Lords Sitting of 11 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 Gloucester.

Lord Cobbold
David Antony Fromanteel Lord Cobbold, having received a Writ of Summons following the death of the Baroness Wharton in accordance with Standing Order 9(7)(Hereditary Peers), took the oath.
2.37 p.m.

Nuclear Waste: Consultation Paper
Lord Tombs Lord Tombs asked Her Majesty's Government:
When they will publish the consultation paper on nuclear waste which was promised in their response to the report of the Select Committee on Science and Technology on Management of Nuclear Waste (3rd Report, Session 1998–99, HL Paper 41).
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, I had indicated that we aimed to publish the consultation paper on the management of radioactive waste in the spring of this year. However, drafting has proved more complicated than expected. The paper will be published as soon as possible.
Lord Tombs: My Lords, I thank the Minister for that reply. The noble Lord will recall that in response to the same Question in March of this year he said:
"we are talking about the spring, and spring it will be".—[Official Report. 16/3/00; col. 1680.]
Spring it manifestly is not, whatever the weather may suggest. Having failed on one promise, I hope that the Minister can be a little more specific today. I look forward to a more definitive date. Is the Minister aware that it is now 16 months since the Select Committee published its report and no action has been taken by the Government, other than a rather flimsy response? Is the noble Lord also aware that 16 months was the time taken by the Select Committee, with its meagre resources, to take oral and written evidence, to visit installations and to consider, write and publish its report? Is that not an unflattering comparison with government activity over the same period? Finally, does the Minister, on behalf of the Government, endorse the following comment in the report:
"The long time-scales involved might be thought to be a reason for postponing decisions. The contrary is the case"?
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We went on to spell out the reasons why the contrary was the case.
Lord Whitty: My Lords, the fact that we need to take decisions which affect the long term is the reason why the Government must get the consultation paper right in the first instance. One of the matters to which the Select Committee draws attention is the need to ensure that there is public support for whatever policy we adopt. Clearly, the consultation paper is part of the strategy to gain public support for whatever solution to this very serious problem eventually emerges. The Government have taken significantly longer than they intended. As I indicated last time the matter was before the House, that underlines the complexity of the issue. I am afraid that I cannot give a definitive date. Spring has indeed gone, and we doubt whether summer is far behind. Nevertheless, we shall take a little more time before we produce the consultation paper. I have made a mistake before and I do not intend to repeat it. This has proved to be a very complex task. I hope that the noble Lord and other members of the Select Committee who carried out this work accept that the Government are making their best efforts in this matter.
Lord Peyton of Yeovil: My Lords, the Minister appears to give a very thin reply to the reasonable Question tabled by the noble Lord, Lord Tombs. Is it too much to hope that the army of draftsmen who are employed in producing loads and loads of rubbish from government sources could be better employed simply responding slightly more quickly than has proved possible?
Lord Whitty: My Lords, the Government did respond to the report of the Select Committee, albeit the noble Lord, Lord Tombs, believes that that response was not entirely adequate. It is, therefore, not a question of discourtesy to the Select Committee. The next stage is consultation with the public and the interests involved on what is a very serious issue. Decisions taken today in this matter will affect the position 50 years ahead and beyond.
Lord Ezra: My Lords, the Select Committee over which the noble Lord, Lord Tombs, presided made a number of very specific recommendations. Some of those recommendations will require further consideration; others could, I believe, be acted upon by the Government quite quickly. Can the Minister indicate the reaction of the Government to the view of the Select Committee that the present management of nuclear waste is fragmented and should be better coordinated? Can that not be done before publication of the considered opinion of the Government on the longer-term treatment of this problem?
Lord Whitty: My Lords, we noted and took into account the comments on the structure of the management of nuclear waste in this country. We did not entirely agree with the Select Committee's solution. We now consider that that issue, together with the other policy issue, should be covered in the consultation document. We shall discuss those issues in that context.
Lord Jenkins of Putney: My Lords, is not the production of less nuclear waste one fairly simply solution? I should like to think that it is not excluded from discussions.
Lord Whitty: My Lords, clearly significant decisions have to be made on the future of the nuclear industry and the role nuclear power plays in meeting our energy requirements and those of the rest of the world. However, the fact remains that were there to be no further nuclear generation there is already substantial waste which will continue to require management and storage. Even were my noble friend's policy to be adopted, we should still require an effective waste management policy.
Lord Jenkin of Roding: My Lords, did not Mr Meacher himself say shortly after the last election that it would be irresponsible to leave this problem to be dealt with by future generations? How much longer shall we have to wait before his welcome statement will be implemented? Alternatively, has the Prime Minister come to the conclusion that there are no votes in the matter and it will have to wait until after the next election?
Lord Whitty: My Lords, it is too serious an issue for remarks like that to be made in this House. The Government take the issue seriously. To refer to decisions by future generations when we are talking about taking a few months to get the first stage of the process right is not appropriate.
Lord Avebury: My Lords, will the Minister elaborate on the complexities to which he referred? Are they of a technical nature? Can he give the House some hint about what they consist of?
Lord Whitty: My Lords, the report covers a significant number of different aspects of the management of waste: the structure of management—the noble Lord, Lord Ezra, referred to that—the future of plutonium, policy on different levels of waste; treatment of military wastes; waste substitution; and a number of other issues all of which have substantial degrees of complexity. I cannot go further than that. The noble Lord will have to await the consultation paper.

HIV/AIDS in Africa
2.45 p.m.
Baroness Rendell of Babergh Baroness Rendell of Babergh asked Her Majesty's Government:
In the light of the spread of HIV/AIDS in some African countries, what warnings, if any, they offer to men and women from the United Kingdom about to visit Africa.
Baroness Amos: My Lords, the Government produce two important resources for the general population travelling abroad. Health Advice for Travellers contains essential information about avoiding health risks, including HIV/AIDS, anywhere in the world. Travel Safe provides specific advice on how to avoid HIV infection. The sexual health and HIV strategy currently being developed is reviewing HIV/AIDS health promotion information needs.
Baroness Rendell of Babergh: My Lords, I thank the Minister for that positive reply. Does she agree that in the United Kingdom people are largely unaware of the extent of HIV/AIDS in sub-Saharan Africa? Therefore the forthcoming international conference should be widely publicised.
Does the noble Baroness also agree that since drug treatment is not affordable in many countries of sub-Saharan Africa, with the exception, I think, of Uganda, international fund-raising measures along the lines of famine relief should be started and public awareness raised?
Baroness Amos: My Lords, I agree with my noble friend that there is a lack of awareness of the extent of the AIDS epidemic in sub-Saharan Africa. There have been recent programmes on television and radio. Those may be associated with the fact that the international conference on HIV/AIDS is taking place now in Durban. We have to ensure that that interest is sustained. I have been surprised that press coverage refers to the HIV/AIDS epidemic as though we have only just learnt about it. It has been continuing for a considerable time. It is important to ensure that the press do not lose interest.
Affordability is only one issue with regard to drugs treatment particularly in sub-Saharan Africa. We need to ensure that the health systems are in place which will assist with that treatment being used in the appropriate way.
Raising money in the way that we do with respect to famine relief is led by NGOs. I am sure that NGOs which wish to start such a campaign would be widely supported.
Baroness Williams of Crosby: My Lords, I congratulate the Minister on the work done by her department, especially as regards research on a vaccine against the AIDS virus.
Does the noble Baroness agree that AIDS is now on a scale comparable only with the great plague in the Middle Ages? It is wiping out up to one in four adults

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in many African countries, including South Africa and Zimbabwe. Will the Minister consider whether the matter is now so serious that it should be raised at the highest international levels, such as the G7 and the Commonwealth Ministers Meeting, so that a strategy can be devised in which pharmaceutical companies, governments and the Churches can all take part in an effective strategy?
Baroness Amos: My Lords, I totally agree with the noble Baroness. Conflict and AIDS are the two issues which have the biggest negative impact in sub-Saharan Africa. The Department for International Development has allocated £l4 million towards the international AIDS vaccine. We cannot be specific about when there might be a breakthrough but we hope that there will be a breakthrough of some kind in the next live years or so. I agree with the noble Baroness that we need to ensure that there is a coordinated international response to this matter. It is important that it is raised and discussed and that some kind of implementation strategy is agreed at the highest levels.
Baroness Knight of Collingtree: My Lords, is the Minister aware that UNICEF has just announced that over 11 million children in Africa and 13 million world-wide are orphaned as a result of AIDS? Indeed, there will be many more. Can she tell the House whether there are any plans for us to help with that terrible situation?
Baroness Amos: My Lords, I agree with the noble Baroness, Lady Knight, that the number of children orphaned as a result of HIV/AIDS is growing, particularly in sub-Saharan Africa. We have ensured that AIDS-related issues, including that of orphans, are integral to the work being done in our development programmes in sub-Saharan Africa. We are also looking at ways of working particularly with women and young people with a view to preventing infection in the first place.
Baroness Masham of Ilton: My Lords, does the Minister agree that some government Ministers and many taxi drivers in those African countries deny the presence of HIV and AIDS and that that is a dangerous situation for tourists? Can something be done through diplomatic lines with the Ministers and Prime Ministers of those countries?
Baroness Amos: My Lords, there is a great deal of denial across the world with regard to the whole area of HIV/AIDS. That is why it is important that we invest money in raising awareness of the subject among populations across the world. We are trying to deal with some of the, as they are termed, "cultural factors" which prevent AIDS programmes being put in place. In countries which have tackled HIV/AIDS successfully, such as Uganda, Senegal and Thailand,
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we have seen leadership coming from the very top of society. It is important that we encourage that leadership in sub-Saharan Africa and in South Asia.
Lord Hughes of Woodside: My Lords, can the Minister say whether the Government are represented at the international conference on AIDS which is taking place currently, or perhaps has just finished, in Durban in Kwazulu-Natal? If the Government are not represented, what support are they giving to those who are in attendance?
Baroness Amos: My Lords, the Government, are represented. The senior health adviser at the Department for International Development is heading the UK delegation and there are also representatives from the Department of Health.
Baroness Gardner of Parkes: My Lords, if it is not already included in the advice which the Minister mentioned, will she include advice to people to take a small safety pack of syringes and medicament which they may require for treatment, because even the most basic items may be unavailable in Africa?
Baroness Amos: My Lords, the advice that we give is extremely comprehensive. Indeed, we ensure that those with HIV/AIDS who travel abroad know that they should take their own medicines with them.

Tobacco Smuggling
2.53 p.m.
Lord Faulkner of Worcester Lord Faulkner of Worcester asked Her Majesty's Government:
What action they are taking to combat tobacco smuggling.
Lord McIntosh of Haringey: My Lords, the Paymaster General announced on 22nd March the Tackling Tobacco Smuggling strategy and a £209 million investment to implement it. That strategy is designed to reverse the trend of tobacco smuggling within three years and reduce it to below current levels in the longer term.
Lord Faulkner of Worcester: My Lords, I thank my noble friend for that reply. However, is he aware that, if current smoking trends continue, tobacco will kill 1 billion people in the 21st century, which is 10 times more than in the whole of the 20th century? Of those, three-quarters will be in developing countries. Is he familiar with the report of the Health Select Committee in another place which describes how companies such as BAT, Gallaher and Philip Morris are targeting the Third World and also contains serious allegations that BAT has been involved in smuggling? Is he yet in a position to announce

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whether the Government accept the committee's recommendation that BAT should be subject to a Companies Act investigation?
Lord McIntosh of Haringey: My Lords, we are certainly well aware of the serious health implications throughout the world, and particularly in developing countries, of continuing and rising levels of tobacco smoking. So far as concerns the Health Select Committee, we are considering its recommendations and shall respond in full in due course. It would not be right for me to respond to a specific recommendation before the full response has been prepared and submitted to the committee. Customs and Excise has not received evidence that UK tobacco manufacturers have committed criminal acts relating to tobacco smuggling into the UK. However, if any evidence is produced, Customs and Excise will of course investigate fully.
Lord Clark of Kempston: My Lords, does the Minister agree that, in view of the fact that, so far as concerns the Chancellor of the Exchequer, the loss of revenue since 1997 has tripled, surely that must point to the fact that the draconian tax on tobacco smoking is detrimental to our revenue? Will he say whether the Taylor report will be published and whether it recommends that VAT or tobacco duty should be reduced? When will the Government stop saying that taxation under this Government has been reduced? If one takes into account direct and indirect taxation, it has increased enormously.
Lord McIntosh of Haringey: My Lords, I shall certainly not underestimate the cost to this country of tobacco smuggling. We estimate that that cost now runs at approximately £2.5 billion, which is 25 per cent of tobacco revenue. As to the Taylor report, that was a private report to government and we do not intend to publish it. However, the Tackling Tobacco Smuggling White Paper, which we published in March and which I referred to in my first Answer, implements many of the recommendations which Mr Taylor made to us.
Lord Hardy of Wath: My Lords, does my noble friend agree that, so long as a wide and unharmonised gap exists between the price of tobacco products in this country and in our neighbouring EU states, there will be a temptation and incentive to smuggle and such crime will continue? Do the Government appreciate that that means that many young people will have access to less expensive tobacco or cigarettes outside the normal and lawful system which governs the retailing of those products, and that, in addition to the burdens and loss faced by the Treasury, the effect on the retail trade is serious?
Lord McIntosh of Haringey: My Lords, it is common ground that too many people smoke and too many people smoke smuggled cigarettes. That is damaging both to health and to taxation. However, there are two ways of approaching that as a problem.
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One is the solution proposed by the noble Lord, Lord Clark, to reduce excise duties. That might help in one sense but certainly would not help from the health point of view. The other is the course that we are taking: to crack down on smuggling itself. The strategy which we published involves disruption of the supply chain, improved intelligence at ports and inland distribution points, confiscation of assets, and more and better human and, indeed, technological resources to catch those who carry out the smuggling.
The Earl of Northesk: My Lords, perhaps I should say that I am definitely not a non-smoker. Can the Minister confirm that, after drug smuggling, tobacco smuggling is the second biggest criminal activity in the UK, far exceeding the level of benefit fraud identified in the report of the noble Lord, Lord Grabiner, on the informal economy? That being so, how does the Government's spending on the problem compare with the resources that they commit to deal with benefit fraud?
Lord McIntosh of Haringey: My Lords, we are prepared to spend what is necessary to tackle tobacco smuggling. I have outlined some of the things that we are going to do. Our proposals involve considerable extra expenditure, including nearly 1,000 additional staff for Customs and Excise. If we found it necessary or appropriate to spend more money, I am sure that we would do so. Given that we are losing £2.5 billion a year, the programme is not constrained by cash.
Lord Peston: My Lords, does my noble friend recall that the policy of raising excise duty at a rate higher than inflation was introduced by the previous Conservative government? That was very much to the credit of the then Chancellor, the noble Lord, Lord Lawson, and we strongly supported that policy at the time, when we were in opposition. Would my noble friend be impressed if the Conservatives occasionally supported the Government in pursuit of a policy that is very beneficial to the nation—and also happens to help the Treasury?
Lord McIntosh of Haringey: My Lords, I noticed that the opposition to excise duties on tobacco came from the noble Lord, Lord Clark, on the Conservative Back Benches. He was not supported by his Front Bench. It would be helpful if the Conservatives supported us now as we supported them then.
Lord Shaw of Northstead: My Lords, is the Taylor report available to the Comptroller and Auditor General?
Lord McIntosh of Haringey: My Lords, I do not think that it is a financial report, so it does not come within the scope of the Comptroller and Auditor General's responsibilities. If I am wrong, I shall write to the noble Lord.

Public Transport: Concessionary Fares
3.2 p.m.
Lord Islwyn Lord Islwyn asked Her Majesty's Government:
Whether any further consideration has been given to the starting time for the proposed minimum half-fare concession for pensioners on public transport.
The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston): My Lords, as some noble Lords may recall, the issue was addressed on two occasions yesterday during the Committee stage of the Transport Bill. To repeat what I said then, the Bill provides that the starting time for the statutory minimum concession is 9.30 a.m. That reflects representations from local government. It is open to local authorities to set an earlier time if they think it appropriate. If they already have an earlier start time, there is no need for them to change it because of anything in the Transport Bill.
Lord Islwyn: My Lords, although the introduction of concessionary fares in the Transport Bill is welcome, it is a very restricted measure. Even the 9.30 a.m. start is unacceptable to pensioners' organisations and the disabled. They are particularly concerned about getting to hospital appointments. Does the Minister also accept that the 9 a.m. start has operated in London for many years, where free passes are available? Why not at least make the 9 a.m. start uniform throughout the country? That would be welcomed as fair by pensioners and the disabled.
Lord Macdonald of Tradeston: My Lords, in the other place, we introduced a free bus pass. In your Lordships' House, we extended the concessions to the disabled. We accepted a Liberal Democrat amendment in Committee in the other place to change the morning start time from 9 a.m. to 9.30 a.m. The passenger transport executive group had called for that later starting time because considerable numbers of school and college journeys are undertaken between 9 a.m. and 9.30 a.m. and in larger cities transport operators have to recover from the congestion of the morning peak during that time. It is also true that 9.30 a.m. is the usual starting time for concessionary fares and for off-peak season tickets. I stress that local authorities are free to provide a scheme that is better than the statutory minimum.

Consolidated Fund (Appropriation) Bill
The Bill was brought from the Commons endorsed with the certificate of the Speaker that the Bill is a Money Bill, and read a first time.

Limited Liability Partnerships Bill [H.L.]
3.4 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.

Limited Liability Partnerships Bill [H.L.]
  COMMONS AMENDMENTS
  [The page and line refer to Bill 108 as first printed for the Commons.]

  COMMONS AMENDMENT
  1 Clause 7, page 4, line 19, leave out from ("partnership") to end of line 21 and insert—
  ("(3) But subsection (2) does not affect any right to receive an amount from the limited liability partnership in that event.")
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1.
  The aim of the amendment is to prevent difficulties that we foresaw might arise from the interpretation of the phrase
  "may receive from the LLP any amount to which the former member, or member, would have been entitled but for that event".
  There is a risk that the phrase could be interpreted to mean that the only entitlement was to what the former member had been receiving before that event—the event being the circumstances set out in subsection (1)(a) to (d), such as death or bankruptcy.
  In many cases, the former member or his representative would not want to receive a continuing entitlement, which the phrase implies, but would wish to have his share in the firm bought out. That may also be favoured by the limited liability partnership, which would otherwise face a continuing liability. The amendment replaces the problematic phrase with a new subsection that refers to the right to receive an amount to ensure that any buyout provision in the member's agreement is not hindered by the clause.
  Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord McIntosh of Haringey.)
  Lord Goodhart: My Lords, I welcome the amendment in principle. I have one technical question on it. It is understandable and correct to leave out the words that follow "partnership" in line 19, but I am not sure why it is necessary to insert a new subsection (3). Subsections (1) and (2) say that a retired member

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  or personal representatives of the deceased may not appear in the management or administration of the business. Nothing in that would affect the right to receive a payment from the limited liability partnership by reason of retirement or death. I merely wonder why the new subsection is thought necessary.
  Baroness Buscombe: My Lords, I support the amendment. I have some sympathy with what the noble Lord, Lord Goodhart, has said. The amendment may not be necessary, but I was pleased to see that it has been added to the Bill, because it clarifies a point as regards which the original drafting of the Bill was hard to understand.
  Lord McIntosh of Haringey: My Lords, I am grateful for that support—one and a half times—for the amendment. Subsection (3) is there more for the avoidance of doubt than because it adds anything positive. However, it ensures certainty of rights for third parties, which is not stated anywhere else in the clause. Clause 7 is intended to ensure that third parties have no right to interfere in the activities of the limited liability partnership—both opposition parties have supported that—but it is desirable to say explicitly that their rights for repayment or for a continuing interest are ensured.
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  2 Clause 17, page 11 line 4, after ("in") insert ("or made under")
  3 Page 11, line 7, after ("in") insert ("or made under")
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 2 and 3.
  We were concerned that the references in subsection (5)(a) and (b) to "provisions contained in" the Insolvency Act 1986 or the specified parts of the Companies Act 1985 might be interpreted too narrowly. In either case, some of the provisions may trigger subordinate legislation. It would be peculiar—and unintentional—if the affirmative procedure were triggered in that way. The intention of the amendments is to make the position more certain by changing the wording to read:
  "provisions contained in or made under".
  That covers primary and secondary legislation.
  Moved, That the House do agree with the Commons in their Amendments Nos. 2 and 3.—(Lord McIntosh of Haringey.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  4 Clause 19, page 12, line 18, leave out subsection (6)
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 4. The amendment removes the privilege clause.
  Moved, That the House do agree with the Commons in their Amendment No. 4.—(Lord McIntosh of Haringey.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  5 In the schedule, page 15, line 15, leave out ("incorporated as a limited liability partnership with that name.") and insert ("a limited liability partnership or oversea limited liability partnership.")
  Lord McIntosh of Haringey: I beg to move that the House do agree with the Commons in their Amendment No. 5. When the Trade and Industry Select Committee of the other place undertook its review of the limited liability partnership legislation, we told the committee that it was our intention that company legislation which requires that oversea companies prominently display the company's name and country in which it is incorporated would also be applied to oversea-registered limited liability partnerships by regulation, and that that would include the requirement to display that information on letterheads and all notices and other official publications of the limited liability partnership. That remains our intention.
  Therefore, it was queried with us why we were additionally planning to prevent the use of the phrase "limited liability partnership" at the end of the title of an oversea registered LLP. That would cause particular difficulties for existing oversea LLPs, many of whom are required, by the legislation of the jurisdiction in which they are registered, to include exactly those words.
  We concluded, as a result, that it was unnecessary and unreasonable both to restrict the use of the words "limited liability partnership" in the title of oversea LLPs and to require that they display their place of registration on all their publications. The latter should prove wholly sufficient to notify clients that they are dealing with an oversea entity.
  On a related point, the noble Lord, Lord Phillips of Sudbury, will remember that at an early stage of the Bill I undertook that we should amend the application in regulations of Section 351(a) and 351(b) of the Companies Act 1985 to limited liability partnerships so as to require firms that use the abbreviation "LLP" after their names to mention on their business letters and order forms that they are limited liability partnerships. That will show clearly to those who are unfamiliar with the acronym "LLP" that they are dealing with a limited liability entity.

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  Clearly, the existing wording in paragraph 4 would not actually prevent the use of the words "limited liability partnership" in the title or name of an oversea-registered LLP. It would merely prevent those being the last words in the title. The regulatory requirement to display the place of registration will be far more effective to alert clients to the fact that the firm with which they are dealing is registered oversea.
  Moved, That the House do agree with the Commons in their Amendment No. 5.—(Lord McIntosh of Haringey.)
  On Question, Motion agreed to.

