes net metering for renewables. Net metering is allowable under the Bill where it is appropriate, but not universally. It would be wrong to introduce genera] net metering for one simple reason: that is, that inflexible and unpredictable plant imposes substantial costs on the system which are ultimately passed on to the customer. The system operator has to take capacity off or put it on to the system in order to balance it and to maintain its integrity. That imposes costs.
It is important that we encourage both environmentally friendly generation, and flexible and predictable generation; better still, that we encourage environmentally friendly and flexible and predictable generation. Net metering eliminates an incentive for flexibility and predictability and will skew the nature of technical development in this area in the wrong direction.
It is worth noting that NETA has a number of special facilities for renewables which encourage small-scale renewable generation. In detail, these arrangements are very technical—I am not sure that they are fully understood—but they are carefully designed to encourage the emergence of aggregators, who will buy the inflexible and unpredictable part of output from small generators, pool those risks and therefore eliminate—or certainly substantially reduce—the discount that small, unpredictable generators will face. Those measures go quite a long way to meeting the concerns and overcoming the disadvantages. They are special arrangements; they go quite a long way towards promoting renewables without going as far as promoting net metering, which has quite substantial disadvantages.
Lord Beaumont of Whitley: My Lords, before the noble Lord sits down, he has noticed, has he not, the word "including"? There is no effort to make,
"small-scale renewable generation through net metering"
a major item; it is merely one of the things included in the targets.
Lord Currie of Marylebone: My Lords, by including a specific mention one is giving it weight over and above other measures which are equally important in the promotion of renewables and embedded generation.
Lord McIntosh of Haringey: My Lords, it is true that these amendments go to the issue of the treatment of small-scale embedded generation within the electricity distribution networks. As the noble Lord, Lord Currie, has drawn out, the Government have recognised in drafting the Bill the importance of small-scale generation—typically, embedded generation—to the development of environmentally-friendly generation technologies, in particular renewables and combined heat and power.

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As I said in Committee—and as the noble Lord, Lord Currie, has confirmed—the Government have sought through the various provisions of the Bill to make sure that embedded generators get fair access to distribution systems so that they can compete in the generation market on level terms with conventional large-scale generation. I think it will be acknowledged that that was not the case before. That is why the Bill introduces changes to the regulatory structure of the electricity industry which will remove barriers to embedded generation and enable it to compete fairly on its merits. This is key to encouraging renewable and combined heat and power generation.
I should emphasise that this is a very significant shift in the regulatory framework, working to the benefit of embedded generation. Even though it is difficult to understand and to find in the Bill, it is important not to underestimate it. For example, the separation of electricity supply and distribution, presently combined in the public electricity suppliers, will change the way distribution systems are managed, to the benefit of embedded generators. This is underpinned in the Bill by the explicit duty imposed on distributors to facilitate competition in generation—including embedded generation—as well as in supply. It is also supported by the draft distribution licence conditions which, for example, place system entry and exit points on an equal footing and introduce a power for the regulator to direct distributors to publish long-term development plans, as transmission licence holders are already required to do. In addition, distributors will be obliged to offer terms for connection to embedded generators, something which is not a feature of the present legislation.
The aim is to put in place a framework so that embedded generators will be able to obtain full value for their energy output and any locational benefits they provide and that distribution companies will look at embedded generation on an equitable and transparent basis when considering any network augmentation.
Furthermore, the Government are looking closely at any further practical difficulties faced by embedded generation. We have committed ourselves to addressing any continuing problems relating to the operation of distributed generation and its connection to the distribution system that are identified by a new industry-wide working group, chaired by Ofgem and involving DTI, DETR and representatives of the industry.
I hope that in the light of all this the noble Lords, Lord Beaumont and Lord Ezra, will accept that the Bill already does everything that they want and that Amendment No. 26 is unnecessary.
Let me be clear—as the noble Lord, Lord Currie, has been—the Bill does not rule out net metering. Indeed, the market is starting, as it should, to address this issue. At least one supply company has already offered a net metering package. The Government welcome this, but we cannot agree that we should introduce a provision which would, in effect—even
1518
with the word "including"—prescribe a system of net metering. This would ignore the difference in value between electricity that a customer supplies to the network and that which he takes from it. Any such general obligation would imply a degree of mandatory cross-subsidisation that would have to be paid for by other consumers.
Nor do we agree that legislation is the place for exhortations about this matter. Legislation is the place for strong, practical measures to make sure that the regulatory framework properly addresses embedded generation. That is what we have provided. Of course electricity suppliers can offer net metering to their customers if they choose, but from the point of view of the law and of this Bill the way forward lies in the measures to benefit embedded generation that I have described.
Lord Beaumont of Whitley: My Lords, in the time-honoured phrase, I should like time to study what the Minister has said before we come to the next stage of the Bill. In the meantime, with the permission of the noble Lord, Lord Ezra, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Ezra Lord Ezra moved Amendment No. 27:
Page 53, line 15, at end insert—
("(c) to provide embedded generators with fair access at fair prices to the network"").
The noble Lord said: My Lords, I note what the noble Lord said about embedded generation. He is quite right. It is obscure; one has to find one's way through a labyrinth in the Bill and supporting documents. I still find it difficult to understand why the words used by one of the noble Lord's ministerial colleagues should not be accepted. The noble Lord, Lord Currie, said that he did not know what "fair" meant. Apparently Mr Chris Mullin knew what it meant because he used the word in another place. Indeed the noble Lord referred to "fair access". I should like to withdraw the amendment with the proviso that I shall study carefully what has been said and may well come back to the matter at the next stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 4 [Schedule to be substituted for Schedule 6 to the 1989 Act]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 28:
Page 126, line 45, after ("person") insert ("at any place other than premises at which electricity is being supplied under a contract with an authorised supplier or a deemed contract with an electricity supplier").
The noble Baroness said: My Lords, in moving Amendment No. 28, I should like to speak also to Amendment No. 32. Paragraph 4(1) of Schedule 4 provides for a distributor to recover the value of electricity taken improperly while being conveyed by a distributor. That provision does not, however, take account of the arrangements which have been put in place by electricity companies for recovering sums for

1519
the improper abstraction of electricity. The provision could imply that distribution companies have wider responsibilities than they actually have.
Primarily, responsibility for dealing with unlawful abstraction will be a matter for suppliers and not distributors. Under these arrangements, where electricity is stolen and the customer is taking supply from an identifiable supplier, the supplier makes good any additional costs incurred by other suppliers and any loss suffered by the distributor. The supplier is then able to pursue any remedies for recovering those amounts from the customer.
In a small number of cases where there is no identifiable supplier—for example, abstraction by an improper connection in the road—it would be appropriate for a distributor to have the power of recovery. The amendment would restrict the scope of the provision to those limited circumstances.
I turn to Amendment No. 32. The amendment would provide electricity distributors with rights of access to meters in the case of an emergency. While distributors will retain ownership of the thousands of meters currently in place, they will not have any right of access to those meters. Electricity suppliers will be responsible for providing and reading meters and the powers to enter premises for access to meters will be given to those suppliers, who will be able to exercise those powers themselves or through persons appointed by them.
A distributor could be appointed for this purpose but a supplier will equally be able to select another party to provide metering services. Where the supplier has not appointed the distributor as its agent for metering services, the distributor will not be able to deal with a faulty meter on the customer's premises. In that event, a distributor will be able to disconnect the supply only in order to leave a safe situation and ask the supplier to arrange for its meter operator to deal with the meter. Until that is done the consumer will be without electricity. That cannot be in the consumer's best; interests.
Without the right of access to meters, distributors will be blamed for the poor and confused service consumers will receive, a problem not of the distributors' making. Consumers will rightly not be willing to listen to explanations about the subtle differences between the statutory powers of electricity suppliers and distributors when they are told that their power will have to be left off after they have called out what they still regard in many, many circumstances as the Electricity Board at midnight.
These amendments would enable distributors to enter premises in an emergency to inspect, repair and reinstall meters and, if I may say so, in that case serve the customer. The Government claim that their intention is to put customers first by offering a one-stop shop. Where the distributor is not appointed as the supplier's meter service provider, that simply will not happen. Without these powers distributors, through no fault of their own, will end up providing a poorer service to the customer. I beg to move.
5.15 p.m.
Lord McIntosh of Haringey: My Lords, I shall reply to opposition Amendments Nos. 28 and 32 and I shall then speak to my Amendments Nos. 30, 77, 78 and 103. I should like first to say a few words about an amendment which we propose to make at Third Reading on rights of entry to premises.
We have recently received—within the past few days—representations from electricity distribution companies which are concerned to ensure that they have sufficient rights of entry to premises in cases of emergency. We have listened to their arguments and are persuaded that we should act. Therefore, we will be tabling at Third Reading a small amendment to Schedule 4. As is my usual practice, I shall write to noble Lords to explain the amendment when it has been tabled. The reason I mention this now is both to inform the House and to underline that we are always ready to accept the industry's proposals to amend the drafting of the Bill where its proposals are well founded. That is not the case for Amendments Nos. 28 and 32.
Amendment No. 28 was originally proposed to us by the Electricity Association. It expressed concern that paragraph 4 of new Schedule 6 to the Electricity Act, as inserted by Schedule 4 to the Bill, appeared to place responsibility on distributors to recover the value of electricity illegally abstracted from their distribution networks, whereas in their view all responsibility for energy used by consumers should be the responsibility of suppliers. I am happy to give to the House the response we gave to the association explaining why its concerns were unfounded and why, therefore, this amendment is not appropriate.
First, paragraph 4 of new Schedule 6 gives distributors statutory rights to recover the value of illegally abstracted electricity. It does not place obligations on them to do so. In practice, I understand that there are agreements within the industry itself which may assign such a role to distributors. That would normally only be in cases where there was no supplier to whom the role could appropriately be assigned; for instance, if someone were illegally to connect into a distribution line in the street. The sole purpose of paragraph 4 is to make the distributors' lives easier in these cases by allowing them to use civil legal procedures to recover the value of the electricity so taken.
Secondly, new Schedule 6 has been drafted so that paragraph 4 applies only in cases where paragraph 3 does not. Paragraph 3 provides that a contract shall be deemed to be in place with a supplier where someone takes a supply of electricity without there being an express contract in place. That could cover a number of circumstances, but what is relevant here is that it would cover electricity taken illegally, always provided that a supplier can be identified as being responsible for the supply taken. If not, and only if not, the statutory rights—not obligations—under paragraph 4 would be available to distributors.
I turn to Amendment No. 32. Again, this proposal was first made by the Electricity Association. We considered it carefully but were unable to accept it.

1521
This is not a safety issue, despite what the noble Baroness, Lady Buscombe, says. It is a competition issue. The amendment does not improve safety but it does undermine competition. Certainly, it is usually the distributor who needs statutory rights of entry in an emergency. We have made proper statutory provision for that. But a distributor does not need rights of entry, except in case of emergency, to inspect, repair or replace my deluxe all-singing, all-dancing electric rice-steamer with an egg poacher side attachment. By the same token he does not need them for a meter. It is irrelevant that the distributor might happen to own the meter.
At present it happens that the public electricity suppliers own most of the meters in this country. It may be that these will pass to and remain with their distribution arm after the separation of supply and distribution. That is a matter for the public electricity suppliers and in the longer term also for the authority, which continues to consider the implications for competition of meter ownership. However, the Bill assigns statutory rights and responsibilities for meters and metering to suppliers, not distributors. Suppliers will not have to own meters or provide services for themselves, but may procure them from third parties, who may, of course, include distributors. That is because metering of electricity supplied to premises is a supply not a distribution matter. It also ensures that customers may deal with their supplier for metering as for all other aspects of their electricity supply—the one-stop shop principle. Distributors will continue to be responsible for line and plant. So it is right that they should have various rights of entry related to those, including emergency access. But there is no reason for them to have privileged access to meters for which they are not responsible.
The way we have structured the legislation allows for full competition in metering services. By giving all matters relating to metering to suppliers, we have quite rightly removed the distribution companies, which may well continue to have associated supply companies under the same ownership, from statutory access to meters operated by their supply competitors. Equally, we place distributors on the same statutory footing as independent providers of meter services who have no statutory rights. Both could nevertheless exercise the supplier's rights of entry on his behalf and with his agreement.
I turn to the government amendments, Amendments Nos. 30, 77, 78 and 103. Amendments Nos. 30 and 78 are technical amendments to do with meters, in particular pre-payment meters, and the rights that licensed companies have to enter premises related to meters and pre-payment meters. Amendment No. 77 reflects government policy that pre-payment meters should not be used to recover charges other than those owed for the supply of gas or electricity. For example, hire purchase payments for cookers or fridges should not be charged through a pre-payment meter.
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Amendment No. 77 aligns the provisions implementing this policy for gas with the provisions relating to electricity set out in paragraph 8 of Schedule 5 to the Bill. First, the amendment ensures that the restriction on non-supply related charges applies to suppliers authorised by exemption as well by licence. This is achieved by the reference to an authorised supplier, which is defined in Section 48, as amended, as meaning a licensed or exempt supplier. Secondly, as metering is part of the process of supply, the costs of providing the pre-payment meter itself should be recoverable.
Amendment No. 30 corrects an omission by giving a power of entry to a licensed supplier to install a pre-payment meter. In order to reduce the number of disconnections, the Bill gives companies a right to fit a pre-payment meter instead of disconnecting, but the associated right of entry was omitted. Amendment No. 78 corrects a similar omission in gas by creating a right of entry corresponding to the right to fit a pre-payment meter in the first place. This is achieved by the reference to paragraph 7(3)(a). Amendment No. 78 also deals with an issue which arises in gas but not electricity. There is a risk of an explosion if gas mixes with air in a service pipe or in an appliance such as a cooker. This can occur when a meter is fitted. So if a company fits a pre-payment meter it needs to purge gas from the system and then test it.
In the absence of the right of entry to premises covering this purging and testing, the licence holder would be forced to leave the pre-payment meter in the "off' position if the consumer was not present, and the consumer would then have specifically to request another visit from the company before he could use his cooker or boiler, doubling the "waiting for the gasman" excuse which employees are known to give from time to time. The amendment would make such a visit unnecessary. We propose extending the right of entry with the words at the end of new paragraph 23(2)(c). As paragraph 3(5) also deals with installing or replacing a meter it is preferable that the power to test and purge the system also applies in relation to paragraph 3(5). I must emphasise that only licensed companies, and not exempt ones, have rights of entry. Licence conditions apply, including the requirement to have a regulator-approved code of practice on access to consumers' premises.
Amendment No. 103 changes the Rights of Entry (Gas and Electricity Boards) Act 1954 in respect of rights for electricity suppliers and distributors to reflect the abolition of the concept of public electricity supplier and to provide for electricity what the Gas Act 1995 provides for gas: namely, that a person who is authorised by an agent of a licensee, to whom the rights of entry in the Electricity Act apply, may apply for a warrant to exercise the right of entry. For the reasons given, I cannot support Amendments Nos. 28 and 32.
Baroness Buscombe: My Lords, I shall read with care in Hansard what the Minister said about Amendment No. 28. We may well return to that matter at Third Reading. With regard to Amendment No. 32,

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I am sorry that the noble Lord feels that what we suggest does not impinge on safety but damages competition. I would say that the contrary is true. At one point I thought that we were talking about different amendments. We are talking about the right of access to meters in cases of emergency. We are talking about the responsibility on the part of the industry to serve the customer in cases of emergency. We strongly believe that the amendment deals with that situation. When we raised the issue in Committee the Government were not willing to respond to our amendments. They still feel unwilling to respond to what we believe is a commonsense, practical amendment. I intend to test the opinion of the House on Amendment No. 32. I beg leave to withdraw Amendment No. 28.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 29:
Page 127, line 34, leave out ("belonging to") and insert ("provided by").
The noble Lord said: My Lords, in moving Amendment No. 29 I should like to speak also to Amendments Nos. 32, 93, 95, 99, 101, 102, 124, 125 and 128. These amendments are all minor and technical. They make adjustments to the Bill which reflect changes to, or arising from, other parts of the Bill. One could say that about a great many amendments!
Amendments Nos. 29 and 31 provide that provisions which concern distributors' plant and line in new Schedule 6 to the Electricity Act relate only to electrical line and plant actually provided by a distributor, rather than to any line or plant.
Amendment No. 93 makes two changes to the Bill. The first limb of the amendment places the authority under a duty to send a copy of a new licence or an extension to or restriction of an existing licence to any licence holder likely to be affected by its granting. The second limb changes the provisions in Section 15A of the Gas Act which relate to billing disputes so that they apply to all consumers, not just domestic consumers. This is to make them consistent in this respect with the equivalent electricity provisions.
Amendment No. 95 is a purely technical amendment to the drafting and has no substance at all—it says in my brief. It must have some substance! Amendment No. 99, which is a corollary to the second limb of Amendment No. 93 to which I have just referred, and Amendments Nos. 101, 125 and 128 all amend the provisions of Section 44A of the Electricity Act and Section 15A of the Gas Act, which relate to billing disputes, to reflect the abolition of the concepts of public electricity supplier and tariff customer and to make the gas provisions applicable to all customers, not just domestic ones.
Amendment No. 102 amends Section 59 of the Electricity Act, which relates to making of false statements and so on to reflect the changes elsewhere in the Bill to provisions for rights of entry. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 30:
Page 128, line 22, leave out from beginning to ("an") and insert ("Where an electricity supplier is authorised by paragraph 2(1) to install a pre-payment meter on any premises, any officer or other person authorised by the supplier may at all reasonable times enter the premises for the purpose of installing such a meter.
(5) A power of entry for the purpose of removing or installing").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 28. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 31:
Page 128, line 44, at end insert ("provided by the distributor").
The noble Lord said: This amendment was spoken to with Amendment No. 29. I beg to move.
On Question, amendment agreed to.
Baroness Buscombe Baroness Buscombe moved Amendment No. 32:
Page 129, line 16, at end insert ("; or
(c) in the case of emergency, inspecting, repairing or re-installing any electricity meter").
The noble Baroness said: My Lords, I beg to move.
5.28 p.m.
On Question, Whether the said amendment (No. 32) shall be agreed to?
Their Lordships divided: Contents, 87; Not-Contents, 122.

Division No. 2

CONTENTS

Anelay of St Johns, B.

Eden of Winton, L.

Archer of Weston-Super-Mare, L.

Elles, B.

Elliott of Morpeth, L.

Astor of Hever, L.

Flather, B.

Attlee, E.

Fraser of Carmyllie, L.

Biffen, L.

Glentoran, L.

Blackwell, L.

Gray of Contin, L.

Blaker, L.

Hanham, B.[Teller]

Boardman, L.

Haslam, L.

Brabazon of Tara, L.

Henley, L.

Bridgeman, V.

Higgins, L.

Brigstocke, B.

Hodgson of Astley Abbotts, L.

Brougham and Vaux, L.

Home, E.

Burnham, L. [Teller]

Hooper, B.

Buscombe, B.

Hunt of Wirral, L.

Byford, B.

Jellicoe, E.

Caithness, E.

Kimball, L.

Campbell of Alloway, L.

Knight of Collingtree, B.

Carlisle of Bucklow, L.

Lane of Horsell, L.

Clark of Kempston, L.

Lang of Monkton, L.

Coe, L.

Lucas, L.

Cope of Berkeley, L.

Lyell, L.

Courtown, E.

McColl of Dulwich, L.

Cowdrey of Tonbridge, L.

Mackay of Ardbrecknish, L.

Dean of Harptree, L.

Marlesford, L.

Denham, L.

Mayhew of Twysden, L.

Denton of Wakefield, B.

Miller of Hendon, B.

Dixon-Smith, L.

Montrose, D.

Dundee, E.

Murton of Lindisfarne, L.

1525

Newton of Braintree, L.

Roberts of Conwy, L.

Norfolk, D.

Seccombe, B.

Northbrook, L.

Shaw of Northstead, L

Norton of Louth, L.

Skelmersdale, L.

O'Cathain, B.

Stewartby, L.

Oppenheim-Barnes, B.

Stodart of Leaston, L.

Park of Monmouth, B.

Strathclyde, L.

Peel, E.

Taylor of Warwick, L.

Perry of Southwark, B.

Tebbit, L.

Peyton of Yeovil, L.

Thomas of Gwydir, L.

Pilkington of Oxenford, L.

Trefgarne, L.

Rawlings, B.

Vivian, L.

Rees, L.

Waddington, L.

Renfrew of Kaimsthorn, L.

Wade of Chorlton, L.

Renton, L.

Young, B.

NOT-CONTENTS

Acton, L.

Howie of Troon, L.

Amos, B.

Hoyle, L.

Andrews, B.

Hughes of Woodside, L.

Archer of Sandwell, L.

Hunt of Chesterton, L.

Bach, L. [Teller]

Hunt of Kings Heath, L.

Barnett, L.

Irvine of Lairg, L. (Lord Chancellor)

Bassam of Brighton, L.

Berkeley, L.

Islwyn, L.

Billingham, B.

Janner of Braunstone, L.

Blackstone, B.

Jay of Paddington, B. (Lord Privy Seal)

Blease, L.

Borrie, L.

Jenkins of Putney, L.

Bragg, L.

Judd, L.

Brennan, L.

King of West Bromwich, L.

Brett, L.

Layard, L.

Brooke of Alverthorpe, L.

Lea of Crondall, L.

Brooks of Tremorfa, L.

Levy, L.

Burlison, L.

Lockwood, B.

Carter, L. [Teller]

Lofthouse of Pontefract, L.

Chandos, V.

Macdonald of Tradeston, L.

Christopher, L.

McIntosh of Haringey, L.

Clarke of Hampstead, L.

