Lords Sitting of 29 November 2000

Preamble
The House met at half-past two of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Lichfield): The LORD CHANCELLOR on the Woolsack.

Supermarkets: Competition Commission Report
Baroness Miller of Chilthorne Domer asked Her Majesty's Government:
What importance they attach to the recommendations in the Competition Commission's report on supermarkets, published in October, that a code of practice should be drawn up to counter adverse practices that supermarkets inflict on suppliers and that an independent third party should be established to report breaches to the Office of Fair Trading.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman): My Lords, the Government have welcomed the Competition Commission's report, the recommendations of which have been accepted by my right honourable friend the Secretary of State for Trade and Industry. We are keen to establish effective relationships within the supply chain and have pursued this aim as part of our long-term strategy for agriculture. We therefore attach particular importance to the development of a code of practice with suppliers.
Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for that Answer. I am pleased that her Ministry will attach particular importance to relationships with suppliers. Does she agree that one of the difficulties for the public is that they do not know what price farmers and growers receive from supermarkets and it is confusing for them to hear that farmers are receiving almost nothing for their produce when consumers are paying a fair price for it? Does she further agree that farmers' markets are popular because that link is obvious? Will she ensure that the code is drawn up in a way which helps small producers and co-operatives, and that it will include a requirement on supermarkets to publish figures of the amount of local and British produce sold and the percentage of the price that farmers receive for that produce? Does she further agree that it is very important that the code does not deter supermarkets from buying British produce by driving them to buy overseas?
Baroness Hayman: My Lords, I agree with much of what the noble Baroness said, in particular with regard to the desire of consumers to have the opportunity to buy British food and local food, which has advantages for both the environment and local producers. The rise in the popularity of farmers' markets confirms that. As
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to the code, it will follow very closely the specific concerns about competitiveness identified in the commission's report. It will require that supermarkets' standard terms of business are available on request; that supermarkets do not delay payments to suppliers; it will outlaw retrospective price reductions and prevent supermarkets from seeking payments as a pre-condition of supply—many of the things that suppliers were concerned about. The OFT will seek the views of suppliers on the draft code when it has been drawn up.
Lord Borrie: My Lords, does my noble friend recall that the National Farmers Union told the Competition Commission that very few individual farmers were willing to give details of the bullying tactics to which they had been subjected by supermarkets because they feared reprisals? Bearing that in mind, does the Minister feel that a code of practice will be effective if it is dependent upon individual farmers and other producers making complaints to the Office of Fair Trading? Indeed, what will be the sanctions if supermarkets ignore the requirements laid down by the Competition Commission and the code?
Baroness Hayman: My Lords, there are often difficulties in going from the anecdotal to the evidence. I have outlined the areas that the code will cover. They represent exactly the kinds of situations that one has heard farmers complaining about, such as retrospective price reductions and the imposition of unfair penalty payments and so on. I should make clear that the code of practice will be binding. The supermarkets will be expected to give legally binding undertakings to comply with these remedies, which will include provision for independent dispute resolution. So there will be legal remedies. The Secretary of State has made clear that he wants the code finalised quickly and has asked the Director-General of Fair Trading to report back to him on progress by mid-January.
Lord Mackie of Benshie: My Lords, is the Minister aware that yesterday I received a reply from one of her colleagues saying that the age of the marketing board was over? Does she not agree that under the marketing board—and possibly subsequently under Milk Marque, which has now been broken up—the price of milk for consumers in this country was the lowest in Europe and the farmers got a fair return? Does she think that the new body will have any effect whatever?
Baroness Hayman: My Lords, we are all aware—and the noble Lord, Lord Mackie of Benshie, will make sure that we remember—of the problems there have been recently in the dairy industry. We welcome the recent announcement of price increases for the autumn of around 2p per litre and that both the international commodity market and UK production point towards more optimism, in the short term at least. The noble Lord will also be pleased about the setting up of the Milk Task Force, announced on 23rd November, which has been welcomed by the NFU. Its membership will reflect the key areas of the

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dairy food chain, from production to retail. It will ensure greater efficiencies and greater long-term stability in the dairy industry.