Utilities Bill
3.12 p.m.
Read a third time.
Clause 5 [Annual and other reports of the Authority]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 1:
Page 3, line 27, after ("year;") insert—
("( ) a statement of accounts giving a true and fair view of the state of affairs and the income and expenditure of the Authority for the year;").
The noble Baroness said: My Lords, Amendment No. 1 relates to Clause 5 of the Utilities Bill and would require the authority to include a statement of accounts in its annual report. As the cost of regulation is borne by licence holders and ultimately the consumer, it is important that information about the financial performance of the authority is in the public domain.
A similar amendment was tabled in Committee and discussed alongside other proposed changes to the reporting obligations of the authority. The Minister said:
"I have sympathy, in principle, with the amendment. It would ensure that readers have in one document an account of the authority's activities alongside a statement of the resources used in delivering those activities. That would be a good thing".
He went on to reject the amendment by saying:
"I do not believe that we should make it a statutory requirement … I accept the general principle but should prefer not to be tied down in the way provided in the amendment".—[Official Report, 13/6/00: col. 1545.]
We believe that it is right to press the Government on this point, or at least to ask the Government to give an undertaking that the authority will publish accounts at or near the same time as publication of its annual report. I beg to move.
Lord Borrie: My Lords, this sounds a reasonable amendment to make to the provision relating to the annual report of the new authority. The annual report to the Secretary of State should include a statement of accounts. However, if the reference in the amendment to,
"a true and fair view",
means that they are audited accounts, it is likely that there will be some delay in the publication of the annual report due to the time needed by the National Audit Office to sign off the accounts.
Your Lordships may consider that there is an analogy between the requirement in Clause 5 and the requirement in the Fair Trading Act 1973 which requires an annual report of the work of the Director-General of the Office of Fair Trading, but there is no requirement that the annual accounts should be included in the same document. Although, as is wholly desirable, the accounts of the Office of Fair Trading are published and are in the public domain, they are simply not required to be published together with the annual report.
Only this morning I made inquiries about the annual report of the Office of Fair Trading for 1999. It has just been published, but I have not yet received a copy. As with many public authorities, one has to wait quite a long time after the end of the year before one can obtain the annual report. I would not like such reports to be delayed even further, as may be the case if the annual report has to be accompanied by audited accounts.
As I understand it, the accounts of the gas and electricity markets authority have to be presented each year to Parliament—technically the annual report is presented to the Secretary of State—under the new Government Resources and Accounts Bill. Therefore, it seems that this amendment would not only create the possible difficulty that I mentioned earlier of the annual report being delayed but would also create an unnecessary duplication. I would advise the House not to accept the amendment.
Lord McIntosh of Haringey: My Lords, I agree with part of what the noble Baroness, Lady Buscombe, said and all of what my noble friend Lord Borrie said. Indeed, in Committee, in responding to a similar amendment, I said that I had sympathy in principle with the intention underlying it. Readers of annual reports would have in one document an account of the authority's activities alongside a statement of the resources used in delivering those activities. I agree with the noble Baroness that that would be helpful.
I also agree with my noble friend Lord Borrie that the reference in the amendment to giving,
"a true and fair view",
of the state of affairs implies that the accounts about which we are talking are the audited accounts. The effect of the amendment would be to require the authority to publish its annual audited statement of accounts as part of its annual report.
The Bill already makes it easier to publish the authority's audited accounts with the annual report because the respective reporting periods have been aligned. The Bill now requires the authority to prepare its annual report on a financial year basis, whereas the preceding regulator has been required to produce his annual report on a calendar year basis.
I do not believe that we should make it a statutory requirement to include audited accounts, exactly for the reasons given by my noble friend Lord Borrie because the publication timetable would be tied to the audit timetable. That is too inflexible. There is a risk

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that in some years publication of the annual report would be significantly delayed if the audit took longer than usual to complete.
It may be helpful if I were to illustrate the potential difficulty. The Government Resources and Accounts Bill which will apply, subject to Royal Assent, from the start of the financial year 2001 to 2002, sets out the requirements on government departments relating to the preparation and the audit of resource accounts. Those accounts have to be submitted by departments to the National Audit Office no later than 30th November each year. The Comptroller and Auditor General has to send the audited accounts to the Treasury no later than 15th January the following year and the accounts are to be laid before the House of Commons by 31st January. Those are final deadlines and, in practice, the accounts are likely to be audited before then. However, at worst, an annual report ready for publication in July or August could be delayed until the end of January in the following year if it were to include the audited account.
As a general principle, I agree that the report and accounts should be published together and as quickly as possible. Where the audited accounts are not available, I believe that the authority should, as Ofgem currently does, include basic unaudited information about income and expenditure and staffing levels in the report. But if there is a significant delay with the audited accounts, I do not think the annual report should be held back.
Baroness Buscombe: My Lords, I thank the Minister for his response to the amendment. I can reassure the noble Lord, Lord Borrie, that we do not intend this to be a delaying tactic. Rather, we are looking for proper accountability of the workings of the authority. That is why we said we would look to the Government for an undertaking that the authority would publish accounts at or near the same time as publication of the annual report.
I am pleased that the Minister stated today that audited accounts should be published as quickly as possible. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 9 [Objectives and duties under 1986 Act]:
Lord Jenkin of Roding Lord Jenkin of Roding moved Amendment No. 2:
Page 7, line 26, at end insert
("(c) to secure a diverse and viable long-term energy supply;").
The noble Lord said: My Lords, in debating Amendment No. 2, I suggest that we discuss also Amendment No. 3. I am delighted to note the Liberal Democrat names added to the amendment.
I make no apology for returning to this issue, which was covered extensively in earlier debates. I want to make two introductory remarks. With regard to the offshore oil and gas industry, about which I spoke at earlier stages, I understand that the day after Report stage last week there was a fruitful meeting between
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that industry and the DTI—its regulator—at which the industry made it clear that it supported the Government's Vision for Gas to 2010 scheme. Part of the presentation included discussion of some of the perceived obstacles to the vision and the industry raised its concerns about regulation by Ofgem (or GEMA, as we now call it).
The important point that emerged from that meeting was that the DTI has now agreed to facilitate tripartite meetings with the regulator at which the industry can highlight its concerns. That is a welcome development and meets many of the points which I and others made in earlier debates in relation to the difference between the onshore regulation by GEMA and the offshore regulation by the DTI.
My only other point is that I am sorry I was unable to be present for the Report stage debates. I was not able to be in London but I did read them in Hansard. I am grateful to my noble friend Lady Byford for the way in which she moved the amendments which, had I been here, I would have been happy to move. I saw from the debates that a number of useful government concessions were made to points raised from these Benches.
However, we are still left with an unsatisfactory omission from Clauses 9 and 13 of any reference to the need to secure a diverse and viable long-term energy supply. I accept that at each stage the noble Lord, Lord McIntosh, made valiant efforts to try to convince the House that it is right that that omission should apply. In the debate on 5th July he said,
"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".
I read the rest of his speech and have to say that I remain totally unconvinced. I detected four arguments in his speech at that time. One referred to the fact that 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".
With respect to the Minister, I cannot see what that has to do with the matter. It is a question of whether or not the regulator will have regard to the overall obligation to secure diverse and viable supplies.
His second argument was that,
"security of supply is indeed the responsibility of government as a whole".
And nobody would quarrel with that. But we are here setting up an instrument of government—a regulator—and it is perverse that in the course of that regulator's duties there should not be a duty to have regard to diversity and viability of supply. After all, the regulator is enjoined in these two clauses to have regard to many other things and it seems to me to go to the heart of the argument.
The Minister's third reason was that,
"The bulk of these issues falls far outside the scope of utilities legislation".
I wondered whether that should be "regulation". But the Minister shakes his head and therefore I do not understand that point. It is at the heart of utilities legislation that there should be built in a clear

139
obligation on the part of all concerned, including the regulator, to have regard to the long-term diversity and viability of supply. I therefore find it difficult to accept that argument.
Finally, the Minister said that,
"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".—[Official Report, 5/7/00; col. 1497.]
I find it difficult to take that argument seriously. The holders of those offices will be men and women of immense ability. Part of their task will be to balance the various demands which will be made upon them, expressly in the interests of consumers, but also in regard to the environment and so forth. I cannot see why it should be a distraction for them to have to have regard to the question of long-term diversity and viability.
I say with regret to the Minister that I do not find those arguments any more convincing than his earlier attempts to persuade the House that these amendments should be excluded. The Minister took some comfort from the fact that the word "consumers" was defined to mean "future consumers" and that therefore it must imply long-term diversity and viability. But that is to build a substantial structure on a slender foundation. I find it unconvincing. I still believe that the words of the amendment should appear on the face of the Bill. I beg to move.
Lord Ezra: My Lords, I support the noble Lord, Lord Jenkin, in his amendment. I, too, am extremely puzzled why the Government have persistently, in earlier stages of our consideration of this Bill, refused to insert the words of the amendment even though the Minister has stated repeatedly that it is an objective of government.
So far the Government have not introduced any legislation setting out their energy policy. This is the nearest we have got to it. Therefore such an important statement of intent should be included. The regulator must surely bear in mind that this is a major intention of government in regard to energy policy. There are a number of likely changes in energy development in the years ahead. For example, we in Britain will see the phasing out of nuclear power. It started with the Magnox stations and it will go on to the AGRs. In due course the PWR reactors will be phased out. The question will then arise as to how this capacity is to be replaced.
There is also the issue of gas supply. At present we are well supplied from the North Sea, but that is a limited resource. In due course we shall have to depend on supplies from more distant places which are not entirely reliable. There is the role that coal may have to play, assuming that we can progress the use of clean coal technology. These are all issues which bear directly on the future regulation of the gas and electricity industries. Therefore, it is very difficult to see why the Government persist, on what appear to be purely technical grounds, in leaving this important
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element of their energy policy out of account on the face of the Bill. I strongly support what the noble Lord, Lord Jenkin of Roding, said.
3.30 p.m.
Baroness Byford: My Lords, I apologise for being a minute or two late arriving in the Chamber. I support both my noble friend and the noble Lord, Lord Ezra. It is perplexing that the Government say that they have a commitment to make sure that we have a diverse supply of energy but cannot accept this amendment. It seems very contrary. I cannot understand why the Government are taking that tack. Perhaps the Minister will tell us.
I hope that I am not out of order. I thank the Minister for responding to my Amendment No. 54 tabled at Report stage. However, I did not receive the reply until this morning, which was too late for me to do anything with it. I have contacted the other people concerned with the amendment. They appreciate the Minister's reply and accept what he says. In principle it is possible to have renewable resources, but I am told that commercially it is still unlikely to happen, as it would have been if my amendment had been accepted. Therefore, I hope that the Minister will he able to respond. I support both noble Lords.
Baroness Sharp of Guildford: My Lords. I also support this amendment. My name is attached to it. In the debates both in Committee and on Report we discussed at length the issue of whether security of supply was necessary. The Minister conceded that the market will not always provide. As the noble Lord, Lord Jenkin, mentioned, security of supply is a matter of government policy. If that is so, then, as the noble Lord, Lord Jenkin, said, this is an obvious place where the Government devolve that responsibility to the regulator. It is natural that the Government should do that.
The amendment takes up three other issues which were of concern to us during the debates. One of them is diversity of supply. We have spoken about the offshore gas and oil industry and later we shall be talking about renewables. The advantage of writing these provisions into the terms and objectives of the regulator is that it would write the diversity of renewables into the heart of the regulator's objectives.
We also talked at some length about clean coal technology. Coal is a fossil fuel where the United Kingdom is best endowed. It is vitally important that we do not lose the technology completely. As my noble friend Lord Ezra made clear at both Committee and Report stages, we were at the leading edge of the technology, but we have allowed it to lag and for other countries to take over. If we write such a provision into the heart of the objectives of the regulator, it would provide at least a little chink through which we could get something more done.
Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Jenkin, began by saying that he made no apology for raising again at Third Reading a matter dealt with both at Committee and Report stages and,

141
indeed, at Second Reading. I do not know whether that means that I should make an apology for the fact that I have very little new to say on a matter which has been debated on several occasions in very similar terms with very similar arguments to those put before. Some people would say that it is an abuse of Third Reading to deal with the matter in this way. I do not express any view on that, but if the House finds it helpful I shall be happy to repeat what I have already said.
The essence of our position is that where the Bill involves issues of security of supply, the current provisions in the Bill are already sufficient and the amendments add nothing. The authority and the Secretary of State are already given a principal objective to protect the interests of consumers. Clauses 9 and 13 of the Bill make clear that that includes future as well as existing consumers. The noble Lord, Lord Jenkin, does not seem to believe that that is important. Everyone else to whom I have spoken seems to believe that it is enormously important. If we were concerned only with existing consumers, it could be argued that short-term considerations were paramount. However, the needs of future generations of energy consumers are clearly set out in the objectives of the Bill. To me that is a very fundamental sign of dedication to security of supply in the longer term.
Of course, consumers have a fundamental interest in securing that reasonable demands for gas and electricity are met. That is what the clauses are intended to achieve. But it is the Government's responsibility—and I stress that—and not just that of the regulator for ensuring supply, which involves the exercise of a whole range of policy instruments, most of which raise issues or concern matters which fall far outside the scope of utilities regulation. I indicated by a nod of the head to the noble Lord, Lord Jenkin, when he asked whether I meant legislation or regulation, that I meant utilities regulation. That is what this Bill is about: it is a utilities regulation Bill. As I said, to the extent to which the Bill can play a part in ensuring security of supply the provisions of Clauses 9 and 13 already achieve that.
The noble Lord, Lord Ezra, and the noble Baroness, Lady Sharp, believe that if one has an energy policy one needs legislation to set it out. It does not follow from having a government policy that one has to have legislation to enforce it. Anyone who has been in government will recognise that one does not introduce legislation unless one has to. Legislation is not introduced giving government powers if they already exist or if they can, by their own free will, so to speak, adopt, for example, the climate change levy objectives. One does not need legislation for that as such but only to implement certain parts of it. Where legislation is required, it has been, and is being, introduced.
Perhaps I may illustrate the range of policy issues which contribute to the maintenance of security of supply. Quite apart from the issues raised by the Bill, they include the management of the UK Continental Shelf and such matters as securing stability and access to overseas sources of energy. All issues which are
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relevant to the offshore energy industry not covered by this legislation need not necessarily be covered exclusively by legislation anywhere. The Government can have effective policies on those issues. Many of them are far outside the scope of the utilities regulation. To the extent that this legislation for utilities regulation is appropriate, the Bill makes appropriate provision.
But the Bill is not the whole picture. The Government are working to ensure security of supply. On a day-to-day basis the markets will ensure that energy supplies are maintained. Diversity of approach and the ability to change quickly, which are provided by competitive markets, ensure the sort of responsive system needed to underpin security and diversity. The Government will use their ability to set the framework in which the energy markets will achieve this.
The Bill makes provision for the new electricity trading arrangements. These will increase the incentive on generators and suppliers to ensure that adequate generation is available to meet demand. Generators and suppliers will face commercial penalties, which could be large, if they do not meet their contractual obligations. This will be an important further contribution for security of supply. The new electricity trading arrangements will also ensure that the appropriate price signals are given to bring forward new investment when this is needed and for customers to manage their demand to the benefit of energy security.
The existing framework of legislation provides for tough service standards on transmission and distribution companies. These are monitored by Ofgem, the industry regulator, and include guaranteed standards whereby the distributor must pay the customer if the service levels laid down are not met. There are also licence conditions that apply to gas suppliers and transporters which lay down quantified standards of security of supply in relation to meeting demand. These are enforced by Ofgem. The measures are backed up by wide-ranging emergency powers under the Energy Act 1976. These permit the Secretary of State to make orders regulating or prohibiting the production, supply and acquisition of fuels to ensure security of supply.
The Electricity Act also includes powers to give directions on the level of stocks and the use of generating stations. Further measures are set out in the Electricity Supply Regulations 1988, which provide for the continuity and safety of electricity supply. These require electricity supplies to be constant, except in certain circumstances.
It is obvious that we are continuing to keep the strategic issues that relate to diversity and security of supply under review. Future energy policy will increasingly be conducted in the context of global and European markets. We have been working actively with the European Commission and other member states to help to build a single European market. This will not only help to promote free trade and energy but should also assist in improving the security of supply across Europe.

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The hierarchy of duties in the Bill already contains all the duties that are relevant for the purposes of this legislation and which are necessary for the security of supply. As I said in Committee, it follows that amendments such as these are a distraction and would serve to confuse rather than enhance the framework of obligations and duties under the legislation.
I must apologise to the noble Baroness, Lady Byford, for not having referred earlier to her point about access by renewables generators to the network under NETA, which was the focus of her previous Amendment No. 54 on Report. As I said in my letter to her, we are seeking to resolve this point in the context of the balancing and settlement codes rather than on the face of the Bill. Amendments to the Bill would not make matters any better. They would not make anything worse; but they would not make things any better. This is another example of not seeking to do everything by means of primary legislation.
I believe that it is a well-established fact—in this House at any rate—that the volume of legislation is increasing and ought to be diminished. I suggest that noble Lords should not seek to make legislation the only source of expression for government policy.
Lord Jenkin of Roding: My Lords, I am extremely grateful to those noble Lords who expressed their support for this amendment. Perhaps I may point out to the Minister that I did not argue that it is only the regulator—I believe I remember his words correctly—who should have regard to security and diversity. Of course that is not so: it is all those who are concerned with the future of energy supplies in this country who should have that responsibility. In a Bill that sets up a new regulator of our two major energy industries—namely, electricity and gas—all we are asking is that that body should also have this obligation placed upon it as one of the matters to which it must have regard and that that should be written into the legislation.
The Minister concluded by saying that we should not have unnecessary legislation. I was a member of the special Select Committee on renewable development chaired by the noble Lord, Lord Tombs, which sat about four years ago. I have the clearest recollection of the time when we were looking at complaints about the Energy Saving Trust. The trust was supposed to be financed by a very modest levy on the gas and electricity industries, which would provide the necessary resources to enable it to help people with insulation and other energy-saving measures. The electricity regulator complied with that obligation and that industry was allowed to make a contribution. However, the gas regulator said very firmly that there was nothing in her terms of reference or in her legislation that obliged her to make such a contribution to the trust. She was extremely robust about it—indeed, she is a very robust lady—and said that she was not going to do so. Therefore, the gas industry never made its contribution. Why? It was simply because that obligation was not in the legislation.
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We believe that GEMA should have regard to diversity and a long-term energy supply and that that obligation should be placed on the face of the Bill It should not be able to say what its predecessor, Clare Spottiswoode said; namely, that because it was not in the legislation she was not going to do it. I believe this to be a sufficiently important matter to test the opinion of the House.
3.45 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 136; Not-Contents, 133.

Division No. 1

CONTENTS

Aberdare, L.

Haslam, L.

Addington, L.

Hayhoe, L.

Alderdice, L.

Henley. L.[Teller]

Astor of Hever, L.

Higgins, L.

Attlee, E.

Howell of Guildford. L

Avebury, L.

Hylton-Foster, B.

Barker, B.

Jellicoe, E.

Beaumont of Whitley, L.

Jenkin of Roding, L.

Biffen, L.

Jenkins of Hillhead, L.

Blaker, L.

Jopling, L.

Blatch, B.

Kimball, L.

Bledisloe, V.

Kingsland, L.

Boardman, L.

Knight of Collingtree, B.

Brabazon of Tara, L.

Lamont of Lerwick, L.

Bradshaw, L.

Lang of Monk ton, L.

Brougham and Vaux, L.

Liverpool, E.

Burnham, L. [Teller]

Luke, L.

Buscombe, B.

Lyell, L.

Butterworth, L.

McConnell, L.

Byford, B.

Mackie of Benshie, L.

Campbell of Alloway, L.

Mar and Kellie, E.

Campbell of Croy, L.

Masham of Ilton, B.

Carnegy of Lour, B.

Miller of Hendon, B.

Chadlington, L.

Monson, L.

Chalfont, L.

Montrose, D.

Clark of Kempston, L.

Mowbray and Stourton, L.

Clement-Jones, L.

Moynihan, L.

Coe, L.

Murton of Lindisfarne, L.

Colwyn, L.

Northbrook, L.

Cope of Berkeley, L.

Northesk, E.

Courtown, E.

Northover, B.

Craig of Radley, L.

O'Cathain, B.

Dacre of Glanton, L.

Onslow, E.

Darcy de Knayth, B.

Oxfuird, V.

Dean of Harptree, L.

Palmer, L.

Denham, L.

Peel, E.

Dixon-Smith, L.

Peyton of Yeovil, L.

Eden of Winton, L.

Phillips of Sudbury, L.

Elles, B.

Rawlings, B.

Elliott of Morpeth, L.

Razzall, L.

Ezra, L.

Redesdale, L.

Ferrers, E.

Renfrew of Kaimsthorn, L.

Flather, B.

Rennard, L.

Fookes, B.

Renton, L.

Forsyth of Drumlean, L.

Roberts of Convey, L.

Gardner of Parkes, B.

Rodgers of Quarry Bank, L.

Garel-Jones, L.

Rotherwick, L.

Geddes, L.

Saatchi, L.

Glentoran, L.

Sanderson of Bowden, L.

Goodhart, L.

Seccombe, B.

Goschen, V.

Selborne, E.

Gray of Contin, L.

Selsdon, L.

Harris of Greenwich, L.

Sharman, L.

145

Sharp of Guildford, B.

Thomson of Monifieth, L.

Sharpies, B.

Tordoff, L,

Shaw of Northstead, L.

Trefgarne, L.

Shutt of Greetland, L.

Trumpington, B.

Simon of Glaisdale, L.

Vinson, L.

Skelmersdale, L.

Vivian, L.

Smith of Clifton, L.

Waddington, L.

Stodart of Leaston, L.

Walmsley, B.

Strange, B.

Warnock, B.

Strathclyde, L.

Watson of Richmond, L.

Swinfen, L.

Weatherill, L.

Taverne, L.

Williams of Crosby, B.

Thomas of Gresford, L.

Willoughby de Broke, L.

Thomas of Gwydir, L.

Wilson of Tillyorn, L.

Thomas of Walliswood, B.

Young, B.

NOT-CONTENTS

Acton, L.

Healey, L.

Ahmed, L.

Hilton of Eggardon, B.

Amos, B.

Hogg of Cumbernauld, L.

Andrews, B.

Hollis of Heigham, B.

Archer of Sandwell, L.

Howells of St. Davids, B.

Ashley of Stoke, L.

Hoyle, L.

Ash ton of Upholland, B.

Hughes of Woodside, L.

Bach, L.

Hunt of Chesterton, L.

Barnett, L.

Hunt of Kings Heath, L.

Bassam of Brighton, L.

Irvine of Lairg, L. (Lord Chancellor)

Berkeley, L.

Bernstein of Craigweil, L.

Islwyn, L.

Billingham, B.

Janner of Braunstone, L.

Blackstone, B.

Jay of Paddington, B. (Lord Privy Seal)

Blease, L.

Borrie, L.

Jeger, B.

Bragg, L.

Jenkins of Putney, L.

Brett, L.

King of West Bromwich, L.

Brooke of Alverthorpe, L.

Kirkhill, L.

Brookman, L.

Laird, L.

Bruce of Donington, L.

Layard, L.

Burlison, L.

Lea of Crondall, L.

Carter, L.[Teller]

Lipsey, L.

Castle of Blackburn, B.

Lofthouse of Pontefract, L.

Christopher, L.

Lovell-Davis, L.

Clarke of Hampstead, L.

McCarthy, L.

Clinton-Davis, L.

Macdonald of Tradeston, L.

Cocks of Hartcliffe, L.

McIntosh of Haringey, L.

Crawley, B.

[Teller]

Currie of Marylebone, L.

McIntosh of Hudnall, B.

David, B.

MacKenzie of Culkein, L.

Davies of Coity, L.

Mackenzie of Framwellgate, L

Davies of Oldham, L.

Marsh, L.

Dixon, L.

Mason of Barnsley, L.

Donoughue, L.

Massey of Darwen, B.

Dormand of Easington, L.

Mishcon, L.

Dubs, L.

Molloy, L.

Elder, L.

Morris of Castle Morris, L.

Evans of Parkside, L.

Morris of Manchester, L.

Evans of Watford, L.

Murray of Epping Forest, L.

Ewing of Kirkford, L.

Nicol, B.

Farrington of Ribbleton, B.

Parekh, L.

Faulkner of Worcester, L.

Patel of Blackburn, L.

Filkin, L.

Paul, L.

Fyfe of Fairfield, L.

Peston, L.

Gale, B.

Pitkeathley, B.

Gibson of Market Rasen, B.

Ponsonby of Shulbrede, L.

Gladwin of Clee, L.

Ramsay of Cartvale, B.

Goudie, B.

Randall of St. Budeaux, L.

Gould of Potternewton, B.

Rea, L.

Grabiner, L.

Rendell of Babergh, B.

Graham of Edmonton, L.

Richard, L.

Greengross, B.

Roll of Ipsden, L.

Grenfell, L.

Sainsbury of Turville, L.

Hardy of Wath, L.

Scotland of Asthal, B.

Harrison, L.

Serota, B.

Haskel, L.

Sewel, L.

Hayman, B.

Shepherd, L.

146

Simon, V.

Tomlinson, L.

Slim, V.

Uddin, B.

Smith of Gilmorehill, B.

Varley, L.

Smith of Leigh, L.

Wedderburn of Charlton, L

Stallard, L.

Whitaker, B.

Strabolgi, L.

Whitty, L.

Symons of Vernham Dean, B.

Williams of Elvel, L.

Taylor of Blackburn, L.

Williams of Mostyn, L.

Taylor of Gryfe, L.

Williamson of Horton, L.

Thornton, B.

Woolmer of Leeds, L.

Resolved in the affirmative, and amendment agreed to accordingly.
3.55 p.m.
Clause 13 [Objectives and duties under 1989 Act]:
Lord Jenkin of Roding Lord Jenkin of Roding moved Amendment No. 3:
Page 10, line 37, at end insert ("and
(c) to secure a diverse and viable long-term energy supply;").
On Question, amendment agreed to.
Clause 41 [Transfer of electricity licences]:
Baroness Buscombe Baroness Buscombe moved Amendment No. 4:
Page 42, line 4, leave out ("two months") and insert ("28 days").
The noble Baroness said: My Lords, Clause 41 inserts a new Section 7A into the Electricity Act 1989 which sets out the arrangements for the transfer of electricity licences granted under that Act. Subsection (9) of new Section 7A requires the authority to publish a notice setting out the reasons for its consenting to a transfer and allowing not less than two months for representations or objections to be made.
Generally in that Act the standard notice period is 28 days and a minimum period of two months may impose an unnecessary delay where the transfer is by mutual consent and no objections are likely to arise. This amendment would reduce the minimum period from two months to 28 days but—this is important—would leave the authority the discretion to prescribe a longer period on a case-by-case basis where it considered it necessary. I beg to move.
Lord McIntosh of Haringey: My Lords, the noble Baroness says that the proposed consultation period is unlikely to be contested. It is important to recognise the nature of the transaction we are talking about. Transferring a licence will involve changes to a large number of contracts with third parties. It is the kind of deal that by its own nature will take time to work through. In these circumstances it does not seem excessive to allow for a minimum period of two months to accommodate the possible breadth of consultation.
I acknowledge that in practice the proposal would not make much difference because the period for consultation, whether it is two months or 28 days as proposed, is a minimum period. However, the draft Code of Practice on Written Consultation issued by the Cabinet Office proposes that there should be a general minimum of eight weeks for public consultation. In my experience, governments are generally criticised for permitting too short a period of