McIntosh of Hudnall, B.

Clinton-Davis, L.

MacKenzie of Culkein, L.

Cocks of Hartcliffe, L.

Mason of Barnsley, L.

Crawley, B.

Massey of Darwen, B.

Currie of Marylebone, L.

Merlyn-Rees, L.

David, B.

Molloy, L.

Davies of Coity, L.

Morris of Castle Morris, L.

Davies of Oldham, L.

Morris of Manchester, L.

Desai, L.

Nicol, B.

Dixon, L.

Orme, L.

Donoughue, L.

Parekh, L.

Dormand of Easington, L.

Patel of Blackburn, L.

Dubs, L.

Peston, L.

Elder, L.

Plant of Highfield, L.

Evans of Parkside, L.

Prys-Davies, L.

Evans of Temple Guiting, L.

Ramsay of Cartvale, B.

Evans of Watford, L.

Randall of St. Budeaux, L.

Farrington of Ribbleton, B.

Rendell of Babergh, B.

Faulkner of Worcester, L.

Sainsbury of Turville, L.

Filkin, L.

Scotland of Asthal, B.

Gale, B.

Serota, B.

Gavron, L.

Shepherd, L.

Gibson of Market Rasen, B.

Simon, V.

Gilbert, L.

Smith of Gilmorehill, B.

Gladwin of Clee, L.

Smith of Leigh, L.

Gordon of Strathblane, L.

Stoddart of Swindon, L.

Gould of Potternewton, B.

Stone of Blackheath, L.

Graham of Edmonton, L.

Strabolgi, L.

Grenfell, L.

Symons of Vernham Dean, B

Hardy of Wath, L.

Thornton, B.

Harris of Haringey, L.

Tomlinson, L.

Harrison, L.

Turnberg, L.

Healey, L.

Turner of Camden, B.

Hogg of Cumbernauld, L.

Uddin, B.

Hollick, L.

Walker of Doncaster, L.

Hollis of Heigham, B.

Warner, L.

Howells of St. Davids, B.

Warwick of Undercliffe, B.

1526

Weatherill, L.

Wilkins, B.

Wedderburn of Charlton, L.

Williams of Mostyn, L.

Whitaker, B.

Williamson of Horton. L

Whitty, L.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
Schedule 5 [Electricity metering]:
5.39 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 33 and 34:
Page 131, line 2, leave out ("inserted") and insert ("substituted").
Page 131, line 3, leave out ("inserted") and insert ("substituted").
On Question, amendments agreed to.
Clause 57 [Information with respect to levels of performance]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 35:
Page 57, line 22, leave out subsection (6) and insert—
("(6) Subsection (3) shall cease to have effect.").
The noble Lord said: My Lords, in moving Amendment No. 35, I shall speak also to Amendments Nos. 80, 96, 100, 126 and 129. Companies are under a duty to provide the authority with information concerning the standards of performance they have attained in their dealings with customers. At present (and ever since standards of performance were introduced) failure to comply with this duty is a criminal offence, triable in the magistrates' courts, carrying a maximum fine of level 5 on the standard scale (currently £5,000).
These amendments taken together decriminalise the failure to provide information, making it instead a "relevant requirement". Failure to comply with a "relevant requirement" can lead to action by the authority, through enforcement orders up to financial penalties. I say this to the noble Lord, Lord Renton, who raised a question about how the information on standards of performance could be enforced. I did not go into detail because I did not want to anticipate the fact that we are now making it a civil rather than a criminal offence.
Specifically, Amendments Nos. 35 and 80 decriminalise failures to provide information. Amendments Nos. 96 and 100 make the duty into relevant requirements, and Amendments Nos. 126 and 129 are technical consequential amendments to the schedule of repeals.
The reason for this change is consistency, on two counts. First, all the other duties relating to standards of performance are relevant requirements and, secondly, almost all the other duties requiring the provision of information to the authority are also relevant requirements. The one exception is failure to provide information which the authority has requested when investigating possible breaches of relevant requirements. Clearly, if that failure were subject to the same enforcement provision, we should get into endless loops.
There is no ulterior purpose behind the amendments. It is simply neater if all the standards of performance provisions are treated consistently. I commend the amendments to the House. I beg to move.
Lord Renton: My Lords, for the reasons that the noble Lord has given, I am glad that he is doing this. I hope that my noble friend on the Front Bench will agree to support his amendment on this occasion.
On Question, amendment agreed to.
Clause 59 [Financial penalties]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 36:
Page 58, line 10, at end insert—
("() The Authority shall not impose a penalty on a licence holder under subsection (1) where it is satisfied that the most appropriate way of proceeding is under the Competition Act 1998.").
The noble Baroness said: My Lords, this amendment relates to the possibility of double jeopardy arising from the combination of the authority's competition and regulatory functions. The point was raised at Second Reading by my noble friend Lord Kingsland.
The authority has a dual role in its sector, as regulator and as the competition authority. Its competition powers are exercised concurrently with those of the Director General of Fair Trading. If the new United Kingdom competition regime is to develop in a fair, consistent and coherent manner and undertakings are to receive the benefit of the safeguards provided by the Competition Act, competition matters must be dealt with by means of competition powers across industry as a whole, including the regulated sectors.
During the passage of the Competition Bill, provisions were added by the Government which amended the Electricity Act 1989 and the other sectoral statutes to ensure that double jeopardy did not arise where the exercise of competition powers was more appropriate. This amendment makes similar provision to Section 25 of the Electricity Act 1989, as amended by the Competition Act 1998. It would prevent the authority from imposing a penalty where the contravention is one which the authority is satisfied should be dealt with under the Competition Act. I beg to move.
Lord McIntosh of Haringey: My Lords, the amendment is based on the fact that the provisions on licence enforcement orders in the Gas and Electricity Acts contain a restriction that the regulator shall not make an order if it is satisfied that the most appropriate way of proceeding is under the Competition Act. This provides a substantial measure of protection against what has been described as double jeopardy. But there is no equivalent restriction in relation to the penalties provisions in Clauses 59 and 95 of the Bill.
The position in relation to financial penalties is not exactly the same as that on enforcement orders. The regulator has a duty to make licence enforcement
1528
orders. The limitation that is now in Section 25 of the Electricity Act was, therefore, essential if overlapping enforcement was to be avoided. However, the power to impose penalties is only a discretion and the regulator therefore has the ability to avoid any overlap.
Nevertheless, the Government naturally wish to achieve as much consistency as is practical between provisions which the Bill inserts into the Gas and Electricity Acts and provisions that are already there; and they wish to achieve as much clarity as it practical on the interaction between licence enforcement provisions and Competition Act enforcement provisions.
The noble Baroness has raised an issue that merits attention and I am grateful to her. I have considered the drafting of Amendment No. 36 and I am pleased to accept it. We shall bring forward an equivalent amendment for gas at Third Reading.
Baroness Buscombe: My Lords, I thank the Minister for his support for the amendment.
On Question, amendment agreed to.
5.45 p.m.
Baroness Buscombe Baroness Buscombe moved Amendment No. 37:
Page 58, line 10, at end insert—
("() the Authority shall not impose a penalty under subsection (1) where the licence holder shows that—

(a) he used his best endeavours to avoid the contravention or failure in question; or

(b) the contravention or failure was due to circumstances beyond his control.").

The noble Baroness said: My Lords, penalties may be imposed on licence holders on the basis of strict liability. Therefore, a company may be liable to a penalty even where it has taken all possible steps to avoid any breach of its licence. That means that a company may be penalised for matters entirely beyond its control: for example, power outages caused by storm damage. I always think of the example of the storms of 1987, which I thought were an "act of God". Indeed, when I was a law student we often referred to "acts of God", which do not seem to be discussed any more, not least by this Government.
A company may also be penalised where the allowed capital and operating expenditure inherent in the price control regime results in the ability of the company to implement the optimum replacement and maintenance regimes being curtailed, potentially leading to an increased likelihood of power failures and longer restoration times.
The Government's justification for this draconian approach seems to be that consumers are not concerned how a problem occurs but merely want someone punished for it. We feel that that approach is unfair and unjustified. When one looks, for example, at the rate of power system failures elsewhere in the developed world, it is evident that the utilities in this country have provided services to an extremely high standard when compared to those elsewhere. One has only to go on holiday to places such as France and

1529
Spain to be made aware of what amazing services we receive in this country and have received for some considerable time.
The amendment would provide a "best endeavours" defence against such penalties, ensuring that companies are not penalised for matters beyond their control as a consequence of the constraints placed on them. If the standards deteriorate, who is to blame? Is it the companies; or is it the body which now effectively controls the amount that can be spent on replacement and maintenance? If a company can demonstrate that it is spending in accordance with the allowances, is it to be penalised by the very body that determined those allowances? I beg to move.
Lord McIntosh of Haringey: My Lords, the amendment seeks to preclude the imposition of financial penalties in cases where the licence holder concerned uses his "best endeavours" to avoid a contravention or failure, or where the contravention or failure was due to circumstances beyond the control of the licence holder. It is similar to an amendment tabled by the noble Lord, Lord Kingsland, and the noble Baroness, Lady Buscombe, at Committee stage, but that sought to limit penalties to cases of recklessness and negligence.
We have resisted amendments of this kind throughout the passage of the Bill and we are going to do so again on behalf of consumers. There are valid precedents for the approach that the Government have adopted. The National Lottery Act 1998 and the Broadcasting Acts 1990 and 1996 provide for the relevant regulatory authority to impose financial penalties for contravention of licence conditions. They do not provide get-out clauses for companies which breach their licences without negligence or intent; they do not even provide an automatic get-out where circumstances are beyond their control or their best endeavours. There is a good reason for this. We see no reason why the Government should provide a weaker power in relation to vital public services such as gas and electricity. We hold to the view that the onus should be on the licence holder to maintain compliance, particularly when the consumers concerned cannot move to another service provider, as in the case of electricity transmission and distribution companies and gas transporters.
Let us look more closely at the matter. There may be circumstances, for example in relation to repeated failures to maintain security of supply, where the individual contravention cannot be traced directly to any fault of the licence holder on that occasion but the underlying picture is one of inadequate investment in the long term. Contraventions involving interruption of supply can cause considerable harm to the interests of consumers, both domestic and business. It is entirely right that the onus should be on the licence holder to comply and that the authority should have the opportunity to impose a reasonable financial penalty where the obligation is not fulfilled.
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Another point to stress is that, as I explained in response to similar amendments in Committee, these amendments entirely ignore the nature of the powers that we are providing. The authority will have a power, not a duty, to impose financial penalties; it will not be compelled to do so. Any penalty that it imposes must be reasonable in all the circumstances of the case. It is very unlikely that any penalty which did not take account of efforts by a licence holder to correct a contravention could be considered reasonable in all the circumstances of the case. Any such penalty would certainly be likely to be challenged in the courts. However, consumers deserve proper protection and the amendment does not help in that respect. I hope that the noble Baroness will withdraw her amendment.
Baroness Buscombe: My Lords, while I thank the Minister for his response I am sorry that he has resisted the amendment. As the Minister observed, we are talking about vital public services. We on these Benches do not seek to defend those who are responsible for repeated failures in supply, for example because of underlying inadequate investment. We agree with the noble Lord in that respect. However, we are talking about companies which use their best endeavours in all circumstances to maintain supply. We shall read with care in Hansard the Minister's response. On that basis, at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Borrie Lord Borrie moved Amendment No. 38:
Page 59, line 18, at end insert—
("(6A) No penalty imposed by the Authority under this section may exceed 10 per cent. of the turnover of the licence holder (determined in accordance with provisions specified in an order made by the Secretary of State).
(6B) An Order under subsection (6A) shall not be made unless a draft of the instrument containing it has been laid before and approved by a resolution of each House of Parliament.").
The noble Lord said: My Lords, in moving Amendment No. 38 I should like to speak also to Amendment No. 81. The amendments deal respectively with electricity and gas. As the Minister indicated a moment ago, as the Bill now stands there is a requirement in Clauses 59 and 95 that any penalty imposed must be reasonable in all the circumstances of the case. My noble friend Lord Currie of Marylebone and I proposed in Committee that there should be a cap or upper financial limit on the penalty that may be imposed. We put forward that case on the lines of the Competition Act 1998 in which the maximum specified is 10 per cent of the turnover of the company.
In response to our amendment tabled at Committee stage the Minister was inclined to believe that a specific limit was unnecessary. However, he recognised that some points had been made in favour of a limit and that the issue merited serious consideration. I understand that the Minister is now willing to agree to such an amendment. He has provided official drafting assistance to arrive at the simplified and—I am sure noble Lords will agree—clear amendments that are

1531
now before the House. We are extremely grateful to the Minister for his reconsideration of the matter and the trouble that he has taken. I beg to move.
Lord Renton: My Lords, the noble Lord, Lord Borrie, makes a good case for the first part of Amendment No. 38. However, a considerable burden will he placed on both Houses of Parliament if they are asked to approve—which means a positive resolution—perhaps a good number of relatively minor matters. I hope that the Government do not agree to subsection (6B) of the amendment.
Lord Fraser of Carmyllie: My Lords, when one finds a provision in the Competition Act reflected in the Utilities Bill one is dangerously close to joined-up government. That is desirable inasmuch as the penalty, which hitherto has been unlimited in the framework of the Bill, is now subject to a restriction. If the hint is correct and the Minister is prepared to accept the amendment it is a considerable improvement. However, we shall consider the matter further because we are not entirely sure who in practice is the licence holder. If BP Amoco is a single licence holder, a penalty of 10 per cent of turnover does not appear to be much of a restriction. However, more realistically, given the way that the market has developed a penalty that is restricted to 10 per cent of turnover will provide some companies with a degree of comfort.
Baroness Sharp of Guildford: My Lords, noble Lords may recall that at Committee stage I tabled an amendment in very similar terms to that tabled by the noble Lords, Lord Borrie and Lord Currie of Marylebone. I then joined them in urging this matter on the Government. These Benches welcome the fact that the Government have responded positively to these amendments. We join the noble Lord, Lord Renton, in expressing slight surprise at the terms of subsection (6B), in that it imposes a considerable burden on both Houses of Parliament.
Baroness Buscombe: My Lords, we are concerned about the implications of this amendment. I add my voice to the observations of my noble friend Lord Renton and my noble and learned friend Lord Fraser of Carmyllie. We do not regard a maximum penalty of 10 per cent of the turnover of the licence holder as a concession. We suggest that the penalty should be limited to turnover in the United Kingdom. Our concern is that this may set an inflated tariff which in the eyes of the regulator becomes the norm. In particular, in cases where there is only a small breach a penalty of 10 per cent of turnover may amount to an awful lot of money in the circumstances. We believe that it may give the regulator an inflated perception of what is a reasonable tariff. With a cap of this nature there is a possibility that the ceiling may become the norm and set precedents for the future. The Minister will be aware that we on these Benches are keener on
1532
a proper defence as opposed to a cap, although the latter is better than nothing. We are also concerned that in the long run it may prove to be grossly unfair.
Lord McIntosh of Haringey: My Lords, perhaps the noble Baroness, Lady Buscombe, and the noble and learned Lord, Lord Fraser of Carmyllie, can solve a problem that has worried me all my life. I have never known what a gift horse looks like. If they are good at looking gift horses in the mouth, perhaps when they come back next time they will tell me what they look like. I believe that in accepting these amendments we are doing rather well. The amendments again draw to the attention of the House the issue of a specific upper limit on financial penalties imposed by the authority for contraventions of licence conditions, standards of performance and other specified statutory obligations. The amendments seek to impose an upper limit on any financial penalty of 10 per cent of the turnover of the licence holder concerned, with detailed provisions set out in an order made by the Secretary of State. This introduces a limit on financial penalties analogous to that under the Competition Act 1998, which, as I understand it, was not opposed by the Opposition at that time.
It is right that this is not a concession. We do not think that the Bill as drafted was wrong. As we have repeatedly said, penalties are already limited under the Bill. New Section 27A of the Electricity Act 1989 and new Section 30A of the Gas Act 1986 give the authority a power only to impose such a penalty as is reasonable in all the circumstances of the case. The Bill also provides licence holders with a right to challenge both the imposition and the amount of the penalty in the courts if they consider them unreasonable; and gives the court powers to quash the penalty or to impose a lower penalty if it agrees with the licence holder. I think that those are the protections that the noble Baroness, Lady Buscombe, sought. This imposes a genuine constraint on the level of any penalty.
However, the Government have taken careful note of the views of the House on this point. We have also listened carefully to the points put to us by interested parties outside this House. I note, for example, that the Gas Consumers Council, in contact with officials at the Department of Trade and Industry, recently declared itself in favour of a 10 per cent of turnover ceiling. The noble Lords, Lord Borrie and Lord Currie, who may be presumed to have the ear of the regulator, have tabled these amendments on two occasions.
I recognise that an upper limit would give extra comfort to companies which are concerned about these provisions, although I would stress once again that companies which adhere to their licences and fulfil their statutory obligations have nothing to fear from the financial penalties provisions.
We would not be accepting this amendment if we thought that there was any risk that it would unduly inhibit the operation of these powers. It is of vital importance that any limit which is imposed does not

1533
undermine the purpose for which these powers are being introduced: to protect the interests of consumers.
I turn for a moment to the precise terms of the amendment. It would give the Secretary of State power to make detailed provisions, for example, in relation to the definition of turnover by order made by affirmative resolution. This appears to strike the right balance in terms of giving the Secretary of State flexibility to vary the precise terms of the order, while providing the appropriate level of parliamentary scrutiny. The amendment also mirrors the equivalent Competition Act provisions in this respect.
As I said earlier, it is clear that the industry would draw some comfort from the amendment; and that it would not damage the Government's objectives. We are, therefore, ready to accept both the amendment under discussion and the identical amendment for gas under Clause 95.
6 p.m.
Lord Renton: My Lords, will the Minister answer my point? The proposed subsection (6B) imposes an unnecessary burden upon Parliament. I do not know of a precedent for positive resolutions having to be made in circumstances like this.
Lord McIntosh of Haringey: My Lords, I thought that I had already given the exact analogy and precedent. The Competition Act 1998 contains an exactly comparable cap on financial penalties and provides for affirmative resolution procedures. I understand that the provision has gone to the Delegated Powers and Deregulation Committee. The pressure on us is always to increase the scope of parliamentary scrutiny. I hope that this will not be seen as a defect of the amendment.
On Question, amendment agreed to.
Baroness Buscombe Baroness Buscombe moved Amendment No. 39:
Page 60, line 36, leave out ("make an application") and insert ("appeal").
The noble Baroness said: My Lords, in moving the amendment, I speak also to the consequential amendments.
Clause 59 provides licence holders with the power to seek review by the High Court or Court of Session of a financial penalty imposed by the authority. In Committee the Minister indicated that the scope of the review would allow the court to look at the circumstances and facts of the case. The Minister commented:
"The Government believe that the provisions on financial penalties go further than judicial review and allow for appeal on similar grounds to those provided by the Telecommunications (Appeals) Regulations 1999".—[Official Report, 21/6/00; col. 302."
He continued later:
"There is no less protection in the Bill than there is in the telecommunications appeal regulations".— [Official Report, 21/6/ 00; col. 304.".
However, from the drafting of the Bill it is far from clear that the court has the power to examine all the facts and the circumstances of a case. There is nothing in the drafting of these provisions which indicates that the court's power to consider the reasonableness of a penalty extends beyond the normal public law standard of considering Wednesbury reasonableness. If that is the limit of the court's power, it will be able to vary a penalty only where the penalty imposed is so unreasonable that no authority properly directing itself would impose it.
The amendments would convert the right of review into a right of appeal similar to that provided by the Telecommunications (Appeal) Regulations 1999. They would allow the court to consider appeals on the same grounds as appeals under those regulations and thus meet what appears to be the Government's intention of ensuring, as the Minister puts it, that,
"there is no less protection in the Bill than there is in the telecommunications appeal regulations".
I beg to move.
Lord Borrie: My Lords, it is a pity that the noble Baroness has repeated an argument put forward on a previous occasion by the noble Lord, Lord Kingsland: that the Bill does not go beyond the judicial review type of decision on the basis of Wednesbury unreasonableness.
I draw the attention of the noble Baroness to two provisions in the Bill. First, as has been said several times, and the noble Baroness agrees, the penalty which may be imposed must be reasonable in all the circumstances of the case. I stress the words "reasonable in all the circumstances of the case". I believe that it is impossible to determine whether a penalty is reasonable in all the circumstances of the case unless the facts are considered.
Secondly, under subsection (4) of new Section 27E, one of the grounds for going to court is,
"that it was unreasonable of the Authority to require the penalty imposed, or any portion of it".
It seems clear enough that if a penalty is not reasonable in the circumstances of the case, it can be challenged. Under new Section 27E, it will be unreasonable for the authority to require the penalty to be imposed.
That is fundamental to the point the Minister made clear in his intervention following the remarks of the noble Lord, Lord Kingsland, on the last occasion. An aggrieved person who thinks it unjust that the penalty has been imposed can appeal to the court—that is not the word used by the noble Baroness but it has precisely the same effect—and apply on a number of grounds, including that the authority has acted beyond its powers and that the penalty is not reasonable in all the circumstances of the case. Under that provision, the court must be prepared to consider all the relevant circumstances and facts.
Lord McIntosh of Haringey: My Lords, these amendments relate to the statutory right of review which is available under the Utilities Bill in relation to the imposition of financial penalties, and they seek to

1535
replace that right of review with a right of appeal to the High Court analogous to that provided under the Telecommunications (Appeals) Regulations 1999.
I am afraid that I shall take a long time in responding to the amendment. I had hoped that when I met the noble Lord, Lord Kingsland, and the noble Baroness, Lady Buscombe, after the Committee stage I had persuaded them that if I read out the following long statement it would be satisfactory for the purpose. I go no further than expressing a hope.
The Government are satisfied that the specific rights of review they have provided in relation to financial penalties under the Utilities Bill are appropriate. It has been suggested that they somehow give less protection to licence holders than is afforded in relation to regulatory decisions by judicial review or, in the telecommunications sector, by the Telecommunications (Appeals) Regulations (S.I. 99/3180). That is not the Government's view.
The Telecommunications (Appeals) Regulations, inserting Section 46B into the Telecommunications Act 1984, were made in response to the requirements of two EC telecommunications directives (the Licensing and ONP Directives) which required member states to provide an appeals mechanism against certain regulatory decisions. Section 46B of the Telecommunications Act 1984 provides that:
"a person aggrieved by a decision to which this section applies may appeal against the decision on one or more of the following grounds:

(i) that a material error as to the facts has been made;

(ii) that there was a material procedural error;

(iii) that an error of law has been made; or,

(iv) that there was some other material illegality, including unreasonableness or lack of proportionality".