Baroness Byford: My Lords, does the Minister agree with her noble friend Lord Borrie that some producers showed great hesitation in giving evidence to the commission? If she does agree, is she not equally concerned that they will also hesitate to report supermarkets to whom they are suppliers? This is part of the difficulty. Does she agree that it is important that we should revisit the issue of labelling? We currently have the "red tractor" promotion, but we are still unable to label our products as UK products. Now that our beef has to be labelled "UK" for French purposes, is it not high time that all UK-grown produce should be "UK" labelled as well?
Baroness Hayman: My Lords, it is perfectly possible for people voluntarily to label produce with its country of origin. That can be done very distinctively. The red tractor mark, which covers a variety of issues about quality assurance, is important for consumers. As to the reluctance of people to give evidence, the importance of the code is that it will lay down that legal undertakings must be given by the supermarkets to abide by its terms. It will address the practices that have been of concern to suppliers and enable them to take action against supermarkets. It will also provide for independent arbitration, if necessary, when there are disputes.

NHS and the Euro
2.38 p.m.
Baroness Knight of Collingtree asked Her Majesty's Government:
Whether they will postpone instructions to the National Health Service to incur expenditure on preparations for Britain joining the euro until such time as Britain decides to do so.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, NHS bodies were asked to undertake a measure of pre-planning for possible UK entry to the single currency. This has been a limited management exercise and resources have not been diverted from patient care.
Baroness Knight of Collingtree: My Lords, can the Minister tell the House who authorised health authorities and trusts not to tell MPs how much money was being spent on this exercise, and why the instruction was given? Is this not taxpayers' money? Can he further inform the House of the volume of trade carried on by the NHS with the 11 countries mentioned by the noble Lord, Lord McIntosh of
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Haringey, during Questions on 25th October? Why is it thought that the NHS is incapable of carrying out currency conversions?
Lord Hunt of Kings Heath: My Lords, we do not have specific information on trade with other countries. It is thought that most trade with such countries would be through wholesalers. I understand that the National Blood Authority mentions trade with foreign countries in its annual accounts.
As regards the implications of potential entry into the euro, if this were to happen the NHS could expect to receive euro invoices under the "no compulsion, no prohibition" rule and would need to be covered by a multi-currency financial system. However, I assure the noble Baroness that no expenditure has been diverted from patient care to undertake what has been a very limited pre-planning exercise. Information has been made available in Answers to parliamentary Questions, or could be made available centrally. Thus, we sought to ensure that 500 different NHS bodies did not have the bureaucratic burden of responding individually.
Lord Marsh: My Lords, perhaps I may help the House on this matter. Clearly, the National Health Service must import drugs and equipment from Asia and North America and from various parts of Europe, in and outside the European Union. Why should it have difficulty in adding one more currency to the large number in which it already deals?
Lord Hunt of Kings Heath: My Lords, surely that is the whole point of a limited pre-planning exercise: to examine the implications for the National Health Service in the event that this country were to enter the euro. As I explained, if Britain were to enter, during any transition period the NHS could expect to receive euro invoices under the "no compulsion, no prohibition" rule.
Noble Lords: So what?
Lord Hunt of Kings Heath: My Lords, noble Lords say, "So what?". If that were to occur, the NHS would have to be geared up to be able to deal with it. That is the whole point of pre-planning—to see exactly what would be involved for the National Health Service.
Lord Harrison: My Lords, does my noble friend agree that, whether we are in or out of the single currency, wise preparation for the euro now will mean considerable savings of pounds for the NHS, which increasingly uses the euro base and the developing single European market in medical goods and pharmaceuticals? This is a sprat to catch a very considerable mackerel.
Lord Hunt of Kings Heath: My Lords, my noble friend puts it very well. The National Health Service needs to develop the most up-to-date financial systems possible to ensure that its financial management procedures are as effective as they can be. If, as part of

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that process, multi-currency systems can be developed, the NHS will incur little extra cost, its financial systems will be better, and, in the event of this country entering the euro, it would be fully prepared.
Lord Clement-Jones: My Lords, I wonder whether the Minister considers it good for the health of Members of the Official Opposition to continue to worry about this issue. Is this not a typical "euro-myth" over a matter of a few hundred pounds of expenditure?