147
consultation rather than too long a period. I hope that the noble Baroness will accept that we are doing the right thing.
Baroness Buscombe: My Lords, I thank the Minister for his response. Like the Electricity Association and other representatives we have consulted, we feel that a period of 28 days would make sense because in many cases we are talking about house transfers and simple realignments. The utilities industry wishes to get on the job and carry it out as expediently and as quickly as possible. That is why we have tabled the amendment. I am sorry that the Minister has not reduced the period but we accept what he has had to say on the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4 p.m.
Clause 62 [Obligation in connection with electricity front renewable sources]:
Lord Jenkin of Roding Lord Jenkin of Roding moved Amendment No. 5:
Page 65, line 34, at end insert—
("( ) The Secretary of State shall ensure that the provisions of an 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 him.").
The noble Lord said: My Lords, in moving Amendment No. 5, which stands in my name and that of my noble friend Lady Byford, I shall speak also to Amendment No. 6. The amendments are slightly different but they are clearly linked.
We come now to the question of the renewables obligation. I remind the House that a new scheme will be set up under this Bill to replace the non-fossil fuel obligation, which has existed for a number of years and has produced the present level of renewables.
Perhaps if I mention a preliminary point now, the Minister may be able to acquire the necessary knowledge to reply to it. I am not entirely clear why hydroelectric power—particularly when there has been a substantial improvement in this field—is not included in renewables. I learnt this fact only recently—I was not aware of it before—and it seems to me to be a fairly strange situation. If ever there is a renewable source of energy, it is hydroelectric—of which, of course, there is a great deal more in Scotland and Wales than in England.
Turning to the issue generally, there was much debate at earlier stages of the Bill on how the new provisions to promote renewable sources of energy will work and whether they will meet the Government's targets—which, frankly, at present seem ambitious. Our present level of renewables is about 2.5 per cent; the Government are aiming at 5 per cent by 2003 and 10 per cent by 2010. The House will be aware that the recent report of the Royal Commission regarded that as quite inadequate. It certainly does not meet the likely changes in other sources—the Minister mentioned nuclear power earlier—and the Royal Commission has recommended that it should be much higher.
I am grateful to the Minister for meeting representatives of those who are concerned with the provision of renewables. I shall return to that in a moment. Parts of what the Minister said in the meeting was of some reassurance, but they still remain quite unconvinced that the new scheme will produce the additional sources of electricity from renewable supplies that the Government are aiming at. Clearly this stage of the Bill is not the moment to rehearse all the anxieties of those who are concerned in trying to meet these targets; suffice it to say that, as of today, they do not think the scheme will work.
The existence of a price cap, which was put in, clearly, because of the Government's overriding obligation to protect consumers; the refusal of the Government to write into the legislation the long-term contracts which alone will provide the necessary basis for raising loans to finance investment; the refusal so far to recognise in the Bill that different sources which are in different stages of development inevitably involve different levels of cost, and that this should be recognised by different levels of capping, all militate in the eyes of the generators of renewables—particularly the smaller ones—against the viability of the scheme.
These amendments suggest two ways in which the Bill may be improved and may possibly marginally help to achieve the renewables target. Amendment No. 5 seeks to impose an obligation on the Secretary of State to ensure that the provisions of the order that he makes provide,
"a suitable environment for investment in generating capacity for electricity from diverse renewable resources".
Therefore, as well as considering the views of the generators, he will have to take account of what the bankers and the investment world have to say about the kind of contracts they will be asked to finance. Any sensible banker will want a renewables obligation that lasts longer than the term of his loan in order to ensure that the loan will be repaid. So Amendment No. 5 simply spells out an obligation that, in making the order, the Government must have regard to a suitable environment for investment.
As to Amendment No. 6, the House will be aware that the clause provides a list of those who must be consulted—the Minister has been clear that there will be very firm consultation—but, curiously enough, it does not include the generators of electricity from renewable sources. Here I come to the interesting point of the meeting that we had with the Minister. On my side of the table were representatives of two trade associations—one representing the people interested in biomass and other non-food crops as a source of energy, and the other the Association of Electricity Producers. On the whole, they represent the very small operators who produce electricity from quite a wide variety of renewable resources.
There came a moment when the Minister and his advisers were saying that they had consulted the generators and that the generators were quite happy with the provisions in the Bill. I said, "But on this side of the table you have a lot of generators who are not happy and who do not feel that they are yet being properly consulted". The situation may have changed

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in the past week, but they were quite clear. The smaller generators and the Association of Electricity Producers—which is not a large trade association; it is run on very slender resources and represents, as I said, very small firms (some of them only family firms) that have small sources of electricity generation—want to be quite sure that the Bill places an obligation on the Secretary of State to consult them before making the order.
We have argued this case before and I have had rather unsatisfactory answers. It seems to me that both creating an environment for investment and consulting the generators from renewable supplies will go at least part of the way to allay the concerns that have been voiced. I beg to move.
Lord Hardy of Wath: My Lords, I shall be very brief. I hope that I may be excused, perhaps before the end of the debate, because there is a Joint Select Committee meeting upstairs and I would not wish your Lordships' component of that committee to be inquorate.
Perhaps I may ask my noble friend to consider seriously a point I have made before, both in Committee and on Report. I believe that the Government are right to set a target; they are also right to ensure diversity. What worries me—and I am still anxious despite the earlier debates—is that the quickest way of meeting the target will be from onshore windpower. I am not at all satisfied that that would be the wisest or most acceptable course. Certainly other forms of generation need to be encouraged to avoid an excessive proliferation of windmills over every prominent, and perhaps beautiful, part of our landscape—a landscape which needs to be treasured.
Can my noble friend give an assurance that, if it looks as though the Government may not meet their target, they will not be tempted to lean on local authorities and urge them to give planning permission for such projects? I say that because I have a vivid memory of the period when the noble Lord, Lord Jenkin, was Secretary of State for the Environment and, under successive governments, many of his colleagues sustained the position of the Department of the Environment leaning on planning authorities very firmly indeed to ensure that planning permission was given for open-cast mining development—a development which soured, injured and inconvenienced local communities, perhaps for many years. Indeed, in my part of South Yorkshire, 40 years after open-cast mining farmers cannot grow root crops.
I am not suggesting that there should not be windpower—perhaps offshore windpower is desirable—but I do not want to see a situation in which we are compelled to have a vast number of onshore windmills in order to meet the very tight targets the Government have set. I have made the point before and I await my noble friend's response, perhaps by
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letter. To avoid that disfigurement of our heritage it is essential to ensure adequate consideration is given to promoting diversity.
Baroness Byford: My Lords, I rise to support my noble friend Lord Jenkin. I appreciate the words spoken by the noble Lord, Lord Hardy of Wath. I shall not rehearse the excellent presentation with which my noble friend Lord Jenkin moved the amendment. But I would point out that on an earlier amendment the Minister referred to "the short-term solution". Obviously short-term solutions are important. But for very small producers of power, if there is no long term, there is no short term. I add my voice in support of the amendments. I hope that the Minister will reconsider our arguments on this issue.
Lord Ezra: My Lords, I support the amendments spoken to by the noble Lord, Lord Jenkin. The amendments support the Government's intent, which is to secure the renewable sources targets. The two amendments spoken to by the noble Lord, Lord Jenkin, deal with the environment within which renewable sources should be promoted and orders made for the renewable obligation. The second amendment deals with an obligation on the Secretary of State to consult the generators of electricity from renewable sources. When this second issue was debated at Report stage, the Minister stated that there was an omnibus subsection that would enable him to consult,
"such other persons, if any, as he considers appropriate".—[Official Report, 5/7/00; col. 1545.]
I regard that as weak and dismissive. He might well say that there are none. The whole clause deals with generation from renewable sources. Therefore, consultation with generators of electricity from renewable sources should be made an obligation on the Secretary of State. The two amendments support the Government's intent. I look forward with great interest to the Minister's response.
Lord Wilson of Tillyorn: My Lords, perhaps I may make a brief comment on a point raised by the noble Lord, Lord Jenkin. In doing so, I declare a direct interest as chairman of an electricity company which has substantial hydroelectric resources. I do not wish to argue a point directly related to that company, but it would be helpful if the Minister could comment on the point raised by the noble Lord, Lord Jenkin. Do the Government wish to encourage investment in hydro resources? It is not a matter to be put on the face of the Bill itself. It is more a matter of attitude.
Baroness Sharp of Guildford: My Lords, I support the amendments introduced by the noble Lord, Lord Jenkin. My name is attached to Amendment No. 6. I do not need to reiterate the arguments. I endorse them entirely. I should like to mention an excellent report last year from the Select Committee on Science and Technology, chaired by the noble Lord, Lord Geddes. The committee looked at the issue of renewable targets and underlined the need for long-term investment.

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Much of the investment, particularly in some of the more speculative renewable areas, such as photovoltaics, needs the surety of the environment to which the noble Lord, Lord Jenkin, referred. It is very important that we consider meeting the renewables target. At present we are at just over 2 per cent of the renewables target. The target is 10 per cent by 2010. We stand little chance of meeting that target unless there is long-term investment.
4.15 p.m.
Lord McIntosh of Haringey: My Lords, I shall deal with each of the amendments in turn. Amendment No. 5 seeks to impose on the Secretary of State a duty to ensure that the terms of any renewables order that he makes are, if I may paraphrase, sufficient to ensure that there are enough investment incentives to achieve the long-term objectives that he has set. I cannot say that I disagree that this should be uppermost in the Secretary of State's mind when setting an order. But I must ask the noble Lord, Lord Jenkin, this question. Can he imagine a Secretary of State making an order when he does not believe that it will bring about the objectives which he himself has set? I think the answer is obvious. On reflection I think he will agree that the amendment is unnecessary.
Amendment No. 6 would introduce a statutory obligation to consult the generators of electricity from renewable sources before making a renewables order. Again, I have no quibble with the underlying thought. Of course those who generate renewables energy should be consulted about the terms of an order. But then so should those who have ideas about how possible new renewable sources can be tapped. Academics and pressure groups will have views. They should be consulted. The general public too have a right to express their views and have them heard. We could make a long list. We have heard differing views on the effect of particular renewables sources on the local environment. But the Bill provides for all of these to be consulted in new Section 32(7)(d), which provides that the Secretary of State must consult,
"such … persons … as he considers appropriate".
It is not necessary to pick out one group for special treatment. Indeed, there are those who argue that it is dangerous to pick out one group for special treatment. However, I am a reasonable person and I am always willing to listen to arguments. The amendment will not work. The amendment refers to,
"the generators of electricity from renewable sources".
Strictly speaking, that means every generator of energy from renewable sources. It means that if a single one were to be left out, including a very small generator of energy from electricity sources, there could be a risk of ultra tires challenge in the courts. I am prepared to let the amendment go on the basis that when it goes back to the Commons we will have to reword it to avoid the risk I have indicated but still achieve the objective of noble Lords who propose it. With those provisos I shall not oppose Amendment No. 6.
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Before I sit down, perhaps I may say a few words about hydro power and wind power. Hydro power is included in the definition of "renewables". We certainly do not want to use the powers to support large-scale commercial hydro power which is already commercially established and does not need any help. Regarding wind power, to which my noble friend Lord Hardy referred, there is no question of our leaning on councils to grant planning permission for wind farms. We have made clear that the strategy is market-based and we shall not be picking technologies. I hope that the noble Lord will not press Amendment No. 5 and will accept that Amendment No. 6 can be accepted only subject to subsequent amendment.
Lord Jenkin of Roding: My Lords, we seem to have scored a second victory today. I am grateful that the Minister has agreed to accept Amendment No. 6; otherwise we might have been tempted to press it to a Division. We shall not. We look forward to seeing what comes back from another place. I take the point about drafting. We shall deal with that when we reach it.
On Amendment No. 5, the noble Lord asked a rhetorical question. He asked whether I could imagine any Secretary of State who would not want to create a climate favourable to investment, with the right incentives and so on. If I was dealing with reasonable people, that might well be the case. But I suspect that some of us could think of names where that might come rather low in their order of priorities. That is why we thought that the provision should appear on the face of the Bill. However, as the Minister has met us on Amendment No. 6 and made a good case against including Amendment No. 5 in the Bill, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Jenkin of Roding Lord Jenkin of Roding moved Amendment No. 6:
Page 65, line 40, after ("apply;") insert—
("( ) the generators of electricity from renewable sources;").
On Question, amendment agreed to.
Clause 63 [Orders under section 32: supplementary]:
Lord Jenkin of Roding Lord Jenkin of Roding moved Amendment No. 7:
Page 67, line 11, at end insert—
("( ) In the case of electricity from biomass, or from such other renewable sources as the Secretary of State shall specify, any such order shall specify a minimum contract term of not less than 15 years for the delivery of the specified amount of electricity from renewable sources by the designated electricity supplier, and that the terms of any contract made between the electricity supplier and the provider of the renewable resources pursuant to such an order shall be in a form approved by the Secretary of State and shall provide that—

(a) it shall run for not less than 15 years from the start of generation,

(b) the price paid by the supplier to such supplier shall be subject to an annual price adjustment to reflect the effects of inflation, and

(c) the contract must be in a form capable of being used as security for a loan or loans to such provider.").

The noble Lord said: My Lords, the potential producers of electricity from biomass have argued most insistently that there need to be long-term contracts. Those firms will require substantial investment. In many cases they are quite small firms—perhaps family firms—and they will need to borrow from the bank in order to be able to finance their investment. There is a special case to be made in this respect. Perhaps the Minister will be prepared to recognise on the face of the Bill that there should be a requirement for long-term contracts.
We have argued this point before and the Minister has explained clearly why the matter should be left to the market. The problem is that the renewables obligation is of itself an interference with the market. If there were no renewables obligation, and if the non-fossil fuel obligation had not been introduced by the previous government, does anyone seriously believe that we would have had as much investment in renewables as there has in fact been? I do not believe so because the market would not have moved anything like as quickly in that direction. It is perfectly proper for government to insert a requirement of this kind based on long-term environmental objectives—from before Rio and afterwards—to increase the share of the power market supplied from renewable sources.
Having decided to do that, having decided to manipulate or guide the market in a particular direction, I do not find it in the least offensive to say that that must be accompanied by other regulatory changes to ensure that it actually happens. The potential producers of electricity from biomass are assuredly not confident that without some clear steer on the need for long-term contracts they will be able to negotiate contracts with the suppliers which will enable them to meet the requirement.
We have added the words,
"or from such other renewable sources as the Secretary of State shall specify".
It is left entirely to the Secretary of State to decide whether other people in this category could well argue for the protection of long-term contracts. Contracts are at the heart of this matter. That was stated in a government publication, which I shall not quote again because I quoted it on the second day of Committee stage. Having decided to go down this road, I am unclear why the Government are not prepared to recognise that long-term contracts are the best way of securing their renewables objectives. I beg to move.
Baroness Byford: My Lords, I rise briefly to support the amendment. At various stages of the Bill's passage through the House we have discussed the whole future of renewables—particularly biomass and the adaptation of non-food crops. I do not believe that the Minister disagrees with us. I think he accepts that it is not a short-term job and that it needs long-term planning and investment. The people working in this field with whom I have had conversations feel strongly that they would like to have more government support. If the Minister does not accept the logic
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behind the amendment, perhaps he will explain to the House how, without such commitments, he sees the development of renewables in the future.
Baroness Sharp of Guildford: My Lords, the amendment has the support of the Liberal Democrats. It picks up the arguments which I put forward in respect of the previous amendment. I refer to the need for long-term planning and long-term contracts. I thoroughly endorse what the noble Lord, Lord Jenkin, and the noble Baroness, Lady Byford, have said on that issue. In relation to biomass, we should also bear in mind that agriculture is going through a major crisis and that it is looking for areas into which it can diversify. Biomass is an important area into which it can diversify.
Lord McIntosh of Haringey: My Lords, I fear that this amendment runs into exactly the same objections as did similar amendments which we debated in Committee and on Report. We do not accept that we should retain a feature of the old non-fossil fuel obligation mechanism—government-mandated long-term renewable supply contracts. That runs contrary to the entire thrust of the Government's market-based policy for the new renewables obligation.
I have to point out that the amendment is unworkable and could be perverse in its effects. No order can ensure that contracts entered into are suitable for use as security for a loan. Requiring indexation of the price paid runs directly counter to the objective of bringing down the price of renewables energy in real terms, so that it is genuinely competitive with energy from other sources. After all the debate we have had on renewable energy, I am astonished that any noble Lord opposite could think that it is possible to have a renewables policy which relies on indexation of the price of renewable energy. Surely, the only way practically that we shall get an increase in the amount of renewables used is by bringing down the price. I am astonished to find the noble Lord, Lord Jenkin, proposing government interference in the terms of contracts between consenting parties. I am sure that the noble Lord's Front Bench cannot possibly agree with that part of the amendment.
Perhaps I may repeat our position on the underlying issue, which is whether the new obligations as planned by the Government will in fact deliver sufficient investment in renewables to meet the Government's renewables targets. The noble Baroness, Lady Sharp, addressed that point. 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. So the Government are putting in place 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 of buy-out receipts.

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Renewable energy resources are limited. They are not always available to meet potential demand. The rate at which they can be deployed is limited. The Government are 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.
If we are moving to a market-based approach, the matter of individual contracts and the choice of technologies to meet the supply obligation are surely matters properly left for negotiation between generators and suppliers. I should not have to say that—to the Conservative Party at any rate. Having said that, I would repeat that the obligation on suppliers will be a long-term obligation. Any supplier with any sense, facing a long-term obligation, will negotiate a long-term contract to fulfil it. There is no need, even if it were a practical option, which it is not, to make the kind of provisions included in the amendment.
Lord Jenkin of Boding: My Lords, I believe that the Minister has done rather better in his response to this amendment. The arguments he has deployed seem to have some force. However, without wishing to repeat myself, the fact is that the entire system is essentially an interference with the market and so it is not unreasonable to suggest that that interference might be extended.
However, the Minister has made a strong case and I take entirely his point as regards the indexation clause. It would be wrong to press the amendment to a Division. Given that, I am extremely grateful to all noble Lords who have supported it.
The Minister's speech will be studied with interest by all those who are involved in this area. I hope that it will provide them with some reassurance. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.30 p.m.
Clause 65 [Alternative way of discharging renewables obligation. Payments]:
Lord Jenkin of Roding Lord Jenkin of Roding moved Amendment No. 8:
Page 68, line 9, at end insert—
("( ) The Secretary of State shall have regard both to the costs of production of differing sources of renewable electricity and to the implications for fulfilment of the renewables target when setting the differing sums which are to be regarded as discharging the renewables obligation under this section.").
The noble Lord said: My Lords, I rise to move the amendment standing in my name and that of my noble friend Lady Byford, the noble Lord, Lord Ezra, and the noble Baroness, Lady Sharp. We tabled a similar amendment at an earlier stage. The amendment seeks to reflect the undoubted fact that different sources of renewable electricity are at different stages of development. Some will require a great deal more development expenditure than others and therefore the costs involved may well be substantially
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differential as between well-established sources such as gas from waste and some forms of biomass. However, other sources, such as offshore wind power, mentioned by the noble Lord, Lord Hardy, will require a great deal more development before they become truly viable.
This subject was covered at some length in the report of the Royal Commission. The report contains an interesting table detailing the DTI's own classification of the likely timescales over which new and renewable energy technologies will become available. In the medium term, certain biomass residues, offshore wind and energy crops will be developed. In the longer term, technologies such as fuel cells, photovoltaics and wave power will come on stream. In the very long term we shall see technologies such as tidal barrages.
However, the Bill does not recognise differing scales of development at all. The cap on the buy-out price is to be a flat rate cap on everything. The Royal Commission very properly voiced the anxieties of what will be the effects. In paragraph 7.112, after welcoming the introduction of the scheme to replace the NFFO and supporting the general approach of the Government, it stated:
"We are concerned however that, because ail generating plants using renewable energy will be competing against each other on price, there will not necessarily be sufficient support for those technologies which have the greatest long-term potential but may be more expensive at present. The experience under NFFO illustrates what we see as the danger".
By suggesting that a differential price cap should be introduced on the buy-out price, the intention behind the amendment is to reflect that proposition. As we have discussed previously, the price cap is there primarily to protect consumers. However, as one renewables generator recently commented rather sharply to me, "The Government has got to make up its mind. Does it want to protect consumers or does it want renewable energy? The chances are that it probably cannot have both".
If the Government are putting the protection of consumers at the top of their priorities in this part of the Bill, they may well find that they will not meet their renewables targets. The amendment seeks to give them the opportunity to put that right. I beg to move.
Baroness Byford: My Lords, I support the arguments put forward by my noble friend in moving this amendment. I believe that the targets on renewable energy sources are a matter of great concern to Members on all sides of the House rather than only those on these Benches. If we do not take care, those targets will not be met. Whatever can be done in the Bill to help to achieve those aims will be greatly appreciated by many, both within and outside of this House.
Lord McIntosh of Haringey: My Lords, the short answer to the challenge set by the noble Lord, Lord Jenkin, is that consumers have an interest in renewable energy sources because those consumers are both present and future consumers. Unless real progress is made towards the achievement of our targets on

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renewable energy sources, then security of supply and all the other factors for which we are providing in this Bill will not be gained.
I must repeat what I have said at earlier stages of the Bill: this amendment is unnecessary. The fact that the Secretary of State was contemplating setting different buy-out prices for different technologies would imply of necessity that he was having regard to different costs of different technologies. It cannot mean anything else. By the same token, it is not conceivable that the Secretary of State would set different prices without regard to the implications for the levels of renewables generation likely to be achieved as a result. Again, the Bill as drafted cannot mean anything else. Furthermore, it will not benefit the Bill to have an amendment of this kind added to it.
Unless there should be any doubt about this matter, perhaps I may set out again our thinking on how our support for the new technologies is going to work. I believe that it is generally agreed that as electricity suppliers move towards the 10 per cent target they are likely to find that the supply of cheaper renewables may run out or will not be available in sufficient quantities to achieve the more demanding targets. The suppliers will look increasingly towards more expensive sources of renewable energy—for example, offshore wind and energy crops—to meet their obligations. Those energy sources cannot be brought in overnight. In their own interests, it would be prudent and sensible for electricity suppliers to look ahead now to ensure that such technologies will be brought forward on a timescale and in sufficient quantities to meet their needs. The suggestion behind the amendment is that price bands should be used to achieve that. I should point out that the legislation does not rule out the use of price bands. However, we have no current intention to put them to use. If we did, then we could use the existing provisions of the Bill without having to make further provision along the lines suggested in the amendment.
I am not unsympathetic to the intentions that lie behind the amendment, but the Bill very adequately provides the basis on which electricity suppliers themselves will be urged and, if necessary, even forced towards the objectives so eagerly sought by the noble Lord, Lord Jenkin, and indeed by the Government.
Lord Jenkin of Roding: My Lords, I listened with care to the Minister. Once again he made a fairly strong case. If indeed it is already within the power of the Bill to implement differential buy-out prices, it strikes me that difficulties will be encountered with the single flat rate cap. This may be something that the Government need to examine more closely. At an earlier stage we argued that a cap should be triggered only if it was clear that excessive prices were being charged to consumers. However, the Government did not like that. As they see it, the cap forms an integral part of the process.
However, if the power is in place to use differential prices, at this stage perhaps we should rely on that. I welcome also the thought that was given to the
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response to meet the intentions that lie behind the amendment. I believe that we all seek the same objective in this area, and perhaps the amendment is not the right way forward. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 72 [Uniform prices etc. in certain areas of Scotland]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 9:
Page 75, line 19, leave out ("and") and insert ("or").
The noble Lord said: My Lords, Clause 72 of the Bill ensures that powers will continue to be available to ensure that the prices charged by electricity transmission or distribution licence holders for use of their systems in a specified area of Scotland will not differ for reasons of geography between different parts of the area. This obligation benefits the remote communities of the north and west of Scotland.
The minor drafting amendment clarifies the intention that the requirement for uniform prices is intended to apply to holders of either transmission or distribution licences within the specified area, regardless of whether such licensees also carry out the other function within the area. The amendment thus ensures that possible future changes in the ownership structure of the industry will not narrow the scope of this provision. I beg to move.
On Question, amendment agreed to.
Clause 95 [Financial penalties]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved amendment No. 10:
Page 100, line 31, 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 Lord said: My Lords. Amendments Nos. 10, 23 and 24 are all consequential amendments to changes to the financial penalties provisions which the Government accepted on Report.
Amendment No. 10 is identical to an amendment tabled by the noble Lord, Lord Kingsland, and the noble Baroness, Lady Buscombe, on Report and accepted by the Government, except that their amendment applied to the electricity sector and this applies to gas.
The amendment was intended to insert a protection against double jeopardy in relation to financial penalties imposed under the Utilities Bill and the Competition Act 1998. It was intended to mirror the provisions already in place in the Gas and Electricity Acts in relation to enforcement orders and double jeopardy under the Competition Act 1998. The amendment is necessary in order to ensure consistency in the Bill's provisions as they apply to the electricity and gas sectors.
Amendments Nos. 23 and 24 are consequential on amendments to Clauses 59 and 95 tabled by the noble Lords, Lord Borrie and Lord Currie, and accepted by the Government on Report. The amendments