In the Utilities Bill, the Government have provided for electricity and gas companies to challenge the imposition of financial penalties on the following basis: first, that the imposition of the penalty was not within the power of the authority under Section 27A of the Electricity Act 1989 or Section 30A of the Gas Act 1986; secondly, that any of the (procedural) requirements of subsections (2) to (4) or (6) of Section 27A of the Electricity Act or Section 30A of the Gas Act (concerned with the giving of notice) have not been complied with in relation to the imposition of the penalty and the interests of the operator have been substantially prejudiced by the non-compliance; or, thirdly, that it was unreasonable of the authority to require the penalty imposed, or any portion of it, to be paid by the date or dates by which it was required to be paid.
It has been said that a licence holder's rights of appeal against the imposition or amount of a penalty are severely limited—less than the rights available on judicial review—and that the provisions would not allow the court to look at the underlying facts of a case to determine whether the amount of a penalty was unreasonable in all the circumstances. The Government do not agree with this analysis.
Section 27E of the Electricity Act and Section 30E of the Gas Act provide that a licence holder aggrieved by the imposition, the amount or the payment
1536
schedule set for any penalty may make an application to the court. As I have said, one of the grounds on which such an application may be made is that it was not within the power of the authority to impose the penalty in question.
The formulation that a decision of a regulator or other body is "not within its powers" is common to a number of statutory rights of review in legislation; for example, in planning law. In the planning context, the courts have held that the formulation is wider than a classic ultra vines ground and encompasses challenge on grounds very similar to the grounds of judicial review, including that where the jurisdiction to make an order depends on particular facts there is no evidence to support those facts and that a regulator has otherwise gone wrong in law.
But the Bill goes beyond that. Under Section 27A of the Electricity Act and Section 30A of the Gas Act, the authority only has power to impose a penalty,
"of such amount as is reasonable in all the circumstances of the case".
If the amount of a penalty is not reasonable in all the circumstances of a case, it follows that the imposition of the penalty would not be within the power of the authority under that section and an application could therefore be made to the court under new Section 27E(4)(a) of the Electricity Act and new Section 30E(4)(a) of the Gas Act.
Accordingly, if a company challenges the amount of a penalty on the grounds that the imposition of it was not within the authority's power under Section 27A of the Electricity Act or Section 30A of the Gas Act, the questions the court will have to consider will include whether the penalty was indeed reasonable in all the circumstances. If it does not think this is the case, it may quash or lower the penalty as it thinks appropriate.
In Committee, the noble Lord, Lord Kingsland, acknowledged that "reasonable in all the circumstances" is the test in the Bill. But, he said,
"the test in law, the test for an authority acting outside or beyond its authority, requires an action to be so unreasonable that no reasonable person would ever entertain it".—[official Report, 21/6/00; col. 335.]
The latter test, however, applies on judicial review, whereas we have provided an express and specific right of review on the face of the Bill. The use of the word "reasonable" in this context has the same meaning as when used expressly in any legislation; that is, its ordinary English meaning of "appropriate or fit in all the circumstances". The two tests are distinct.
It has also been suggested that since the authority is required only to be "satisfied" that a contravention has occurred, the imposition of a penalty could be unreasonable under an objective assessment but provided the authority's view that a contravention had occurred was not manifestly unreasonable, there could be no challenge on this ground. Again, the Government disagree.
It is necessary to look at the relevant subsections—that is, proposed Section 27A of the Electricity Act and proposed Section 30A of the Gas Act—as a whole. As

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we have said, the court can and should look at the facts to determine whether the authority acted within its power by imposing a penalty that was reasonable in all the circumstances of the case. Those circumstances must on any reading include the extent of the contravention or failure in question. It is improbable that the authority would be satisfied that there was a contravention or failure where there was none. However, in that unlikely event, the question whether there had been a contravention or failure would be part of the question whether the authority had acted within its power to impose a penalty.
Looking again at the grounds of challenge provided under the Telecommunications (Appeals) Regulations against those provided for in relation to financial penalties under the Utilities Bill, the Government believe that the Bill's provisions match up to the protection afforded by the regulations. For example, the court will have the ability to look at the imposition and amount of a penalty and in so doing will have to look at the circumstance—in other words, the facts—underlying the case. Accordingly, the court will be able to quash or reduce a penalty if there has been a "material error as to the facts".
Procedural error is, as I have already set out, a separate ground for challenge under Section 27E(4) of the Electricity Act and Section 30E(4) of the Gas Act. Error of law, or some other material illegality, including unreasonableness or lack of proportionality, would fall under the ground that the imposition of the penalty was not within the power of the authority—again a specific ground under Section 27E(4) of the Electricity Act and Section 30E(4) of the Gas Act.
In light of this analysis, the Government consider that the right of statutory review provided in relation to the imposition of financial penalties under the Utilities Bill is appropriate and provides an equivalent degree of protection to licence holders as that provided by the Telecommunications (Appeals) Regulations 1999 as well as going beyond that provided by judicial review. On that basis, we believe that the amendments are unnecessary.
6.15 p.m.
Baroness Buscombe: My Lords, I thank the Minister for his full response to the amendment. As he will appreciate, at this stage I do not want to make a full reply. I hear what the noble Lord, Lord Borrie, had to say, but in response to the statement I would rather confer with my noble friend Lord Kingsland and then consider whether to return to the matter at Third Reading. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 40 to 51 not moved.]
Baroness Buscombe Baroness Buscombe moved Amendment No. 52:
Page 62, line 5, at end insert—
("Review of conditions giving rise to penalties.
27G.—(1) It shall be the duty of the Authority to keep under review any licence condition the contravention of which may give rise to a liability to a financial penalty under section 27A.
(2) Where any such licence condition—

(a) is expressed in insufficiently specific terms, or

(b) may otherwise be interpreted ambiguously or without legal certainty,

the Authority shall take appropriate steps to amend or revoke that condition in accordance with the procedures laid down in sections 23 to 26A."").
The noble Baroness said: My Lords, penalties for breach of licence conditions will be imposed on licence holders on a strict liability basis, yet licence conditions may not be expressed in terms which are precise or specific enough for the licence holders to be aware of every instance in which the authority may determine that a breach has occurred.
The drafting of such conditions will inevitably give rise to legitimate differences in interpretation between the authority and the licence holder. For example, some licence conditions require the licensee to use "best endeavours", while others require the licensee to "make sufficient arrangements" or to "take reasonable steps".
An ambiguous statutory provision would be interpreted by an independent court or tribunal and according to the cannons of statutory interpretation construed in favour of the defendant. However, in this case interpretation and adjudication will be by the authority—the body responsible for the drafting. If the penalty regime is introduced as proposed, the authority will be in a position to determine that a failure has occurred, notwithstanding the legitimate difference in interpretation, and impose a penalty. The amendment would require the authority to keep licence conditions under review and take appropriate steps to amend or revoke those which may lead to doubtful penalisation. I beg to move.
Lord McIntosh of Haringey: My Lords, I am entirely sympathetic to the intention of reducing the risk of unclear licence conditions which may lead to inadvertent contraventions and the imposition of financial penalties. However, we do not believe that the Bill runs that risk.
Our position is that, if a licence condition is worth having, it should be properly enforced. If the condition is unclear, that is something that should be taken up between the authority and the licence holder. It is not a matter which relates only to the issue of financial penalties but is fundamental to regulatory certainty. For example, if a company is in breach of its licence, the authority already has a duty to make an enforcement order stating what the licence holder must do, or must cease to do, in order to return to compliance. If the condition were thought to be unclear and companies claimed that it was lack of clarity that led to the breach, one would expect them to take up the matter with the authority, irrespective of the potential for financial penalties.
Let us not forget that if a company continued to contravene its licence conditions after it had been ordered to comply by the authority, it could face legal action for any loss or damage suffered by third parties—that is, basically the consumer—as a result of its failure to comply. Therefore, a considerable incentive already exists for the licence holder to clarify the precise effect of the licence conditions to which it is subject.
Of course, any penalty which is imposed in relation to contravention of licence conditions and other obligations must be reasonable in all the circumstances of the case. I believe that that is the mantra for this Bill. The circumstances of the case clearly would include the question as to whether it was clear that a company was in compliance. It would not be reasonable for the authority to impose a penalty on the licence holder for non-compliance if the provision in question was unclear. Such a decision would certainly be very likely to be challenged in the courts.
The financial penalties provisions in the Bill can be contrasted with the powers inserted in the Gas Act by the previous government. Under Section 28(7)(a) of the Gas Act the regulator could impose an unlimited, but appropriate, financial penalty on a company for a likely future breach of its licence conditions. Evidently there were no concerns about the clarity of licence conditions when those powers were introduced or the previous government would not have introduced them. It seems odd to assume that licences have become distinctly less clear as the regulatory system has evolved. We believe that the amendment is unnecessary.
Baroness Buscombe: My Lords, I am sorry that the Minister feels that the amendment is unnecessary. We have talked about this matter at great length with members and representatives of the utilities industries. The whole aspect of reviewing conditions which give rise to penalties is of deep concern to them. We are sorry that the Minister feels that it is unnecessary to respond. He referred earlier to "looking a gift horse in the mouth". Our interest is in good law. On that basis, I wish to test the opinion of the House.
6.23 p.m.
On Question, Whether the said amendment (No. 52) shall be agreed to?
Their Lordships divided: Contents, 64; Not-Contents, 133.

Division No. 3

CONTENTS

Astor of Hever, L.

Campbell of Alloway, L

Attlee, E.

Carlisle of Bucklow, L.

Biffen, L.

Clark of Kempston, L.

Blatch, B.

Colwyn, L.

Boardman, L.

Cope of Berkeley, L.

Brabazon of Tara, L.

Craig of Radley, L.

Bridgeman, V.

Dean of Harptree, L.

Burnham. L. [Teller]

Denton of Wakefield, B.

Buscombe, B.

Dixon-Smith, L.

Byford, B.

Eccles of Moulton, B.

1540

Elliott of Morpeth, L.

Norton of Louth, L.

Freyberg, L.

Park of Monmouth, B.

Glentoran, L.

Pearson of Rannoch, L.

Goschen, V.

Peel, E.

Hanham, B.

Perry of Southwark, B.

Haslam, L.

Peyton of Yeovil, L.

Henley, L.

Pilkington of Oxenford, L.

Higgins, L.

Rawlings, B.

Home, E.

Renton, L.

Hooper, B.

Roberts of Conwy, L.

Hunt of Wirral, L.

Seccombe, B. [Teller]

Kimball, L.

Shaw of Northstead, L

Knight of Collingtree, B.

Skelmersdale, L.

Lucas, L.

Stodart of Leaston, L.

Lyell, L.

Strathclyde, L.

McColl of Dulwich, L.

Swinfen, L.

Mackay of Ardbrecknish, L.

Thomas of Gwydir, L.

Marlesford, L.

Trefgarne, L.

Miller of Hendon, B.

Vivian, L.

Montrose, D.

Waddington, L.

Newton of Braintree, L.

Weatherill, L.

Northbrook, L.

Young, B.

NOT-CONTENTS

Acton, L.

Grenfell, L.

Amos, B.

Hamwee, B.

Andrews, B.

Hardy of Wath, L.

Archer of Sandwell, L.

Harris of Haringey, L.

Bach, L.

Harrison, L.

Barker, B.

Hogg of Cumbernauld, L.

Bassam of Brighton, L.

Hollis of Heigham, B.

Berkeley, L.

Howells of St. Davids, B.

Billingham, B.

Hoyle, L.

Blackstone, B.

Hughes of Woodside, L.

Blease, L.

Hunt of Chesterton, L.

Borrie, L.

Hunt of Kings Heath, L.

Bragg, L.

Irvine of Lairg, L. (Lord

Brett, L.

Chancellor)

Brooke of Alverthorpe, L.

Islwyn, L.

Brooks of Tremorfa, L.

Janner of Braunstone, L.

Burlison, L.

Jay of Paddington, B. (Lord

Carter, L. [Teller]

Privy Seal)

Chandos, V.

Jenkins of Putney, L.

Christopher, L.

Judd, L.

Clarke of Hampstead, L.

King of West Bromwich, L.

Clement-Jones, L.

Kirkhill, L.

Clinton-Davis, L.

Layard, L.

Cocks of Hartcliffe, L.

Lea of Crondall, L.

Crawley, B.

Levy, L.

Currie of Marylebone, L.

Lockwood, B.

David, B.

Lofthouse of Pontefract, L.

Davies of Coity, L.

Macdonald of Tradeston, L.

Davies of Oldham, L.

McIntosh of Haringey, L. [Teller]

Dean of Thornton-le-Fylde, B.

Desai, L.

McIntosh of Hudnall, B.

Dixon, L.

MacKenzie of Culkein, L.

Donoughue, L.

McNally, L.

Dormand of Easington, L.

Maddock, B.

Dubs, L.

Mar and Kellie, E.

Elder, L,

Massey of Darwen, B.

Evans of Parkside, L.

Merlyn-Rees, L.

Evans of Temple Guiting, L.

Miller of Chilthorne Domer, B

Evans of Watford, L.

Molloy, L.

Ezra, L.

Morris of Castle Morris, L.

Farrington of Ribbleton, B.

Morris of Manchester, L.

Faulkner of Worcester, L.

Murray of Epping Forest, L.

Filkin, L.

Nicol, B.

Gale, B.

Orme, L.

Geraint, L.

Parekh, L.

Gibson of Market Rasen, B.

Patel of Blackburn, L.

Gilbert, L.

Pitkeathley, B.

Gladwin of Clee, L.

Plant of Highfield, L.

Goodhart, L.

Prys-Davies, L.

Gordon of Strathblane, L.

Ramsay of Cartvale, B.

Gould of Potternewton, B.

Randall of St. Budeaux, L.

1541

Razzall, L.

Thornton, B.

Redesdale, L.

Tomlinson, L.

Rendell of Babergh, B.

Tordoff, L.

Rennard, L.

Turnberg, L.

Roper, L.

Turner of Camden, B.

Sainsbury of Turville, L.

Uddin, B.

Scotland of Asthal, B.

Walker of Doncaster, L.

Sharp of Guildford, B.

Warwick of Undercliffe, B

Shepherd, L.

Watson of Richmond, L.

Simon, V.

Whitaker, B.

Smith of Leigh, L.

Whitty, L.

Stoddart of Swindon, L.

Wilkins, B.

Stone of Blackheath, L.

Williams of Crosby, B.

Strabolgi, L.

Williams of Mostyn, L.

Strange, B.

Williamson of Horton, L.

Symons of Vernham Dean, B.

Woolmer of Leeds, L.

Thomas of Walliswood, B.

Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.
6.34 p.m.
Clause 62 [Obligation in connection with electricity from renewable sources]:
Baroness Byford Baroness Byford moved Amendment No. 53:
Page 65, line 42, at end insert—
("() Before making an order, the Secretary of State must consult those persons who appear to him to represent the generators of electricity from renewable resources—

(a) as to the current availability and projected generating capacity of the industry;

(b) as to the terms proposed in the order;

(c) as to any specific provisions that will be required in the order as to length and terms of any contracts to be made by electricity suppliers or otherwise;

(d) as to the sum and different such sums which are to correspond with the supply of a given amount of electricity generated in different ways under section 32C(2); and

(e) on such other matters, if any, as he considers appropriate,

to ensure that the provisions of the order will provide a suitable environment for investment in generating capacity for electricity from diverse renewable resources in order to meet the targets for production of electricity from renewable resources set by the Secretary of State.").
The noble Baroness said: My Lords, I shall speak also to Amendment No. 56. The Royal Commission on Environmental Pollution reported two weeks ago that unless carbon dioxide emissions are reduced by 60 per cent within the next 50 years, our climate will change markedly. The changes will not be pleasant. They will effectively destroy the British landscape and submerge large tracts of low-lying and coastal land, rendering obsolete all the energy currently being expended on the Countryside and Rights of Way Bill.
The report makes 87 recommendations. I am principally concerned today with those that urge the Government to replace fossil fuels with renewable energy sources, such as wind power, solar power, energy crops and biomass. The report says that growing crops for energy purposes should be regarded as a primary use of our agricultural land.
According to Robert Shrimsley of the Financial Times, the Government expect a surplus of £50 million on the climate change levy. That allegedly fiscally neutral tax will apparently swell the coffers of the
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Government, who are minded generously to dedicate half of the income to research into offshore wind power, which should get at least £10 million, and other renewable sources. I hope that that will not be heralded as new money. The Government are ending the non-fossil fuel obligations. Perhaps the Minister will assure us that the integrity of existing generators' NFFO contracts will be protected.
We must ensure that the Bill allows, even encourages, parties to enter into long-term contracts for renewable resources. I spoke on Second Reading against any let-out clause to permit suppliers to avoid meeting their 10 per cent obligation by purchasing notional renewable energy certificates from the Government, the proceeds of which purchase will be shared among other suppliers. Such a scheme surely means that if the use of non-fossil fuels is too expensive or difficult, everyone in the producer pool can ignore their obligation, pay their fine and sit back and wait for their share of everyone else's fine.
Similarly, the ability of electricity generators to switch off electricity production from renewable sources whenever demand drops must be checked. There must be an obligation to encourage parties to make long-term contracts with a variety of renewable sources and to honour them through thick and thin. When demand falls, it should be fossil fuels—oil, gas and coal sources—that are switched off. Unless and until the Government ensure that these things happen, it will be difficult, if not impossible, to increase the use of non-renewables in electricity generation.
The British Wind Energy Association has said that £10 million will not fund a farm, although it might be enough for a couple of offshore turbines. Private finance will not be forthcoming unless there is a rock solid legal framework and a government-supported commitment to the regular use of renewable sources over the long term.
The same argument applies to biomass. To raise its contribution to the same level as hydro power would require the planting of 100,000 to 150,000 hectares—250,000 acres in old money—of willow short rotation crop or miscanthus. That would be a huge increase on current plantings, using approximately half the land currently set aside. The money available under the rural development plan for England should allow us to achieve 20 per cent of the above figure. However, that fund lasts only until 2005–06, after which farmers have to go on nurturing their crops in the expectation of continuous demand.
The Department of Trade and Industry publication Financing Renewable Energy Projects makes crystal clear the assurances that banks and others will seek before they will lend the money. I shall highlight but three. First, on the power purchase agreement, the document says:
"This contract is the cornerstone of most renewable projects. The power purchaser must be creditworthy. Lenders will want the contract term to extend beyond the term of the loan. The contract will be assessed by the lenders for its economics and conditions that might cause early terminations—lenders will want the ability to cure any defaults rather than face termination".
Secondly, the document goes on to say:
"In a power purchase agreement the terms and price should be clearly defined and there should be no 'market out' clauses allowing for contract cancellation due to market conditions".
Thirdly, on page 14, it states:
"Repayment provisions are usually a function of the project economics and lenders will require full repayment of their loans well within the period of the major contracts, in particular the power purchase agreement (and/or the fuel waste supply contract for an energy-from-waste project). Lenders will normally be prepared to see their repayments tailored specifically to the cash flow profile of a project. A typical repayment would be approximately ten years from the start of the project, with a maximum of 13–15 years, depending on the term of major contracts".
I should like to ask the Minister whether the people who wrote that had anything to do with the drafting of the Bill.
The use of biomass will not only result in cleaner electricity and somewhere for the banks to put their millions. It will enable farmers to grow a crop instead of having set aside. It will mean also that the growing trees will consume the same amount of carbon dioxide as is produced when the wood is burnt during electricity generation.
In other words, biomass, seen from an environmental viewpoint, should have a neutral pollution effect. From an agricultural point of view, it will enable farmers to switch from the much maligned common agricultural policy while continuing to care for and protect our green and pleasant land. Moreover, the crop has significant wildlife and biodiversity benefits.
I do not feel that with so much at stake we should simply rely on the promises of the Secretary of State to take the necessary steps to ensure the future. Our amendments spell out what must be included in a clear obligation to consult all parties involved and only to make a renewable order that takes into account the requirement for a suitable environment for the investment.
Amendment No. 56 merely corrects the grammar. I beg to move.
6.45 p.m.
Lord Hardy of Wath: My Lords, I congratulate the noble Baroness, Lady Byford, on her presentation of the case. I do not wish to be excessively partisan but I am reminded of an occasion some years ago when I was in another place, taking part in a debate on the threat of global warming. There were, I think, 90 Conservative Members sitting opposite, all of whom were passionately opposed to public expenditure. I pointed out that about 80 of them represented constituencies which lay less than 100 feet above sea level. I said that I looked forward to the time when each of them, being opposed to public spending, would have a squeegee mop and seek to do a Canute to stem the approaching waters.
Things are changing and the stakes are now seen publicly to be very much higher. I certainly endorse the basis of the noble Baroness's excellent presentation. But I have an anxiety. As I see it, the contents of the
1544
renewables basket, in terms of that which is likely to be imminent, is far less varied than it should be. The noble Baroness referred to wind power, biomass and energy crops. I am fearful about the question of on-shore wind power. The noble Baroness referred specifically to off-shore wind power, which is a different matter.
I should hate to think that because we can move rapidly in relation to wind power there will be too many wind power eggs in the basket. I should hate to think that in 50 or more years time the visible legacy of this Government, who are doing such good work, will be seen as a proliferation of windmills disfiguring the glorious landscape of our country.
I spoke briefly on the matter in Committee. My noble friend may wish to reply to the fact that there sometimes seems to be an inflated view of the contribution windmills can make. I referred—and I mention it again—to one proposed wind farm which is under consideration in part of my own county. That would produce in a year only the amount of electricity which Drax power station, the cleanest of our power stations, produces in six days.
We must give greater priority to biomass. We could rapidly start to produce energy crops of enormous importance and make a marked contribution to achieving the Government's splendid target. But my anxiety is that we do not have the outlets or the generative capacity to use those energy crops which the noble Baroness mentioned. If the Government are to see their very commendable targets achieved, they must give a push to ensure that British agriculture can use land wisely.
Let us think about the enormous areas of land which have been set aside in recent years. We could actually put that land to a positive and valuable use. Therefore, we should be looking with more urgency at that aspect.
I ask my noble friend for an assurance. I hope that we shall not get into a situation where, in order to achieve the Government's splendid targets and not having developed alternative forms of renewable energy, local planning authorities would have their arms and elbows twisted to give favourable consideration to wind power developments which their communities do not like and for which posterity would not thank us if our landscape was disfigured as it would be.
I do not suggest that we should have no windmills on-shore. But the place for them is at sea. To allow a temporary need, which is unnecessary if we develop biomass properly, to disfigure part of our glorious heritage would be a mistake. That is best avoided by urgent action in this year of grace instead of allowing a delay, creating a problem which we may regret before very long.
Lord Renton: My Lords, the noble Lord has performed a valuable service by stressing the environmental factors which arise with regard to the production of electricity and other forms of fuel. We must prepare for events which cannot always be foreseen. Climatic change will be a vital factor. The