Lord Hunt of Kings Heath: My Lords, the health of the Opposition is a matter of great concern to all of us. Noble Lords are getting themselves unduly exercised in this area. Surely we want a National Health Service that is prepared for potential possible change. That is all that is happening. A very limited pre-planning exercise has taken place. I would rather have an NHS that looks to the future than one that might be caught out by change.
Lord Elton: My Lords, without "getting myself unduly exercised", may I ask the noble Lord—who has twice told us that not a penny has been diverted from patient care—where the resources have been diverted from and how many pennies they amounted to?
Lord Hunt of Kings Heath: My Lords, the great bulk of the pre-planning work has been done by serving administrative and financial officers within NHS organisations as part of their normal duties.
Baroness Knight of Collingtree: My Lords, may I put it to the noble Lord that he should cease to worry about the health of the Opposition—which is in a very fine state indeed? Will he please answer my question? I have in my hand a letter giving the instruction that MPs are not to be informed of these matters. If individual MPs cannot be informed, can we be told the total sum involved?
Lord Hunt of Kings Heath: My Lords, as regards the health of the Opposition, I should have thought that the three by-elections last week told their own story. So far as concerns the advice given to the health service and the letter from Dr Liam Fox, Opposition spokesman on health in another place—and in response to the concerns of noble Lords opposite about bureaucracy in the NHS—we wanted to ensure that 500 different organisations were not unduly burdened by responding separately and individually to the honourable gentleman. As I have said to the noble Baroness, the information that Dr Fox sought has either been answered or could be answered through parliamentary Questions. Surely it is better that that is done. I have already responded by saying that the pre-planning exercise has cost very limited extra resources. To take the case of the Buckinghamshire health authority, a few weeks ago the noble Lord, Lord Tebbit, not letting facts get in the way of a good story, asserted that the authority was spending £1.5 million this year on pre-planning. As the statement issued by
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the Buckinghamshire health authority made clear, the amount of time and money taken up by this exercise so far has been a few days in each organisation and equates to a cost of several hundred pounds.

Community Law
2.47 p.m.
Lord Waddington asked Her Majesty's Government:
Whether, after the adoption of the European Union Charter of Fundamental Rights, the European Court of Justice will take account of its provisions in interpreting and considering the scope of Community law.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): My Lords, the charter will be adopted as a political declaration. It establishes no new powers for the EU or the European Court of Justice. The Union is already obliged by Article 6(2) of the Treaty on the European Union to respect fundamental rights as general principles of Community law. The ECJ is responsible for ensuring this. In interpreting Article 6(2), the Court can have regard to any material it considers relevant. This may include the charter. But that does not make this declaratory charter legally binding.
Lord Waddington: My Lords, I thank the Minister for that reply. The Minister for Europe likened the charter to the Beano comic, and both the Prime Minister and the Foreign Secretary have said— as the Minister herself has told the House—that it is a mere political declaration and will not impact on national law. However, does he agree that the Commission, in an official communication, and the vice-president of the European Court of Human Rights have stated that the charter will become mandatory through the European Court's interpretation of it and that our judges will have to apply it? Who is right? Surely it is plainly wrong to assert, as the Government have, that the charter is a mere showcase of existing rights and will not affect member states. One has only to look at Article 19, which purports to restrict the right of member states to extradite criminals.
Baroness Scotland of Asthal: My Lords, I know that on this topic, too, noble Lords opposite have been exercised in a way similar to that just referred to by my noble friend. Perhaps I may speak plainly and assist the noble Lord in relation to the Commission's attitude to the charter. The Commission's press release of 12th September, regarding what the charter will not be, stated:
"It will not be a vehicle to extend or reduce the powers of the Union and the Community. Changes in any powers are a matter for the Intergovernmental Conference only, not for the Convention. As the discussions within the Convention have shown, it will not require any amendments to the Member States' constitutions. It will basically group together rights already existing in different documents and in the Treaties. It will have no

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impact on forms of court action or the court structure put in place by the Treaties, as it does not provide for new channels of access to Community courts. It neither requires nor precludes the European Union's accession to the European Convention on Human Rights. This matter does not fall within the remit of the Convention".