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imposed a cap on financial penalties of 10 per cent of the turnover of the licence holder concerned, with detailed provisions to be made in an order by the Secretary of State.
The amendments we are tabling today simply have the effect that any order made under Section 27A(8) of the Electricity Act 1989 or Section 30A(7) of the Gas Act 1986, for the purposes of specifying provisions in relation to the cap—such as the definition of turnover—will be excluded from the generic provisions under the Acts that orders shall be subject to negative resolution, and will therefore allow it to be subject to affirmative resolution as specified by the financial penalties clauses. The provision for affirmative resolution mirrors the arrangements under the Competition Act 1998. I beg to move.
Baroness Buscombe: My Lords, we are delighted that the Government have introduced this provision, which mirrors the amendment that we tabled on Report, and which is now Clause 59(2) of the Bill. We are particularly delighted that the drafting is as ours.
On Question, amendment agreed to.
Clause 106 [Interpretation]:
Lord Brightman Lord Brightman moved Amendment No. 11:
Page 118, line 13, at end insert—
("( ) The definitions in sections 48 and 66 of the 1986 Act shall, as regards matters relating to gas, apply to this Act, unless the context otherwise requires.")
("( ) The definitions in sections 64 and 111 of the 1989 Act shall, as regards matters relating to electricity, apply to this Act, unless the context otherwise requires.").
The noble and learned Lord said: My Lords, I beg to move Amendment No. 11. I do so in order to have the opportunity to explain the genesis of the four amendments which stand in my name, and also to have the opportunity to express my thanks to the Minister for his co-operation in meeting the problems which I thought arose in the drafting of subsections (2) and (3) of Clause 106. These subsections are to be found on page 118 of the Bill beginning at line 14.
My problem with the subsections was that they placed on the reader the burden of scanning the whole of Part I of the Gas Act 1986, some 48 pages, and Part I of the Electricity Act 1989, which is of a similar length, in order to discover the definitions which are to be carried forward into the Utilities Bill. There is no reference in those subsections as drafted to the relevant sections of the two parts.
Furthermore, the subsections suggest that only Part I of each of the Acts need be looked at in order to discover the definitions. In fact, the reader must refer also to Part III of each Act for definitions which have to be carried forward into the Utilities Bill. A person of a critical turn of mind might be tempted to describe subsections (2) and (3) as drafted as both obscure and misleading.
As a result of discussions with the Minister yesterday, I drafted Amendments Nos. 11, 12 and 15 in order to meet the situation. However, the noble Lord has tabled Amendments Nos. 14 and 16 with the same purpose in view. I am more than content to
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accept his amendments, and I am grateful to him for his patience in listening to me and providing the answer to the problem. In those circumstances, I beg leave to withdraw the amendment.
The Deputy Speaker (Lord Murton of Lindisfarne): My Lords, perhaps I should put the amendment to the House.first! The amendment is at page 118, line 13, at end insert the words as printed.
4.45 p.m.
Lord Elton: My Lords, I did not want to interrupt that graceful minuet. I should merely like to express my satisfaction and, I believe, the gratitude of many other Members of this House for the noble and learned Lord's careful scrutiny of so much of our legislation. His ability, which few if any others of us possess, lies in persuading the Government and the parliamentary draftsmen that what he proposes is better than what they propose. In this case, they have managed to propose something nearly as good, and we are very pleased. But it is notable, the way in which the noble and learned Lord on occasion comes in and disperses the fog that has obscured matters. I merely want to say thank you to him.
Noble Lords: Hear, hear.
Lord McIntosh of Haringey: My Lords, the noble and learned Lord, Lord Brightman, said nearly all of it, and the noble Lord, Lord Elton, said most of the rest—although I have to say that I bridle at the phrase "nearly as good". Of course, it is marvellous that the noble and learned Lord should, as he so often does, pursue his intention of making the drafting of this Bill and other measures more transparent and more accessible to laymen. He has a point and he has argued it. He is right. However, our drafting is better, as I think the noble and learned Lord will admit!
Lord Brightman: My Lords, I think I may have been premature in asking leave to withdraw the amendment!
Amendment, by leave, withdrawn.
[Amendments Nos. 12 and 13 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 14:
Page 118, line 14, leave out ("and in Part I of the 1986") and insert ("which are defined in section 48 or 66 of the 1986 Act or used in Part I of that").
On Question, amendment agreed to.
[Amendment No. 15 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 16:
Page 118, line 18, leave out ("and in Part I of the 1989") and insert ("which are defined in section 64 or 111 of the 1989 Act or used in Part I of that").
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 17:
Page 118, line 19, at end insert—
("( ) Section 46 of the 1986 Act (service of notices, etc.) shall apply to any document authorised or required by virtue of any provision of this Act to be served on or given to any person as if it were authorised or required to be served or given by virtue of that Act.").
The noble Lord said: This amendment inserts into Clause 106 (the interpretation clause) a new subsection with the effect that Section 46 of the Gas Act 1986, which is concerned with service of notices, etc, applies to the Utilities Bill. The provision is required because the Bill does not contain any provisions analogous to Section 46 as to the manner of such service. I beg to move.
On Question, amendment agreed to.
Schedule 1 [The Gas and Electricity Markets Authority]:
Lord Kingsland Lord Kingsland moved Amendment No. 18:
Page 120, line 8, at end insert—
("( ) Before making any appointments to the Authority, the Secretary of State shall seek and take account of the opinion of the Trade and Industry Select Committee of the House of Commons.").
The noble Lord said: My Lords, this amendment requires the Secretary of State to seek and take account of the opinion of the Trade and Industry Select Committee in another place before appointing the chairman or other members of the gas and electricity markets authority.
An amendment moved in Committee which would have required formal confirmation of such appointments by the Select Committee was rejected by the Government. But the Minister commented that,
"perhaps at some time in the future—if, for example, I can persuade my party to put the matter into a manifesto—it may be desirable for there to be confirmatory hearings".—[Official Report. 13/6/00; col. 1532.]
The amendment would require consultation rather than confirmation, and therefore provides a compromise solution which would go a long way to fulfilling the Minister's ambitions. I beg to move.
Lord Borrie: My Lords, the Trade and Industry Select Committee of another place will have a most important role in scrutinising and checking the work of the new gas and electricity markets authority, just as it has an important role in checking the work of other governmental bodies and executive bodies of very different kinds but within the general area of trade and industry. I think it is important that the job should be done by a body which is completely independent of the gas and electricity markets authority. If the legislature is to be a proper check on the executive, it is important that it should not have a hand in the appointment of the people who are to constitute an executive body.
If the Select Committee has a role in choosing members of the gas and electricity markets authority, and if the choices favoured by it are approved by the Government, possibly it would be a little less than robust in the work that it did. If, on the other hand, the Trade and Industry Select Committee was looking into
162
the work of a body whose members it did not suggest, or indeed did not believe to be appropriate, the attitude might be one of determined opposition and it might be so robust as to be unreasonable.
That may sound a little exaggerated but, if it is, it is only to make my point that I am not sure that the same body which is to do the checking of the executive should have a hand, albeit a consultative hand, in the choice of members of that executive body. I believe that there may be a case—and this needs to be argued over a broad field and not just in connection with this particular authority—for Parliament, through a Select Committee, to have some kind of consultative role in the appointment of members of governmental and public bodies. However, I very much doubt whether the same Select Committee should have a role in the choice of members of an executive or public authority and also be an effective check on that authority's work. I think that a much broader parliamentary role for public appointments needs a much broader study than we can give on this occasion. Indeed the same argument would have applied to earlier discussions of the Bill. Confining ourselves, as we must under this Bill, to one particular authority, that would be an interesting innovation and one well worth debating, but it would not be an appropriate innovation to introduce in respect of this Bill, and certainly not at this stage.
Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Kingsland, seems to think that this amendment is a compromise on the amendment which he moved at an earlier stage, which was in effect a confirmatory amendment. Of course it is not really a compromise, because it requires the Secretary of State not just to seek the opinion of the Trade and Industry Select Committee before appointing members of the new authority but to take account of their views. That immediately puts us into the dilemma described by the noble Lord, Lord Borrie.
Speaking, if I may, as a human being and as a rank-and-file member of the Labour Party, I think the whole issue of the relationship between Select Committees in another place and public bodies would deserve broader discussion. That is why I would hope to persuade my party that this might be included in a future manifesto. It may well be, although I have not discussed this with my colleague Ministers, that many people hold a view which is strongly opposed to that. But whatever view they may have, the issue of whether you start to involve Select Committees of the House of Commons in whatever way—whether by way of having their views taken account of or by needing formal consultation—would be a complete innovation in our constitution. It certainly would deserve a great deal more public discussion than we can achieve in the House of Lords examining the Utilities Bill at Third Reading.
There was some confusion at an earlier stage about the position of the Monetary Policy Committee of the Bank of England and it was suggested that there was something comparable to confirmatory hearings by the Treasury Select Committee. Of course the

163
Treasury Select Committee can call members of the Monetary Policy Committee to appear before it and it has the right to pass any judgment it sees fit. However, it does not have a statutory role in regard to appointments. As was made clear in respect of a recent appointment, that decision lies entirely with the Chancellor of the Exchequer. I suggest that this is not the place for constitutional innovation. I know that the noble Lord, Lord Kingsland, would like to make a name for himself as a great constitutional innovator, but I think he might find a better occasion to do it.
Lord Kingsland: My Lords, I do not know what gave the noble Lord the Minister the idea that I want to make a name for myself in any sphere of political activity, let alone the constitution.
I must say that I am disappointed by the reaction of the noble Lord and indeed that of the noble Lord, Lord Borrie. In my submission, the innovation by the Government in introducing a power for the Treasury Committee to interview members of the Monetary Policy Committee of the Bank of England was a wholly admirable one. Indeed, I would not have thought that the Government would have introduced it unless they thought it was admirable.
I understand that the Government, in general terms, support the strengthening of Parliament in relation to the executive. Here we are not even talking about the executive as Ministers but about the executive as members of regulatory authorities. Surely it is desirable for parliamentary committees to examine the policies of members of regulatory committees before they take office and to ask what targets they seek to reach so that, if they fail to meet them, they can be taken to task. That is what the role of parliamentary committees is supposed to be.
Certainly many other countries, notably the United States of America, are far ahead of us in this respect. Indeed, such is my disappointment with the reaction of the noble Lord the Minister that I wish to test the opinion of the House on this matter.
4.57 p.m.
On Question, Whether the said amendment (No. 18) shall be agreed to?
Their Lordships divided: Contents, 106; Not-Contents, 184.

Division No. 2

CONTENTS

Alton of Liverpool, L.

Byford, B.

Anelay of St Johns, B.

Caithness, E.

Astor of Hever, L.

Campbell of Alloway, L.

Attlee, E.

Carnegy of Lour, B.

Beaumont of Whitley, L.

Chadlington, L.

Biffen, L.

Coe, L.

Blaker, L.

Colwyn, L.

Blatch, B.

Cope of Berkeley, L.

Boardman. L.

Courtown, E.

Bridgeman, V.

Cranborne, V.

brougham and Vaux, L.

Crathorne, L.

Burnham, L. [Teller]

Dacre of Glanton, L.

Buscombe, B.

Dean of Harptree, L.

164

Denham, L.

Moynihan, L.

Dixon-Smith, L.

Murton of Lindisfarne, L.

Eden of Winton, L.

Northbrook, L.

Elles, B.

Northesk, E.

Elliott of Morpeth, L.

O'Cathain, B.

Elton, L.

Onslow, E.

Ferrers, E.

Oppenheim-Barnes, B.

Flather, B.

Oxfuird, V.

Fookes, B.

Palmer, L.

Forsyth of Drumlean, L.

Peel, E.

Gardner of Parkes, B.

Peyton of Yeovil, L.

Garel-Jones, L.

Platt of Writtle, B.

Geddes, L.

Plumb, L.

Glentoran, L.

Rawlings, B.

Goschen, V.

Renfrew of Kaimsthorn, L.

Gray of Contin, L.

Renton, L.

Hayhoe, L.

Renton of Mount Harry, L.

Henley, L. [Teller]

Roberts of Conwy, L.

Higgins, L.

Rotherwick, L.

Hogg, B.

Saltoun of Abernethy, Ly.

Howell of Guildford, L.

Sanderson of Bowden, L.

Jenkin of Roding, L.

Seccombe, B.

Jopling, L.

Selborne, E.

Kelvedon, L.

Selsdon, L.

Kingsland, L.

Sharpies, B.

Knight of Collingtree, B.

Shaw of Northstead, L.

Lamont of Lerwick, L.

Skelmersdale, L.

Lang of Monkton, L.

Stevens of Ludgate, L.

Liverpool, E.

Stewartby. L.

Luke, L.

Stodart of Leaston, L.

Lyell, L.

Strathclyde, L.

McColl of Dulwich, L.

Thomas of Gwydir, L.

McConnell, L.

Trefgarne, L.

Macfarlane of Bearsden, L.

Trumpington, B.

Mackay of Ardbrecknish, L.

Vivian, L.

Marlesford, L.

Waddington, L.

Masham of Ilton, B.

Wade of Chorlton, L.

Miller of Hendon, B.

Warnock, B.

Montrose, D.

Willoughby de Broke, L.

Mowbray and Stourton, L.

Young, B.

NOT-CONTENTS

Acton, L.

Crawley, B.

Addington, L.

Currie of Marylebone, L.

Ahmed, L.

David, B.

Allenby of Megiddo, V.

Davies of Coity, L.

Amos, B.

Davies of Oldham, L.

Ampthill, L.

Dean of Thornton-le-Fylde, B.

Andrews, B.

Desai, L.

Archer of Sandwell, L.

Diamond, L.

Ashley of Stoke, L.

Dixon, L.

Ashton of Upholland, B.

Donoughue, L.

Bach, L.

Dormand of Easington, L.

Barker, B.

Dubs, L.

Bamett, L.

Elder, L.

Bassam of Brighton, L.

Evans of Parkside, L.

Berkeley, L.

Evans of Temple Guiting, L.

Bernstein of Craigweil, L.

Evans of Watford, L.

Billingham, B.

Ewing of Kirkford, L.

Blackstone, B.

Ezra, L.

Blease, L.

Falconer of Thoroton, L.

Borrie, L.

Falkland, V.

Bradshaw, L.

Farrington of Ribbleton, B.

Bragg, L.

Faulkner of Worcester, L.

Brett, L.

Filkin, L.

Brooke of Alverthorpe, L.

Fyfe of Fairfield, L.

Brookman, L.

Gale, B.

Brooks of Tremorfa, L.

Geraint, L.

Burlison, L.

Gibson of Market Rasen, B.

Carter, L. [Teller]

Gilbert, L.

Christopher, L.

Gladwin of Clee, L.

Clarke of Hampstead, L.

Goodhart, L.

Clement-Jones, L.

Goudie, B.

Clinton-Davis, L.

Gould of Potternewton, B.

Cocks of Hartcliffe, L.

Grabiner, L.

165

Graham of Edmonton, L.

Patel of Blackburn, L.

Grcgson, L.

Paul, L.

Grenfell, L.

Peston, L.

Hardy of Wath, L.

Phillips of Sudbury, L.

Harris of Greenwich, L.

Pitkeathley, B.

Harris of Haringey, L.

Plant of Highfield, L.

Harrison, L.

Ponsonby of Shulbrede, L.

Haskel, L.

Prys-Davies, L.

Haskins, L.

Ramsay of Cartvale, B.

Havman, B.

Randall of St. Budeaux, L.

Healey, L.

Razzall, L.

Hilton of Eggardon, B.

Rea, L.

Hogg of Cumbcrnauld, L.

Redesdale, L.

Hollick, L.

Rendell of Babergh, B.

Hollis of Heigham, B.

Richard, L.

Rodgers of Quarry Bank, L.

Holme of Cheltenham, L.

Rogers of Riverside, L.

Howells of St. Davids, B.

Rolloflpsden, L.

Howie of Troon, L.

Russell, E.

Hoyle, L.

Sainsbury of Turville, L.

Hughes of Woodside, L.

Sawyer, L.

Hunt of Chesterton, L.

Scotland of Asthal, B.

Hunt of Kings Heath, L.

Serota, B.

Irvine of Lairg, L. (Lord Chancellor)

Sewel, L.

Sharman. L.

Islwyn, L.

Sharp of Guildford, B.

Janner of Braunstone, L.

Shepherd, L.

Jay of Paddington, B. (Lord Privy Seal)

Shutt of Greetland, L.

Simon, V.

Jeger, B.

Smith of Clifton, L.

Jenkins of Putney, L.

Smith of Gilmorehill, B.

Judd, L.

Smith of Leigh, L.

King of West Bromwich, L.

Strabolgi, L.

Kirkhill. L.

Symons of Vernham Dean, B

Laird, L.

Taverne, L.

Layard, L.

Taylor of Blackburn, L.

Lea of Crondall, L.

Taylor of Gryfe, L.

Lipsey, L.

Thomas of Gresford, L.

Lofthouse of Pontefract, L.

Thomas of Walliswood, B.

Lovell-Davis, L.

Thomson of Monifieth, L.

McCarthy, L.

Thornton, B.

Macdonald of Tradeston, L.

Tomlinson, L.

McIntosh of Haringey, L. [Teller]

Tordoff, L.

Uddin, B.

McIntosh of Hudnall, B.

Varley, L.

MacKenzie of Culkein, L.

Walker of Doncaster, L.

Mackenzie of Framwellgate, L.

Wallace of Saltaire, L.

Maddock, B.

Walmsley. B.

Marsh, L.

Warner, L.

Mason of Barnsley, L.

Warwick of Undercliffe, B.

Masscy of Darwen, B.

Watson of Invergowrie, L.

Merlyn-Rees, L.

Watson of Richmond, L.

Molloy, L.

Weatherill, L.

Morris of Castle Morris, L.

Wedderbum of Charlton, L.

Morris of Manchester, L.

Whitty, L.

Murray of Epping Forest, L.

Wilkins, B.

Newby, L.

Williams of Crosbv, B.

Nicol, B.

Williams of Elvel, L

Northover, B.

Williams of Mostyn, L.

Oakeshott of Seagrove Bay, L.

Williamson of Horton, L.

Parekh, L.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.7 p.m.
Schedule 2 [The Gas and Electricity Consumer Council]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 19:
Page 122, line 39, leave out ("publish") and insert ("include").
The noble Lord said: My Lords, with Amendment No. 19 I should like to speak also to Amendments Nos. 20 and 21. Paragraph 6 of Schedule 2 sets out the annual reporting obligations of the Consumer Council. The report is made to the Secretary of State, who subsequently lays it before Parliament. The council is responsible for wider publication. Consistent with the disclosure provisions in other parts of the Bill, the paragraph prevents the council from publishing certain types of information as part of the annual report unless certain conditions are met. The impression that the current wording gives, however, is that there may be a difference between the report as it is made to the Secretary of State and the report which is eventually published, which is not the intention. They are one and the same. The report which is made to the Secretary of State and laid before Parliament is itself a public document. The issue is one of excluding certain types of information from the report in the first place rather than removing information subsequently prior to publication; in other words, we do not want power to doctor the council's report. These amendments clarify the position. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 20 and 21:
Page 122, line 43, leave out from ("be") to end of line 44 and insert ("included in the report if—
(a) that individual or body has consented to its inclusion:").
Page 123, line 1, leave out ("disclose") and insert ("include").
On Question, amendments agreed to.
Schedule 4 [Schedule to be substituted for Schedule 6 to the 1989 Act]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 22:
Page 130, line 13, leave out ("to which lie is maintaining a connection").
The noble Lord said: My Lords, this amendment was requested by the electricity industry for safety reasons. The request was made only recently, just before Report stage, and the amendment was not therefore ready to be brought before the House at that stage. Noble Lords may recall that on Report I announced the Government's intention to bring forward an amendment in this area, and that is the amendment I should now like to discuss.
The purpose of the amendment is to allow licensed distributors access to any premises where they have line or plant which requires replacement, repair or alteration of some kind. This mirrors rights presently held by the public electricity suppliers. I beg to move.
On Question, amendment agreed to.
Schedule 6 [Minor and consequential amendments]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 23 and 24:
Page 135, line 1, after ("23,") insert ("30A.").
Page 138, line 31, leave out ("section 32, section") and insert ("27A. 32,").
On Question, amendments agreed to.
Schedule 7 [Transitional provisions and savings]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 25:
Page 140, line 33, leave out from ("effect") to ("as") in line 35.
The noble Lord said: My Lords, in moving this amendment, I speak also to Amendment No. 26. These minor drafting amendments relate to the timing of transfer and licensing schemes coming into effect. They make clear that it will be possible for both licensing and transfer schemes in relation to different suppliers to come into effect on different dates, thus achieving flexibility in implementation, which has been a key objective in developing these technical provisions.
That is what we intended, but following discussion with the electricity industry, we have agreed that the current drafting could be improved to clarify this, which is what these amendments do. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 26:
Page 141, line 8, leave out from ("that") to end of line 9.
On Question, amendment agreed to.
Lord McIntosh of Haringey: My move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord McIntosh of Haringey.)
On Question, Bill passed, and returned to the Commons with amendments.

Postal Services Bill
5.13 p.m.
Lord Carter: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Postal Services Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Read a third time.
Clause 4 [Provision of a universal postal service: meaning]:
The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville)The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville) moved Amendment No. 1:
Page 2, line 32, leave out ("the") and insert ("a").
The noble Lord said: My Lords, in moving the amendment, I speak also to Amendments Nos. 3, 11 and 15 to 19. These are drafting amendments intended to tidy up or clarify the Bill. Amendment No. 1 is a drafting amendment to the definition of a universal postal service. It is intended to clarify that Clause 4(1)(b) is a separate obligation which goes wider than Clause 4(1)(a). The effect of the amendment is that a
168
universal postal provider is to provide a postal service for all relevant postal packets, including cross-border mail.
Amendment No. 3 is a drafting amendment to the exceptions from Clause 13(6) contained in subsection (7). Subsection (6) provides that, subject to subsection (7), no action shall lie or in Scotland be competent in respect of a contravention by a licence holder of a condition of his licence. Subsection (7) sets out exceptions to this. The Government's intention with these provisions is to prevent any action for breach of a condition (other than by enforcement notice or financial penalty under the provisions of this part of the Bill) but without prejudice to any other right of action which could arise under general law in relation to the underlying act or omission. Amendment No. 3 amends the wording of the exception at subsection (1)(a) to ensure that these other rights of action remain available where there is an act or omission which takes place in the course of doing anything to which the condition relates. Depending on the terms of the licence, this could go beyond the provision of letters or a universal postal service.
Amendment No. 11 is a simple drafting amendment correcting an error in the existing text by replacing the reference to "any other" with "a" foreign administration.
Amendments Nos. 15, 16, 17 and 18 together clarify the definition of a "letter" for the purposes of this Bill. First, they put beyond any doubt that "letter" does not include an electronic communication. Amendment No. 18 provides that the reference to a letter being conveyed and delivered "otherwise than electronically" (itself inserted by Amendment No. 15 into the definition of "letter" in Clause 125(1)) is a reference to a communication to be conveyed and delivered otherwise than by means of a telecommunications system (within the meaning of the Telecommunications Act 1984) or by other means while in electronic form. This means that a letter on a disk sent by post will be a postal packet for the purposes of this Bill but will not be a letter. Secondly, they spell out that a postal packet containing a letter is a letter. Thirdly, they allow a communication to satisfy the definition of letter even where the communication is addressed to a person and not an address.
As intended in the existing definition of a letter, hybrid mail services remain caught within the definition of a letter only when the communication is not being conveyed or delivered electronically. Postal operators will, of course, remain free to offer hybrid mail services so long as they operate either outside the licensed area or, if they are operating within the licensed area, they have a licence to do so for that part of the service where communications are conveyed or delivered otherwise than electronically.
Amendment No. 19 is a minor consequential amendment to the list of expressions in Clause 126. It extends the reference to the meaning of letter to include the new provisions on the meaning of

169
conveyed and delivered otherwise than electronically (the subject of Amendment No. 18). I beg to move that these amendments be accepted.
Baroness Miller of Hendon: My Lords, we thank the Minister for the change from "the" to "a" which we believe meets in some way the amendment we tabled on Report.
On Question, amendment agreed to.
Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendment No. 2:
Page 3, line 5, at end insert—
("(3A) If no-one falls within subsection (3) because there is no Community obligation to notify the European Commission of the identity of a person providing a universal postal service or a part of such a service in the United Kingdom, references in this Act to a universal service provider shall be construed as references to any person who is treated by the Secretary of State as a universal service provider for the purposes of this Act and on whom the Secretary of State has served a notice informing him of that fact.").
The noble Lord said: In moving the amendment, I speak also to Amendment No. 20.
These are technical amendments. The effect of Amendment No. 2 is to ensure that it will be possible to identify a universal service provider or providers in the United Kingdom for the purposes of the Bill in the event that the current requirement to notify the Commission of their identity under the Postal Services Directive lapses.
Article 4 of the directive requires each member state to notify the European Commission of the identity of its universal service postal provider or providers. Clause 4 of the Bill is drafted in this context. Subsection (3) of Clause 4 sets out the meaning of a universal service provider for the purposes of the Bill. It provides that any person whose identity is notified by the Secretary of State to the European Commission as a person providing a universal service (or part of a universal service) within the UK (in accordance with Article 4 of the Postal Services Directive) and who has been served with a notice of that fact by the Secretary of State is to be taken to be a universal service provider for the purposes of the Bill.
We see no problem with this construction for the foreseeable future. However, Article 27 of the directive provides that the provisions of the directive (with the exception of Article 26) shall apply only until December 2004 unless otherwise decided in accordance with Article 7(3). Article 7(3) concerns further provisions for the completion of the internal market of postal services. There is, therefore, the possibility that Article 4 of the directive could lapse.
We expect that it is unlikely that this provision of the directive would lapse without being replaced by some further Community provision. But we cannot rule it out entirely. Given the importance attached in the Bill to the concept of a universal service provider, we consider that it is sensible to provide on its face for a universal service provider to be capable of being identified in the unlikely event that the relevant provisions of the directive lapse.
Amendment No. 20 is a minor consequential amendment to the list of expressions in Clause 126. It extends the reference to universal service provider to include the new provisions at Clause 4, identifying a universal service provider in the event of the lapse of an EU directive—the subject of Amendment No. 2. I beg to move.
Lord Skelmersdale: My Lords, I am grateful to the Minister for his explanation. However, I am slightly confused about some of the words in new subsection (3A). The fourth line from the bottom of Amendment No. 2 refers to,
"any person"—
I underline the next words—
"who is treated by the Secretary of State as a universal service provider".
Surely he either is or is not a universal service provider. Why should he be "treated" by the Secretary of State as such?
Lord Sainsbury of Turville: My Lords, I believe that it is simply because previously a "universal service provider" was defined by the fact that the provider was notified to the EU. In this case, the provider has been designated as a person by the Secretary of State. I believe that in this context it amounts to the same thing. Clearly there are regulations which refer to the Secretary of State's ability to designate someone, but in this case the basis is that the provider has already been designated.
Lord Skelmersdale: Yes, my Lords, but I am still confused. To be designated is one thing. But that becomes a fact—he is a universal service provider. Surely to be treated by the Secretary of State as a universal service provider is something else. However, I shall not waste the time of the House now. Perhaps the noble Lord would again be very generous and write one of his copious letters to me.
On Question, amendment agreed to.
Clause 13 [Licences: conditions and other provisions]:
Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendment No. 3:
Page 9, line 31, leave out from ("of") to end of line and insert ("the provision of any postal services or the doing of anything else to which the condition relates").
On Question, amendment agreed to.
Clause 30 [Financial penalties]:
Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendment No. 4:
Page 2I, line 12, at end insert—
("(1A) No such penalty shall 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).").
The noble Lord said: My Lords, in moving Amendment No. 4, I wish to speak also to Amendment No. 14. These amendments will place a cap on the financial penalties which can be imposed on licence holders for a contravention of a licence condition. Such a penalty will be limited to a