1545
change in scientific progress, which often comes at short notice and as a great surprise, is another factor which may have a bearing on the matter.
My noble friend who moved the amendment was right to stress what she did. It is an important amendment. It may be that there are some industrial interests which do not want the flexibility and adaptability which the amendment would provide. But it is extremely important that this clause, which is very necessary, should be strengthened and the position it has in mind made more flexible by the terms of the amendment.
As I said, it may be that some vested interests do not welcome it. On the other hand, one should bear in mind that the Country Landowners' Association, the National Farmers Union and some very important scientific industrial lobbies—British Biogen and Abre, the largest biomass generator in the United Kingdom—want this matter dealt with. I think that something should be done, in all parts of the House, to support the amendment moved by my noble friend.
Lord Ezra: My Lords, I support the amendment so ably moved by the noble Baroness, Lady Byford. Before the Secretary of State makes an order relating to the renewables obligation, it is important that, as well as consulting the authority and the council—which he is bound to do—he should also consult closely with the persons who are likely to generate the electricity from renewable sources. It seems to be perfectly logical and sensible that he should do so. Otherwise, there would be a lack of understanding of the scope of the issues involved. The amendment clearly sets out what the Secretary of State should seek to establish before he proceeds to make an order. Therefore, I warmly support the proposal.
Lord McIntosh of Haringey: My Lords, it is difficult to resist an amendment which is moved on the basis of preserving England's green and pleasant land. I find it difficult, on emotional grounds, to resist what is being said. However, there are different ways of preserving England's green and pleasant land. I agree with the noble Lord, Lord Hardy, that perhaps in some parts of the country, wind farms might not be the best way to do that.
The noble Baroness, Lady Byford, is right to be concerned that the new obligations in Clause 62, in connection with electricity from renewable sources, should provide the right investment environment. That is the concern of the Government, too. I assure the noble Baroness that consultation with renewable generators on all the issues listed in the amendment, with one exception, is already taking place, and will in future take place, under the provisions for consultation already in the Bill.
Before noble Lords look at the bottom of page 65 and see reference to the authority and the council, perhaps they would turn to page 66 and see that the consultation required has included, now includes, and will in future include such other persons, if any, as he
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considers appropriate. I assure all Members of the House that the consultation includes those named in the amendment, and will continue to do so.
The exception is the question of long-term supply contracts. As I explained in Committee, the Government simply do not accept that we should retain a feature of the old non-fossil fuel obligation mechanism—Government-mandated long-term renewable supply contracts—which runs contrary to the entire thrust of the Government's market-based policy for the new renewables obligations.
I turn to the broader underlying issue; that is, whether the new obligations as planned by the Government will deliver sufficient investment in renewables to meet the Government's renewables targets. The Government consulted last year on the kinds of support mechanisms which should be used to promote the development of renewable energy.
Among a number of diverse views in the responses to that consultation there was considerable support for an obligation on suppliers. That is why we are putting a long-term obligation on suppliers which will last until 2025. That will determine from the outset the profile of the obligation on suppliers, the eligible renewables, the buy-out mechanism and the mechanism for recycling buy-out receipts.
Renewable energy resources are limited in their availability and the rate at which they can be deployed. I think that that point was recognised by the noble Baroness, Lady Byford. The Government are therefore confident that such a long-term obligation and the premium price which renewables will attract will enable suppliers and generators to bring forward renewables capacity in the confidence that there will be a market for the product at prices that will attract appropriate levels of investment capital.
In line with the move to a market-based approach, the matter of individual contracts and the choice of technologies to meet the supply obligation is a matter properly left for negotiation between generators and suppliers. The Government recognise, however, that in order to meet the 10 per cent target it may be necessary to bring forward long-term technologies such as offshore wind power and energy crops, which were spoken to so eloquently. We are considering support for those technologies in the context of the spending review 2000.
The noble Baroness, Lady Byford, sought assurance that the integrity of the existing non-fossil fuel contracts would be secured. I am happy to give her that assurance. We are working with the industry to ensure the integrity of existing contracts. Indeed, that is the purpose of Clause 67, which we shall come to in due course.
As I have said, it is difficult when amendments are moved in such a way that opposition appears to be supporting sin rather than opposing sin. However, it is not as simple as that. Although most of the matters in the amendment are unexceptional, we think it is

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important to reassert our opposition to long-term contracts which appear to be implied by the amendment.
Baroness Byford: My Lords, I thank the Minister for his lengthy and detailed response. I also thank the noble Lord, Lord Hardy, for his comments; my noble friend Lord Renton and, indeed, the noble Lord, Lord Ezra. I shall read carefully what the Minister has said and discuss it with my noble friend Lord Jenkin, who is extremely sorry that he is not able to be in his place.
In addition, perhaps I may make two comments regarding onshore and offshore wind power, which were referred to in the Minister's response and in contributions by other noble Lords. The truth of the matter is that once such wind power stations are set up, they will cost nothing, whereas the planting of non-food crops involves ongoing costs. I would be grateful if the Minister could consider that point before Third Reading. There is a difference between the two. Wind can be captured at no cost, but growing crops have to be cared for and there are continuing costs.
Lord Hardy of Wath: My Lords, the noble Baroness is right. However, construction costs can be considerable, and there are ongoing costs. There is the problem of noise and the problem of people who live nearby who did not want wind power stations near their homes in the first place. In some cases, there is a great deal of bird mortality as a result of the operation of windmills. From time to time, the sails fall off. Wind speeds can sometimes be so high that they cannot possibly operate and produce electricity as they are designed to do.
Baroness Byford: My Lords, I am grateful to the noble Lord. He perhaps adds to the point I make. I referred earlier to non-food crops produced by farmers on set-aside land. I also said that that would obviously encourage wildlife and biodiversity. The comments of the noble Lord add to my argument, which I am delighted to hear.
Lord McIntosh of Haringey: My Lords, I believe that the noble Baroness invited me a moment ago to write to her between now and Third Reading. Time is short, but if she has not seen the leaflets on renewables published by the Department of Trade and Industry, I shall certainly send them to her.
Baroness Byford: My Lords, I thank the Minister. However, I am sure that I have seen the leaflets. Perhaps I may also mention one matter following the Minister's response.
In response to an earlier amendment and indeed, in the Minister's response to me, it was said that market forces would perhaps have a bearing on this matter. However, earlier, the Minister stated that market forces could not be entirely replied upon. Hence, I press the point that the amendment is extremely important.
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I thank all noble Lords who have taken part in the discussion. I shall discuss the matter with the noble Lord, Lord Jenkin. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7 p.m.
Baroness Byford Baroness Byford moved Amendment No. 54:
Page 65, line 42, at end insert—
("() Operators of generating stations producing electricity from renewable sources shall be permitted to supply electricity produced by the generating stations to more than one party.").

The noble Baroness said: My Lords, in moving Amendment No. 54 I shall speak also to Amendment No. 59.
Amendment No. 54 seeks to allow small generators to obtain the best possible price for their output. A generator using wind power, for example, will not be able to predict exactly how much output he will have available at a given time in the future. He is required to contract to supply three-and-a-half hours ahead. If he contracts, say, for 20 kilowatt hours and can only make 18.3, he falls foul of what is called the "balancing mechanism" and is charged heavily for his failure.
Amendment No. 54 will allow each operator to calculate his minimum output, sell that at price X and then contract with another company to receive anything above X. The company who takes that excess may be a supplier, it may be a consolidator or art electricity broker, and may be in the local area or anywhere in the country. The advantage to the generator is that he avoids the penalty of under-producing and may obtain a premium for the fact that his output comes from renewable sources and can be counted by an end-user towards avoidance of the climate change levy.
This arrangement was endorsed by Ofgem/DTI and in the conclusions of its document of October 1999 on page 84, Section 75, it said,
"The new balancing mechanism unit splitting arrangements will allow … a fixed volume to be sold to a supplier within the same Grid Supply Point Group. Since the output contracted is fixed and secure, the price achievable for this output should be attractive … The remaining unpredictable proportion … could then be managed either directly by the generator or by using the services of a supply aggregator acting at either a local or national level".
I understand that the reason this option is not on the face of the Bill is that major alterations would have to be made to what is called the "master registration agreement". Global warming and the need to use renewable sources is too serious a matter to allow substantial changes to an operating agreement to stand in the way.
Amendment No. 59 will enable renewables generators to ensure that they can obtain arty renewables premium, even if they sell their physical output to a supplier who does not need to meet the renewables obligation. Sales by generators might be made at brown electricity prices and the certificate sold separately to a supplier who needs it to make up any difference between green and brown electricity prices. Some customers want to buy green power. The "greenness" of the electricity from renewable energy

1549
sources has a value that is separate from, or additional to, the value that the customer places on the energy. One could say that renewables generators produce energy and greenness as two separate outputs. Amendment No. 59 enables them to sell those outputs separately. I beg to move.
Lord McIntosh of Haringey: My Lords, I shall have to read carefully in Hansard what the noble Baroness, Lady Byford, said. Some of her comments do not strike a bell with me at all in relation to these two amendments. If I may, I shall read again what she said and write to her on the issues. I do not believe I am capable of replying to them at the moment. However, I am capable of replying to the amendments and I shall try to do that.
Amendment No. 54 is intended to allow renewables generators to sell their output to more than one supplier. Nothing in the new renewables powers under Clauses 62 to 65 places any obligations or restrictions on generators at all. All obligations are on suppliers. Therefore generators are free to do what they like with the electricity they generate. It is purely a matter of choice and contract as to how many parties they choose to sell their output to.
Amendment No. 59 is intended to allow generators to sell their green certificates separately from their physical output if they wish. Clause 64, to which the amendment relates, is already drafted so that they can. It is fundamental to the certification system that a certificate may be traded separately from the physical electricity to which it relates. There would be no point in having such a provision otherwise. That is why Clause 64 is drafted the way it is. It simply allows the authority to certify that a generating station has generated renewable electricity that has been supplied to customers in Great Britain. A supplier may subsequently present such a certificate to the authority as evidence that he has fulfilled such amount of his obligation under Clause 62 as is certified, irrespective of who has actually been involved in the purchase of the physical output of the generator in question. Indeed, the Government's intention was indicated in Conclusions in Response to the Public Consultation, published in February this year, which stated on page 11 that,
"the trade in green certificates may be entirely separate from trade in the electricity that gave rise to their issue".
Therefore, although I may not be able to satisfy the noble Baroness, Lady Byford, in terms of the issues raised in her speech, I hope that she will be satisfied that these amendments are unnecessary.
Baroness Byford: My Lords, I find myself in the unusual position of accepting what the Minister said but acknowledging that we may not be speaking about the same things. It would seem logical at this stage, therefore, for me to withdraw the amendment. We will both then have a chance to look in Hansard at the other's contribution. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Byford Baroness Byford moved Amendment No. 55:
Page 65, line 42, at end insert—
("() The making of an order will not be dependent on the coming into effect of separate distribution and supply licences.").
The noble Baroness said: My Lords, I hope to do better with Amendment No. 55. There appears to be doubt about the date at which this obligation comes into force. It was to have started in 2003. But my latest information is that it will happen next year. Perhaps the Minister will clarify that point.
Whatever the implementation date is, it is clear that it will be some way ahead. It does not make sense to hold a renewables order until all public electricity supply companies have been split. It should be possible for the Government to ensure that an order applies to the public electricity supply companies in relation to their supply function even before they are formally split. I beg to move.
Lord Renton: My Lords, I want to add just a few brief words to what my noble friend has already said. Amendment No. 55 has the advantage of adding to the main purpose of the Bill, which is to enable adaptability to take place in the changing circumstances of the future. It would be a great pity if something to the effect of this amendment were not included in the Bill.
Lord McIntosh of HaringeyMy Lords, I recognise that Amendment No. 55 addresses a real issue. This amendment is aimed at allowing a renewables order to be put in place before the introduction of separate licensing of supply and distribution. It reflects a concern that there may be an interval between the introduction of separate licensing of supply and distribution and a renewables order. As the clause is currently drafted, we cannot make a new obligation until the separation has taken place. To that extent the noble Baroness and I are in agreement. This is because the clauses are drafted so as to place the obligations on the new category of electricity suppliers as they will exist only after the separation. But I want to reassure the noble Baroness that this will not be a problem in practice.
We aim to introduce a new renewables order as soon as we can, consistent with the timetable we are establishing for full and proper consultation on the detail of the order. Equally, we will waste no time in bringing in the separate licensing of supply and distribution. That is why the Government tabled Amendments Nos. 113 and 114 for consideration today which will allow this to happen before the transfer schemes under paragraph 2 of Schedule 7, which will split the public electricity suppliers into separate supply and distribution companies, have been approved by the Secretary of State.
As a result of these amendments, the only remaining important matter to be settled before we can make the separation will be to finalise the new licence conditions for supply and distribution. And we are already well

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down the path towards that. Therefore I am confident that the separation of supply and distribution will not be the cause of significant delay to the coming into effect of a new renewables order. But even if it were a matter of a few additional months, the practical effect would not be significant. What is at issue here is the legal starting point of a long-term obligation that the Government have said we intend to impose over a period up to 2025. Once we have finished our consultation, it will be quite clear to everyone what the obligation will be and the period over which it will be in effect. So a few months' difference in the actual date on which the order comes into effect would hardly impact on the development of the arrangements to meet the obligations under it. I hope that the noble Baroness, Lady Byford, will accept that this is a problem which does not in practice need to be addressed by this amendment.
Baroness Byford: My Lords, I thank the Minister for those comments. However, I am not sure how to take his response. He has not disagreed with the amendment; therefore I am rather surprised that the Government have not accepted it, particularly as the Minister mentioned that they would introduce a renewables order. According to my humble thought processes it does not follow that the Government have not accepted the amendment. I am somewhat disappointed at that.
Lord McIntosh of Haringey: My Lords, with the leave of the House, I apologise if I have not made myself clear. We have to separate the distribution and supply licences because one cannot introduce an order which applies to the old organisation of the industry; it must apply to licensees as they will exist after the coming into effect of the Bill.
Baroness Byford: My Lords, I understand what the noble Lord is saying. But I believe that he mentioned a time lapse before the separation can take place which could delay the introduction of a renewables obligation. However, I shall read carefully in Hansard what the Minister has said. At this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Byford Baroness Byford had given notice of her intention to move Amendment No. 56:
Page 65, line 43, at end insert ("also").
The noble Baroness said: My Lords, I spoke to this amendment when I moved Amendment No. 53. However, the Minister did not respond to Amendment No. 56 at that point. I am not sure where that leaves me.
Noble Lords: Do not move it!
Baroness Byford: I shall not move Amendment No. 56.
[Amendment No. 56 not moved.]
Clause 63 [Orders under section 32: supplementary]:
Baroness Byford Baroness Byford moved Amendment No. 57:
Page 66, line 23, after ("for") insert ("electricity generated from different specified descriptions of renewable resource both concurrently and for").
The noble Baroness said: My Lords, the Bill as drafted does not properly differentiate between different types of renewable electricity. As my noble friend Lord Jenkin mentioned at Second Reading, our fear is that this will lead to the development of cheaper renewable energy sources such as onshore wind and energy from waste.
The problem is that considerable investment is needed in order to bring forward new renewables—we mentioned these earlier—including offshore wind and biomass. This amendment highlights the opportunity for a renewables order to be "banded".
I have been advised by the CLA, the NFU and the British Biogen, the trade association for the emerging biomass industry, that banding is essential in order to secure the necessary investment, particularly in biomass. It is proposed that an order should require suppliers to purchase a proportion of the renewables obligation from new sources.
The Minister confirmed in a meeting following Second Reading that the Government favour a market solution to developing renewable energy. In the same breath, the Minister confirms the Government's willingness to provide substantial grant aid for new renewables. There is a logical inconsistency in this approach. Our alternative suggested in the amendment is to have a double market approach: one for old renewables and one for new ones. This will ensure that the industry is enabled to finance its own R&D, producing much needed savings in public expenditure. I beg to move.
The Duke of Montrose: My Lords, I support the amendment. There is a need for research to develop a variety of renewables. We should consider how we can further assist research into micro and hydro energy, for example, in addition to the other sources we have discussed tonight.
Lord Ezra: My Lords, I too wish to support the amendment. It is important that a variety of renewables should be encouraged and stimulated. Market forces will not necessarily achieve that in all cases.
7.15 p.m.
Lord McIntosh of Haringey: My Lords, I assure the noble Baroness, Lady Byford, that the amendment is not necessary. If we wanted to set specific obligations for particular technologies, which is the purpose of her amendment, we can already do so using the powers in new Section 32A(1)(b),(c) and (d) in Clause 63. New Section 32A(1)(b) states,
"that only electricity generated using specified descriptions of renewable source is to count".
New Section 32A(1)(c) states,
"that only electricity generated by specified descriptions of generating station is to count".