People have been very careful which quotations from the Commission they choose to adopt. The Commission has made it absolutely clear that the charter is not a binding document; it is declaratory. The courts can take it into account, but it is not legally binding. I invite the noble Lord's attention to the end of the charter, especially Articles 52 and 53. The House will find that that puts the matter very much in its proper context.
Lord Lester of Herne Hill: My Lords—
Lord Bruce of Donington: My Lords—
Lord Clinton-Davis: My Lords, in any event, does my noble friend agree that it is not desirable for this House to give instructions to the European Court of Justice, any more than it would through any avenue of law enforcement in this country? Indeed, the noble Lord is a Queen's Counsel and should know much better than that.
Baroness Scotland of Asthal: My Lords, I agree with my noble friend that it is an opportunity for us to exercise not only judgment but also moderation. As has been rightly said, the matter will be capable of being taken into account by the European Court of Justice. The Court has indicated that it understands that this is a political document, which is declaratory in nature, and, therefore, will have to be approached appropriately.
Lord Lester of Herne Hill: My Lords—
Lord Howell of Guildford: My Lords—
Noble Lords: Lester!
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, I believe that there is probably enough time for both noble Lords to put their questions, provided that they are reasonably brief.
Lord Howell of Guildford: My Lords, the Minister told us most eloquently everything that the new charter is not. We already have the European Convention on Human Rights, which our courts are seeking to assimilate, and our national rules governing people's rights. In addition, we are being threatened with a Commission document encapsulating the rights and aims of the European Union. If, on top of that, this new charter really does not add anything at all, what on earth is the point of the whole endeavour?
Baroness Scotland of Asthal: My Lords, I believe that I have answered that point on a number of occasions. However, I am quite happy to repeat my answer. Clarity is always of use—making visible those
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rights that we already have is a matter of real importance to the peoples of our countries. The charter will be a measure that can be used to good effect by ordinary men and women. Indeed, to highlight the issue raised in this House previously, perhaps the lawyers will not have it all their own way.
Lord Lester of Herne Hill: My Lords does the Minister agree that it is desirable for the European Court of Justice to have regard in areas of EU competence to the charter and the European convention to protect the individual citizen against the misuse of power by EU institutions and officials? Taking the specific example given by the noble Lord, Lord Waddington, does the Minister also agree that Article 19 of the charter, to which he takes objection, is already in Article 3 of the European Convention on Human Rights, which forbids inhuman or degrading treatment, punishment or torture?
Baroness Scotland of Asthal: My Lords, the noble Lord is quite right. The ECJ will be able to take these measures into account, as is proper. However, as the noble Lord pointed out, a good basis for the upholding of those rights is already inherent in the current structure that we have. It is a persuasive document, but nothing more.

Asylum Seekers
2.54 p.m.
Earl Russell asked Her Majesty's Government:
Whether the latest monthly figures for asylum applications shed any light on the progress of their attempt to deter applicants from applying for asylum in the United Kingdom by changing the way they are treated when they arrive.
The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton): My Lords, the Government's strategy is to create a fairer, faster and firmer system under which genuine refugees are identified quickly; and we deal firmly with unfounded claims. The number of applications from central European countries, where the vast majority of applications prove to be unfounded, has dropped since April of this year.
Earl Russell: My Lords, does the Minister agree that a policy of reducing the number of applications by deterrents can only be viable, first, if the undesirable features of the present treatment of asylum seekers are promulgated in the refugee-producing countries—for example on the streets of Baghdad—and, secondly, if the Minister can convince applicants that refugees are now worse treated than they were when Mr Michael Howard was in office? Can the noble Lord attempt to show the House that either of those factors is the case?
Lord Bassam of Brighton: My Lords, I believe that I have made it plain on a number of occasions that our policy is to adopt a fair but firm approach to dealing with the matter of asylum applicants. That is the course that we have set for ourselves. We believe that we offer fair treatment. Indeed, when people, quite understandably, come to this country in fear of persecution in their home country, they will be given a fair hearing. That is the Government's policy and one that we have had for a long time. Moreover, it is a policy that has been shared by successive governments. We are fully committed to carrying out our obligations under the 1951 convention; and we shall continue to do so both fairly and firmly.