171
maximum of 10 per cent of the turnover of the licence holder, determined in accordance with provisions to be specified in an order made by the Secretary of State.
Under Clause 30 as currently drafted, there is no specific limit on penalties for breaches of licence conditions, although there is a requirement that they must be reasonable in all the circumstances of the case. We have previously argued, and continue to believe, that the requirement that the fines should be reasonable would ensure that any fines are proportionate and not excessive in the circumstances of a particular case. However, we have reflected on the concerns expressed in Committee about the concept of unlimited fines and also in relation to similar provisions in the Utilities Bill.
Following that consideration, the Government have decided that it would be appropriate to amend the Bill so as to limit financial penalties to 10 per cent of the turnover of the licence holder on whom the penalty is imposed, with detailed provisions for determining that turnover to be set out in an order made by the Secretary of State. That will bring the provisions of the Postal Services Bill into line with those of the Competition Act 1998 and with those now included in the Utilities Bill. I beg to move.
Baroness Miller of Hendon: My Lords, we have no difficulty in accepting this amendment. We argued for it quite strongly either in Committee or on Report. I remember that the noble Lord, Lord Dearing, supported it because we did not like the fact that the Minister said that it would be "reasonable". We would then have needed a discussion as to what is "reasonable". Therefore, we thank the Minister for bringing it back in this form.
Lord Dearing: My Lords, I congratulate the Minister on a very reasonable amendment.
On Question, amendment agreed to.
Clause 45 [Annual and other reports: the Commission]:
Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendment No. 5:
Page 29, line 32, at end insert—
("( ) a report as to the manner in which the Commission has complied with its obligations under the Postal Services Directive,").
The noble Lord said: My Lords, this amendment will require the Postal Services Commission to include in its annual report each year a report on the manner in which it has complied with its obligations under the Postal Services Directive.
The Government are bringing forward this amendment in response to concerns expressed in Committee by the noble Baroness, Lady Miller. In the debate on a proposed amendment to Clause 13, I agreed to consider further whether the Bill should include an express reference to the duty of the Postal Services Commission to comply with the current and any future European directive on postal services.
As I said before, the European Postal Services Directive has direct effect, and bodies treated as carrying out functions of the state, such as the Postal Services Commission, are therefore obliged to comply with its requirements. That is reinforced by the explicit provisions in Article 22 of the directive which provide that the national regulatory authority—in this country, the Postal Services Commission—shall, as a particular task, ensure compliance with the obligations which arise from that directive.
The commission's responsibilities are quite clear and would not be made clearer by imposing through the Bill a general duty on the commission to comply with the directive. To do so would be unnecessary and unprecedented. However, in recognition of the noble Baroness's concerns, we have considered ways, other than a general duty, of highlighting in the Bill the commission's role in ensuring compliance with obligations arising from the directive. We believe that the best way to achieve that is to require the commission to include in its annual report each year a report on the manner in which it has complied with its obligations under the Postal Services Directive.
An annual report required under Clause 45 will be laid before Parliament and published by the Secretary of State. It will therefore be possible for Parliament and any other interested parties to see and comment on how the commission is carrying out its duties in relation to the obligations under the directive.
With this amendment the commission will be under a duty not only to ensure compliance of universal service providers with the directive, but it will also be required to report on how it has done so, year on year. Exactly how it ensures compliance will be a matter for the commission. It may be through licence conditions, but we believe that we should not rule out other ways of ensuring compliance. I beg to move.
Baroness Miller of Hendon: My Lords, it looks like three out of three so far. I am extremely grateful to the Minister, particularly because I remember feeling most embarrassed during the Report stage that, according to the Minister, I moved so many detective amendments. It now seems that the amendments that I moved that were not defective have found a sympathetic ear.
On Question, amendment agreed to.
Clause 54 [Exercise of functions: general]:
Lord Skelmersdale Lord Skelmersdale moved Amendment No. 6:
Page 35, line 4, at end insert ("and
(iv) at least one committee for England.").
The noble Lord said: My Lords, Amendments Nos. 6 and 7 go together, and Amendment No. 8 is the Government's formulation of exactly the same thing. Throughout the various stages of the Bill concern has been expressed as to whether a committee for England would be established under Clause 54. Ultimately, the Minister accepted that there should be one. Therefore, the question now is: which formulation is better? I only speak now, rather than not move Amendments Nos. 6 and 7, in order to give the Minister the opportunity to say whether, in the eyes of his department and the

173
draftsmen, his own amendment is better than mine. I suspect that he will say that it is, in which case, obviously, I shall withdraw my amendment.
Viscount Goschen: My Lords, after the detailed debates about principle that we have had throughout the Bill, I am delighted to see that my noble friend Lord Skelmersdale and other Members of the House eventually have succeeded in persuading the Minister that, if the Bill were left unamended, the tragic consequence could arise of England having no committee. Personally, I prefer my noble friend's drafting on the grounds that it is shorter. The words "at least" would tend to imply to most people that there could be more. Therefore, with those reservations, I prefer my noble friend's drafting. However, it would be churlish not to congratulate the Minister wholeheartedly on his approach to the moving of his slightly longer amendment.
Baroness Miller of Hendon: My Lords, I, too, congratulate the Minister. This is the third time that this amendment has been discussed in your Lordships' House: first in Committee, when I think that I added my name to it, then on Report, and now today. I would not dream of saying whether the Minister's amendment was better drafted than that of my noble friend Lord Skelmersdale, but it would be right for me to say, as my noble friend Lord Goschen did, that we prefer the wording of our noble friend Lord Skelmersdale. We are, however, grateful to the Minister.
5.30 p.m.
Lord Sainsbury of Turville: My Lords, I shall respond to Amendments Nos. 6 and 7 and speak to Amendments Nos. 8 and 22 to 28. I do not want to spend too much time on the issue, but it is important that we get it right.
When I first saw Amendments Nos. 6 and 7, I thought that they were better because they were short, elegant and simple. However, having looked at the issue in detail, there are good reasons for preferring our wording. The draftsman fulfils a useful function in such circumstances.
I shall try to explain why I hope to convince the noble Lord, Lord Skelmersdale, to withdraw his amendment and to accept the government amendments. On Report, in response to an amendment he had tabled, I agreed to consider whether the Government should table an amendment to place a duty on the new consumer council to establish, at the very least, a committee in England to help it have regard to the needs of users in England. Amendment No. 8 does that, providing that the council must establish at least one committee in England. That duty can be met by establishing either a committee for the whole of England or one for an area within England. The amendment will not prevent the council from doing both. The Government anticipate that if the council decides not to establish a committee
174
for the whole of England it will seek to establish a number of area committees covering the whole of England.
Amendments Nos. 22 to 28 are, for the most part. consequential amendments to Schedule 2. The intention is to ensure that the rules governing the establishment of any committee for England are consistent with those applying to the committees for Scotland, Wales and Northern Ireland and that the rules relating to any committee for any area of England will be consistent with those for any committees for areas within Scotland, Wales and Northern Ireland.
The government amendments fulfil what the noble Lord, Lord Skelmersdale, seeks. However, his amendments would have some unwanted consequences. First, they appear to permit more than one committee for England as a whole while removing the express power for the council to set up committees for areas within England. Secondly, they would require each chairman of the committees for England to be a member of the council by virtue of Schedule 2(1)(b). Neither of us would want either of those situations to arise. In view of that, I hope that the noble Lord will feel that, with the help of the draftsman, we have been able to fulfil his intentions even better than his amendments would and that he will therefore withdraw Amendment No. 6.
Lord Skelmersdale: My Lords, I, too, am extremely grateful to the Minister. I thought at one moment that he was going to break out into his old method of speaking and describe my amendments—or even his own Amendment No. 8—as unnecessary. However, he resisted that temptation and I am sure that the House is grateful. I repeat my gratitude to the Minister and his department. I shall not move Amendment No. 7, and I beg leave to withdraw Amendment No. 6.
Amendment, by leave, withdrawn.
[Amendment No. 7 not moved.]
Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendment No. 8:
Page 35, line 7, leave out paragraph (c) and insert—
("(c) shall establish at least one committee, and may establish other committees, in relation to England (whether a committee for England or a committee for an area within England).").
On Question, amendment agreed to.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 9:
After Clause 67, insert the following new clause—

Postal Services Bill

  NOTIFIABLE TRANSACTIONS
  (" .—(1) Where the Post Office company or any relevant subsidiary enters into a notifiable transaction it must, as soon as practicable after the terms of that transaction have been agreed, issue a disclosure notice in accordance with this section.
  (2) For the purposes of' this section "notifiable transaction" means any acquisition or disposal of any undertaking or interest in any undertaking by the Post Office company or any relevant subsidiary which, if the acquisition or disposal was made by a

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  listed company, would be a transaction in respect of which that company would need to give notification or make an announcement in accordance with the listing rules.
  (3) A disclosure notice must include the same information regarding the transaction to which it relates as any notification or announcement under the listing rules would be required to include if the transaction was an acquisition or disposal which had been made by a listed company.
  (4) A disclosure notice shall—

  (a) he published in the London Gazette, the Edinburgh Gazette and the Belfast Gazette; and

  b) he published or disseminated in any other manner as the Secretary of State may prescribe.

  (5) In this section—

  "listed company" means a company any class of whose securities have been admitted to the official list: and

  "listing rules" and "official list" have the same meaning as in Part VI of the Financial Services and Markets Act 2000.").

  The noble Baroness said: My Lords, in Committee I moved an amendment similar in principle to this one but different in wording. The Minister rejected it on the ground that, as he claimed, it would put the Post Office company,
  "at a considerable commercial disadvantage compared with its commercial competitors".
  He added:
  "Publicly listed companies are merely required, in certain circumstances, to announce acquisitions, once the terms of the transaction have been agreed".—[Official Report, 8/6/00; col. 1358.]
  I am afraid that I believe that the Minister is mistaken in that assertion. Every day we can read in the press of bids, deals and negotiations in progress. Shareholders are entitled to know a fact that could affect the value of the shares that they are considering buying or selling. Relevant details should be published as soon as it is reasonable to do so. If the Post Office were in negotiations with a publicly quoted company, that company would be required at some suitable stage to make an announcement, whereas the Post Office would be entitled to remain silent, thereby confusing the market. That would be preposterous.
  There was some criticism of the wording of the amendment I proposed in Committee. Although I divided the House, due to an insufficient number of your Lordships voting the House was counted out. In accordance with the rules, on 15th June I had a second bite at the same cherry. On that occasion, I told your Lordships that on the previous day I had received certain information that I had privately imparted to the Minister and that that information had suggested there was a cogent reason why the Government should have introduced a similar amendment. As I had not had a chance to verify the information, I did not repeat it to your Lordships at that time. The Government again rejected the amendment, which I withdrew in order to give them an opportunity to reconsider their attitude in the light of the information that I had given to the Minister. They did not do so.
  On Report, I brought back my amendment in a revised form—the same form in which it appears today. I am afraid that it is necessary for me to quote from what I said on that occasion. I said:
  "I wish to turn now to another serious and major point. I am informed from a very reliable source … that"—
  the National Audit Office—
  "had reported to the Government advising that the disclosure regime for the Post Office should he the same as the one I am now proposing".—[Official Report, 29/6/00; col. 1115.]
  I asked the Minister five specific questions: whether there was such a report; whether I was correct in saying what it recommended; whether the Government agreed with the report; if not, why not; and finally, if they agreed, whether they would undertake to bring forward a similar amendment on Third Reading. The Minister did not answer those questions. He merely said, at col. 1116:
  "The National Audit Office intends to produce a report, but the publication date is for the NAO to decide".
  I remember saying that I would not ask when it would be published because I thought that that was not very tactful. Note the Minister's words,
  "intends to produce a report",
  as though it were not already in the hands of the department at the time of the debate. I shall come back to that in a moment.
  The Minister rejected my amendment yet again on the same specious and unacceptable grounds as before—grounds that, I was given to understand, are in contradiction of the recommendations of the National Audit Office.
  In a later letter to me, the Minister said that he wanted to secure the same objective as I did but that he felt it would be achieved by provisions in the articles of association of the new Post Office company, which are still under discussion. He also said that on Report.
  That is not correct procedure. Every company has certain obligations of disclosure to its shareholders. In some cases, companies are required to obtain shareholders' approval before acquisitions or disposals, particularly those entailing issues of shares or loan stock. I am not seeking to make the Post Office report to its one and only shareholder; I want disclosure to Parliament. Parliament should make the rules of disclosure, not some cosy group of lawyers or accountants currently working in the public service.
  The Minister's letter also confirmed the existence of the National Audit Office report. It said that,
  "the report has not yet been finalised and I am sure you ill appreciate that I cannot go into detail of what is being recommended while the report is still in draft".
  I do not appreciate that. Whether or not the report has been finalised, there has come into my hands an extract of what the Minister says is still only a draft. I believe, although I am not sure, that the extract is from the second draft. From some of the text it is clear that the

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  report had been discussed between the National Audit Office and the department of the Minister and accepted by that department. The relevant passages call for,
  "the disclosure to Parliament of analogous information to that which would have been required had the state-owned business been quoted on the London Stock Exchange. This would, where relevant, include information on the price paid … and the effect of the transaction on the profit and loss account and balance sheet of the purchaser".
  The report continues:
  "The Department has told us that it accepts our argument that there is a case for the Post Office and other similar public bodies to accept analogous rules".
  That could not be clearer. Whether or not the report has been published and whether or not the Minister was previously aware of it, once I had alerted him of it on 15th June there was plenty of time for him to find out what it said. Whatever alterations there may be in the final wording, there is no possibility that the National Audit Office would perform a complete somersault and reverse its key recommendation.
  More importantly, when the Minister glossed over the report while speaking on this amendment previously, I believe he should have known that his department had already accepted the principle. Therefore, I find somewhat surprising the Minister's failure to answer my questions on Report and his casually dismissive and absolutely minimalist reference to the report as though it were not relevant.
  The report is even more emphatic than the short extract I have quoted. In a section headed,
  "What lessons of good practice can he learned from this transaction?"—
  that is the German parcel office deal—it calls for detailed information on deals to be given to the board, which I would have thought went without saying, and a procedure to monitor acquisitions that preserves accountability and avoids second-guessing. Most important of all, it says that the department should consider the Stock Exchange requirements on listed companies.
  Item (iv) states:
  "the provision of transparent information to Parliament on the transaction as if the acquisition were subject to the London Stock Exchange disclosure requirements".
  In Figure 13, the report even contains a checklist to illustrate the information to be provided for public sector acquisitions.
  The Government claim to be in favour of open government. On the three previous occasions that we have debated this issue, the Minister's speeches have been peppered with references to "transparency", a buzz word currently in high favour with the Government. But here they refuse to accept, in the face of clear advice from a most influential independent source, that once the Post Office is launched into the ordinary commercial world it should conform to the same rules—not more—as other public companies. The Government argue that it should be less open to public scrutiny in its dealings.
  On Report the Minister's response was that the National Audit Office intends to produce a report. That suggests that he did not know the contents or, at the lowest, that he had not investigated the information that I had given to him some two weeks earlier. I believe that the Minister should tell the House what he knew of the contents of the National Audit Office report on 29th June, the date of the previous stage of this Bill.
  Assuming that he has acquainted himself with those contents that I had discussed with him, we also need to know why the Government persisted in pursuing their negative attitude to this amendment, contrary to the independent and authoritative advice they had not only received but had accepted. Is the Minister telling the House that, despite my alerting him to the report, he was unaware of its contents when he last addressed your Lordships on this topic and found all sorts of irrelevant reasons for refusing to accept an amendment that carries the recommendation of the report into effect? Or is he saying that despite his department having told the Audit Commission that it accepted the recommendations, in fact it had no intention of doing so?
  The Government have been dismissive of Parliament on more than one occasion. It seems as though they are also dismissive of an important, independent, supervisory body such as the National Audit Office. Who told the Audit Commission that the recommendations were accepted? Was it the Minister? If he did not, why was he not aware of his own department's policy? The House would also like to know whether the Government will take this opportunity to follow the advice fully and so ensure that a public company, of which the Government will be the sole shareholder, conforms to the same high standards of disclosure to which other companies are required to conform. Why does the DTI say one thing to the Audit Commission and do another in Parliament? I beg to move.
  5.45 p.m.
  Lord Razzall: My Lords, the amendment tabled by the noble Baroness touches on the point she has nobly struggled through at every stage of this Bill and which I raised initially at Second Reading. On this occasion I do not require the normal mandatory plaudits that she has given to me in relation to that. I assume she is aware of what I am about to say.
  Baroness Miller of Hendon: My Lords, the first time I mentioned this amendment I gave all credit to the noble Lord, Lord Razzall. He knows very well that I congratulate him on having brought the matter to the attention of the House.
  Lord Razzall: My Lords, noble Lords who have followed the progress of this Bill will realise that I can never resist teasing the noble Baroness.
  At Second Reading I was concerned about "transparency", the point that the noble Baroness has raised at every stage of the Bill. I agree with her, as do other noble Lords on these Benches—I understand the

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  Minister also agrees—that it is essential that under its new guise the Post Office complies with the degree of transparency that would be normal for a public company of this nature.
  Far be it from me to lecture her or the Minister, considering his previous guise, about the way that listed companies work in the public company arena. However, I fear that the point made by the noble Baroness does not work because, as the Minister has said previously, to attempt to incorporate the listings into the legislation as applicable to the Post Office ignores the fact that the listing rules, by and large, are there to protect the interests of shareholders. As the noble Baroness rightly says, if a significant transaction takes place in the market that can affect the price at which shares are dealt in, the companies involved have to make an announcement. That is right and proper. Of course, in relation to the Post Office, that cannot happen because there are no shareholders who can buy or sell shares in the Post Office.
  Secondly, if under the listings rules the acquisition is a significant one, approval has to be sought from company shareholders and documents under the listings rules have to be published with details of the transaction requiring the approval of the company shareholders. Again, that does not apply to the Post Office. Despite this lengthy report from which she has quoted endlessly and which noble Lords have not had an opportunity to see, the noble Baroness is left with the third obligation under the listings rules, namely, that an announcement has to be made by the company after a certain transaction has taken place.
  The Government appear to be saying that the listing rules do not apply to the Post Office and that to attempt to make them do so simply will not work. Therefore they are trying to take the principle of the listing rules—that is, that transactions of a certain size have to be notified to the public at large and to Parliament—and put that requirement into the articles of association of the Post Office. In so doing they will comply with the recommendation of the National Audit Office that, to the extent that it is practicable, the principles of the listing rules should be applied to the Post Office.
  It is not a difference of principle between the noble Baroness, myself and the Government; it is simply an argument as to how in practice we can insert the substance of the listing requirements. The only one which can apply to the Post Office is the requirement to notify a significant transaction after the event. That is why, despite the fact that I support the principle of what the noble Baroness is trying to do, I do not believe the mechanism she chooses can possibly work and why, as long as the Minister repeats the undertaking he gave on Report that this requirement will be entrenched in the Post Office's articles, from these Benches we will support the Government.
  Lord Skelmersdale: My Lords, of course this is an issue of transparency. But I disagree with the noble Lord, Lord Razzall. For example, Parcel Force, which is a Post Office entity, may bid for and secure International Carriers Limited (ICL). On its side,
  180
  because of the listing rules and because it has shareholders, ICL would have to admit that such an approach had been made. But the Post Office would not and we would be left with a rather nasty hybrid situation.
  I believe that, since we all seem to he agreed with the principle of the intentions of the amendment—that is, to have transparency on the face of the Bill rather than in the memorandum and articles of association—the Bill is where it ought to go. Our difficulty is that we are now at Third Reading of the Bill. But if the principle that this matter should go on the face of the Bill is accepted, then it is up to another place to change the details of that principle in order to fit in with the wishes both of another place and of your Lordships' House. Therefore I say to my noble friend, "More power to your elbow".
  Lord Sainsbury of Turville: My Lords, when we discussed this same amendment at Report stage, the noble Baroness asked me a number of questions about whether the National Audit Office had made similar recommendations regarding the disclosure of information on acquisitions and disposals. She asked me to write in response to those questions before Third Reading. For the benefit of the House, perhaps I can repeat the points I made in my reply.
  The National Audit Office has been examining the DTI's role in approving the Post Office's acquisition of German Parcel. But I repeat that the report has not yet been finalised and therefore has not been seen by Ministers, formally replied to or had consents given to it.
  However, that is not the issue here. We accept the principle that, if the noble Baroness is correct, the report recommends; namely, that there should be transparency about this issue. I wish to reinforce the point of the noble Lord, Lord Razzall, that, while we accept the principle of transparency, it must be said clearly that this is not a public company in the sense of having shareholders on the Stock Exchange who have to be kept informed because of the implications and possible impact of that information on the market-place.
  I turn to the substantive issue of the disclosure of information about major acquisitions and other significant deals.
  Lord Mackay of Ardbrecknish: My Lords, before the Minister does that, perhaps he will give way. I have been observing this debate almost from afar, and my noble friend has been keeping me informed. The Minister is almost dancing on the head of a pin in relation to the National Audit Office report, saying that the department does not know anything about it.
  If I read the extract correctly, the department clearly told the National Audit Office that it accepts its argument that there is a case for the Post Office and similar public bodies to accept analogous roles. Therefore the department must know the view of the NAO, otherwise it would not be able to make the response that the NAO intends to publish. I suspect

  181
  the Minister has been caught because this report has not yet been published. Perhaps it ought to have been, or perhaps the Bill ought not to have had its final stages until it was published.
  Lord Sainsbury of Turville: My Lords, I thought I was clear on this point. I did not say that the department did not know of the report. I said that the report had not been finalised; that no Ministers had seen the report and that no agreements to its contents had been given by Ministers. That is the substantive point in this case. Clearly officials in the department would know of the report; it would be inconceivable that they would not.
  Baroness Miller of Hendon: My Lords, I am grateful to the Minister for giving way. The line in the report says,
  "The Department has told us that it accepts our argument".
  I asked who it was in the department who told the National Audit Office that. I understand the Minister to be saying that his department knew about the report but no Minister had seen it. If so, how can anybody say that they accept the principle behind it?
  Lord Sainsbury of Turville: My Lords, I cannot comment on what is presumably a quotation from internal documents of the National Audit Office. All I can say is that, when one refers to the department giving authority to the report, that must mean Ministers. I can assure the House that Ministers did not give authority for the statements being made. I cannot say any more than that. The noble Baroness obviously has access to an internal memorandum from the National Audit Office, which I have not. The substantive point is that Ministers have not agreed to this.
  I turn to the question of how we handle this issue. The Government made clear that we are proposing to formalise the requirement for the Post Office company to disclose information by making provision for disclosure in the Post Office company's articles of association. I said that we are currently discussing the draft memorandum and articles of association for the Post Office company with the Post Office. We shall be discussing the inclusion of an article which requires the disclosure to the Secretary of State of information about major acquisitions and disposals relating to transactions involving 10 per cent or more of consolidated profits, turnover or gross assets. The provision will require disclosure within a specified period of business days after the transaction in question has been agreed and will also require the Post Office company to issue a press announcement giving certain prescribed information.
  During Report stage I explained at some length why we did not agree that the noble Baroness's amendment was the best way of securing transparency for the Post Office company and so I shall not repeat that argument. But I stress that we wish to achieve the same objective as the noble Baroness, without subjecting the Post Office company to an unnecessarily onerous and
  182
  inflexible regime which is designed to serve a very different purpose. The Post Office changed its approach to disclosing information about acquisitions in the light of the concerns expressed following the acquisition of German Parcel. Our proposals will ensure that the current policy of openness is enforceable by the shareholder.
  The noble Baroness asked me during the Report stage whether the Government would be bringing forward an amendment at Third Reading to the same effect as her own. But I can only repeat the comments I made on Report. We consider that our proposals achieve the transparency the noble Baroness desires, but without inflexibly shackling the Post Office company to a regime which is intended for another purpose entirely and to which no competitor would be bound in the same way. And perhaps I can reiterate that the difference here is that other companies have the possibility of going to the authorities and discussing the need for specific disclosures to be made. That would not be possible if this were simply a legal requirement on the Post Office.
  In addition, our proposals better reflect the requirements that are placed on other companies. No competitor would be required by law to disclose the information demanded by this amendment about transactions undertaken by its subsidiaries unless they were material in the context of the group as a whole. Again, this amendment goes far beyond what would be required if the Post Office was a quoted company. I am all in favour of ensuring a level playing field, but the noble Baroness's amendment would tilt the balance too far against the Post Office company. I urge Members of this House not to contemplate shackling the Post Office company in that way with an amendment which in fact would make its task more difficult than that of a public company.
  I very much hope that the noble Baroness is now persuaded that our proposal is the best means of securing the transparency that she seeks while at the same time being fair to the Post Office company. We want both a fair and level playing field. I believe that our proposal for securing that off the face of the Bill will achieve our joint objective. I ask the noble Baroness to withdraw her amendment.
  Baroness Miller of Hendon: My Lords, I know the Minister has said that he believes that he, I and the noble Lord, Lord Razzall, are seeking to achieve the same thing. We believe that articles of association are all very well, but they are not as good as having a provision on the face of the Bill. That would be far better.
  The Minister may have called it an internal document of some kind. My explanation came in a brown envelope. It is the second draft of the National Audit Office report on the German takeover. If the final printed and published report contains the assertion that,
  "The department has told us that it accepts our argument that there is a case for the Post Office"

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  I believe that the Minister may have to eat some words. So much for the Government's pledge for freedom of information. In the circumstances I must seek the opinion of the House.
  6.1 p.m.
  On Question, Whether the said amendment (No. 9) shall be agreed to?
  Their Lordships divided: Contents, 103; Not-Contents, 190.

  Division No. 3

  CONTENTS

  Alton of Liverpool, L.

  Lamont of Lerwick, L.

  Anelay of St Johns, B.

  Liverpool, E.

  Astor of Hever, L.

  Lucas, L.

  Attlee, E.

  Luke, L.

  Barber, L.

  McColl of Dulwich, L.

  Biffen, L.

  McConnell, L.

  Blatch, B.

  Macfarlane of Bearsden, L.

  Boardman, L.

  Mackay of Ardbrecknish, L

  Bridgeman, V.

  Marlesford, L.

  Burnham, L. [Teller]

  Miller of Hendon, B.

  Buscombe, B.

  Montrose, D.

  Byford, B.

  Mowbray and Stourton, L.

  Caithness, L.

  Moynihan, L.

  Campbell of Alloway, L.

  Murton of Lindisfarne, L.

  Carnegy of Lour, B.

  Norfolk, D.

  Chadlington, L.

  Northbourne, L.

  Clark of Kempston, L.

  Northbrook, L.

  Coe, L.

  Northesk, E.

  Colwyn, L.

  O'Cathain, B.

  Cope of Berkeley, L.

  Onslow, E.

  Courtown, E.

  Oppenheim-Barnes, B.

  Dacre of Glanton, L.

  Palmer, L.

  Dean of Harptree, L.

  Park of Monmouth, B.

  Dixon-Smith, L.

  Pearson of Rannoch, L.

  Eccles of Moulton, B.

  Pike, B.

  Elles, B.

  Pilkington of Oxenford, L.

  Elliott of Morpeth, L.

  Prior, L.

  Elton, L.

  Rawlings, B.

  Feldman, L.

  Rees, L.

  Ferrers, E.

  Renton, L.

  Flather, B.

  Roberts of Conwy, L.

  Fookes, B.

  Rotherwick, L.

  Forsyth of Drumlean, L.