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New Section 32A(1)(d) states,
"that a specified minimum amount of electricity generated … is to be counted".
Therefore, all of the measures that the noble Baroness seeks to provide for are already provided for in the Bill.
The amendment is contrary to the thrust of the Government's renewables policy, which is to leave the market, not the Government, to pick the winners. We recognise that this will lead suppliers to go for the immediately accessible technologies first. That is right and proper. We want to achieve our renewables targets as efficiently as possible to fight global warming.
I can confirm—the noble Baroness, Lady Byford, will recall this from the Committee stage—that we are looking at the scope for making limited additional government support available for offshore wind and energy crops. One possibility, though not the only one, is to draw some funding from the £50 million Climate Change Levy Fund. This and other options will be pursued in the Spending Review 2000.
I do not see any conflict between going first for those technologies which will have a quicker impact on the environment and the climate and providing resources for other renewable energy sources which may take longer to develop. I believe that the longer term renewables technologies will benefit from the renewable obligations too. As electricity suppliers move towards the 10 per cent target, they are likely to find that there is insufficient availability of cheaper renewables and they will need to look increasingly to offshore wind and energy crops to meet their obligation. I believe that it is recognised that these energy sources cannot be brought in overnight. It would be prudent therefore for energy suppliers to look ahead now to ensure that these technologies will be brought forward on a timescale and in sufficient quantities to meet their needs.
On the basis that provision is already made in the Bill to meet this amendment's objectives, I hope that the noble Baroness will not press it.
Baroness Byford: My Lords, I thank the Minister for those comments. I am slightly alarmed by his reference to the market picking the winners. I find that disturbing, as what one person might consider to be a winner one year may not prove to be a winner in the long term in terms of providing something that is beneficial to the country as a whole.
I refer to willow crops and energy crops. These crops may take a little longer to become established. The Arbre plant is still in its early stages. Those kind of plants need investment. Along with my noble friend Lord Jenkin, I have tried to ensure that we try to encourage a greater variety of renewable resources. I believe that the Government recognise that farming has gone through difficult times. If we are to allow the market to pick the winners, we may not get any winners at all. If we do, they may be those big, unsightly wind turbines about which the noble Lord, Lord Hardy, has reservations.
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I have spoken at length on this matter. I am disappointed with the Minister's response but at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 58:
Page 67, line 27, at end insert—
("if the Secretary of State is of the opinion that the differences are such that no electricity supplier would he unduly disadvantaged in competing with other electricity suppliers").
The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 63 and 64. Amendment No. 58 fulfils the commitment I made in Committee on 21st June when I said that I would bring forward a government amendment in response to Amendment No. 241 in the name of the noble Lord, Lord Kingsland. This amendment has the effect that the Secretary of State may only make different provision for different suppliers if he is of the opinion that no supplier would be unduly disadvantaged in competing with other suppliers by his making different provision. I believe that the amendment is consistent with the objectives of the original amendment proposed from the Benches opposite and I ask the House to support it.
Amendments Nos. 63 and 64 are two small, linked technical amendments which simplify the drafting of the renewables provisions without altering their substance. They delete a specific power to amend the NFFO reference price because the powers under Clause 67 are sufficient to achieve the same objective. The amendments will also simplify the transitional arrangements made under the clause. I beg to move.
Lord Renton: My Lords, it may be that I am being a little dense. Can the noble Lord explain whether the qualification in Amendment No. 58 applies to both paragraphs (a) and (b) or only to (b)?
Baroness Buscombe: My Lords, I support Amendment No. 58 because the Minister has stated that it is in response to our Amendment No. 241 tabled at Committee stage and debated in full at that stage. We welcome the response.
Lord McIntosh of Haringey: My Lords, I am grateful for that. In answer to the noble Lord, Lord Renton, the qualification applies to both paragraphs.
On Question, amendment agreed to.
Clause 64 [Green certificates]:
[Amendment No. 59 not moved.]
Clause 65 [Alternative way of discharging renewables obligation: payments]:
Baroness Byford Baroness Byford moved Amendment No. 60:
Page 68, line 14, after ("may") insert ("in the circumstances set out in subsection (1A) below").
The noble Baroness said: My Lords, in moving this amendment I shall speak also to Amendment No. 61. Clause 65, as drafted, is no doubt intended to protect the consumer from the failure of the market in

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renewable energy or, as we hope, both the market in new and old renewable energy. I understand the Minister's concern for the fuel poor and indeed share it. However, the opportunity for suppliers to buy their way out of the obligation must be carefully controlled in order to ensure a stable market. In fact, there is no need for the mechanism until or unless there is market failure. This amendment requires the cost of electricity to have become excessive in the light of the need for renewables before the buy-out mechanism kicks in. I beg to move.
Lord McIntosh of Haringey: My Lords, I entirely support the noble Baroness's concern that the new renewables obligation should be met by the generation of renewables and not by the buy-out mechanism as far as possible. But these amendments would have the opposite effect of what is intended. They would allow the use of the buy-out mechanism under Clause 65 for renewables only after the event and only if the price of renewables was judged to be excessive.
The Government's intention is to put in place a long-term renewables obligation lasting until 2025. This will determine from the outset both the level of the obligation and the level of the buy-out price. Under our plans everyone will know exactly what the cost level will be beyond which suppliers will not be obliged to purchase renewables. Only by doing this can we provide the certain and stable regulatory framework against which suppliers will be able to plan to meet their obligations and generators, together with their financiers, respond by constructing the necessary plant.
However, the noble Baroness's amendment would leave the sword of Damocles hanging over the heads of the industry. Supplies and generators would never know when a price cap would be introduced, or at what level, so that they and their bankers would never have a certain basis on which to price their projects. That would be regulatory uncertainty at its worst. It would bear particularly badly on the more expensive, less near-market technologies that have been so rightly raised. That is because they would be operating closer to the cost margin at which this delayed price cap might suddenly be introduced. Nothing could be more calculated to deter long-term agreements for renewables, which was the concern of the noble Baroness, Lady Byford, when we discussed Amendment No. 53, than the risk that the underlying pricing assumptions could be suddenly overturned by a future price cap.
Therefore, I urge the noble Baroness to accept that the question of the level of the buy-out price under this clause has to be settled in advance and not left hanging, as this amendment would require. The level of the buyout price will be a key element of the further consultation which we shall carry out before introducing the new renewables obligation.
Baroness Byford: My Lords, I thank the Minister for his response. I shall look very carefully at what he has said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 61 not moved.]
Lord Ezra Lord Ezra moved Amendment No. 62:
After Clause 65, insert the following new clause—

Utilities Bill

  ELECTRICITY FROM COMBINED HEAT AND POWER AND CLEAN COAL TECHNOLOGY.
  (" . In making an order and other arrangements under sections 32, 32A, 32B and 32C of the 1989 Act the Secretary of State may also make provision for—

  (a) electricity generated by any form of combined heat and power stations:

  (b) electricity generated by approved systems of clean coal technology.")

  The noble Lord said: My Lords, the purpose of this amendment is to extend the renewables obligation to include combined heat and power and clean coal technology. Perhaps I may deal first with combined heat and power. The Government's support for that way of making better use of the electricity generating capacity in the country is well known. They have set an objective, as they have for renewables, for the year 2010. In discussions I have had with the noble Lord since Committee stage he has assured me that CHP will be included in the energy efficiency obligations which are dealt with in Clauses 70 and 99. That is one kind of obligation contained within this Bill. I am quite satisfied about that.
  However, the purpose of this amendment is to make sure that CHP would come into the other kind of obligation, the renewables provision, which imposes an obligation on suppliers to take certain types of electricity. As regards renewables, my proposal is that it should be extended to combined heat and power. That is the simple proposition that I make. In view of the Government's known support for CHP, I believe that it should come into both sorts of obligations contained in this Bill as regards the energy efficiency obligation and the proposed extension of the renewables obligation. That is the proposition as regards combined heat and power.
  The proposition as regards clean coal technology we touched on earlier. We ought to be moving in the direction of having plant operating on clean coal technology systems in this country. The noble Lord, Lord Dormand of Easington, is one of a number who have been fighting the battle for years. We need to create a climate in which that type of activity can be stimulated.
  As I mentioned at Committee stage, I tried some years ago to persuade the government to extend the non-fossil fuel obligation to include clean coal technology. That was on the point of being agreed, but then it failed. It was a Private Member's Bill and these days the fate of such a Bill is uncertain. It is another way in which the creation of this type of plant could be brought about. If there were an obligation to take a proportion of electricity produced by clean coal technology, then we would get the plant to produce it. There is not a situation at present in which one would put money into the venture because, on a straight comparison with other forms of energy generation, it would be too expensive. And so it is with regard to renewables. That is the whole reason for the renewables obligation. Therefore, I strongly

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  propose—I hope that it will gain support—that the renewables obligation be extended both to combined heat and power and to clean coal technology. I beg to move.
  Lord Hardy of Wath: My Lords, I endorse the comments of the noble Lord, Lord Ezra. The logic of the case for combined heat and power is clear. It is both sensible and economic. There are also double benefits from combustion.
  So far as concerns clean coal technology, we debated this matter earlier and I certainly do not wish to delay the House. I accept that the Government recognise that clean coal technology is desirable and that there could be a substantial international market for its development. The point I wish to make is that, if our mining engineering and related industries are to take advantage of that opportunity, there has to be a home base of a sufficient size to provide the demonstrations required to attract an international audience.
  In her admirable speech, the noble Baroness, Lady Byford, was sweepingly condemnatory of fossil fuels. The raw consumption of fossil fuels which emit noxious gases must come to an end. But, whatever we do, the world will continue to burn vast quantities of coal. If we were to shut down all our pits and coal-fired power stations tomorrow, it would make very little difference to the total amount of coal which will be burnt internationally. It is therefore highly desirable for a number of countries to ensure that clean coal technology is supported not only at its research stage but at its development stage, in order to demonstrate to the world that the planet need not continue to be polluted on the scale that it inevitably will be if leads are not taken.
  Britain is in a position to give a lead. I hope that the Government will take a favourable view of the case that the noble Lord, Lord Ezra, has been advancing for a very long time, with the support of a number of my noble friends, of whom the noble Lord, Lord Dormand of Easington, is a notable example. I hope that the Government will recognise that we have an international opportunity. We may also be able to respond to an international obligation in a material and sensible way if the views expressed in the amendment are considered sympathetically.
  7.30 p.m.
  Lord Dormand of Easington: My Lords, my name has been mentioned twice in connection with this amendment, which I strongly support. The arguments need not be repeated; the onus is now on the Government to disprove the case for clean coal technology, which has been made for a number of years.
  Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord, Lord Ezra, and others for the time that they have taken in discussions with me and my officials between Committee stage and now. The meeting we had last Thursday—which ended with us walking out and leaving his advisers talking to DTI
  1558
  officials—was particularly helpful. It provided more light than we are often able to achieve across the Floor of the House. As a result of those meetings, I have twice written to the noble Lord: once on combined heat and power on 29th June, and once on clean coal on 3rd July. Those letters are in the Library of the House.
  Let me restate what I said in the letter on combined heat and power. I can confirm that the Bill already contains a power which would allow the Secretary of State to set a specific obligation for combined heat and power if he wished. That is what subsection (a) of the noble Lord's amendment would provide. This is by virtue of new Section 41A(5)(b) as introduced by Clause 70 of the Bill, which applies to electricity—if that is difficult to find, it is on page 73, line 39—and there is a gas equivalent under Clause 99.
  This subsection provides that the Secretary of State may specify the action which qualifies for the purpose of meeting an energy efficiency target. The effect of this is that he could set an obligation for requiring suppliers to meet energy efficiency targets and specify that the only way of meeting the targets is by installing or otherwise procuring CHP. New Section 41 A(9), and its gas equivalent, removes any possible doubt about CHP being able to count towards targets in this way. But I have to say again that we do not intend to use the powers in this way. This is because we are already putting in place an extensive range of measures in favour of CHP, which I explained in Committee and in my letter.
  I wrote to the noble Lord, Lord Ezra, on 3rd July to explain the context of the Government's policies for clean coal. I can confirm the main points of what I said. The Government's policy with regard to the coal industry should be seen in the context of the Government's central energy policy objective to ensure secure, diverse and sustainable supplies of energy at competitive prices. Our October 1998 White Paper, Conclusions of the Review of Energy Sources for Power Generation, highlighted the need for an acceptable level of diversity and saw coal as a main contributor to diversity of UK electricity production into the foreseeable future. That is why the Government were so concerned that distortions in the electricity market were pushing out existing coal-fired plant at the expense of new gas build and undertook a programme of reform to remove those distortions.
  That programme will be complete with the introduction of the new electricity trading arrangements later this year. At that point we will be able to relax the stricter consents policy for new gas-fired power stations that we introduced to safeguard diversity while the reforms were undertaken. We recognise that the restructuring of the market and the lifting of the stricter consents policy will be a challenge for the UK coal industry, and we are in discussion with the European Commission about a programme of state aid to help the industry through this period of restructuring.
  The rationale for government support for cleaner coal technology R&D fits firmly within this policy framework. A key purpose of the R&D programme is

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  to identify the extent to which all the extensive coal resources of the UK can be used as a source of energy in the future. Both coal bed methane and underground coal gasification technology offer some promise to contribute to future energy supply in the longer term if they can be successfully developed commercially on a large scale.
  A further element of the rationale of the programme is the contribution that cleaner coal technology would make towards achieving global environmental goals as part of the climate change programme. My noble friend Lord Hardy is right about that. In the UK, the availability of gas as a fuel for electricity generation means that clean coal does not offer environmental advantages other than over existing coal capacity. Any clean coal plant would probably displace existing coal plant, at some cost and without substantial efficiency gain.
  However, coal used for electricity generation is expected to grow substantially in developing countries and the efficiency gains to be derived from improvements to existing coal plant and the adoption of new advanced cleaner coal technology plant is expected to make a substantial difference to emissions at the global level, again a point referred to by the noble Lord, Lord Hardy. The R&D programme will underpin substantial export opportunities, with business and employment benefits for UK companies.
  But we do not see the need for support for demonstration projects as a priority at present. There are a number of commercially proven cleaner coal technologies available from a number of suppliers, both in the UK and overseas. They do not need to be demonstrated again on a commercial scale and subsidised by the taxpayer. Our funds are best channelled to R&D for more advanced technologies capable of offering substantial efficiency and environmental benefits.
  However, the Foresight Task Force identified a case for demonstration after about 2005, and the Government undertook in their October 1998 White Paper to re-examine the position in about three years' time. We shall honour that commitment and take account of all the points that have been raised in debate, including the potential export benefits.
  I trust that I have given a sufficiently clear statement of the Government's position on the issues of combined heat and power and clean coal to enable the noble Lord, Lord Ezra, not to press his amendments.
  Lord Ezra: I thank the noble Lord for that full statement, which he sent me in writing earlier. So far as concerns CHP, I am pleased that he has confirmed that the Government have a reserved power to introduce specific obligations. It was never my intention to press for such obligations to be imposed at the present time. Obviously the position will remain under review, and if at any time it should be desirable for such obligations to be imposed, no doubt we shall exert suitable pressure on the Government to do so. I am satisfied with the CHP position as the Minister has explained it.
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  However, we part company on the issue of clean coal technology. The Government fully support the concept. They fully recognise the global implications. They support further investment. But, unfortunately, what they will not do is support—what those of us who feel strongly about clean coal technology support—the construction of demonstration plants. Every attempt made so far to bring that forward has failed. We now have a date of 2005 when this matter might be reexamined. I do not find that very satisfying. Nonetheless, at this stage I do not wish to press the point any further. We may come back to it. We certainly will on different occasions. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 66 [Modification and abolition of fossil fuel levy]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 63:
  Page 68, line 43, leave out subsection (1).
  The noble Lord said: My Lords, Amendment No. 63 has already been spoken to. I beg to move.
  On Question, amendment agreed to.
  Clause 67 [Supplementary]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 64:
  Page 69, line 29, leave out from ("cost") to ("referred") in line 30.
  The noble Lord said: My Lords, Amendment No. 64 has already been spoken to. I beg to move.
  On Question, amendment agreed to.
  Clause 69 [Help for disadvantaged groups of electricity customers]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 65:
  Page 71, line 43, after ("of") insert ("the conditions of").
  The noble Lord said: My Lords, Amendment No. 65 has already been spoken to. I beg to move.
  On Question, amendment agreed to.
  Clause 70 [Energy efficiency requirements for electricity distributors and suppliers]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 66:
  Page 73, line 18, leave out from beginning to ("that") in line 28 and insert—
  ("() An order under this section may specify criteria by reference to which the Authority is to determine energy efficiency targets for the electricity distributors or electricity suppliers on whom obligations are imposed by the order.
  () The Secretary of State and the Authority shall carry out their respective functions under this section in the manner he or it considers is best calculated to ensure").
  The noble Lord said: My Lords, in moving Amendment No. 66, I should like to speak also to Amendments Nos. 67, 88, 89 and 91. Although there are many words in these amendments, I can assure the House that they make only small, important, changes to the energy efficiency provisions of the Bill. Amendments Nos. 66 and 88 do two things. First, they allow the Secretary of State to tell the authority what

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  criteria to use in splitting up the obligations into separate targets for individual suppliers. That means that, rather than leaving it to its discretion, the Secretary of State could tell the authority that individual suppliers should be given a target in proportion to their market share. He could also specify how market share was to be calculated. The Government will be consulting further on all these issues before making orders under the provisions.
  Secondly, consistent with the other provisions of the Bill, they make it clear that the duty to avoid distorting competition is a duty that is to be exercised in the judgment of the Secretary of State or the authority. At present the clauses are silent on the issue of whose judgment is involved.
  Amendments Nos. 67 and 89 make it clear that trading of obligations can take place between gas and electricity obligations holders rather than simply among gas obligation holders on the one hand and electricity holders on the other. That flexibility to trade obligations between gas and electricity is essential to the Government's objective to provide scope for participants in the market to develop the most cost-effective mechanisms for meeting the Government's energy efficiency obligations.
  The same objective gives rise to Amendment No. 91. That provides a power so that the Secretary of State can set one global energy efficiency target that can then be applied separately under the separate energy efficiency provisions for gas and electricity. He can provide for the authority to apportion the global target between gas and electricity and he can specify to the authority how that division is to be made. The reason we have had to introduce a separate order-making power to achieve this arises from the structure of the Bill. In general, the Bill works by amending the existing gas and electricity legislation. This is the case for the energy efficiency provisions. Therefore, in order to have the provision which links the separate gas and electricity legislation it is necessary for it to be a free-standing provision of the Bill. That is what we have done. I beg to move.
  On Question, amendment agreed to.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved amendment No. 67:
  Page 74, line 34, after ("supplier") insert ("or to a gas transporter or gas supplier (within the meaning of Part I of the Gas Act 1986)")
  1986 c. 44.
  The noble Lord said: My Lords, I have just spoken to Amendment No. 67. I beg to move.
  On Question, amendment agreed to.
  Clause 74 [Gas licence conditions]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 68:
  Page 77, line 36, leave out ("inserted") and insert ("substituted").
  The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
  On Question, amendment agreed to.
  Clause 76 [Gas transporters]:
  Baroness Buscombe Baroness Buscombe moved Amendment No. 69:
  Page 78, line 3, leave out subsection (1).
  The noble Baroness said: My Lords, in moving Amendment No. 69, I should like to speak also to Amendment No. 74. With regard to Amendment No. 74, the words,
  "it considers it appropriate to do so".
  in Clause 77 provide an enormously wide discretion when one considers the need for the 20 to 25-year investment security required by independent public gas transporters. Independent public gas transporters have only limited opportunities to legally cross-subsidise. If a project fails to meet its target return because its infrastructure has been bypassed by a competitor, the shortfall cannot readily be recovered from elsewhere without breaching licence obligations.
  The only remedy would be to raise prices to the domestic consumers already connected at the site. That cuts directly across the objectives of independent public gas transporters, which have been to achieve lower prices on individual developments through local scale economies. It would also put the authority in breach of its proposed duty to protect the interests of consumers and, if prices were not increased, its current duty under Section 4 of the Gas Act to ensure that licensees can finance the carrying on of their activities.
  Since independent public gas transporters only win the project following an intensely competitive bid process, the outcome could be that the most efficient pipeline operators are punished at the expense of the least efficient. Alternatively, the outcome could be that consumers bear the brunt. Given the enormous width of the clause, it is difficult currently to predict how the discretion might be exercised.
  An independent public gas transporter could win a development by being the most efficient in the bid process but then lose most of the connections, not through its own lack of efficiency, but because of price distortions generally. Given the current duty under Section 9 of the Gas Act for economy and efficiency, this gives perverse incentives.
  The problem is exacerbated with investment already sunk by independent public gas transporters under the current competitive regime. Since the costs are sunk—they could hardly pull up the pipes—the new legislation will have a retrospective effect.
  I turn to the drafting. The amendment seeks to preserve the unfettered discretion which the authority must have by law. It introduces, however, a device whereby the discretion may be exercised in a balanced and informed way by reference to guidelines. I beg to move.
  7.45 p.m.
  Lord McIntosh of Haringey: My Lords, was the noble Baroness speaking only to Amendments Nos. 69 and 74 and not to the other amendments in the group?
  Baroness Buscombe: My Lords, I was perhaps a little unclear. My intention was not to move

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  Amendments Nos. 69 to 73, but I thought that I had to move Amendment No. 69 in order to get to Amendment No. 74. So I have spoken to Amendment No. 74.
  Lord McIntosh of Haringey: My Lords, I am grateful for that explanation. It does not make life any easier for me but I shall do my best. In order to make my response to Amendment No. 74 comprehensible, I have to refer briefly to Amendments Nos. 69 to 75, which refer to Clause 76. It is important to establish that what we are doing in this part of the Bill is to remove the geographic exclusivity for gas transporters. At the moment they have licensed areas and no one else is allowed to intervene in their licensed areas. We are saying that competition has to have force and that with various provisos set out in these clauses they can no longer have that exclusivity. Clearly, gas transporters do not like that. They would like to maintain the monopoly position that they have had in their various areas. But we think that it is right to have the objective of ending geographic exclusivity by removing the requirement that public gas transporters' licences may not include areas which are specified in the licensing of other public gas transporters. They object because it increases competition. We hope that it will reduce the prices that they can charge. Incumbent monopolies do not like this kind of thing, but we want consumers to benefit from increased competition. I am a little surprised that the Opposition are seeking to challenge any part of this thoroughly capitalist procedure.
  I turn to Amendment No. 74. The clause as drafted is flexible enough to allow the authority to respond to changing circumstances. If the amendment were to be accepted, that flexibility would disappear. I think that giving the authority flexibility to use its judgment, and giving it the ability to protect consumers from being overcharged by incumbents, is a good policy aim. I commend our proposals to the House and I oppose Amendment No. 74.
  Baroness Buscombe: My Lords, I am disappointed by the Minister's response to Amendment No. 74. I hear what he has had to say with regard to competition and flexibility. However, there is a need to consider the viability of the independent public gas transporters. In order to be in business, they have to invest for a long period. Clause 77 as it stands gives an enormously wide discretion to the authority which they feel is unreasonable.
  Lord McIntosh of Haringey: My Lords, I realise that I failed to reply to an important point made by the noble Baroness in introducing Amendment No. 74. I apologise for that. She said that the phrase,
  "by the Authority where it considers it appropriate",
  is too broad. That is for a very good reason. We expect the companies to protect their investments, but we
  1564
  expect them to protect their investments by using contracts. In our view, the authority should become involved only when there are disputes.
  I failed to reply to another point raised by the noble Baroness, for which again I apologise. She said that the Bill is retrospective because the pipes are already in the ground. Clause 77 deals with pipes already in the ground. The discretion which the noble Baroness criticised includes the ability of the authority to allow transporters to place conditions on consent which protect their investment if it thinks that it is in the interests of consumers. I think that we have thought this out properly. We have thought about the short-term position, where people have investments and where the threat is that new people can come in, and we have thought about the long-term interests of consumers and the industry.
  Baroness Buscombe: My Lords, I hear what the Minister has had to say. We have had a good deal of consultation with the industry on this point. The industry does not feel that what the Minister has said thus far has given it enough assurance. On that basis, when we reach Amendment No. 74, I should like to test the opinion of the House. I beg leave to withdraw Amendment No. 69.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 70 to 73 not moved.]
  Clause 77 [Restriction on use of certain pipe-lines for providing a supply of gas]:
  Baroness Buscombe Baroness Buscombe moved Amendment No. 74:
  Page 79, line 3, at end insert ("having regard to any guidelines drawn up by the Authority from time to time in consultation with gas transporters and to the provisions of section 7(8)(b)").
  The noble Baroness said: My Lords, I beg to move.
  7.52 p.m.
  On Question, Whether the said amendment (No. 74) shall be agreed to?
  Their Lordships divided: Contents, 36; Not-Contents, 102.