Baroness Trumpington: My Lords, at the risk of being a bore, can the Minister tell me what happens if an asylum seeker gives birth to a baby in this country? Will that baby automatically become British? If it is British, does that change the status of the asylum seeker?
Lord Bassam of Brighton: My Lords, if a child is born in the United Kingdom, that does not necessarily mean that he or she will attract British nationality. Therefore, the child of an asylum seeker born in this country will not be deemed to be British. I should add that a multiplicity of factors, such as the nationality of ancestors, are required to qualify for British nationality, but being born in the UK is not the only relevant factor as far as concerns British nationality.
Lord Hylton: My Lords, I believe that we all respect the Government's wish to be fair. However, does the Minister agree that the factors controlling the volume of asylum applications are largely the number of dictatorial regimes, the number of countries with no effective government and the number of internal conflicts, all of which generate genuine fears of persecution?
Lord Bassam of Brighton: My Lords, the circumstances described by the noble Lord have a bearing on the number of applications received for asylum status. However, we should also recognise the fact that there are many who seek to come to this country and claim asylum but who do so in a way that is entirely unfounded. We must have fair and firm procedures in place to deal with that situation. Since we were elected in May 1997, the Government have very successfully adopted that course.
Lord Avebury: My Lords, has the Minister observed that the number of applications still outstanding is roughly 11-times the increased number of applications made in the month of October alone? In view of that fact, will the noble Lord acknowledge that it is impossible for the Government to meet their target of making first decisions on all applications within two months by April 2001?
Lord Bassam of Brighton: My Lords, I do not acknowledge the noble Lord's final point. The number of applications lodged in October was 6,970, which was a 7 per cent increase on the September figure. However, applications over the past three months—August to October 2000 averaged 6,610 per month, which is 5 per cent lower than the monthly average for the same period in 1999. We are on course: we shall reach our April 2001 target. As I understand it, we have substantially reduced the backlog of asylum applications down to some 89,000 at present. Our intention is to reduce those to fractional levels by April 2001.
Lord Cope of Berkeley: My Lords, how can there be a deterrent to improper asylum applications when the Government's dispersal and support policies are collapsing and a high level of granting leave to remain is being given?
Lord Bassam of Brighton: My Lords, it is not a question of deterrence; it is a question of having a firm, reasonable and fair policy. That is the policy of the Government. I contrast that with the absolute shambles of a policy we inherited and the absolute shambles that noble Lords opposite have got into with their current policy. On 18th April, William Hague said that the next Conservative government would detain all new applicants for asylum. This was echoed by Ann Widdecombe on 4th October when she said that the Conservatives would automatically house all new asylum applicants in secure reception centres. As of 27th November 2000, she changed her mind yet again—they would only lock up all new applicants from the so-called "white list" of third safe countries. Which policy are we to believe, William Hague's or Ann Widdecombe's, or which Ann Widdecombe policy do we now believe on Tory asylum policy?

Business
Lord Carter: My Lords, after consideration of Commons amendments to the Insolvency Bill my noble friend Lady Hollis of Heigham will, with the leave of the House, repeat a Statement which is being made in another place on inherited SERPs.

Transport Bill
3.1 p.m.
The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston): My Lords, I beg to move that the Commons amendments in lieu of Lords amendments be now considered.
Moved, That the Commons amendments in lieu of Lords amendments be considered forthwith.—(Lord Macdonald of Tradeston.)
On Question, Motion agreed to.
The noble Lord said: My Lords, I wish to speak also to Amendments Nos. 28D and 29D. Once again we return to the matter of the part privatisation of NATS—a policy that was not only not included in the Labour Party manifesto but which it very publicly pledged it would not implement.
I listened carefully to the noble Lord, Lord Macdonald of Tradeston. I acknowledge that not everything can be in a manifesto. God forbid that manifestos should be like the prospectuses for the sale of shares that are no doubt being worked on for NATS at this moment. However, the public are entitled to expect that when a party pledges in such clear and stark terms as Labour did in 1997 that, "our air is not for sale", it will not totally reverse policy without far better cause and far clearer explanation than we have heard so far from the Government.