  Saltoun of Abernethy, Ly.

  Gardner of Parkes, B.

  Sanderson of Bowden, L.

  Seccombe, B.

  Garel-Jones, L.

  Selsdon, L.

  Glentoran, L.

  Sharples, B.

  Gray of Contin, L.

  Shaw of Northstead, L.

  Greenway, L.

  Skelmersdale, L.

  Hanningfield, L.

  Stewartby, L.

  Harris of Peckham, L.

  Stodart of Leaston, L.

  Haslam, L.

  Strathclyde, L.

  Hayhoe, L.

  Thomas of Gwydir, L.

  Henley, L. [Teller]

  Trefgarne, L.

  Higgins, L.

  Trumpington, B.

  Holderness, L.

  Tugendhat, L.

  Howell of Guildford, L.

  Vivian, L.

  Jenkin of Roding, L.

  Waddington, L.

  Jopling, L.

  Wade of Chorlton, L.

  Kelvedon, L.

  Weatherill, L.

  Kingsland, L.

  Willoughby de Broke, L.

  Knight of Collingtree, B.

  Wolfson, L.

  NOT-CONTENTS

  Acton, L.

  Andrews, B.

  Ahmed, L.

  Archer of Sandwell, L.

  Allenby of Megiddo, V.

  Ashley of Stoke, L.

  Amos, B.

  Ashton of Upholland, B

  184

  Avebury, L.

  Hoyle, L.

  Bach, L.

  Hughes of Woodside, L.

  Barker, B.

  Hunt of Chesterton, L.

  Barnett, L.

  Hunt of Kings Heath, L.

  Bassam of Brighton, L.

  Irvine of Lairg, L. (Lord Chancellor)

  Berkeley, L.

  Billingham, B.

  Islwyn, L.

  Blackstone, B.

  Jacobs, L.

  Blease, L.

  Janner of Braunstone, L.

  Bledisloe, V.

  Jay of Paddington, B. (Lord Privy Seal)

  Borrie, L

  Bragg, L.

  Jeger, B.

  Brennan, L.

  Jenkins of Hillhead, L.

  Brett, L.

  Jenkins of Putney, L.

  Brooke of Alverthorpe, L.

  Judd, L.

  Brookman, L.

  King of West Bromwich, L.

  Brooks of Tremorfa, L.

  Kirkhill, L.

  Burlison, L.

  Layard, L.

  Carter, L. [Teller]

  Lea of Crondall, L.

  Chandos, V.

  Lipsey, L.

  Christopher, L.

  Lofthouse of Pontefract, L.

  Clarke of Hampstead, L.

  Longford, E.

  Cocks of Hartcliffe, L.

  Lovell-Davis, L.

  Craig of Radley, L.

  McCarthy, L.

  Crawley, B.

  Macdonald of Tradeston, L.

  Currie of Marylebone, L.

  McIntosh of Haringey, L. [Teller]

  Dahrendorf, L.

  David, B.

  McIntosh of Hudnall, B.

  Davies of Coity, L.

  MacKenzie of Culkein, L.

  Davies of Oldham, L.

  Mackenzie of Framwellgate, L

  Dean of Thornton-le-Fylde, B.

  Mackie of Benshie, L.

  Dearing, L.

  McNally, L.

  Desai, L.

  Maddock, B.

  Diamond, L.

  Marsh, L.

  Dixon, L.

  Mason of Barnsley, L.

  Donoughue, L.

  Massey of Darwen, B.

  Dormand of Easington, L.

  Merlyn-Rees, L.

  Dubs, L.

  Molloy, L.

  Elder, L.

  Monson, L.

  Evans of Parkside, L.

  Morris of Castle Morris, L.

  Evans of Temple Guiting, L.

  Morris of Manchester, L.

  Evans of Watford, L.

  Murray of Epping Forest, L.

  Ewing of Kirkford, L.

  Newby, L.

  Ezra, L.

  Nicol, B.

  Falconer of Thoroton, L.

  Oakeshott of Seagrove Bay, L.

  Falkland, V.

  Parekh, L.

  Farrington of Ribbleton, B.

  Patel, L.

  Faulkner of Worcester, L.

  Patel of Blackburn, L.

  Filkin, L.

  Paul, L.

  Fyfe of Fairfield, L.

  Peston, L.

  Gale, B.

  Phillips of Sudbury, L.

  Geraint, L.

  Pitkeathley, B.

  Gibson of Market Rasen, B.

  Plant of Highfield, L.

  Gilbert, L.

  Ponsonby of Shulbrede, L.

  Gladwin of Clee, L.

  Prys-Davies, L.

  Goodhart, L.

  Ramsay of Cartvale, B.

  Gordon of Strathblane, L.

  Randall of St. Budeaux, L.

  Goudie, B.

  Razzall, L.

  Gould of Potternewton, B.

  Rea, L.

  Grabiner, L.

  Rendell of Babergh, B.

  Graham of Edmonton, L.

  Rennard, L.

  Gregson, L

  Renwick of Clifton, L.

  Grenfell, L.

  Richard, L.

  Hardy of Wath, L.

  Rodgers of Quarry Bank, L.

  Harris of Haringey, L.

  Rogers of Riverside, L.

  Harris of Richmond, B.

  Russell, E.

  Harrison, L.

  Sainsbury of Turville, L.

  Haskel, L.

  St. John of Bletso, L.

  Hayman, B.

  Scotland of Asthal, B.

  Healey, L.

  Scott of Needham Market, B.

  Hilton of Eggardon, B.

  Sewel, L.

  Hogg of Cumbernauld, L.

  Sharman, L.

  Hollick, L.

  Sharp of Guildford, B.

  Hollis of Heigham, B.

  Shepherd, L.

  Howells of St. Davids, B.

  Shutt of Greetland, L.

  Howie of Troon, L.

  Simon, V.

  185

  Smith of Clifton, L.

  Walker of Doncaster, L.

  Smith of Gilmorehill, B.

  Wallace of Saltaire, L.

  Smith of Leigh, L.

  Walmsley, B.

  Strabolgi, L.

  Warner, L.

  Warwick of Undercliffe, B.

  Symons of Vernham Dean, B.

  Watson of Invergowrie, L.

  Taverne, L.

  Watson of Richmond, L.

  Taylor of Blackburn, L.

  Wedderburn of Charlton, L

  Taylor of Gryfe, L.

  Whitaker, B.

  Thomas of Gresford, L.

  Whitty, L.

  Thomas of Walliswood, B.

  Wilkins, B.

  Thornton, B.

  Williams of Crosby, B.

  Tomlinson, L.

  Williams of Elvel, L.

  Tordoff, L.

  Williams of Mostyn, L.

  Turnberg, L.

  Williamson of Horton, L.

  Uddin, B.

  Winston, L.

  Varley, L.

  Woolmer of Leeds, L.

  Resolved in the negative, and amendment disagreed to accordingly.
  6.12 p.m.
  Clause 75 [Dissolution of the Post Office]:
  Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendment No. 10:
  Page 47, line 18, at end insert ("or an order made under this Act").
  The noble Lord said: My Lords, this is a small amendment aimed at ensuring that the Post Office is not dissolved while there are any outstanding issues relating to the old Post Office. The transfer provisions in Clause 62 ensure that all the property, rights and liabilities of the current Post Office corporation transfer to the Post Office company on the appointed day. There should thus be no outstanding issues, apart from the vesting of foreign property rights (which may not be transferred simply by the UK statute) as provided for in Schedule 3.
  However, there may be transitional issues that we may need to lay on the Post Office under the powers provided in Clause 129. An example could relate to the way in which the final accounts of the Post Office are drawn up, in accordance with Clause 73(1)(b). We may need to make a transitional order to determine the handling of this. We would not want the Post Office to be dissolved until duties under such an order had been discharged. The amendment would require the Secretary of State to be satisfied that everything had been completed before making the dissolution order. I beg to move.
  On Question, amendment agreed to.
  Clause 105 [Application of customs and excise enactments to certain postal packets]:
  Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendment No. 11:
  Page 63, line 35, leave out ("any other") and insert ("a").
  On Question, amendment agreed to.
  Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 12:
  Page 63, line 47, at end insert—
  ("(6) The power to make regulations under this section shall be exercisable by statutory instrument.
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  (7) No regulations shall be made under this section unless—

  (a) a draft of the regulations has been laid before the House of Commons together with a reasoned statement from the Treasury confirming that, in its opinion, the regulations, if made, would not distort competition in the provision of postal services; and

  (b) the draft regulations are approved by resolution of that House.").

  The noble Baroness said: My Lords, I believe that this is the third time that we have debated this issue. I hope that that will show the Minister the seriousness that we attach to the amendment. When the clause was debated for the first time in Committee, I pointed out that the commercial courier services would be at a severe disadvantage vis-à-vis the Post Office because of new procedures being imposed by Customs and Excise regarding the clearance of packages to and from this country.
  I shall not trouble your Lordships this evening by repeating the details, but at the very least the commercial concerns will be forced to do their pickups for goods consigned abroad at a much earlier time in the evening which will adversely affect their highly competitive, next-day delivery round the world. The extra paperwork will cost millions of pounds over a period to implement, aside from creating the problem of recruiting and training staff to do all the computer input.
  Four major express operators have ascertained that it will cost them £5 million every year to implement these new procedures and to no object from the point of view of either security or increasing the tax revenue. As far as can be seen, it is simply to facilitate the Customs and Excise administration. The Minister previously told the House that this was an international issue and that a study was being conducted by the World Customs Organisation, the Universal Postal Union and the International Express Carriers Conference. Unfortunately, he could not tell my noble friend Lord Caithness when those deliberations would reach a conclusion. I am far from hopeful of an early decision.
  It took the best part of a generation for the Universal Postal Union to establish itself and for the respective countries to enact the necessary legislation. We have to deal with the matter for the benefit of our own carrier industry here and now. If the international negotiations eventually reach a conclusion, then, as with any other form of treaty, the Government can introduce the necessary legislation to implement it. The other parties to the negotiations are not currently enacting the postal services legislation, so they will have to create their own new legislation in due course.
  In his reply to my amendment, the Minister also said—presumably with the authority of Customs and Excise—that they had no wish to impose undue financial or administrative burdens on anyone or to distort competition. I am most grateful to the noble Lord for those fine words. But as they have been told in the course of the vigorous representations that the industry has made to them, that is precisely the effect that their current proposals will have. It is not too late for them to reconsider, because imposing these

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  procedures on everyone, except the Post Office, will distort competition. It is certainly not a level playing field.
  The other matter I wish to raise is the information that is required. Again, I also raised the issue on Report, when the Minister commented:
  "Customs are clear that the information called for will in no way exceed that provided at present".—[Official Report, 29/6/00; col. 1136.]
  I faxed a letter to the noble Lord on 5th July to inform him that I had been advised by the express operators that that does not appear to be the case. Of course, I shall not go into a detailed breakdown at this point, but my letter also gave details regarding what Customs are now requiring under the so-called "simplified procedures", which do not look much more simplified to me.
  However, the question as to whether Customs require more information cannot, I suggest, be relevant to the central issue. The core issue is, as the Minister himself stated, that there are two types of traffic that partly reflect the difference in the Customs' treatment. But from the figures that the Minister supplied in a Written Answer on 29th June and from the Parcelforce advertisement—as well as from a cursory look at its Internet site, as I informed the Minister—it appears that the company actively sells rapid guaranteed deliveries around the world. It clearly competes head to head with the express industry.
  I can do no better than to quote my noble friend Lord Freeman, who summarised the situation so well in our debate on Report when he said that,
  "if there is no distortion in competition, as the Government have argued, there can be no problems in ensuring that Parcelforce and the public sector abide by and are governed by exactly the same Customs and Excise regulations and new procedures as is the private sector".—[Official Report, 29/6/00; col. 1135.]
  I received a fax this afternoon from the Minister containing three points, which no doubt the noble Lord will remake in his reply. The first is that this provision only brings the Customs and Excise powers up to date to reflect the modern postal services required. But why does that not apply to the Post Office? Why not adopt a minimalist approach to help to reduce red tape?
  Secondly, the Minister stated that the matters are under discussion with the trade association and cannot be settled before 3rd August, which is too late for the Bill. All we want is an assurance from the Minister that the independent carriers will not be at a disadvantage vis-à-vis the Post Office. If the matter is not settled before the Bill is passed, the independents will not have a leg to stand on.
  Thirdly, the Minister stated that the date required is mandatory under the EC agreement. Will the Minister confirm that that applies to the state-owned Post Office as well as to the express companies?
  The amendment that I propose simply ensures that regulations made under the clause should be scrutinised by the other place before they come into effect, as I believe should be the case as they involve
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  fiscal issues. That would give the other place the opportunity to ensure that the Treasury, in seeking such approval, was not distorting the competition in postal services or imposing undue financial burdens, both consequences having been disclaimed by the noble Lord on behalf of Customs and Excise. I am afraid that those who advise me do not think that is the position. I beg to move.
  Lord Sainsbury of Turville: My Lords, as I stated in the fax, the provisions contained in the Postal Services Bill that apply Customs legislation to postal packets do not give Customs greater powers than they have at present. Clause 105 merely re-enacts and updates the provisions contained in Section 16 of the Post Office Act 1953. It gives the Treasury, on the recommendation of the Secretary of State and the Commissioners of Customs and Excise, the power to make regulations specifying how the legislation should apply. This power has been amended only in so far as it is necessary to reflect the changing market conditions by changing references to the Post Office to postal operator. It is intended only to maintain the powers that Customs and Excise currently enjoy and operate.
  The regulation-making power contained in Clause 105 was included in the Department of Trade and Industry's memorandum to the Lords Delegated Powers and Deregulation Committee, dated 2nd May. The committee, in its seventeenth report, dated 24th May, did not find it necessary to comment on the use of the negative resolution procedure in the case of this power. In fact, it considered that no amendment was necessary to either the delegated powers in the Bill or to the parliamentary control provided by those powers.
  I now turn to two distinct issues which the noble Baroness, Lady Miller, has raised. The first concerns whether there is unfair treatment by Customs of express courier companies and the supposed advantages enjoyed by the Post Office. However, the different treatment of the two groups reflects the different arrangements that are put in place by the two different international bodies that govern these arrangements. The differing arrangements arise because the legal bases are different. The arrangements for postal traffic are based on international agreements, made under the auspices of the Universal Postal Union and the World Customs Organisation. These provide standard Customs declaration forms for postal traffic which serve as both the exporter's declaration and the import declaration in the country of arrival. EC agreements confirm that these are the only declarations required for the vast majority of postal packages.
  The arrangements for express carrier traffic, on the other hand, follow the EC provisions for general import and export trade—specifically the EC Customs Code and its implementing regulation. These provide for a different form of Customs declaration. We have little room to act alone—changes can come only with international agreement. As I said before, the World Customs Organisation, Universal Postal Union and

  189
  the International Express Carriers Conference are jointly undertaking a study to compare Customs procedures for postal and express carrier traffic. Recommendations will be considered by the WCO and UPU and decisions will be incorporated into international agreements. I cannot give a time when that will occur because no time limit has been set. I share the pessimism of the noble Baroness that this will not occur quickly.
  Fair competition between the postal service and express carriers is also an issue in the USA. There, too, the express industry has made representations that there should be a level playing field with the same Customs requirements being imposed on both kinds of traffic. The House of Representatives sub-committee on Postal Services commissioned a fact-finding report on competitive concerns with particular reference to Global Package Link, an international parcel post service. The report of June 1998 did not contain recommendations but recognised that the post and express carriers faced different Customs requirements and obligations, both in the USA itself and in other countries which formed part of the study, including Canada, Japan and the UK. The report recognised the international dimension of the problem and noted that legal changes in the USA alone, even if permitted by international agreements, would be of limited benefit.
  The noble Baroness referred to the new export system. This is required to enhance the effectiveness of Customs controls. The existing export system is largely manual with exporters or carriers presenting Customs with paper declarations. These arrangements are becoming increasingly ineffective as trade and the amount of paperwork increase year by year. If the system is not modernised, either the service delivered by Customs will deteriorate or exports will be subject to delay. Maintaining dual manual and electronic systems will be a burden on both the trade and Customs and will require more resources. Electronic processing will provide positive benefits for the majority of exporters and is in line with the Government's commitment to keep pace with developments in electronic commerce.
  Customs are currently in discussion with the Association of International Courier and Express Services (AICES) about features of the system which they claim to be unduly onerous. These discussions are making good progress and there is every prospect that solutions can be found which will be acceptable both to express carriers and to others involved in exporting.
  The noble Baroness wrote to me on the information requirements and provided me with examples of the current system and the future one. I have looked into the matter in great detail. The lists of requirements are not comparable. The first list of the noble Baroness omits some requirements; the second list deals with a situation which allows for local clearance and aggregation. That concession has been made by Customs to the express carriers and there is a longer list of requirements in those different circumstances.
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  Customs have assured me that the information called for will not materially exceed that provided at present and is the minimum required under EC agreements. For low value (that is, less than £600) non-sensitive goods or those which are of no statistical significance, Customs are asking only for a single summary declaration per aircraft, for each of these two categories, which will include the total value and number of items covered by the declaration. This will cover several hundreds of consignments. There will be no need for individual eight-digit tariff codes to be supplied. This accounts for between 70 and 80 per cent of exports by express carriers.
  As I indicated earlier, discussions are already taking place with AICES. However, I note the concerns which the noble Baroness has so eloquently presented and I therefore propose that they be the subject of an urgent meeting between AICES and senior officials in Customs and DTI, where there is every prospect that further acceptable solutions can be found. On that basis, I ask the noble Baroness to withdraw the amendment.
  6.30 p.m.
  Baroness Miller of Hendon: My Lords, I have learnt a very salutary lesson from the Minister today—that is, that it is a big mistake to bring something back at the third attempt, when there is no chance to study the Minister's reply and to come hack at yet another stage. As I was listening to the Minister I came to the conclusion "That wasn't such a good point", "That wasn't a bad point"—and then, all of a sudden, he went on to something completely different and I shall not have the benefit of reading what he said before making a decision as to what to do.
  As regards the question of the paper and electronic mandates, the point I was trying to make is that it would be an unfair playing field if one group of companies—that is, the express postal operators—had to switch to the electronic system and the Post Office did not. From what I can recall—I said it in my speech—the core issue is that the Minister said that there were two different types of postage: one was electronic express and one was not. The point that I was trying to make from the Written Answers to the Written Questions that I tabled some time ago deliberately to tease this out, is that I think they will meet head-on with each other in competition. I do not see where they are so very different.
  Perhaps I may ask the Minister to explain again that issue to me. It is absolutely core as to whether or not the Post Office should be exempt from the burdens under which other express postal operators have to work.
  The Minister suggested that he is willing to call an urgent meeting with his department and people from AICES and so on to deal with this matter. I said that if he could give me some kind of assurance—I am trying to find where I said it so that I can quote the exact words, but I cannot—that the express postal operators will not be at a disadvantage, I would feel much better about the situation. Unless he can clarify

  191
  for me that there are two different kinds of post and that the other express postal operators will not be disadvantaged—as they have assured me on numerous occasions that they feel they are—I may have to take a different approach from the one the noble Lord has asked me to take in regard to withdrawing the amendment. As I shall not have another chance to come back on this issue, I must feel relatively content about it—although I could not go through the whole of that speech again; it went in one ear and by the end it had gone out of the other, I regret to say.
  Lord Sainsbury of Turville: My Lords, I do not know whether I can make the noble Baroness content. Perhaps I may explain the problem. We have two different systems, which are controlled by two different pieces of legislation; therefore one cannot simply take a unilateral decision as a country that one will treat them in the same way.
  Obviously there are cases where the express operators are competing for the same business. That is why this is an issue for them; they feel that they are competing for the same business but are being treated differently. But the fact is that, under international legislation, they are treated differently and there are different systems.
  The second point I would make is that while it may often he felt that a new, modern electronic system for handling information is a backward move—it causes more work and involves more investment and so on—the electronic system is not being imposed as a penalty on people; it is an attempt to deal with a rising amount of extra business and to make certain that it is handled in an efficient and effective way. Clearly there is some disagreement about how it should be done in reaching that point, but the aim of the new electronic system is to improve business, not to make it materially worse. There are a whole series of benefits that should flow to companies by handling it on an electronic basis.
  I do not think that I can give an assurance that the two situations will he treated in the same way; they are covered by different pieces of legislation. However, I know that it is the aim of the Customs that, as far as possible, they will treat everyone on a fair basis. Of course, it is not simply those two bodies involved in this matter; the whole of the rest of the freight industry has to be considered and treated on a fair and common basis.
  With that assurance and the fact that we shall arrange a meeting as soon as possible to see whether these misunderstandings can be ironed out, I again ask the noble Baroness to withdraw her amendment.
  Baroness Miller of Hendon: My Lords, if I understand correctly what the Minister said on that occasion, even though the Post Office or Parcelforce or whatever will compete head-on with these express postal services, there is no way that the electronic system—I forget whether or not private companies want it—would apply to Parcelforce and the Post
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  Office because they are different systems under different international agreements? Am I correct in saying that?
  Lord Sainsbury of Turville: My Lords, as I understand it, they are different systems and therefore will be computerised on a different time-scale. I believe that it is not a situation where there will not be computerisation applied to the postal side, which I believe they wish to have.
  Baroness Miller of Hendon: My Lords, I have tried very hard on this. It is a very difficult situation. But I am prepared to accept that there will be a meeting as soon as possible, as the Minister said. I hope that this will provide some comfort to the express postal service. I do not think that I can take the matter any further. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 122 [Orders and regulations]:
  Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendment No. 13:
  Page 72, line 43, leave out ("laid before an").
  The noble Lord said: My Lords, I apologise for the late tabling of this amendment, but a potential deficiency in the drafting of the Bill was not spotted until yesterday.
  This is a technical drafting amendment which removes an uncertainty that might otherwise arise from the interaction between subsection (10) of Clause 122 of the Bill and Section 6(1) of the Statutory Instruments Act 1946. One of the purposes behind subsection (10) is to enable provisions which can, by themselves, be made under the negative resolution procedure to be included in an order with provisions that have to be approved by the affirmative procedure. Such a "combined order" is then subject to the affirmative procedure.
  That remains our intention, but we have realised that the words that this amendment seeks to remove are unnecessary and could have, on one interpretation, the unintended and unwanted effect of requiring orders under the Bill following the negative procedure to be laid in draft for 40 days before being made. This was not our intention and, as the subsection otherwise makes clear, such orders were intended to be subject to the normal negative procedure. This amendment removes this uncertainty and clarifies the position. I beg to move.
  Lord Skelmersdale: My Lords, I questioned this matter—in part anyway—towards the end of the Report stage. As I understand it, subsection (10) provides that the powers to make orders under the clauses specified can be subject to the negative procedure. However, the subsection also allows these powers to be exercised in affirmative orders, so allowing negative procedure powers to be used in combination with affirmative procedure orders under this or previous legislation. As the noble Lord said, a working definition of this may be "combined orders".

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  I must admit that these are a new animal to me—I assume they are to most of your Lordships—but none the less I would be the first to agree that they are a convenience to Parliament in circumstances where the Government may want to exercise powers subject to both the affirmative and negative procedures together in relation to a related subject. Without this power it would be necessary to make two sets of orders using different routes. That seems to me to be a total nonsense.
  In a very useful letter, for which I thank the Minister, he told me that the Government intended the combined orders to be affirmative orders and follow the normal route for affirmative orders in both Houses of Parliament. However, when I asked a totally off-the-cuff question about the penultimate group of amendments at Report stage, in particular Amendment No. 55, I was told that the powers did not permit the,
  "affirmative procedure powers to be exercised using the negative procedure, nor for negative procedure powers to be used to amend provisions which can only be made following the affirmative procedure".
  The Minister was quite right; that was exactly what I was concerned about. However, it may or may not have been due to my questioning of subsection (10) and Clause 122 altogether that the draftsman looked at the matter once again and concluded that the words in subsection (10) are, to say the least, somewhat opaque and could be construed as not having the effect of making these combined orders subject to the affirmative resolution. Since I want them to be subject to the affirmative resolution procedure, I hope that this time the Bill is word perfect. I congratulate all involved on the amendment. I hope that the Minister, his department and my reading of the situation coincide and we will not have this back again when the Bill is returned from another place.
  Lord Sainsbury of Turville: My Lords, the noble Lord's reading entirely agrees with ours. We would jointly hope that this does not come back as an issue.
  On Question, amendment agreed to.
  Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendment No. 14:
  Page 73, line 10, after ("9,") insert ("30(1A),").
  On Question, amendment agreed to.
  Clause 125 [Interpretation]:
  Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendments Nos. 15 to 18.
  Page 74, line 10, after ("delivered") insert ("otherwise than electronically").
  Page 74, line 10, after ("the") insert ("person or").
  Page 74, line 12, at end insert ("; and includes a postal packet containing any such communication,").
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  Page 75, line 21, at end insert—
  ("(1A) For the purposes of the definition of "letter" in subsection (1) the reference to a communication to be conveyed and delivered otherwise than electronically shall be construed as a reference to a communication to be conveyed and delivered otherwise than—

  (a) by means of a telecommunication system (within the meaning of the Telecommunications Act 1984), or

  (b) by other means but while in electronic form.").