  Division No. 4

  Contents

  Attlee, E.

  Kimball, L.

  Blatch, B.

  Knight of Collingtree, B.

  Bridgeman, V.

  Lucas, L.

  Burnham, L. [Teller]

  Buscombe, B.

  Lyell, L.

  Byford, B.

  McColl of Dulwich, L.

  Carlisle of Bucklow, L.

  Marlesford, L.

  Craigavon, V.

  Monro of Langholm, L.

  Denham, L.

  Montrose, D.

  Dixon-Smith, L.

  Dundee, E.

  Northbrook, L.

  Fookes, B.

  Norton of Louth, L.

  Glenarthur, L.

  Renton, L.

  Glentoran, L.

  Roberts of Conwy, L.

  Hanham, B.

  Seccombe, B.

  Haslam, L.

  Taylor of Warwick, L.

  Henley, L. [Teller]

  Thomas of Gwydir, L.

  Home., E.

  Waddington, L.

  Hooper, B.

  Young, B.

  1565

  NOT-CONTENTS

  Acton, L.

  Hollis of Heigham, B.

  Ahmed, L.

  Howells of St. Davids, B.

  Amos, B.

  Hoyle, L.

  Andrews, B.

  Hughes of Woodside, L.

  Archer of Sandwell, L.

  Hunt of Chesterton, L.

  Bach, L.

  Hunt of Kings Heath, L.

  Barker, B.

  Islwyn, L.

  Bassam of Brighton, L.

  Judd, L.

  Berkeley, L.

  King of West Bromwich, L.

  Billingham, B.

  Layard, L.

  Blackstone, B.

  Lea of Crondall, L.

  Borrie, L.

  Lockwood, B.

  Bragg, L.

  Lofthouse of Pontefract, L.

  Brett, L.

  Macdonald of Tradeston, L.

  Brooke of Alverthorpe, L.

  McIntosh of Haringey, L. [Teller]

  Brooks of Tremorfa, L.

  Burlison, L.

  McIntosh of Hudnall, B.

  Carter, L.[Teller]

  MacKenzie of Culkein, L.

  Chandos, V.

  Mar and Kellie, E.

  Christopher, L.

  Massey of Darwen, B.

  Clarke of Hampstead, L.

  Miller of Chilthome Domer, B

  Cocks of Hartcliffe, L.

  Molloy, L.

  Crawley, B.

  Nicol, B.

  Currie of Marylebone, L.

  Parekh, L.

  Dahrendorf, L.

  Patel of Blackburn, L.

  Davies of Coity, L.

  Phillips of Sudbury, L.

  Davies of Oldham, L.

  Pitkeathley, B.

  Dean of Thornton-le-Fylde, B.

  Ramsay of Cartvale, B.

  Desai, L.

  Randall of St. Budeaux, L.

  Donoughue, L.

  Redesdale, L.

  Dormand of Easington, L.

  Rendell of Babergh, B.

  Dubs, L.

  Renwick of Clifton, L.

  Elder, L.

  Sainsbury of Turville, L.

  Evans of Parkside, L.

  Scotland of Asthal, B.

  Evans of Temple Guiting, L.

  Sharp of Guildford, B.

  Ezra, L.

  Shepherd, L.

  Farrington of Ribbleton, B.

  Shutt of Greetland, L.

  Faulkner of Worcester, L.

  Simon. V.

  Filkin, L.

  Smith of Leigh, L.

  Gale, B.

  Symons of Vernham Dean, B.

  Gibson of Market Rasen, B.

  Thomas of Gresford, L.

  Thomas of Walliswood, B.

  Gilbert, L.

  Thornton, B.

  Goldsmith, L.

  Tomlinson, L.

  Gordon of Strathblane, L.

  Tordoff, L.

  Gould of Potternewton, B.

  Walker of Doncaster, L.

  Grenfell, L.

  Warwick of Undercliffe, B.

  Hamwee, B.

  Whitty, L.

  Hardy of Wath, L.

  Wilkins, B.

  Harris of Haringey, L.

  Winston, L.

  Harrison, L.

  Woolmer of Leeds, L.

  Hogg of Cumbernauld, L.

  Young of Old Scone, B.

  Resolved in the negative, and amendment disagreed to accordingly.
  8.3 p.m.
  Clause 78 [Construction of pipe-lines by gas transporters]:
  [Amendment No. 75 not moved.]
  Clause 79 [Duty to facilitate competition]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 76:
  Page 80, line 16, leave out subsection (5).
  On Question, amendment agreed to.
  Clause 84 [The gas code]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 77 and 78:
  Page 86, line 13, leave out from ("installed") to end of line 15 and insert ("by an authorised supplier on any premises shall not be used to recover any sum other than a sum owing to an authorised supplier in respect of the supply of gas to those premises or the provision of the meter."").
  Page 86, line 28. at end insert—
  ("(4) In paragraph 23(2), for paragraph (c) there is substituted—
  "(c) exercising a power conferred by paragraph 3(5) or 7(3)(a) (and testing gas fittings, and making any adjustments required for their safe operation, after the exercise of the power)."").

  On Question, amendments agreed to.
  Clause 88 [Altering activities requiring gas licence]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 79:
  Page 94, line 17, at end insert (; and
  () any advice given by the Health and Safety Commission under section 4A (advice about health and safety in relation to gas)").
  On Question, amendment agreed to.
  Clause 93 [Information with respect to levels of performance]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 80:
  Page 100, line 6, leave out subsection (6) and insert—
  ("(6) Subsection (3) shall cease to have effect.").
  On Question, amendment agreed to.
  Clause 95 [Financial penalties]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 81:
  Page 102, line 3, at end insert—
  ("(6A) No penalty imposed by the Authority under this section may exceed 10 per cent. of the turnover of the licence holder (determined in accordance with provisions specified in an order made by the Secretary of State).
  (6B) An Order under subsection (6A) shall not be made unless a draft of the instrument containing it has been laid before and approved by a resolution of each House of Parliament.").

  The noble Lord said: My Lords, on behalf of my noble friend Lord Borrie, I beg to move.
  On Question, amendment agreed to.
  Clause 98 [Help for disadvantaged groups of gas customers]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 82 to 87:
  Page 108, line 5, leave out ("persons who supply gas") and insert ("authorised suppliers").
  Page 108, line 11, leave out from ("by") to ("provision") in line 15 and insert ("authorised shippers or authorised transporters (as well as by suppliers); and
  (b) in relation to charges payable to suppliers,").
  Page 108, line 27, leave out ("persons who supply or transport gas") and insert ("authorised suppliers, authorised shippers or authorised transporters").
  Page 109, line 12, leave out ("persons who supply or transport gas") and insert ("authorised suppliers, authorised shippers or authorised transporters").

  1567
  Page 109, line 21, leave out ("persons who supply or transport gas") and insert ("authorised suppliers, authorised shippers or authorised transporters").
  Page 109, line 26, at end insert—
  ("(7) In this section and section 4IA "authorised shipper" means a person authorised by a licence or exemption to arrange with any gas transporter for gas to be introduced into, conveyed by means of, or taken out of a pipe-line system operated by that transporter."").

  On Question, amendments agreed to.
  Clause 99 [Energy efficiency requirements fir gas transporters and suppliers]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 88 and 89:
  Page 109, line 45, leave out from beginning to ("that") in line 8 on page 110 and insert—
  ("() An order under this section may specify criteria by reference to which the Authority is to determine energy efficiency targets for the gas transporters and gas suppliers on whom obligations are imposed by the order.
  () The Secretary of State and the Authority shall carry out their respective functions under this section in the manner he or it considers is best calculated to ensure").
  Page 111, line 14, after ("supplier") insert ("or to an electricity distributor or electricity supplier (within the meaning of Part I of the Electricity Act 1989)")

  1989 c. 29.
  On Question, amendments agreed to.
  Clause 102 [Maximum prices for reselling gas]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 90:
  Page 114, line 17, leave out from ("supplier"") to end of line 20.
  On Question, amendment agreed to.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 91:
  Before Clause 103, insert the following new clause—

  OVERALL ENERGY EFFICIENCY TARGETS.
  (" .—(1) For the purposes of the exercise by the Authority of its functions under either or both of—

  (a) section 33BC of the 1986 Act (energy efficiency requirements for gas transporters and suppliers) and any order made under that section, and

  (b) section 41A of the 1989 Act (energy efficiency requirements for electricity distributors and suppliers) and any order made under that section,

  the Secretary of State may by order specify an overall target for the promotion of improvements in energy efficiency.

  (2) Where an overall target applies in relation to both sections mentioned in subsection (1), the order specifying the target may make provision for the Authority to apportion the target between—

  (a) persons who are gas transporters or gas suppliers (for the purposes of section 33BC of the 1986 Act and any order under that section); and

  (b) persons who are electricity distributors or electricity suppliers (for the purposes of section 41A of the 1989 Act and any order under that section),

  by reference to such criteria as may be specified in the order.

  (3) The Authority shall exercise its functions under the provisions mentioned in subsection (1) in relation to which an overall target applies (and in particular its functions relating to the
  1568
  determination of energy efficiency targets) in the manner it considers best calculated to result in the achievement of the overall target.

  (4) Before making an order under this section the Secretary of State shall consult the Authority, the Council, gas transporters, gas suppliers, electricity distributors, electricity suppliers, and such other persons as he considers appropriate.

  (5) An order under this section shall not be made unless a draft of the instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.")

  On Question, amendment agreed to.
  Baroness Buscombe Baroness Buscombe moved Amendment No. 92:
  Before Clause 103, insert the following new clause—

  STOPPING-UP OF ROADS AND STREET WORKS ETC.
  (" .—(1) Schedule 4 to the 1986 Act shall apply to an electricity distributor as it applies to a gas transporter as if, in each place where they occur, for the words "gas transporter"
  there were substituted "electricity distributor".
  (2) Schedule 4 to the 1989 Act shall apply to a gas transporter as it applies to an electricity distributor as if, in each place where they occur, for the words "electricity distributor" there were substituted "gas transporter".
  The noble Baroness said: My Lords, this amendment seeks to give gas transporters or electricity distributors the right to install the infrastructure of the other utility subject only to the same limitations placed on that other utility. The amendment does not seek to enlarge existing powers but merely to enlarge the number of entities capable of exercising them. In this case, it would be the owner or occupier, often a developer, who will be able to decide who shall enjoy these rights.
  The Minister will be pleased to hear that this is essentially a probing amendment to gauge the Government's thinking in this area, given that our overriding interests are to save costs as well as to be expedient about the manner in which those works are carried out. I beg to move.
  Lord McIntosh of Haringey: My Lords, I am grateful to the noble Baroness for explaining the amendment. Perhaps I may explain the fundamental underlying differences between the gas and electricity provisions with regard to street works. In gas there is a duty on the gas transporter to connect anyone within 23 metres of a gas main. That is an absolute duty and means that there have to be corresponding powers to enable gas transporters to fulfil their duty.
  In electricity there is a duty to connect any person on request, subject to questions of practicality and cost which are reflected in the terms offered for the making of a connection, rather than an absolute right within a prescribed distance of an established part of the electricity distribution network. We believe that it is reasonable to insist that in the 21st century everyone should be able to have access to electricity but it would not make sense to require a transporter to put in several miles of gas main to service one customer in a remote location.
  Turning to the detail of the proposed new clause, if it is designed to align the regimes governing street works under the Gas Act and the Electricity Act by making

  1569
  electricity distributors subject to obligations under the Gas Act and vice versa, this is inappropriate because each Act deals with a defined subject area; namely, gas on the one hand and electricity on the other.
  If the amendment is designed to assist those who are active in both the gas and electricity markets, it is misguided. A company which is both an electricity distributor and a gas transporter will have appropriate rights under the Electricity Act 1989 and the Gas Act 1986 which he should use according to which activity necessitates the street works. If both of them necessitate street works, he will need to exercise rights under both Acts. However, that should not create any problems for a company.
  I should point out that there are other difficulties with the amendment. For example, if the amendment is made workable, there will be a potential for companies to use one Act to exercise rights and, when this proves unsuccessful, to attempt to use the other Act as a way forward. Granting rights under Schedule 4 to the Electricity Act to gas transporters could result in them having more extensive rights to land belonging to third parties than is presently the case.
  On either interpretation of the amendment, it is inappropriate and could lead to damaging rather than helpful consequences.
  Baroness Buscombe: My Lords, I thank the Minister for that response and for his clear explanation of the Government's approach here. I shall read Hansard and consider carefully what he has said. On that basis, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Schedule 6 [Minor and consequential amendments]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 93 to 103:
  Page 132, line 14, at end insert ("; and
  (c) at the end of paragraph (b) there is inserted "; and—
  (c) to any other person who holds a licence and whose interests may, in the opinion of the Authority, be affected by the grant."
  In section 15A (billing disputes)—

  (a) for "domestic customer" (in each place) there is substituted "customer";

  (b) subsection (10) shall cease to have effect.").

  Page 132, line 15, leave out paragraphs 7 and 8 and insert—

  (" .—(1) Section 24 (modification references to Competition Commission) is amended as follows.

  (2) In subsection (1)(a)(i) and subsection (1A)(a), for "required" there is substituted "regulated".

  (3) In subsection (6) for "4 and 4A(1) and (2) above" there is substituted "4AA, 4AB and 4A".

  (4) In subsection (8) for "and 26 below" there is substituted ", 26 and 26A.

  In section 27(3) and (4) (modification by order under other enactments) for "required" there is substituted "regulated".").
  Page 132, line 21, leave out ("inserted") and insert ("substituted").
  Page 132, line 30, at end insert ("33C,"").
  1570
  Page 133, line 5, at end insert—
  (" .In section 36(2) (keeping of register), in paragraph (c)—

  (a) the words "made otherwise than by order" shall be omitted; and

  (b) for "subsection (5)" there is substituted "subsection (7)"").

  Page 133, line 12, at end insert—
  ("() after the definition of "authorised area" there is inserted—

  "authorised supplier" means a person authorised by a licence or exemption to supply to any premises gas which has been conveyed to those premises through pipes;

  "authorised transporter" means a person authorised by a licence or exemption to convey gas through pipes to any premises or to a pipe-line system operated by a gas transporter.").

  Page 133, line 14, after ("6A;";") insert—
  ("() the definition of "domestic customer" shall be omitted;").

  Page 134, line 39, after ("40A,") insert ("42,").
  Page 136, line 23, at end insert—

  (" .—(1) Section 44A (billing disputes) is amended as follows.

  (2) In subsection (2)—

  (a) for "a public electricity supplier" there is substituted "an electricity supplier";

  (b) for "tariff customer" there is substituted "customer".

  (3) In subsection (8)—

  (a) for "public electricity supplier" there is substituted "electricity supplier";

  (b) for "tariff customer- there is substituted "customer".

  Page 136, line 23, at end insert—
  (" . In section 59 (making of false statements etc.) in subsection (2)(a), for "a public electricity supplier" there is substituted ", or other person acting on behalf of, an electricity distributor or electricity supplier"

  Page 137, line 12, at end insert—
  ("Rights of Entry (Gas and Electricity Boards) Act 1954 (c. 21)

  .—(1) The Rights of Entry (Gas and Electricity Boards) Act 1954 is amended as follows.

  (2) In section 1(2) (restriction on exercise of rights), for "a public electricity supplier" there is substituted "an electricity operator".

  (3) In section 2(1) (warrants)—

  (a) for paragraph (a) there is substituted—

  "(a) that admission to premises specified in the information is reasonably required by a gas operator or an electricity operator or by an employee of a gas operator or an electricity operator;"; and.

  (b) for the words "supplier or any employee of the operator or supplier" (in paragraph (b) and the words following paragraph (c)) there is substituted "any employee of the operator".

  (4) In section 2(3) for "a public electricity supplier" there is substituted "an electricity operator".

  (5) In section 3 (interpretation)—

  (a) in the definition of "employee", for paragraph (b) there is substituted—

  "(b) in relation to an electricity operator, an officer, servant or agent of the operator and any person authorised by such an agent";

  1571

  (b) for the definition of "public electricity supplier" there is substituted—

  ""electricity operator" means an electricity distributor or an electricity supplier (within the meaning of Part I of the Electricity Act 1989);".").

  On Question, amendments agreed to.
  Schedule 7 [Transitional provisions and savings]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 104 to 123:
  Page 139, line 13, leave out sub-paragraph (7) and insert—
  ("(7) The same associate may not be nominated both for the purpose of sub-paragraph (6)(a) and for the purpose of subparagraph (3)(a) or (b) or (6)(b).").

  Page 140, line 33, leave out ("this paragraph") and insert ("paragraph 1").
  Page 141, line 9, leave out ("9") and insert ("7").
  Page 141, line 22, leave out from ("by") to end of line 24 and insert ("sub-paragraph (2); and
  (b) to the extent mentioned in those provisions as so modified;").

  Page 141, line 43, leave out ("sub-paragraph (2)(a)") and insert ("sub-paragraphs (1) and (2)").
  Page 142, line 16, leave out ("commencement day") and insert ("effective date").
  Page 142, line 42, leave out ("commencement day") and insert ("effective date").
  Page 143, line 1, leave out ("commencement day") and insert ("effective date").
  Page 143, line 32, after ("(2)") insert ("of the 1989 Act").
  Page 143, line 33, leave out from ("2") to end of line. Page 143, line 45, at end insert—
  ("() A scheme under this paragraph shall have no effect in relation to an existing supply licence if the supplier's transfer scheme does not take effect.").

  Page 144, line 2, leave out from ("scheme") to ("which") and insert ("under this paragraph in relation to existing licences under section 6(1)(c) of the 1989 Act").
  Page 144, line 6, at beginning insert—
  ("(1A) A scheme under this paragraph shall provide for each licence to which it relates").

  Page 144, line 14, after ("6(1)(c)") insert ("of the 1989 Act").
  Page 144, line 19, leave out ("under section 6(1)(d)").
  Page 144, line 23, after ("6(2)") insert ("of the 1989 Act").
  Page 144, line 26, leave out ("under section 6(1)(d)").
  Page 144, line 45, after ("expedient;") insert—
  ("() such amendments relating to the revocation of the licence or exemption as the Secretary of State thinks fit;").

  Page 145, line 22, after ("expedient;") insert—
  ("() such amendments relating to the revocation of the licence as the Secretary of State thinks fit;").

  Page 145, line 47, after ("expedient;") insert—
  ("() such amendments relating to the revocation of the licence as the Secretary of State thinks fit;").

  The noble Lord said: My Lords, these amendments are all of a technical and drafting nature. If the House is satisfied, I shall not offer a detailed explanation on each one. I beg to move.
  On Question, amendments agreed to.
  Schedule 8 [Repeals]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 124 to 129:
  Page 152, line 6, column 3, at end insert ("and in subsection (9), the word "and" preceding paragraph (b)").
  Page 152, line 12, column 3, at end insert— ("Section 15A(10).")
  Page 152, line 36, column 3, after ("subsections") insert ("(3),").
  Page 152, line 44, column 3, after ("(a)") insert (", in paragraph (c) the words "made otherwise than by order"").
  Page 152, line 50, column 3, at end insert ("and the definition of "domestic customer"").
  Page 153, line 49, column 3, after ("subsections") insert ("(3),").
  On Question, amendments agreed to.
  Clause 108 [Power to make transitional provision etc.]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 130:
  Page 118, line 13, leave out from ("enactment:") to end of line 14 and insert ("contained in any Act or subordinate legislation (including an enactment contained in this Act or in any Act passed or subordinate legislation made in the same Session as this Act).";).
  On Question, amendment agreed to.

Business
Lord Bach: My Lords, as consideration of the Utilities Bill is now complete, this evening's Unstarred Question is no longer restricted to the one hour available for business in the dinner break. Instead, a limit of one and a half hours now applies. This change does not affect the time allocated to the noble Baroness, Lady Warwick of Undercliffe, or my noble friend Lady Blackstone, but it increases the time available to each of the other speakers from four minutes to eight minutes. Perhaps I may make it clear, however, that if noble Lords have prepared four-minutes speeches—and I am quite certain that they have—and would prefer to avoid the inconvenience of extending them at such short notice, that will attract: no criticism, I venture to say, not just from these Benches but from the House as a whole.