  On Question, amendments agreed to.
  Clause 126 [Index of defined expressions]:
  Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendments Nos. 19 and 20.
  Page 76, line 18, column 2, at end insert ("and (1A)").
  Page 76, line 43, column 2, at end insert ("and (3A)").
  On Question, amendments agreed to.
  Schedule 2 [The Consumer Council for Postal Services]:
  Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendments Nos. 21 to 28.
  Page 81, line 7, after (" 54(4)(a)") insert ("and the chairman of any committee for England established under section 54(4)(c)").
  Page 81, line 10, after ("chairman") insert ("of the Council").
  Page 81, line 18, after (" 54(4)(a)") insert ("and any committee for England established under section 54(4)(c)").
  Page 81, line 23, leave out ("or (c)") and insert ("and a regional committee (other than a committee for England) established under section 54(4)(c)").
  Page 81, line 32, at end insert ("(other than a committee for England)").
  Page 82, line 13, after (" 54(4)(a)") insert (", the chairman of any committee for England established under section 54(4)(c)").
  Page 82, line 17, after (" 54(4)(a)") insert (", chairman of any committee for England established under section 54(4)(c)").
  Page 82, line 22, after (" 54(4)(a)") insert (" or of any committee for England established under section 54(4)(c)").
  On Question, amendments agreed to.
  Schedule 5 [Acquisition of Land]:
  Lord Sainsbury of Turville Lord Sainsbury of Turville moved Amendments Nos. 29 and 30.
  Page 90, line 6, at end insert—
  ("( ) The Secretary of State shall consult the First Minister and the deputy First Minister in Northern Ireland before exercising his power to make an order under this paragraph in respect of land which—

  (a) is the property of any public body which has power under any enactment to acquire land compulsorily, or

  (b) is declared by or under any enactment to be inalienable,

  where representations objecting to the proposal for making the order have been duly made by the owner of the land and not withdrawn.").
  Page 90, line 13, at end insert (", and
  "public body" means a body established by or under any enactment.").
  The noble Lord said: My Lords, Amendment No. 29 relates to the compulsory acquisition provisions in Schedule 5 to the Bill. It inserts into the Bill a requirement requested by the First Minister and Deputy First Minister in Northern Ireland for the Secretary of State to consult them when a universal service provider, in connection with the provision of the universal postal service, wishes compulsorily to

  195
  acquire land in Northern Ireland that is owned by a public body which also has the power to acquire land compulsorily.
  In Northern Ireland there is no corresponding legislation to the Acquisition of Land Act 1981 which protects land acquired by statutory undertakers for the purposes of their undertaking. A different approach is taken in Northern Ireland legislation and, where this legislation provides for the establishment of a statutory body with powers of compulsory acquisition, it generally includes a provision requiring a vesting order to be approved by the Assembly where objections have been made by the owner of the land. Recent examples of such orders are Schedule 3 to the Electricity (Northern Ireland) Order 1992 and Schedule 2 to the Gas (Northern Ireland) Act 1996.
  The Government consider that the amendment is appropriate as it would ensure that the protections that currently exist for land owned by certain public bodies in Northern Ireland are reflected in the Bill.
  Amendment No. 30, which is consequential to Amendment No. 29, defines "public body" as a body established by or under any enactment. I beg to move.
  On Question, amendments agreed to.
  6.45 p.m.
  Lord Sainsbury of Turville: My Lords, I beg to move that the Bill do now pass.
  Moved, That the Bill do now pass.—(Lord Sainsbury of Turville.)
  Baroness Miller of Hendon: My Lords, the Government have given way on certain matters. I should like the Minister to know that we are most grateful to him. We had hoped that the Government might have given way on more. Despite misgivings on certain matters we were unable to persuade them. We wish the new Post Office company, and indeed all the other postal services providers which will be allowed to compete in the market, every possible success. I thank all my noble friends and all noble Lords who have supported our amendments. I feel sure that all noble Lords will join me in hoping that the new regime provides a good service to the public and to business. Perhaps a more prosperous and efficient postal service will add to the prosperity of Great Britain plc.
  Lord Clarke of Hampstead: My Lords, as one who during the passage of the Bill has spoken in critical terms of the Government's proposals to turn the Post Office into a plc, I want to say that I am still of that opinion. I think that the Government have got it wrong. The purpose of taking up noble Lords' time today is to say that, as a relatively new boy in your Lordships' House, I have been impressed with the way the various stages of the passage of the Bill have taken place and the courtesy which has been shown. It also gives me the opportunity to thank noble Lords who have spoken so highly of Post Office workers.
  Many noble Lords know of my interest in this matter. It is gratifying to know that this House is alive and well in tackling the future of the Post Office. Like
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  other noble Lords, I wish it well in whatever form it ends up, but I hope that it maintains its traditions as it has done for centuries. I should like to place on record my thanks to the Minister for his courtesy in dealing with some of my barbed comments over the past few months. I wish the Bill well. I hope that it has a clear passage now and that the Post Office and its staff can carry on doing the job they do so well.
  Lord Sainsbury of Turville: My Lords, perhaps I may say how grateful I am to the noble Baroness and other noble Lords who have contributed to the debates on the Bill and who have contributed to what I believe is an effective scrutiny of the Bill. I thank them for that contribution. The debates have shown the strong feelings the British public have for the Post Office, its role and the major contribution it makes to our public life. I believe that the Bill will make a major contribution to the continuing life of this country and also to great commercial success in the future.
  On Question, Bill passed, and returned to the Commons with amendments.

  Insolvency Bill [H.L.]
  6.47 p.m.
  Report received.
  Clause 4 [Qualification or authorisation of nominees and supervisors]:
  Baroness Buscombe Baroness Buscombe moved Amendment No. 1:
  Page 2, line 17, leave out subsection (3).
  The noble Baroness said: My Lords, in moving Amendment No. 1, I should like to speak also to Amendments Nos. 2, 13, 14, 17, 23, 25, 26, 29, 30, 32, 34, 34A and 37. In proposing these amendments in Committee we made the point that an authorised person created by subsections (3) and (4) of Clause 4 should not be a licensed insolvency practitioner and should be able to act only as a nominee or supervisor. He would be likely, therefore, to recommend a voluntary arrangement rather than some other insolvency procedure. The Minister attempted to answer that point, but, with great respect, I fear that he missed our point. A debtor, be it a company or an individual, in financial difficulties, will usually seek the advice of some professional person.
  In many instances he will seek the advice of a mere authorised person. That advice will probably be given free, just as at the moment similar advice is given free by licensed insolvency practitioners. That advice is given free in the hope and expectation that the person giving that advice will be appointed as nominee, supervisor, administrator or liquidator in due course and will be remunerated for doing so. That remuneration will more than make up for the free advice given earlier. That is how the system works today with licensed insolvency practitioners and we can think of no reason why that will not be how the system works with authorised persons in the future if these provisions are enacted.
  A number of these authorised persons will be tempted by the hope and expectation of earning remuneration as nominee or supervisor in due course. We believe that they will want to recommend a moratorium and a voluntary arrangement because they will then get paid. If they recommend some other insolvency procedure, such as bankruptcy, administration or liquidation, they will probably not be paid. The temptation is therefore very great.
  Some of these authorised persons will succumb to that temptation. That is an inevitable consequence of human nature. We believe that in a considerable number of cases an authorised person will wrongly advise the debtor to propose a voluntary arrangement because that is the only way the authorised person will be paid. Indeed, it happens now with licensed insolvency practitioners, who may recommend one insolvency procedure instead of another because they are more likely to be paid in due course. It is more likely to happen with authorised practitioners, who will certainly not be paid at all if they recommend insolvency procedures for which they are not qualified.
  I am not saying that this will happen in every case. Indeed, it may happen in only a few cases. But we must stop even that, because debtors are particularly vulnerable. These are people or companies who are in financial difficulties and are clutching at any straws. We must therefore ensure that the risk of that happening is minimised. The amendments will do that. If the professional who can act as nominee and supervisor is also able to act in other insolvency procedures, he is less likely to advise a voluntary arrangement where other insolvency procedures are more appropriate. I beg to move.
  Lord McIntosh of Haringey: My Lords, we have listened carefully to what has been said in debate about Clause 4 of the Bill. We have listened at Second Reading, in Committee and again today. We have struggled—we still do struggle—to understand why there is such strong opposition to the proposals in the clause.
  There seems to be a suggestion behind all this opposition that there is a hidden agenda. There is no hidden agenda. Clause 4 introduces new Section 389A in the Insolvency Act. It enables the Secretary of State, if certain conditions are met, to recognise bodies whose members will be able to act as nominees or supervisors in relation to voluntary arrangements under the Insolvency Act. I realise that my comments during the Committee stage on that point were not as clear as they might have been. As a result, I wrote on 21st June to the noble Baroness, Lady Buscombe, to make it plain that nominees and supervisors authorised under new Section 389A will be able to act in relation to voluntary arrangements generally and not just in moratorium cases.
  The conditions under which a body can be recognised are that it,
  "it maintains and enforces rules for securing that its members—

  (a) are fit and proper persons to act as nominees or supervisors, and

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  (b) meet acceptable requirements as to education and practical training and experience".

  Those are important conditions. It would be strange to suggest that the Secretary of State would regard this measure as a means of "dumbing down" on standards. If an authorised body does not perform to acceptable standards, the Secretary of State can revoke its recognition.
  The noble Baroness, Lady Buscombe, has today taken a slightly different tack. She has suggested that persons authorised pursuant to the power in new Section 389A would be likely to advise a voluntary arrangement as the most appropriate course because they could act only in that area. I hope I have made it abundantly clear that a nominee or supervisor does not have an advisory role. If I have not made it clear, I do so now. The nominee's and supervisor's duties are set out in the legislation and it is those duties—and only those duties—that they are authorised to perform.
  The proposition that only a licensed insolvency practitioner will ever have the skills necessary to act as a nominee or supervisor is untenable. There are areas of, say, a supervisor's role, such as collecting in regular payments and distributing them in accordance with the terms of an agreed voluntary arrangement, where it would be rather absurd to claim that the particular skills of an insolvency practitioner are always needed. As I have said before, membership of the insolvency profession's trade association—formerly the Society of Practitioners of Insolvency and now the Association of Business Recovery Professionals: is there not here a message for those who oppose Clause 4?—is now open to those with expertise in financial rescues who are not licensed insolvency practitioners.
  The skills—we are in no doubt that they are substantial skills—those people have may prove very useful in achieving rescues by way of voluntary arrangements under the Insolvency Act. So, if an organisation exists, or comes into being, which satisfies the requirements of the new Section 389A, we see no good reason why its members should be prevented from playing a part in the rescue process by effectively maintaining an unjustifiable monopoly.
  The Government are in the business of promoting rescues—not protecting vested interests. But I cannot overemphasise that the only reason for taking this power is to ensure that we can harness skills—regulated and professional skills—which, but for Clause 4, would not be available to those attempting a rescue.
  Baroness Buscombe: My Lords, I thank the Minister for his response. There was certainly no suggestion on our part of a hidden agenda. We are seeking clarification. It has been our understanding from the outset that an authorised person would not be able to carry out other insolvency procedures. I do not refer to giving advice. We believe that anyone can advise. We have never strayed from that point. Advice can be given by any professional at any stage. However, in terms of acting, we are seeking confirmation, given the Minister's response, that an authorised person will be

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  able to recommend some other insolvency procedure, or w ill be likely to recommend it where it makes sense, such as bankruptcy, administration or liquidation. They will be able to act in those procedures. If that is the case, we shall be content. Our concern has been that the new animal—the authorised person—will be able to act only in cases where there is a voluntary arrangement but will not be able to act where it would make sense, say, to recommend instead bankruptcy, administration or liquidation. The authorised person would not be able to be involved in those processes as supervisor.
  Lord McIntosh of Haringey: My Lords, if anything, the boot is on the other foot. The present situation is that all kinds of people may advise a company in difficulties. There have been accusations—they have been made known to the Insolvency Service—that if insolvency practitioners provide the advice as authorised persons, they are more likely to recommend insolvency procedures where they can make money. What is sauce for the goose is sauce for the gander. It is the responsibility of those companies that are in difficulties to seek objective advice. They must take into account the possibility that those who are advising them might receive fees through one course of action rather than through another course of action. I am sure that they will.
  It is rather similar to the position of those making investments. It is the responsibility of those making investments to be informed about—that, in turn, is government's responsibility—the reasons why investment advisers might give particular advice rather than other advice. If that reason is that the commission is better, someone ought to know about it. But I do not think that the Bill introduces anything new that might give rise to the danger feared by the noble Baroness, Lady Buscombe.
  Baroness Buscombe: My Lords, I thank the Minister, but I should tell him that we have considered this point carefully. Having read through the debates held in Grand Committee, where we felt that we perceived this matter in a different light was on the question of advice as opposed to action. We hold to the view that anyone can offer advice, but that people are less likely to suggest a certain course of action if they personally will not be able to be involved in that course of action and thus subsequently be paid. That is the point which I am trying to emphasise. I may not have stressed it clearly enough in Grand Committee.
  We are concerned that the proposed "authorised persons" will choose a course of action with which they can then become actively involved and therefore receive payment. If the Minister is now reassuring me that those persons will be able to act in ways other than in a voluntary arrangement—namely, they will be able to act as the supervisor in a bankruptcy, or in administration or liquidation, in which case they would be paid for the job they undertake—then I am satisfied.
  Lord McIntosh of Haringey: My Lords, with the leave of the House, I am saying something much
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  simpler here. I simply wish to state that the Bill does not seek to regulate the provision of advice. That applies whether or not the "authorised persons" are insolvency practitioners.
  Baroness Buscombe: My Lords, I thank the Minister for that explanation. However, the principal point that I wish to make concerns the services people are able and qualified to offer as "authorised persons" rather than advice. If they can offer services, they can then charge a fee for supervising a particular course of action. It is on that point where differences he between us.
  In any event, I shall read with care what the Minister has said and, on that basis, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 2 not moved.]
  7 p.m.
  Schedule 1 [Moratorium where directors propose voluntary arrangement]:
  Lord Kingsland Lord Kingsland moved Amendment No 3:
  Page 12, line 16, after ("arrangement") insert ("(with or without modifications)").
  The noble Lord said: My Lords, the noble Lord has already conceded that the Bill makes provision for the nominee to consider the proposed voluntary arrangement as amended by any modification notified to him by the directors. However, the noble Lord rejected proposals to notify amendments from other sources because of the unreasonable burden which would be placed on nominees to take into account other modifications.
  Therefore, the position is that a nominee, in considering a proposed voluntary arrangement, can take into account any modification noted to him by the directors. However, he cannot take into account any other modifications. Accordingly, if the nominee finds the proposed voluntary arrangement acceptable, except in one or two minor respects, he must nevertheless reject it, even if he is convinced that one of the creditors will propose a modification which will subsequently be acceptable to and capable of approval by the meetings of members and creditors. In those circumstances, even though the nominee is entirely satisfied that the proposed voluntary arrangement has a reasonable prospect of being approved and implemented if a minor modification is considered by the members and creditors, a moratorium will still never come into existence.
  In Committee, the Minister said that the directors might never be prepared to agree to further modifications, in which case the meetings would be unlikely to approve and implement the voluntary arrangement. However, it does not follow at all that, merely because the directors might not agree to further modifications, the meetings would be unlikely to approve and implement the voluntary arrangement. It is the meetings themselves which would propose the

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  modifications. If they proposed them, they would be likely to approve and implement the voluntary arrangement as modified. I beg to move.
  Lord McIntosh of Haringey: My Lords, I hope very much that we are not talking at cross-purposes here. As I said during our debates in Committee, we consider that nominees should look at the proposed individual or proposed company voluntary arrangement as he understands it will be put to the creditors and, if applicable, to the shareholders. As drafted, the Bill already makes provision for the nominee to consider the proposal as amended by any modification notified to him by the directors. We would not want him to consider it as it might conceivably be modified, either in his own mind or on the basis of one or more—possibly conflicting—proposed modifications by creditors.
  As I understand them, the amendments could mean that we would encounter a situation where the nominee has to speculate on all conceivable permutations of possible modifications (proposed or not) and decide whether a voluntary arrangement is likely to be approved and implemented on the basis of those possibilities. The noble Lord, Lord Kingsland, suggested the position where a nominee might think that the proposed moratorium would have a reasonable chance of success—I am not using quite the right words in terms of the Bill. However, unless the directors were prepared to agree the modifications, they would not put them to the meeting and the moratorium would not come into being. In that case, the voluntary arrangement is unlikely to be approved and implemented.
  We would not want the company to be able to obtain a moratorium, or for it to continue. In such circumstances it would be entirely inappropriate because no approved voluntary arrangement would be likely to ensue. The amendments would also place an unreasonable burden on the nominees. They should not be obliged to make decisions on the basis of conjecture. Nominees need certainty in these circumstances and that can be provided only if they are required to consider the proposal as the directors intend it to be put to the meetings.
  We therefore consider it essential that the nominee is required to form a view only in relation to the voluntary arrangement proposal at the various points in time that he is actually considering it for one or other of the various purposes he is required so to do under the Bill, such as considering whether the proposed arrangement has a reasonable prospect of being approved and implemented prior to the directors obtaining a moratorium, or for the purposes of monitoring and considering whether he should withdraw his consent to act during the moratorium.
  I should also say that the nominee would have to withdraw his consent to act if it became apparent to him that valid concerns about the proposal were being raised by creditors which the directors were not prepared to accommodate by way of modifications to their proposal and it appeared to him, in the light of
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  those concerns, that the proposal no longer had a reasonable prospect of being approved or implemented.
  As I said earlier, I hope that we are not talking at cross-purposes and that I have not completely misunderstood what the noble Lord, Lord Kingsland, has been saying. However, I think it is important to stress that the nominee should be required to consider only realistic proposals.
  Lord Kingsland: My Lords, I am grateful to the Minister for his reply. The concern we are seeking to meet here is a situation in which the directors have proposed certain modifications which would not be acceptable to the creditors and the members. In those circumstances, the members and creditors might be able to suggest to the nominee certain solutions which the nominee could then put to the directors in order to achieve a proposal which would ultimately be acceptable. That is the issue that we are seeking to confront in our amendments.
  I can see a look of astonishment passing across the face of the Minister. Perhaps he would like to articulate his response.
  Lord McIntosh of Haringey: My Lords, I still remain a little puzzled here. If all that the noble Lord, Lord Kingsland, seeks to achieve with his amendments is to say that the nominee is a channel of communication between the creditors and the directors and that if a matter arises from the creditors that he should suggest to the directors, nothing in the Bill would create any difficulty in that capacity. The difficulty lies in the range of modifications proposed in the amendments.
  Lord Kingsland: My Lords, the amendments seek to do formally what the Minister says there is no difficulty in doing informally. We believe that it is important that this opportunity for the members and creditors appears on the face of the Bill. The Minister does not agree—hence his opposition to the amendment. I beg leave to withdraw it.
  Amendment, by leave, withdrawn.
  [Amendment No. 4 not moved.]
  Baroness Buscombe Baroness Buscombe moved Amendment No. 5:
  Page 13, line 12, leave out ("either of those meetings") and insert ("the meeting of creditors").
  The noble Baroness said: My Lords, in Committee we proposed the need for this amendment carefully, in terms which we felt were clearly understood by the Minister. The Minister appeared to be entirely happy with the idea of the moratorium coming to an end simply because the members of the company did not bother turning up to their meeting.
  However, it is equally clear that the Minister was perhaps under the impression that the directors would all be members of the company; or, dare I say it, that all the members of the company were directors. He went on to say that the nominee could not continue with the moratorium or have any confidence that it had a reasonable prospect of success if the directors of

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  the company had not had a meeting and responded. That possibly indicates a misapprehension of what a director is and what a member or shareholder is. The Minister will know that, quite often, directors are not members and that not all members are directors.
  It may well be that all the directors are keen that the voluntary arrangements should be approved and implemented and that the moratorium should continue. Indeed, it is inherently likely that they will be, because the structure of the Bill involves their active participation. On the other hand, the company is insolvent and there is little or no prospect of any money going to the members of the company. They are unlikely to have any incentive to turn up to the meeting of members because there is nothing in it for them. It is worse than that; it may well be the case that the creditors and directors are extremely keen for the moratorium to continue and that the members appreciate that, if they do not turn up to the meeting, the moratorium will come to an end. An astute member will extract a price for turning up at the meeting. Is that what the Minister intends? If so, it seems to us that the procedure here is fundamentally flawed.
  Again, I believe that the Minister's comments are based on a false premise. He said in Committee that if the extension of the moratorium was not agreed by the company, for whatever reason—either by it not having a meeting or not turning up to one—it should not be extended. He said it should not be continued on the opinion only of the creditors, because that would make no sense. He went on to say that the nominee could not continue with the moratorium or have any confidence that it had a reasonable prospect of success if the directors of the company had not had a meeting and responded. With respect, that premise is misconceived. Why on earth would it make no sense that the moratorium should not continue on the opinion only of the creditors? That statement is plainly wrong. One can test it by asking the question: should the moratorium come to an end merely because the members have no interest whatever in turning up?
  As I said, the Minister seems to be confusing directors with members. The directors of the company do not have a meeting; it is the members of the company who have a meeting—and they may not be directors. The members are in a very different position from that of the directors and the creditors. When a company is insolvent, the members have no interest in the company. The directors may have an interest and the creditors may have an interest. Why should someone with no interest be able to prevent the creditors extending the moratorium when it is their sole interest to do so? That makes no sense. I beg to move.
  7.15 p.m.
  Lord McIntosh of Haringey: My Lords, I think I owe the noble Baroness an apology. I thought—and she has quoted my words in Committee—that what she sought to do was to disenfranchise the shareholders. I have thought again about what she said and have
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  concluded that that was not her purpose. Indeed, she has confirmed that today—although it could be the effect of the amendment.
  We can now see that the Bill as drafted could lead to a curious outcome. If the creditors' meeting met and decided to extend the moratorium and the company meeting met but decided not to, the result would be that the moratorium would be extended—that is, against the express wish of the shareholders (the members), unless, of course, the court ordered otherwise under paragraph 35.
  But if, instead, the company meeting had not met, the result would be that the moratorium would come to an end. In other words, the creditors would not have their wish, even though no one had even turned up for the company meeting. That is clearly a perverse outcome. We shall therefore bring forward amendments to address the issue raised by the noble Baroness, taking into account, although not necessarily following, the arguments that she has used today. She has raised some new points which we shall have to consider. We shall not be able to do this in time for Third Reading, but we shall do it when the Bill goes to the House of Commons. I hope that on that basis the noble Baroness will feel able to withdraw the amendment.
  Baroness Buscombe: My Lords, I thank the Minister for his apology. I am pleased to learn that he will be bringing forward amendments. I am sorry that our amendments do not fit the bill. On that basis, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Kingsland Lord Kingsland moved Amendment No. 6:
  Page 14, leave out line 19.
  The noble Lord said: My Lords, we on this side of the House are still very troubled by the provisions in the Bill which will prevent a debenture holder from appointing an administrative receiver when entitled to do so. We debated this point at some length in Committee and, although the noble Lord, Lord McIntosh of Haringey, appeared to grasp thoroughly the points that I made, he indicated that the proposed amendments were not acceptable to the Government. However, I urge him to reconsider his position. I do not propose to repeat all the arguments—indeed, any of the arguments—that I made in Committee. The noble Lord understood them and rejected them. Therefore, I shall approach the issue in a different way.
  The Bill, when enacted, will affect the rights of debenture holders even where the debenture has been granted before the Act comes into force. Existing rights will be changed without any agreement with the party prejudiced. All debenture holders will be deprived of the opportunity of appointing an administrative receiver as provided in the debenture when an authorised person says so. In other words, the Government are re-writing the bargain between the debenture holder and the company. In so doing they are depriving themselves of the services of an individual who can manage the company's business

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  and sell it as a going concern. Businesses will be preserved, along with all the jobs necessary to run them. That is good for the economy and, therefore, good for the country.
  In responding to my criticisms in Committee, the Minister was concerned that the appointment of an administrative receiver during the moratorium would almost certainly be disastrous for any rescue attempt. With great respect, I suggest that the noble Lord is mistaken. The appointment of an administrative receiver would not be disastrous for any rescue attempt. Indeed, the contrary is the case because administrative receivers are appointed with a view to receiving the company's assets and administering them in order to realise the company's assets and its business for the best possible price. The receiver's role usually involves preserving both the business and jobs. With the greatest possible respect, the Minister's approach is misconceived.
  If the Bill as drafted is enacted, the decision of an insolvency practitioner will prevent a debenture holder appointing an administrative receiver who may preserve the business and jobs in seeking to realise a company's assets. Instead, the directors of the company, who quite freely accepted the debenture holder's money and may well be responsible for the company's poor trading, will be left in control until the moratorium comes to an end.
  If past performance is any indication of future performance, the company's financial position will probably deteriorate further and the debenture holder will lose more money. He will still be able to appoint an administrative receiver but only after the moratorium has come to an end. It is quite possible that, in those circumstances, there will be little left for the administrative receiver either to administer or to receive. Debenture holders will therefore be severely prejudiced if these amendments tabled by the Opposition are not accepted. And for what benefit? To gain a short breathing space. The company will not be able to prevent the debenture holder subsequently appointing an administrative receiver. The benefit is insignificant in comparison to the prejudice.
  The noble Lord the Minister did not express much concern for the rights of existing debenture holders. What about future debenture holders? They are plainly going to be deterred from lending money to companies which qualify for this new procedure. These are often small companies, and from small companies great businesses grow. Without these companies we would not be the economic power that we are today. We must encourage small companies and encourage debenture holders to lend money to them.
  However, with these new procedures which prevent a debenture holder from appointing an administrative receiver when it is considered appropriate to do so, lenders will think very carefully about the terms of any loan and, in many instances, about whether to lend any money at all. A serious economic effect will flow from these new provisions. Small companies will find it
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  harder to borrow money and that will inevitably have an effect on the future prosperity of this country. I beg to move.
  Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord, Lord Kingsland, for not repeating what he said in Committee but I am going to have to repeat something of what I said then, because it is still true. These are wrecking amendments. I am serious: if they were carried there would be no point in our proceeding with the Bill at all.
  The first two amendments would mean that there would be nothing to stop a floating charge holder—which is what the noble Lord, Lord Kingsland, calls a debenture holder—from appointing an administrative receiver during the moratorium. In our view, the appointment of an administrative receiver would probably be disastrous for any rescue attempt, as in most cases—and the noble Lord, Lord Kingsland, recognised this—it is likely that the receiver would assume control of all the company's assets. He would then proceed to dispose of them with a view to repaying the moneys due to the floating charge holder. The primary purpose of receivership is to recover the money for the charge holder and not to achieve a rescue.
  Of course we accept that receivership can result in rescues, but it is not usually the company which is rescued. The directors lose control and the whole purpose of the moratorium that we are looking to is not the replacement of an administrative receivership—that can still carry on—but an alternative to administrative receivership for a very short period, initially 28 days, in which the directors retain control and it is thought there is a possibility of preserving the company. So administrative receivership during a moratorium simply kills the moratorium and makes it impossible to sustain.
  The third amendment would mean that during a moratorium a floating charge could crystallise or restrictions could be imposed on the disposal of the company's assets. Either way, that would result in virtual paralysis for the company and it would make any rescue attempt very difficult, if not impossible, to achieve.
  We simply do not see any reason why a floating charge holder should be the only creditor whose action should not be stayed by the moratorium. If we are serious about giving the directors the necessary short breathing space to put in place a rescue plan for all their company's creditors, these amendments must be rejected. If not, we would be legislating for a dead letter.
  The noble Lord, Lord Kingsland, made much of the floating charge holder's ability effectively to veto an administration order, but if he looks back at the history he will see that the Court Committee, whose review of insolvency law preceded the Insolvency Act 1985, recognised that the process of receivership could rescue businesses. However, it also saw that possible business rescues were lost when there was no floating charge holder to appoint a receiver to effect the rescue.