Voluntary Service for Young People
8.11 p.m.
Baroness Warwick of Undercliffeasked Her Majesty's Government whether they will take steps to increase the awareness among employers and young people of the case for taking gap years and undertaking voluntary service.
The noble Baroness said: My Lords, it gives me enormous pleasure to be able to introduce this debate. I must immediately declare an interest as chair of Voluntary Service Overseas (VSO). In my six years as chair, I have seen the real benefits of volunteering to everyone involved: to individuals, to host organisations, and to employers. Not only that, but I believe it is possible to show that there are real benefits for UK foreign policy and for international

1573
understanding in developing the spirit of volunteering, and that there are also benefits for community development and citizenship awareness here at home.
Sadly, too few young people are aware of the opportunities and advantages offered by volunteering, particularly those young people who come from disadvantaged homes; and too few employers recognise the skills that volunteering develops. When the UK's competitiveness depends on developing skills and talents to the full, that is a waste that the country can ill afford. I believe the Government share that view, and I hope to persuade the Minister that there are steps that can be taken to achieve real change.
I am grateful to noble Lords who have indicated that they will support this debate. Your Lordships will be well aware of the varied interests that those noble Lords reflect, and that promises us a fascinating debate—a debate that spans local, regional, national and international interests.
The terms of the debate are deliberately focused not only on international volunteering, which is what I know most about, but also on gap year provision. That is because I have been so impressed by the work of the Year Out Group, whose launch I attended a month or so ago.
This is a group of around 20 reputable organisations which is setting standards for gap year providers. It is supported by the Department for Education and Employment, and promotes the structured year out for school leavers before they go to university or start a job, or for those who choose to take a year out between university and looking for a job.
While I want to encourage the Government to promote volunteering for all age groups because I have seen the massive impact it can have on the lives of all involved, the majority of supporters of any voluntary activities, in this country at least, are largely from older sections of society. That in itself can have a negative impact on young people. That is why it is particularly important to encourage the young—although the National Centre for Volunteering reminded me that a pro-volunteering message is probably best coming not from middle-aged people like me but from sports stars or, even better, from the friends of the youngsters concerned. I entirely concur with that. I know that the Government have given much thought to this, and I welcome their active support, for example, for the youth millennium scheme, and of course for the overseas training programme managed by VSO.
VSO started 40 years ago promoting volunteering for school leavers. Its legacy is warmly remembered by huge numbers of people around the world. There are numerous stories of people who are now leaders in their own countries and communities describing the impact that a volunteer had on their education. It is easy to forget that these volunteers were only 18 and straight out of school.
VSO moved a long time ago to concentrate on professionally skilled and experienced volunteers; but that does not mean that there is not huge scope for young people without that degree of skill or experience
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to think of a year out. The demand is very buoyant indeed. The Year Out Group has estimated that the number of organisations offering year out experience for school leavers has grown by 50 per cent in the past two years, to almost 200.
For those thinking of applying to university—again I must declare an interest as chief executive of the Committee of Vice-Chancellors and Principals—it is essential that they know that a gap year experience, so long as it is well structured, will be warmly welcomed. It is important to emphasise "well structured". At present, we are talking about only a small proportion of school leavers who become involved in this activity. UCAS estimates that the number of applicants who take a gap year is just under 7 per cent.
Nicholas St Aubyn, who as a Member in another place has been an active supporter of gap year provision, commissioned some research earlier this year which indicated that universities felt that a year out was beneficial. Indeed, many vice-chancellors believe that it could contribute to promoting greater access. They believe that it helps to develop confidence and raises aspirations.
What is particularly important is the standard of offering that is provided. VSO's extensive experience indicates that placements and volunteers have to be thoroughly researched and carefully matched. That is just as true for an 18 year-old school leaver as it is for a middle-aged, qualified and experienced professional.
Young people who do something beneficial, and who can show that there is some structure in the way they have gone about it, are highly sought after by recruitment agencies, employers and universities. But so much more could be done. Employers need to be alerted to the potential. Resourcefulness, innovation and creativity characterise such volunteers, and these are the very qualities that make business competitive.
Even more relevant, such experiences can provide potential employees with a breadth of experience and the skills to adapt to a global business environment. It can provide an understanding of other cultures and other peoples which provide insights into the very markets which will enable UK companies to maintain global excellence. I ask the Minister to do what she can to encourage employers to take up opportunities such as VSO's business partnership secondments. I urge the Minister particularly to encourage the involvement of local authorities, where there is real scope for further engagement but as yet not a lot has happened.
The majority of students who are likely to consider the possibilities and potential of these opportunities, however, are likely to come from well-informed, middle-class families. The very notion of the gap year can evoke a rather traditional middle-class school leaving applicant. Your Lordships will know that that represents a decreasing minority of students entering university. I should like to see increasing links between gap year provision and more mature, experienced higher education applicants.

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In commending as I do the work of gap year organisations, just as important is recognition that the majority of school leavers still do not go on to higher education, which means that we must work much harder to attract them. VSO and many other gap year organisations have sought ways to work with those who do not appear to have a sparkling academic future. Experience has shown that the potential value to these people of appropriately designed international volunteering is, if anything, even more influential than for those who are waiting to go to university. There are many powerful examples of those who have been out of work, or in casual employment, since leaving school and whose volunteering experience has given them new aspirations and the confidence and commitment to strive to meet them.
We must work to promote schemes that provide opportunities to young people of all backgrounds and must recognise their skills. Inevitably, that can happen only if the necessary resources are made available. Government departments need a co-ordinated approach to avoid people falling down what often appear to be rather large cracks. For example, the DfEE insists that recipients of grants under the millennium volunteer scheme must demonstrate a benefit to UK communities. That is fair enough. However, DfID funding is not available since the department considers that youth volunteers do not make a valuable contribution to development. Yet the truth is that well run volunteering schemes provide important education and employment benefits. Certainly, they can offer development benefits and raise development awareness. For example, surely the cross-cultural exchange and anti-racist agendas offered by youth schemes are of interest to the Home Office. Since this is an interest that affects at least three different departments, joined-up government is essential in cracking the problem of the funding of youth volunteer schemes. I make no apology for mentioning the need for resources. Young people need to live while they gain experience.
In conclusion, I urge the Minister to explore how the benefit system can support the choices of individuals who are sufficiently enterprising to volunteer. I hope that my noble friend will also consider, for example, the case put by the National Centre for Volunteering that the UK's lifelong learning strategy should include credits for volunteer time worked to be added to individual learning accounts. The year 2001 is International Year of Volunteering. I should like to see the Government celebrating it by encouraging a framework that supports gap year activity for all who want to take it up as a contribution not only to the "access" debate but as a means to help deliver the lifelong learning and active citizenship agendas.
8.23 p.m.
Lord Lucas: My Lords, I am very grateful to the noble Baroness, Lady Warwick of Undercliffe, for giving us an opportunity to debate the gap year. I look back with enormous happiness to my gap year in which I visited Afghanistan and Iran. I appear to have had a bad effect on those countries. Today it is not easy
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to visit such places. That had a strong influence on my maturity and general experience of the world. From my observations, most people who undertake it have a similar experience.
The gap year following school, particularly if one is to go to an assured place at university, provides a very rare opportunity. Rarely does one have a year in which to do as one wishes without interrupting or jeopardising what follows it. The noble Baroness made a very important point in extending the idea to people who were not going on to university. That also applies to later stages in one's career, perhaps when one leaves university or other qualification courses. People in that position, and students generally, have difficulty in facing the uncertainty about whether a gap year will enhance their employment prospects. They may feel that, instead of gaining an advantage, they will fall behind in the employment race compared with their colleagues.
There is insufficient information available to people who look at this particular fence. There is little information provided by companies on the web or elsewhere about how much they welcome people with good gap experience which improves their prospects; for example, that a good gap year is worth a couple of years of relatively menial employment and enhances an individual's opportunities thereafter. Perhaps the Government could put their mind to organising an information resource of that kind. The web provides government with an enormous opportunity to make such a resource available on a fairly broad basis. They could have contributions from several hundred companies in different areas of employment pointing out the advantages of a gap year. That would provide easy access to students. The provision of such information would be fairly cheap. All the Government have to do is provide the information on some web space and tell people where it is. The Government are reasonably good at that anyway.
I was also interested in the observations of the noble Baroness about the Year Out Group. The DfEE appears to be moving towards the accreditation, or at least paying someone else to accredit, gap year courses. Someone who has a gap year has great difficulty in deciding what is worthwhile and what the experience will be like. There are a large number of cowboys out there. For example, there is a happy band of enterprises that appears to consist of merely paid holidays for the children of the rich masquerading as gap years; there is another which consists entirely of work in McDonald's so that individuals can take a holiday in one of the Spanish islands.
Information about the quality of courses and the experience of others would be valuable to students. The Government might find it difficult to become involved in putting their chop on such courses and then taking responsibility when, as sometimes happens, things go wrong and students experience serious difficulties overseas in whatever environment they find themselves. However, if the Government have taken the first step by sponsoring the Year Out Group more can be done in that direction. They might consider sponsoring a charter mark or website on

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which students' reactions and histories can be posted so that this year's crop can see the experience of the previous two years. If that is done independently of the providers of such courses it will remove the supposition that the Government are placing their own imprimatur on the quality of the courses.
I have seen so many schools where hardly anybody has taken a gap year. It is not confined simply to the poor who will not do it; there are whole sections of the middle classes, particularly up north, who do not believe that a gap year is part of the experience and focus on the employment ladder. The Government could make a real difference by taking the simple step of helping to make information available in a way that the private sector cannot do easily.
I shall stick to my four minutes, which seems appropriate for a gap debate.
8.28 p.m.
Lord Dahrendorf: My Lords, we owe a debt of gratitude to the noble Baroness, Lady Warwick of Undercliffe, for giving us this opportunity to discuss, however briefly, one of the most important aspects of civil and civilised society: voluntary activity. The noble Baroness listed in an impressive manner some of the benefits of voluntary activity. Such activity responds to needs which otherwise may remain unmet and gives those involved a sense of achievement. It also helps to knit together communities, which perhaps is not the least important of the benefits of voluntary activity.
I should like to deal with a more difficult question. I speak with great hesitation, because I believe that the Minister knows much more about this than I do. I read in a recent report by Community Service Volunteers and Demos that one of the expectations that an individual may have in voluntary activity is that it provides,
"a powerful pathway to social inclusion".
The research that I have seen indicates that it is more an expression of social inclusion by those who are included than an actual pathway to social inclusion. Indeed, the excluded are unlikely to accept voluntary activity as a substitute for the more permanent and stable relationships of employment. That is one of the major problems with regard to volunteering and voluntary activity in general.
I wish to address one aspect of the Question: awareness among employers. I shall not talk about gap years but about voluntary service often of shorter periods. There are quite a few examples of good practice among employers and enterprises. I can speak about them because in no case do I have to declare an interest. They are simply examples of good practice. There is the example of community investment—of companies offering time or payment to institutions in which employees of companies are involved. Marks & Spencer is one such example.
There is the example of companies which allow their employees a certain number of hours, days or sometimes more, for voluntary activity. I believe that Jaguar has the rule that people can engage in voluntary activity for a week each year.
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Better still is the example of companies which match the hours that people give of their own time by allowing them to take off time from work to the same extent. Barclays at Leeds is an example.
The most interesting example relates to the professional organisation, KPMG, which has set up, first, a community brokering service which links employees who are willing and ready to undertake voluntary service with opportunities to do so; and, secondly, a time bank to enable employees to draw on a credit of time for voluntary activity thereby encouraging them to engage in such activity.
Those are excellent examples of good practice. The periods involved do not add up to entire gap years. However, such practices encourage voluntary activity, not through government alone, but by companies and employers taking responsibility for communities and society in general.
I cannot resist another comment on the notion of time banks. The concept may sound strange. However, a distinguished and interesting author, David Boyle, has written a book called Funny Money. The funny money referred to is the activity which emerges as a result of people volunteering to help others. It is an advance on the old system of barter in terms of time—"You teach my daughter the violin and I shall repair your garden fence". A wider network is involved and the relationship within which the time is given does not have to be one-to-one. In an interesting recent paper, Mr Boyle sought to devise conditions under which a London time bank could be created. He calls it A vision. But without vision we are unlikely to get far in this area. Indeed, I regret that the noble Lord, Lord Young of Dartington, is not with us today. With his advocacy and activity for social entrepreneurs, he would have a great deal to say about those who have the vision to encourage people to make a voluntary contribution to the creation of communities.
That leads me to my final comment. Yes, it is nice to receive encouragement, including encouragement from government. But let us never forget that voluntary activity is voluntary; it is not organised by government or anyone else. It can and should be encouraged, but it should always be the result of people's own initiative rather than a parallel organisation of work.
8.35 p.m.
The Earl of Listowel: My Lords, I, too, am most grateful to the noble Baroness, Lady Warwick of Undercliffe, for initiating this debate.
The high priority the Government have given to promoting voluntary activity among young people is greatly to be welcomed. In preparing for this debate, I have read with immense pleasure about the successes of the millennium volunteer scheme.
I recently asked a senior United States government official what was the most obvious difference between the United States and this country. He replied that in Britain people do not starve. We must not lose touch with those on the margins of society. We must remain committed to providing public services which are

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available to all, allowing those whom we accept as refugees, those with physical or mental impairments or those who have been abused or neglected to enter into the mainstream if they will.
Community service for young people is an essential means of maintaining that contact. For example, the millennium volunteer project involves, perhaps exceptionally, large numbers of unemployed young people. So on some schemes young people in employment, at college or university, are acquainting themselves with young people who may never have worked and have minimal educational qualifications. The voluntary work connects volunteers with young people from the ethnic minorities, primary school pupils who risk failing at school and children with AIDS.
Over the past 12 months, one of my co-volunteers is an Afro-Caribbean in his 30s who grew up on the Stonebridge Housing Estate in North London. Knowing him and volunteering with young black men in the past not only helps me to understand life from another point of view but also enables me to see what I have in common with people from an ethnic group not my own. While I recognise that many experiences separate us, I can feel that we share some of the same faults and strengths. Indeed, my fellow feeling prompts me to ask why we have no Afro-Caribbean man regularly contributing to deliberations in your Lordships' House. The voluntary work of young people helps to knit together the different communities within society. It not only increases the respect of one group for another, it also promotes compassion. It encourages future electors to support policies that protect and assist vulnerable minorities, and future taxpayers to fund public services more likely to give direct benefit to others rather than themselves.
I conclude by drawing attention to the National Centre for Volunteering, which is working currently with 170 student groups representing 25,000 student volunteers. The centre provides salaried permanent volunteer co-ordinators at some British universities. These help to make volunteering safe, a learning experience and continuous from one student cohort to another.
In the report on early lessons from millennium volunteer demonstration projects, the importance of such support is highlighted twice. It states that,
"where young people have had a successful millennium volunteer experience, many highlight the support given to them by the millennium volunteer project staff as critical".
Salaried permanent volunteer co-ordinators are critical. I hope that the Government will do all in their power to support the National Centre for Volunteering in its work.
8.40 p.m.
Baroness Andrews: My Lords, I, too, am pleased to contribute to the debate and to thank my noble friend Lady Warwick for the opportunity to do so.
One of the key signatures of the Government is that they have made volunteering such a high priority and have put such value on it. The gap year is a unique and,
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interestingly, growing element of that. Like my noble friend, I particularly welcome the formation of the Year Out Group. It is a remarkable start in creating new standards and opening new opportunities.
The debate raises wider issues—too wide to be dealt with in five minutes—about the way in which people will learn, work and live in a transnational society. In my personal and professional experience, young people thrive on volunteering experiences. Once they have a taste they want to do more. However, as the noble Lord, Lord Lucas, said, the problem is usually finding the right opportunity and information.
It is clear that universities already know the value of volunteering. Parents, students, career services and schools need to know what the university admissions service already knows—that gap-year students are successful. They start fresh, they stay motivated and they succeed. Even though, as research suggests, they have difficulty in adjusting to academic work after being away, their social adjustment is rapid and successful.
In my experience, when a 18 year-old spends a year teaching in a primary class of 60 children in Honduras, knowing that few of them will be in school at 14 and that none of them has any hope of higher education, a high value is put on his or her higher education.
Secondly, parents and students need to know that the skills and attitudes acquired through volunteering at home and abroad literally pay very well. With so many graduates leaving higher education, who is going to stand out? Is it to be someone who has done all his growing up within tertiary education or someone who has been tested by working with refugees at a resettlement centre?
Many employers already know the difference. According to a CSV survey, 80 per cent of the top 500 UK employers affirmed that volunteers demonstrated above average self- confidence, team work and, above all, communication skills. Those are the key skills that the future labour market will need. In London alone two-thirds of employers are currently looking for graduates with generic skills, irrespective of degrees, who can lead, manage and solve problems. And as global players they are looking for graduates with all the extras, particularly the ability to relate to different cultures and speak different languages.
Key skills are sometimes called "soft skills". I cannot understand why because they are so hard, if not impossible, for many young people to acquire. As a way of making the value of volunteering at home and abroad explicit, perhaps I may suggest that the Government consider commissioning a skills audit from the voluntary organisations and the Year Out Group which will aim to chart the skills acquired across the different experiences within the volunteering opportunity and to put new visibility and value on the benefits. With such evidence, employers and parents alike will be left in no doubt of the real value of the time spent. It might even be the start of a new record of achievement for higher education students, which is long overdue.

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In respect of young people, I would argue that a structured gap year has the power to change lives. That opportunity should be within the grasp of a wider group of young people. At the moment it remains a privileged choice and the gap organisations are frank in saying that they have difficulty in recruiting in the inner cities. Where there is no personal connection, no family experience and no folk memory of what it means to take such an opportunity, it is difficult to convince people that it is for them; it is something which happens to other people.
Those who have least opportunity to find out and to make a choice have something extra to give not only because of their empathy but because of the skills they bring and the way in which they can relate to people in worse or similar situations. They may also be the very students whose school lives have been narrowly focused and who have not been able to travel abroad or to experience the out-of-school enrichment in the way that many students can these days.
The first step is to convince parents and students of two things: first, that a period of volunteering is a wise investment of time and money; and, secondly, especially if they are going abroad, that it is safe and well supported. I speak with experience of the Project Trust and can say that many of the organisations have a good record of safety and back-up in the countries to which they send volunteers. A skills audit will help the first aspect and some common standards of support and provision will help the second.
I hope that the Government will encourage the Year Out Group to take the student guidelines further and to create that framework of quality which would be so helpful. But I also believe that there is great scope for companies and trusts to be more proactive in helping young people to find the funds which they are sometimes required to provide. They can help in providing organisations to take returned volunteers into the schools to speak from personal experience of what it has meant to them to be able to give to and learn from other cultures and communities.
Finally, I am optimistic that the millennium volunteer scheme will lead the way in creating new scope for active citizenship and new ways of accrediting volunteers with life-wide as well as lifelong skills. The third report of the Skills Task Force recently stated:
"Too many of our workforce, raised in the routine 'jobs for life' culture of the past … lack basic skills, aspirations and self-belief to broaden their horizons through the power of learning … The development of skills and knowledge has never been and should not become the preserve of traditional education institutions or providers".
The development of volunteering in all its forms serves as an antidote to that. But what counts ultimately is not the skills but the aspirations and attitudes inspired with self-belief and the capacity to manage change. With the new citizenship curriculum in place, perhaps we may see a new vocabulary emerge, not of opting out but of opting in to practical citizenship, even communitarianism, both locally and globally.
8.46 p.m.
Lord Phillips of Sudbury: My Lords, I join others in thanking the noble Baroness, Lady Warwick, for introducing this important debate and hope that she will not mind if I concentrate on its volunteering aspect. I do not disagree with a single word that has been spoken thus far but I want to concentrate on certain issues of concern and thus of challenge.
Volunteering is the oxygen of any good society. It is the first building block of a good community. Without community, the prospect of informal volunteering is vastly reduced. That is the truth for many parts of this country because communities have declined so greatly, bringing a decline in informal volunteering.
Informal volunteering is so easily overlooked but it is crucial. The most vulnerable parts of our communities find their place, their role and their contribution within that realm. In the Citizenship Foundation, of which I am proud to be chair, we often say that the most single telling hallmark of the quality of any culture or society is the extent to which every single member can make a contribution to it. One of the dangers of discussions about volunteering and charity is that people can easily slide into the giving and receiving model. The most crucial aim must be that we are all givers and receivers because only then can we have a society in which one feels comfortable.
One must face the fact that, according to the records of the National Centre for Volunteering, volunteering and giving by the under-30s are in serious decline. That is a challenge. One must also face the reality that the charity and voluntary sector are in some senses professionalising. There is a real danger that inadvertently they will diminish volunteering by the group that I am most concerned about and will overlook the crucial contribution made by the less skilled and apparently less competent cohorts in our society.
Very often it is the tea and sympathy which is the most important element in a voluntary organisation. It is the time that people with no professional skills can give to those who need their care and attention that is the irreplaceable core of many, if not most, charities.
Therefore, I end my few remarks by making those warnings and hoping that whatever is done—and I hope that a great deal is done—the sector itself will take the lead. As my noble friend Lord Dahrendorf said, this is not a government job. Government is there to help the hoop along, but basically this is something that we do for ourselves. In so doing, we must make every conceivable effort to be comprehensive in drawing in the help and contribution of everyone.
Lastly, in praise of the Government, I believe that the citizenship curriculum, which becomes a compulsory component of secondary education from autumn 2002, gives an opportunity to build in the hearts and minds of young people the wish and desire to be contributors, as well as having the ability, the confidence and the skills to be volunteers.
8.51 p.m.
The Earl of Sandwich: My Lords, I congratulate the noble Baroness, Lady Warwick, on finally achieving this debate. I am delighted to support her as one who has worked for years in international development. I apologise to the House that, unavoidably, I shall have to leave before the wind-up speeches.
I declare an interest as a trustee of Christian Aid, which over 40 years ago helped to launch Voluntary Service Overseas. We must remember the Churches' contribution to this whole subject. I, too, had the advantage of working overseas before going to university, and I know many other people whose lives have been shaped by the early experience of living in another community.
My first debate in the House was on the subject of world development and world awareness. I am very pleased to see the emphasis that this Government place on citizenship, as has just been mentioned, and the spreading of understanding of other societies. We must not let current fears of illegal immigration interfere with the genuine wish of the majority to engage with other cultures. The encouragement by government of young volunteers and educational exchanges are essential aspects of this sharing process.
The word "volunteering" has been stretched beyond recognition, and charity employers are still wrestling with the need to maintain standards and a sensible pay structure while generally welcoming the volunteer ethic. That is a subject for another debate. However, there is no real disagreement about the value of the gap year or the year out. Both the NGOs and this Government have fostered a range of initiatives in the UK and overseas through the DfEE, the British Council, the European Union and the volunteer sending agencies, as I am sure we shall hear from the Minister.
As we have heard, the Year Out Group brings together 20 organisations which offer work and teaching opportunities as well as adventure programmes overseas. I mention to the noble Lord, Lord Lucas, that another recent initiative is the Youth for Britain Worldwide Volunteering website, which searches up to 250,000 volunteer places available worldwide. For the UK, the "yini" website of the Royal Academy of Engineering gives information about its excellent Year in Industry initiative.
In the past, concerns about the value of the year out have been expressed in university departments, especially maths departments and, I believe still currently, music. They see it as something of an interruption. However, I believe that those fears have been allayed. As the noble Baroness said, vice-chancellors surveyed recently have overwhelmingly supported it. The structured year out is becoming more and more popular with universities and companies, which together see the advantage of adding value to education.
Aid agencies generally take the view that young volunteers benefit from gap years more than do their host countries. Many years ago, VSO insisted that
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skills were necessary but it has now returned to recruiting young volunteers again. I believe that there is still some debate about that.
Of course, poverty always demands more skills, but in the long term our young people will receive a broader education which will later benefit their own work and the communities that they serve. Mr Peter Brooke's account, in the debate in another place last month, of his own extended family involvement was in itself a remarkable testimony to the success of young volunteers. A phrase used by the agencies is "enriching lives"—I believe that it was used also by the noble Baroness, Lady Andrews—which applies to the volunteer and his or her UK community as much as to the host country. The influence of returning volunteers has been essential in spreading understanding about poverty and development in many fields of life, not only in the aid agencies but in the media, community work and education.
The year out still tends to benefit better-off children. One glance at the list of volunteers from Gap Activity Projects shows that a large majority still come from London and the South East. However, as has been said, that is slowly changing and can be changed, even in the inner cities. On the other hand, it can be expensive. That is something that the agencies must watch. I have a nephew—a school leaver—who is about to go to China with the Dorset Expeditionary Society, and I know how hard many young people must work to obtain sponsorship.
I hope that the Minister will confirm that encouraging young people of all backgrounds to take up overseas placements will be a priority because of the enduring benefits that they undoubtedly bring. There is much scope for involving young people from deprived areas in exchanges overseas, and VSO, too, has some experience of that in Hull and North Tyneside. I take the point made by the noble Lord, Lord Phillips, about giving and receiving. It must a balanced and equal partnership.
Therefore, supporting volunteers is not only a form of aid: it is now accepted that the UK will gain something from it. Industry is taking the lead, showing much more interest in gap year students and the concept of sponsored volunteering because the skills and experience acquired then prove so useful later on. One should perhaps single out the engineering industry, which is particularly active, with universities such as Cambridge and Surrey positively recommending a year out as a prerequisite of training. Rolls-Royce, a company with offices in, I believe, over 35 countries, has been working closely with the organisation, Gap, and declares,
"a real interest in individuals who have been exposed to other cultures at an early stage".
Sadly, there are always a few hard luck stories which cannot and should not be pinned on the lack of facilities in host countries, as often they are. I know personally of cases where well established charities fail to back up young people in very difficult circumstances, where management or training has failed and the volunteer has been critically ill in an isolated place. I had some experience of that myself as

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an 18 year-old in an Australian mission on the River Indus. The gap and year out agencies must give priority to safety and, if necessary, raise their quality of training and administration.
However, professionalism in management must not alter the voluntary basis of volunteering, which motivates young people to take risks and to gain self esteem in a world which often seems to them divisive and exclusive. Finally, I quote Roger Potter, an experienced educationalist and chairman of the Year Out Group:
"In an age that puts more and more emphasis on measured academic qualifications it is more important than ever that we promote less finite challenges that draw from young people their independence, their resourcefulness, their courage and their willingness to explore beyond the boundaries of their immediate experience".
8.59 p.m.
Lord Redesdale: My Lords, I, too, thank the noble Baroness, Lady Warwick, for initiating this debate. I feel slightly hard done by, as I believe that I should be listed as a maiden speaker because this is my first speech in any debate as a reinvigorated life Peer, although many of my noble friends told me that that would be ridiculous.
I should like to promote the work of the Year Out Group, which was mentioned by the noble Baroness. It has produced a valuable comprehensive leaflet that puts together the basic questions that do not occur to many people who think about a year out, without promoting any individual organisation. Perhaps the Department for Education and Employment should provide funding for it to be sent out with UCAS application forms. I do not say that in jest. Universities would benefit from more mature students who have some experience of life before they undertake their university education. Students coming straight from school to any form of higher education can find it difficult to acclimatise, particularly if they are far from home.
Gap years are traditionally taken between school and university. However, as many noble Lords have said, although that is a good time to take a gap year, it should not be thought of as the only time to do so. I know students who have taken a gap year between years of their course. That can be valuable and has even been promoted by course tutors for those who are having difficulties and need time to reflect on where their life is going. Perhaps the best time for a gap year is before someone takes on their first job, or even between jobs. I know of a number of people who have entered the City and now want to take a new direction.
The gap year does not have to be spent abroad. I have found that people who have taken gap years have grown in confidence and, most importantly, in their belief in themselves and their sense of independence. When we ask students what their aim in life is, too many of them have no idea. Gap years can combat one of the great threats facing a lot of students; the introspective nature of education. They put their head down and get on with their studies because they are
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worried about student debt and the need for a good degree to be able to find employment. Having interviewed people and been interviewed, I have found that employers are often more interested in the other aspects of a CV rather than only the conventional qualifications.
Gap years do not have to be undertaken immediately before or after university, but one problem with leaving it too long is that, as we grow older, we inevitably gain ties and responsibilities, such as mortgages, marriage and family.
Some excellent organisations undertake gap year activities. I shall focus on two. I declare an interest in Raleigh International on two counts. First, I went with Operation Raleigh to Zimbabwe in 1989. Secondly, I was recently asked to be an honorary vice-president. Raleigh International offers safe, structured and constructive work. Its partners in overseas countries receive well-structured projects that can be taken forward. The venturers who go on such expeditions often find it a life-changing experience. That phrase is often used glibly, but I know from having worked as a staff member that some of the venturers who accompanied me on some of the toughest hikes through the Mavuradonha wilderness area in northern Zimbabwe changed their view of where their life was going during that time. Two of them changed their jobs afterwards and one decided to go back to university. The project gave them time to make those decisions, away from the pressures that are so often associated with family and work.
We should not focus only on those who are going to university and those who can afford the large price tag involved in going overseas. Raleigh is doing a lot to offer its activities to a wider range of people, particularly those in deprived areas. It is working with those who have had problems with drugs or have been involved in crime. Such people now make up a significant proportion of those who undertake Raleigh expeditions, which can show them a new aspect of life. One of the members of my expedition had been involved in car crime. When I asked him why he used to do it, he said that he was bored and had no view of what to do with his life. He has gone on to achieve a lot with his life.
The other area that I should like to focus on is student community action groups at universities and other higher education establishments. They are important, because they also expand students' awareness of their own communities. In our divided society, it is very important to get students to look at estates where people's horizons are limited to where they live. It is also important to make people aware that some groups are cut off from the rest of our society, such as the carers of relatives with learning or physical disabilities.
My noble friend Lord Dahrendorf put forward the case that volunteering cannot be prescribed. I remember collecting money for a volunteer group and I was told by somebody, "You shouldn't be doing this. This is a job for the Government". However, obviously, volunteers have a place.

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In the very worthy cause of citizenship, the Government should look at giving assistance in relation to two aspects of volunteering: first, in funding the everyday administrative costs of volunteering groups; and, secondly, in helping to make people aware of the very existence of such groups.
Gap years are extremely valuable in providing leaders of volunteer groups which are in short supply. Few of the people I have known who have taken part in volunteering during their gap years have failed to go on to volunteer in the future.
9.15 p.m.
Baroness Blotch: My Lords, I, too, thank the noble Baroness, Lady Warwick of Undercliffe, for initiating this debate. It has been interesting. Also, I thank my honourable friend Nick St Aubyn, who was mentioned by the noble Baroness, for the work that he has done in initiating the Year Out Group. That group has taken on the extremely important project of raising awareness.
I was under something of a misapprehension when I first saw the wording of the Question and its reference to employers. I want to return to that point because I saw it in rather a two-dimensional light.
Also, I declare an interest as a patron of an organisation called Cathedral Camps. That is a voluntary organisation. Young people spend weeks during the summer months doing conservation work. Sometimes that is very basic work in cathedrals; for example, clearing out bat droppings from lofty reaches of the cathedrals. More precious and skilful work is also done conserving and preserving some of the finer artefacts of our cathedrals.
I believe that taking a gap year is, and should be—a point made by the noble Lord, Lord Dahrendorf—a matter for the individual. People usually take a gap year between leaving school and entering higher education or at the end of higher education courses and before entering the world of work. However, the noble Baroness extended that notion, and rightly so, into young, and sometimes not-so-young, people taking gaps in the course of their working lives.
I was interested in the proposal to increase employers' awareness of the case for taking a gap year. I agree with the noble Baroness about the benefits for young people who take a year out. The noble Baroness said that as long as it is well-structured, then it will be important to them. I am just a touch unnerved by that well-structured approach and the notion that it should be very organised.
Again, like the noble Lord, Lord Dahrendorf, I hope that we shall never lose spontaneity. We do not want to lose the efforts of large numbers of young people who think about what they want to do; raise the money; and then go and do their own thing, whatever that may be. It is right that they should receive information about safety and posing to themselves the right questions. Those of us who are mothers whose children have taken gap years have lived on the edge of our seats, wondering whether they have thought it
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through properly or whether they are being too adventurous. But that whole essence of adventure is a very important part of a gap year.
An extremely interesting survey of vice-chancellors was carried out by the Year Out Group. Almost 52 per cent of those surveyed agreed strongly with the statement that:
"A structured year out benefits the personal development of the typical undergraduate".
But if one takes into account agreement or neutrality, then a very large number of people agreed that it was beneficial. It is interesting that only 31 per cent of those surveyed agreed that:
"A structured year out is a critical factor in the development of an undergraduate",
and 68 per cent either had no view or disagreed. Some 71 per cent agreed that:
"A structured year out is a benefit to a wide range of students".
Interestingly, 47 per cent agreed that:
"A structured year out is of particular benefit to less advantaged students",
although a fairly large number of those surveyed either did not agree or were neutral on the issue.
The majority of people—64 per cent—did not agree that the Government should fund a structured year and only 20 per cent agreed that the Government should fund it. There is a real issue in that regard as to whether the Government should find ways, perhaps through grant allocation, of helping some people to achieve a gap either before or after study. However, I do not think that any government could afford to provide the wherewithal for a gap year for everybody.
Finally, to the question,
"Is a structured year out better than an unstructured one?",
80 per cent felt that it was.
One of the challenges and questions which came to mind during the debate concerned the reference to business. I believe that there is more that business can do. However, I am concerned about the cost to business. Large businesses are much better equipped to help young people in this way. Medium-sized, and particularly smaller-sized businesses, which I believe comprise over 90 per cent of businesses, would find it difficult to undertake an obligation to provide for gap years for young people.
The establishment of the Year Out Group coincided with the introduction of tuition fees for students. Initially, those who had arranged a year out at that time were to be penalised for deferring entry into university. A group of year out providers came together, made representations to government and successfully persuaded Ministers to resolve the issue. The Year Out Group grew and set about discussing other issues. I believe that that is where its valuable work lies; namely, in ensuring that information about gap years is made available to all students covering safety, welfare and, importantly, the quality of provision offered to young people. The group's aim is to set standards for providers and to improve information given to students.

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As regards the experience and skills gained by young people, employers have a part to play. As a Minister once responsible for volunteering, I remember the impressive work by Julia Cleverdon and the organisation entitled Business in the Community. Huge efforts were made, not only to interest employers in the volunteering dimension of young people's lives, but to accept that that experience was relevant to the company. I refer not only to the gap year. When young people are being interviewed for a job, what they have done of their own volition tells the employer a little more and adds another dimension to the character of the young person sitting before them. I believe that a great deal of work has been done to that extent.
The noble Lord, Lord Dahrendorf, spoke about the importance to employers of volunteering. The word is now fairly widespread. Employers understand that if they have an employee who thinks of others and believes that giving is better than taking, they are more than half way towards having an employee who will be a positive contributor not only to the company but to the community in which they live.
There is another spin-off. Not only are there benefits to young people and their relationship with the community in which they live; the reputation of the company is enhanced. It is no bad thing that there should be benefits all round. Anybody who has been in the business of volunteering knows that the benefits are mutual.
When Minister responsible for volunteering, I was particularly proud that my right honourable friend John Major initiated the "Make a Difference" campaign. He believed passionately that we can all make a difference, whether by giving small amounts of time, money or both. If we look around, there is something we can do to make a contribution.
The noble Lord, Lord Phillips of Sudbury, who had to leave before the end of the debate because of the change in timing, talked about informal volunteering. I can remember being nervous about not becoming too organised about volunteering. It is right that governments should give encouragement. We should all do what we can to raise awareness. However, informal volunteering is essential. We live in a country which has a proud record of volunteering. I think that we sometimes overlook the amount of volunteering which takes place. In the Victorian era and earlier this century there was a great deal more neighbourly volunteering. It was automatic and informal. If somebody needed help, there was somebody to give it. Some of the closeness of families and communities has been lost. We should be mindful of that when we speak of volunteering.
The scope for better and more accurate information is considerable. I believe that the work of the Year Out Group will make a difference in that respect. I agree with much of what has been said, especially the benefits to be gained by the student. However, as I said earlier, I hope that spontaneity will not be lost for those young people who make their own arrangements and benefit very much from taking a gap year either before or after their education.
9.18 p.m.
The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, I, too, thank my noble friend Lady Warwick for giving us the opportunity to have this debate. Taking a year out between school and university has always been an attractive option. It is right that when young people do so they are making informed choices and that the experience is of genuine benefit for them. The Government want to bring about a step change in the numbers of people of all ages who become involved in voluntary activity. For many young people the opportunity to become involved in the community, either here or overseas, can be a truly formative experience.
UCAS estimates that in 1999 over 20,000 people deferred entry to university. As my noble friend Lady Warwick said, that is around 7 per cent. It is slightly higher in young people who come from professional and managerial groups. I hope that the numbers will increase, especially for those groups that have been rather under-represented in the past. The variety of things that they choose to do is enormous.
People tend to think of gap years as time spent abroad. That is true for some young people but certainly not all. I agree with the noble Lord, Lord Redesdale, and the noble Baroness, Lady Blatch, that gap years can be taken after graduation as well as before going into higher education. However, we have to remember that a year out will not be right for everyone. Some young people will not want to follow that route and we should respect their choices.
I strongly endorse what the noble Lord, Lord Dahrendorf, and the noble Baroness, Lady Blatch, said; that voluntary activity is "voluntary". I agree also with the noble Lord, Lord Phillips of Sudbury, that it would be a pity if voluntary charity work were to become "professionalised". The Government's prime responsibility is to ensure that young people make informed choices about where to take their year out and how they spend it. We also need to try to make sure that it is well spent and undertaken in a safe environment.
Who benefits from young people taking a year out? Clearly, young people themselves. They learn about people and environments with which they might never otherwise come into contact, as the noble Earl, Lord Sandwich, said. They gain experiences that will stay with them for the rest of their lives, that will change their perspectives and raise their aspirations. That is one of the reasons why opportunities for community involvement need to be available to a broad range of young people. They should not just be available to those who have already had the best chances.
As a number of speakers said, employers also benefit. They are able to draw on a pool of young people who have learnt about working with other people and about problem solving and who have gained in self-confidence. Those are the attributes that we do not always learn at school but that employers tell us they value highly. Unfortunately, not all employers recognise those benefits, as the noble Lord,

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Lord Lucas, and others made clear. More research on that has been commissioned and we shall be developing a strategy to try to raise awareness among employers, particularly in relation to Millennium Volunteers—something requested by my noble friend and others.
The noble Lord, Lord Dahrendorf, particularly referred to giving people time to volunteer. In his speech to the Active Community Convention in March this year, the Prime Minister challenged employers to give their employees time off. He suggested that they should have one day off every 18 months to help them undertake volunteering. The Home Office is also funding Business in the Community to set up employee volunteering schemes in cities throughout the country.
There are also benefits to educational institutions where increasingly young people are being asked what they have done in addition to gaining their academic qualifications. I am encouraged by the work that UCAS has done in that regard. When applying to university young people will have to complete a personal statement. If a young person can say that they plan to take a year out and that it will be structured and relevant to the course they want to take, universities will see that as a way of differentiating between candidates, as the noble Earl, Lord Sandwich, said.
The personal growth that young people will have experienced when they start their studies will give them a head start among their peers. It was certainly my experience as a university teacher that such young people had a genuine head start.
I say to the noble Lord, Lord Lucas, that many universities already include a section in their prospectuses or on their website acknowledging the value of a gap year. Some already include specific involvement in community or voluntary activities as being desirable qualities of prospective students. I shall certainly encourage UCAS to include this in the template which institutions use as a guide to completing their profiles.
As many speakers have said, there are benefits to the wider community. Young people can be, and often are, valuable citizens within their communities. If they learn what it means now to be a citizen, that is likely to stay with them for the rest of their lives. If they understand the importance of putting something back into the community and develop a sense of being connected with it, they are likely to stay connected and remain active citizens throughout their lives.
That is why the Government have introduced a framework for citizenship education in schools. I am grateful for the support that various speakers have expressed for that. Young people will need opportunities for putting what they have learned into practice, whether or not they go onto higher education.
There are a number of opportunities that are already supported—either directly by the Government or through European funding. One is the Overseas Training Programme. It aims to provide young people,
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many of whom may be interested in longer term involvement in development work, with a worthwhile experience in less developed countries. The Overseas Training Programme is largely funded by the Overseas Development Agency and managed by Voluntary Service Overseas. Students are supervised by their academic institution in this country and host partner organisations overseas.
The European Voluntary Service enables young people from EU member states to spend up to a year doing voluntary work. The Youth for Europe Programme arranges international exchanges, seminars, project training and other activities. Projects are based around a theme through which young people are able to discover and explore similarities and differences in their cultures and, in doing so, build up their confidence.
Young people are also being encouraged to volunteer their time in this country. The Government have invested £48 million in Millennium Volunteers to engage young people aged 16 to 24 in voluntary activity. Some 150 projects have already been set up across the country. I am grateful for the support that has been given in the debate for that project. Some 4,000 young people have already joined and over 400 have gained their Millennium Volunteer awards—awards which recognise the personal development of the young person and the benefits they have brought to local communities. To earn those awards, young people have committed 200 hours of their time to a huge range of activity. Young people have been involved in peer education around bullying and drugs awareness; community radio; sports coaching; and improving the environment in both cities and rural areas. These are commendable achievements for young people with busy lives. Many of these young people have not been involved in voluntary activity before.
It is important that the gap year is well organised and provides support for the young person. Like other speakers I should like to praise the work of the Year Out Group. The organisations involved in the Year Out Group are working towards setting clear quality standards and criteria for membership. We very much welcome the commitment they have shown to this and support the group's aims to ensure that young people are able to undertake gap year activities in the confidence that they will be safe and secure. I say to the noble Lord, Lord Redesdale, that I shall look into ways to help distribute the group's leaflets to young people.
I also agree that we should explore ways of involving more undergraduates in voluntary work. A great deal is already being done. We have set up a national mentoring project which is aimed at raising the achievements of 12 to 18 year-olds in secondary schools in education action zones. At present that involves six universities and it is going to be extended from September to a further nine. One of our Millennium Volunteers projects is allowing students to use their voluntary activity as a credit towards their degree course. Again, we wish to see whether that

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approach is successful before extending it. There may also be scope to involve students as mentors in the Connexions service.
The noble Earl, Lord Listowel, and the noble Lord, Lord Redesdale, mentioned the National Centre for Volunteering. The Government are already supporting it. A number of student community action groups are now running Millennium Volunteers projects. We are going to have further discussions how to take that further.
My noble friend Lady Warwick asked about better co-ordination between government departments. It is true that Millennium Volunteers are available only in the United Kingdom, while DfID programmes tend to be targeted overseas. I accept that there is always scope for the better co-ordination of activities. I shall try to pass on to the Ministers involved in this work the need to ensure that they do not neglect the international
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dimension. My noble friend also asked me about the benefit system. As that is quite complex, perhaps I may write to her about it.
In conclusion, I believe that our role is to enable young people to make informed choices about what is best and most appropriate for them. I agree with what the noble Baroness, Lady Blatch, said. I do not believe that it would be right for the Government directly to finance gap years. There are many different ways in which young people can do that. In a sense, part of the challenge for them is to organise that.
This debate has provided us with an excellent opportunity to demonstrate not only the ways in which the Government are supporting these measures but also the steps that other organisations are taking. I thank all the speakers in this debate for what has been a stimulating and very informed exchange of views.
House adjourned at twenty-seven minutes before ten o'clock.