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  So the Government then brought into place the administration procedure, but left in place the right to appoint a receiver wherever possible. Recent research has shown that in some 50 per cent of administrations a floating charge was in existence; yet the administration was agreed to, or not vetoed, by the floating charge holder. That suggests that what in the past appeared to he an automatic preference of secured creditors for an administrative receivership over administration has diminished.
  What we must not lose sight of is that both these procedures, while offering the potential for a rescue of the business, means that the directors lose control and the company itself is rarely saved. As a consequence, directors may be reluctant to let their company enter either procedure. The prospect of being able to remain in control of a company while a rescue goes ahead, we think, will mean that directors are more willing to attempt a rescue, and perhaps at an earlier stage. And of course the earlier a rescue is attempted, the more likely it is to succeed.
  We think that there are enough safeguards in place to protect the position of a floating charge holder during the moratorium. After all, his existing rights are not being changed; they are only being stayed for the rather short period of the moratorium itself. We have provided that the company is only able to obtain a moratorium if the nominee is of the view, among other things, that the directors' proposal for a voluntary arrangement has a reasonable prospect of being approved and implemented.
  Any company which obtains a moratorium should stand a reasonable prospect of being able to agree and implement a rescue plan with its creditors. In any case the moratorium is only initially for a maximum period of 28 days, which is a much shorter period than most administrations. We intend to allow secured creditors, including the floating charge holder, to vote for the full amount of the claims on any proposal for an extension of the moratorium beyond the initial period and so they will be able to have a say on whether or not the moratorium should be extended by up to a further two months.
  I would say that if any creditor—that includes a creditor who holds a floating charge—felt that a rescue by moratorium would not work for some reason, it would be open to him to express his concern to the nominee. The purpose of that would be to persuade the nominee that he must withdraw his consent to act and bring the moratorium to an end. A floating charge holder may perhaps make it plain that he fully intends to appoint an administrative receiver the moment the moratorium comes to an end. That act itself may have an impact on the viability of the voluntary arrangement, which may in turn cause the nominee to conclude that he should withdraw his consent to act. That would end the moratorium.
  We would expect any floating charge holder who viewed a moratorium as pointless, because he fully intends to appoint an administrative receiver, to approach the nominee to make that point and because of the floating charge holder's potential ability to
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  wreck the implementation of an approved voluntary arrangement it may well be that the nominee will feel the need to approach the charge holders at an early stage to sound out their views on a proposed rescue attempt.
  So plenty of defences for floating charge holders are provided in the Bill, but to allow them to appoint an administrative receiver during the moratorium period would simply mean that the moratorium could not work, and the Bill would have no point.
  Lord Kingsland: My Lords, I am shocked by the Minister's suggestion that this is a wrecking amendment. It is nothing of the kind. As the noble Lord well recalls, at Committee stage I carefully explained why the Opposition believed that a debenture holder was a proper exception to the general rule as to the options available to creditors during a moratorium. I accept that there is a clear difference of approach between us. I shall reflect carefully upon this matter between now and Third Reading before deciding whether it is appropriate to re-table this amendment and perhaps press it to a vote. Meanwhile, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 7 and 8 not moved.]
  7.30 p.m.
  Lord Kingsland Lord Kingsland moved Amendment No. 9:
  Page 15, leave out lines 23 to 25 and insert—
  ("14.—(1) Any security granted by the company at a time when a moratorium is in force in relation to the company is invalid except for the extent of the aggregate of—

  (a) the amount of any money paid, or the value of goods or services supplied, to the company at the same time as, or after, the security is granted and which is, and is intended to be, secured by the security, and

  (b) the amount of such interest (if any) as is payable on the amount falling within paragraph (a) in pursuance of any agreement under which the money was so paid or the goods or services were so supplied.

  (2) For the purposes of sub-paragraph (1)(a) the value of any goods or services supplied is the amount in money which at the time they were supplied could reasonably have been expected to be obtained for supplying the goods or services in the ordinary course of business and on the same terms (apart from the consideration) as those on which they were supplied to the company.").
  The noble Lord said: My Lords, in Committee the Minister made it clear that the intended effect of what is now paragraph 14 of Schedule A1 was to place the onus on the creditor to satisfy himself, before taking security, that he would be able to enforce it if it became necessary to do so. That was to ensure that no one would lend on the basis of security unless there was a clear benefit to the company. Implicit in that statement was that the onus was on the creditor to satisfy himself that the security would benefit the company.
  The Opposition still believe that this approach is unacceptable. It is not for a creditor to satisfy himself that security is for the benefit of the debtor. Why should the creditor concern himself with the benefit to the debtor when there is a nominee acting who should be as experienced and knowledgeable in moratoria as

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  a licensed insolvency practitioner? In the case of a company, there are directors whose duty it is to ensure that that is the case. It is not clear what duties the nominee will perform during the moratorium; but if it is thought that the directors are incapable of ensuring that their acts are for the benefit of the company, surely that would be a useful task for the nominee. To give that task to the creditor who will act in his own best interests is quite wrong. The creditor is the last candidate for this task; indeed, his interests are in direct conflict with it.
  We are also puzzled as to what the creditor must do to discharge this onus. Simply to ask the directors is not sufficient. If he is told a pack of lies by the directors his security may be unenforceable. Any creditor must, therefore, go further and make independent inquiries to ensure that the security is for the benefit of the company. I remind the Minister that, in response to another amendment tabled at Committee stage, he said that a nominee should be entitled to rely on information given to him by the directors and not be obliged to establish or verify the information for himself because of the cost of so doing. If a nominee is entitled to rely on information given to him by the directors, why should a lender not be entitled to rely on such information but, instead, be put to the expense of making independent inquiries to make certain that the security is for the benefit of the company?
  The cost of any investigation may be prohibitive. If that cost is recoverable from the company, as it inevitably will be, almost certainly it will mean that the security is not for the benefit of the company. The cost will be prohibitive, particularly when the company is in financial difficulties. Instead, any potential lender will simply not bother to lend money. It will be difficult enough for a company in financial difficulties to borrow money; but to impose this extra burden will deter all but the most foolhardy lenders. The inevitable result is that it will prove to be extremely difficult to fund the continued trading of the company.
  Instead, the Opposition propose a provision based in part on Section 245 of the Insolvency Act 1986. That section is workable in practice. The enforceability of any security will be a simple matter of mathematics that is easily within the capability of the new type of insolvency practitioner envisaged elsewhere in the Bill. The company, its directors, the nominee and the creditor can all see at once the extent to which the security is enforceable. As your Lordship would expect, the amendment is simple, straightforward and workable and is based on a previous provision in the legislation which has stood the test of time. I beg to move.
  Lord McIntosh of Haringey: My Lords, perhaps the most significant facet of this amendment is not what it inserts into the Bill but what it removes from it. The amendment deletes paragraph 14 of Schedule A1. The key point about that provision is that,
  "Security granted by a company at a time when a moratorium is in force … may only be enforced if, at that time, there were reasonable grounds for believing that it would benefit the company".
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  That benefit test is removed by the amendment and is not replaced by the proposed wording.
  We do not believe that this will happen in most cases because before entering the moratorium the nominee must give his opinion that the company is likely to have sufficient funds to enable it to carry on its business during the moratorium. However, it is possible that to secure future essential supplies during the moratorium the giving of security for an existing debt is necessary. This would not be covered by the amendment, but it would be for the benefit of the company.
  The amendment would also not ensure that the security could be enforceable only if there were reasonable grounds for believing at the time the security was taken that it would benefit the company. The position of the company's other creditors should not be prejudiced by the company giving new security over its assets to a supplier of new credit where no benefit will flow, as it is likely to reduce the amount of money available for all of them. If that was not the case the company's "free" assets which would otherwise be available to pay its unsecured creditors might be depleted to no advantage. That is why we have provided that security can be enforced only if when it was granted there were reasonable grounds for believing that it would benefit the company.
  We appreciate that this throws the onus onto the creditor to satisfy himself, before taking security, that he will be able to enforce it if it is necessary to do so—we understand the thrust of the noble Lord's speech—but this should ensure the desired effect, as no one is likely to lend on the basis of security unless there is a clear benefit to the company. This is a matter of business judgment. Decisions of this kind are taken all the time in business. Creditors must act as business people, and that is what they are being asked to do here.
  We can see how the amendment may enable the company to obtain funding during a moratorium, but in certain circumstances we do not consider that what is proposed is appropriate for the reasons already given. We believe it is vital that security should be enforceable only where a benefit will flow to the company. We remain of the view that we need to consult fully on the issue of funding before we can find an effective solution to this complex and difficult problem. Where security is unenforceable the lender will be an unsecured creditor. We cannot accept this amendment.
  Lord Kingsland: My Lords, I am most grateful to the Minister for his full reply, upon which I shall reflect carefully before Third Reading. If these particular provisions in the Bill are to be effective this is an important matter to consider. Meanwhile, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Baroness Buscombe Baroness Buscombe moved Amendment No. 10:
  Page 16, line 35, at end insert—
  ("(4) A disposal of the company's property to any person other than a person who is connected with the company shall not be avoided only on the ground that sub-paragraph (1) was not satisfied.").
  The noble Baroness said: My Lords, in Committee we proposed a similar amendment with slightly different wording which brought rare praise from the Minister. However, that praise was qualified by one or two criticisms. We have considered those criticisms with care, and the result is an amendment with slightly different wording which we believe should now merit unqualified praise from the Minister. We were concerned that it was not clear whether a disposal by the company would be avoided if it should turn out that the grounds for believing the disposal would benefit the company were not reasonable. The Minister agreed that the position was doubtful and should be clarified.
  This amendment makes it clear that such a disposal will not be avoided, nor will there be any cause of action against the other party, if it should turn out that the grounds for believing the disposal would benefit the company were not reasonable or if a disposal was made not in the ordinary way of the company's business. Those are matters which are best decided upon by the directors and the nominee, if he is to have any duties, rather than the third party dealing with the company, who may not have sufficient knowledge to form any view about those two matters. We hope that the amendment will meet with the Minister's approval. I beg to move.
  7.45 p.m.
  Lord McIntosh of Haringey: The noble Baroness is right. We recognised that similar amendments proposed in Committee had a valid point. We can see that it would be damaging to rescue attempts if third parties were reluctant to deal with a company which is in a moratorium because of doubts about whether the contracts would be enforceable against the company. We agree that this issue must be addressed in the Bill. However, I am sorry to say that the amendment does not fully achieve what is required.
  The amendment would still leave a third party needing to satisfy himself as to whether the proposed transaction is in the ordinary course of the company's business; and, if not, whether the appropriate consent has been obtained from the nominee or committee under paragraph 18(1)(b). These difficulties may still make third parties wary of dealing with the company. In my view, this proposed amendment would not fully deal with the issue which concerns us all regarding the effect of paragraph 18 on third parties. However, we shall bring forward amendments as soon as we can—I am afraid that again that means in the Commons and not at Third Reading—to make it clear that contracts entered into in breach of paragraph 18 will be enforceable by third parties against the company.
  While on the subject of proposed government amendments, I should like to say what else will or may be needed by way of amendment to the Bill during its
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  passage through Parliament. A number of points arose at Second Reading or in Committee. Both the noble Lords, Lord Razzall and Lord Sharman, expressed concern about the possible effect of Clause 11 which relates to deceased insolvents. As I indicated in Committee, we recognise those concerns and will be bringing forward amendments to address them. We would not want an arm's length disposal of a property by a surviving partner to be made unnecessarily difficult because prospective purchasers are concerned that they might find they do not have good title because a deceased's estate is insolvent.
  The noble Lord, Lord Kingsland, made the point in Committee that he thought there should be a time limit on the ability of the member of a company to go to the court if the decision of a creditors' meeting which takes effect under paragraph 35 of Schedule Al differs from that made by the company meeting. We think that the issue will be largely self-regulating. However, we can see that there is an advantage in having a cut-off point beyond which such applications cannot be made and we shall amend the Bill for that purpose.
  We have also concluded that the offence in paragraph 22 of Schedule Al (disposal of charged property contrary to paragraph 20) needs amendment to set out in clearer terms that the offence in paragraph 22 is committed where a company makes a disposal which it has no power to make, and so we shall bring forward an amendment to do that.
  The current legislation governing companies and the financial markets provides for authorities to take regulatory action, for instance to protect investors' funds and investigate companies. It is possible that in certain instances the moratorium would prevent such action unless leave of the court was obtained first. Clearly that would be inappropriate. We are considering this further and, if this is the case, we shall bring forward amendments to make it clear that such action is not to be stayed by the moratorium provided in Schedule Al.
  There have been many changes and concessions. We have also concluded that the conflict between Section 347 and Section 252(2)(b) of the Insolvency Act in the way we intend it to be amended by way of Schedule 3 paragraph 2 of the Bill needs to be dealt with by express provision in the Bill. We shall bring forward an amendment to deal with that.
  The period of consultation on whether landlords should be able to exercise the right of peaceable reentry during a statutory moratorium has literally just finished and clearly we must consider the responses before we do anything. But we intend that the issue will be determined in the context of the passage of this Bill through Parliament.
  Finally, following the successful passage of the Financial Services and Markets Act through Parliament, we shall need to consider whether that has any implications for this Bill. I hope that the noble Baroness, Lady Buscombe, will not pursue her amendment.
  Baroness Buscombe: My Lords, I thank the Minister for his response. I am sorry that he does not find it

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  acceptable in its current form. However, I am pleased to note that the Government intend to bring forward during the Bill's passage through Parliament a similar, although slightly different, amendment.
  I am also pleased that the Minister has been able to tell us of a number of additional changes and concessions. We note that there has been consultation in relation to forfeiture of leases. We look forward to hearing the results of that consultation process.
  I thank the Minister. I am glad that we have made progress. On that basis, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 11 to 14 not moved.]
  Lord Kingsland Lord Kingsland moved Amendment No. 15:
  Page 23, leave out line 10 and insert—
  ("(ii) could have been so entitled (but was not present or represented at it) but did not have notice of it.").
  The noble Lord said: My Lords, in Committee we were concerned about what is now paragraph 36 of the new Schedule Al which deals with the effect of the approval of a voluntary arrangement. Sub-paragraph (2) provides that a voluntary arrangement binds those who are entitled to vote at the creditors' meetings and those who would have been so entitled if they had had notice of it. I made the point that a creditor would still be entitled to vote at a creditors' meeting even if he had not had notice of it. Sub-paragraph (2)(b)(ii) has no effect because no creditor would have been entitled to vote if he had had notice of the creditors' meeting. Notice is irrelevant for the purposes of entitlement to vote.
  The Minister took me somewhat to task and referred me to Rule 1.17, which provides that every creditor who was given notice of the creditors' meeting is entitled to vote at that meeting. That rule does not say that a creditor who was not given notice of the creditors' meeting is not entitled to vote at that meeting. Indeed a creditor who was not given notice of the creditors' meeting is entitled to vote at that meeting, and I refer the Minister to the case of Re Debtors. The noble Lord's criticism of my comments is, therefore, if I may say so with all due respect, misconceived. I assert that my original comments stand. I beg to move.
  Lord McIntosh of Haringey: My Lords, I hope that I can give the noble Lord some comfort, although not in the context of this Bill but of the insolvency rules.
  The noble Lord's amendments still have the unfortunate effect of an unknown creditor—one who had not had notice of the meeting to consider the voluntary arrangement proposal—being bound by the arrangement when he should not be. We want a voluntary arrangement to bind only those who would have been entitled to vote at a meeting if they had had notice of it. We do not want a creditor who could have been entitled to vote to be bound by a voluntary
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  arrangement in the event that he would not have been so entitled had he been present at the meeting and the chairman had determined his vote.
  We intend to make provision in the insolvency rules to define the circumstances in which an unknown creditor would have been entitled to vote at the creditors' meeting if he had had notice of it. I believe that that is the crux of the point addressed by the noble Lord, Lord Kingsland. That will make it possible to say with certainty whether an unknown creditor would have been entitled to vote and therefore whether or not he is bound by the arrangement.
  Without such a provision, those concerned would be left trying to second guess how the chairman of the meeting would have dealt with the claim of an unknown creditor under Rule 1.17 if he had had that claim before him at the time of the meeting. That would be an unsatisfactory state of affairs. Therefore, we propose to amend the Insolvency Rules 1986 to make clear the circumstances in which an unknown creditor would have been entitled to vote at the creditors' meeting if he had received notice of it.
  In relation to company voluntary arrangements in England and Wales, Rule 1.17(3) of the insolvency rules currently provides that:
  "A creditor shall not vote in respect of a debt for an unliquidated amount, or any debt whose value is not ascertained, except where the chairman agrees to put upon the debt an estimated minimum value for the purpose of entitlement to vote".
  Such a creditor whose debt is unliquidated or not ascertained could therefore be entitled to vote, but only if the chairman of the meeting first agreed to put a value on the debt. Where he did not do so, that creditor would not be able to vote and would not be bound by the voluntary agreement.
  In addition, any creditor can appeal to the court under Rule 1.17(5) in relation to the chairman's decision on a creditor's entitlement to vote. Where the chairman has allowed or refused a creditor the right to vote, that decision could be reversed by the court. That, too, introduces an element of doubt in that it may transpire that some creditors who possibly would be allowed to vote in the event cannot in fact do so. The point is that a creditor with a claim could vote if the chairman of the meeting agreed but would not be able to vote if the chairman did not agree the claim. We consider that only those who would be entitled to vote should be bound by a voluntary arrangement; hence, the proposed change to the rules.
  We do not believe that the proposed amendments would address this issue and they could mean that an unknown creditor would be bound by a voluntary arrangement when he would not have been entitled to vote. I do not know whether the noble Lord ever studied symbolic logic as part of philosophy, but this is one of the most severe tests of syllogistic thinking to which I have ever been subjected. I am not certain that I have passed the test, but I believe that fundamentally

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  the amendments are misconceived. However, we do have a solution for the problem which lies behind the amendments.
  Lord Kingsland: My Lords, I found the Minister's reply both courteous and comprehensive. I should like time to reflect on whether or not I am pleased with what he said. Meanwhile, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 16 and 17 not moved.]
  Baroness Buscombe Baroness Buscombe moved Amendment No. 18:
  Page 26, line 36, leave out ("(c), (d) and (e)") and insert ("(a) to (f)").
  The noble Baroness said: My Lords, paragraph 40 of Schedule 1 does not prevent an officer of a company or a debtor being privy to another person concealing, fraudulently removing or pawning any of the company's or the debtor's property. When we moved this amendment in Grand Committee, the Minister justified the paragraph by relying on its long history dating back to the Debtors Act 1869. With great respect, we feel that that is not good enough.
  The provisions of the Bill give a company or a debtor the right to obtain a moratorium on the say-so of a mere authorised person. During that moratorium, all the rights of all the creditors are suspended and the directors have an almost entirely free hand as to their conduct of the company's business. The nominee has no real duties to perform and will be totally powerless to prevent anyone concealing, fraudulently removing or pawning any of the company's or the debtor's property.
  That was not the position when the Debtors Act 1869 was enacted. It was not the position when the Bankruptcy Act 1914 was enacted. It was not the position when the Companies Act 1929 was enacted. It was also not the position when the Companies Act 1948 was enacted and it was not the position when the Companies Act 1985 was enacted. It will be the position if this Bill is enacted.
  The company's or the debtor's property will be totally unprotected. The creditors will be powerless. They will have to rely on the directors or the debtor to ensure that no one can conceal, fraudulently remove or pawn any of the company's or the debtor's property. If the directors or the debtor are privy to anyone doing that, it must be clear that they run the risk of being prosecuted. There is no other protection. I beg to move.
  Lord McIntosh of Haringey: My Lords, I congratulate the noble Baroness, Lady Buscombe, on climbing painfully up the reverse history tree which I gave to her in Committee. She found her way back from 1869 to 1985 with consummate skill. However, I believe that she is exaggerating the risks which are involved in the Bill as it is at present proposed.
  As currently drafted, among other things, subparagraph (3) provides that during a moratorium an officer of the company is guilty of an offence if he was
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  privy to another doing any of the following: concealing, destroying, mutilating or falsifying any book or paper affecting to relate to the company's property or affairs; making a false entry in any book or paper affecting or relating to the company's property or affairs; or fraudulently parting with, altering or making an omission in any document relating to the company's affairs. The amendment would add to the list of offences: concealing a part of the company's property to the value of £500 or more; fraudulently removing any part of the company's property; or pawning, pledging or disposing of the property.
  All the above apply now and have applied throughout the complicated history of these provisions. None of the other sections provides for an officer or a debtor to be guilty of an offence if they are privy to another concealing, fraudulently removing or pawning any of the company's or debtor's property. This does not present a difficulty because existing legislation allows for the prosecution of directors who are privy to others dealing with the company's property in a way which causes an offence under Section 206 and paragraph 40 of Schedule A1. Officers might be prosecuted under, for example, the Accessories and Abetters Act 1861 in England and Wales and under equivalent laws in Scotland.
  I believe that our difficulty comes hack to the issue which did not convince the noble Baroness, Lady Buscombe. I said in Committee—and this is a real concern—that if the paragraph was to be amended as proposed, it could cast doubt on the meaning of the existing provisions on which it was modelled and also on the use of other legislation to prosecute those officers who are privy to offences by others in relation to company assets. That is why we cannot accept the amendment.
  Baroness Buscombe: My Lords, I have listened with care to what the Minister has said and I am sorry that he cannot accept the amendment. I believe that there clearly remains a difference of opinion in relation to the interpretation of the Bill. We believe that the nominee has no real duties to perform and, as I have already said, will be totally powerless to prevent anyone concealing, fraudulently removing or pawning any of the company's or the debtor's property.
  We feel that the position is different from those Acts which I mentioned. I believe that we should consider with care the Minister's response. However, this is something about which we feel quite strongly and therefore we may be pressed to divide upon it at Third Reading. On that basis, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  8 p.m.
  Baroness Buscombe Baroness Buscombe moved Amendment No. 19:
  Page 26, line 39, leave out ("to the value of £500 or more").
  The noble Baroness said: My Lords, I shall speak also to Amendments Nos. 20, 21 and 22. The same arguments apply to these amendments as applied to

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  the previous amendments to which I have just spoken. I entirely accept, as the Minister said in Grand Committee, that there have been minimum limits at least since the Bankruptcy Act 1914. Those minimum limits may have been appropriate in the past, when an independent insolvency practitioner had been appointed and the directors were no longer running the company, but they will not be appropriate if the Bill is enacted in its present form.
  There will be no licensed insolvency practitioner managing the company. The directors will be managing the company and all the rights of the creditors will be suspended. In those circumstances, the previous financial limits are unacceptable. Surely it must be a criminal offence for an officer of the company to conceal any part of the company's property, conceal any debt due to or from the company or remove fraudulently any part of the company's property during the moratorium, regardless of value. I beg to move.
  Lord McIntosh of Haringey: My Lords, I do not have much to add to what I said in Committee. The provisions have existed in legislation since the Bankruptcy Act 1914, when the figure involved was £10. I said in Committee that if it ain't broke, don't fix it. The response of the noble Baroness, Lady Buscombe, was that it is broke, but she has not shown us how. I have not heard any evidence that this provision—which already exists and is not being introduced for the first time by the Bill—has caused any of the difficulties that she fears since it was first enacted.
  If the £500 minimum is a problem and we find that we cannot prosecute individuals in cases when we think that we should, we shall review it. Schedule 1(10) gives the Secretary of State the power to do that. We would have no hesitation in reviewing the level if we thought that it would be appropriate to do so. However, experience in relation to Sections 206 and 354 suggests that £500 is the right cut-off and it seems reasonable to assume that it will be appropriate in this case.
  On Amendment No. 22, the removal of the power to amend or repeal the provisions of the Insolvency Act 1986 could frustrate the ability to extend the scope of the moratorium to different categories of company, such as large companies or banks. We might wish to
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  amend Schedule Al to allow the use of the new regime by large companies, but if we did that we might also wish to amend the Act to extend the period of the moratorium for large companies only. Without this provision, we would be unable to do that. As a consequence, we would be faced with the prospect of either keeping the moratorium short, which could restrict the ability of large companies to use it, or lengthening the period for all companies when we would not want smaller companies to have such a long moratorium. Neither outcome would be desirable, so I oppose Amendment No. 22 as well.
  Baroness Buscombe: My Lords, I thank the Minister for his response. In summing up, I shall repeat what I have already said. The minimum limits may have been appropriate in the past—although not entirely moral from a criminal standpoint—because in the past an independent insolvency practitioner would have been appointed and the directors would no longer be running the company. However, those limits will not be appropriate if the Bill is enacted in its present form, because there will be no licensed insolvency practitioner running the company. The directors will be managing the company and all the rights of the creditors will be suspended. Also, as I think that I said in Grand Committee, theft is theft, whatever the price and we have an opportunity to change the law.
  We have pressed the point. I shall read the Minister's response with great care. We feel strongly on this point from a moral standpoint and because we feel that the Bill has changed the circumstances, so we may feel pressed to move the amendment on Third Reading. On that basis, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 20 to 22 not moved.]
  Schedule 2 [Company voluntary arrangements]:
  [Amendments Nos. 23 to 29 not moved.]
  Schedule 3 [Individual voluntary arrangements]:
  [Amendments Nos. 30 to 37 not moved.]

  Terrorism Bill
  Returned from the Commons with the amendments agreed to.
  House adjourned at seven minutes past eight o'clock.