The Government promised one thing but then did precisely the opposite, just as they have tried to do on restricting jury trial. In those cases this House is quite within its rights in asking the Government to get explicit public backing for their policy. That is something, incidentally, which the press in the past few days has overwhelmingly supported. That is the constitutional point. It is not a question of foolish threats to use the Parliament Act, something for which this Government are beginning to show an unwelcome and authoritarian attraction. I am glad that that nonsense has been dropped from the rhetoric. I welcome the fact that the Minister avoided such threats today.
Nor is it a question of the legitimacy of any Members of this House, whether hereditary Peers such as myself, or the many long-serving life Peers on all Benches who have grave doubts about this policy, or even, dare I say it, of the close friends of the Prime Minister? That is not the question at issue and the noble Lord, Lord Macdonald of Tradeston, who is much respected in this House, did himself no service in trying that one on at an earlier stage of these disagreements. The issue is not the legitimacy of the House of Lords but the legitimacy and wisdom of the Government's policy. This House was created by overwhelming majorities in both Houses only last year. It is the Government's creation. It is a House that our leader herself has told us is more legitimate, a House with a duty to revise and also sometimes to advise. It is a House with a right and authority on occasions, as the noble Earl, Lord Russell, has said, to force the Government to negotiate. This is such an occasion.
Let me make it clear that I welcome the Government's willingness, demonstrated last night, to begin to move. But the size of the majority in another place last night—just 88—was the smallest majority in this whole process. What a tribute to the first appearance at the Dispatch Box on this issue of the Deputy Prime Minister. It is clear from that small majority that many of the government supporters in another place do not think that the Government have moved enough. But they have begun to move. They have begun to recognise the legitimacy of this House in saying that this policy has not been properly explained
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or accepted by the British people. They have begun to negotiate. Even the Deputy Prime Minister, blustering on as he was a week ago about constitutional outrage, has now woken up to the fact that the public and much of his party have no confidence in this policy. He offered some movement to meet the concerns of this House. Perhaps he is not quite so macho a negotiator as our French friends have claimed; or perhaps he has begun to listen to the noble Lord, Lord Macdonald, a little more and to his circle of special advisers a little less. I hope so, for this House still expects something more from the Government.
Last night the Government at last began to address the legitimate constitutional and policy issues which have been raised by your Lordships. Given what we know of their intentions for the date of the next general election, to all intents and purposes by delaying action until March they have accepted the case that they have had no mandate to implement this policy in this Parliament. That is considerable vindication of the stand noble Lords have taken.
However, this is not only a question of delay; there is the need to explain the policy to the public and to NATS staff—they thought that they were voting for the opposite—and to reassure those who, rightly or wrongly, have worries about safety. It is not enough, although it is something, to say, "All right, we'll wait until next spring if we have to".
There is the separate issue of how Ministers will use that time. I have read carefully the words of the Deputy Prime Minister in another place last night. He was asked this point specifically and repeatedly. His answers were deeply unconvincing. He spoke of using the time to conduct the process properly and to work on the detail. The public will be astounded to think that insufficient thought has yet been given to conducting the process and ironing out the details. On the other hand, given the involvement of the Deputy Prime Minister, they might not be surprised after all.
One would like to have thought that all those things had been done already before plunging ahead with the policy. But if, as it now seems, they have not, the public will say, "Thank goodness for the intervention of your Lordships". Asked to spell out issues, Mr Prescott said in effect that perhaps we could look at the employee share ownership scheme. The concerns of the public, the pilots, air traffic controllers and the press are not about the employee share ownership scheme, although that may be a small part of it. They are about the rationale of the whole policy: what exactly the Government are doing; what it will mean for airline passengers; and whether it has implications for safety. If a delay were to be used to explain and clarify these points along with an active campaign to the public, then that might be a different matter.
There is so much that is still in the dark about this policy: the choice of the strategic partner; whether there is a conflict of interest among the bidders; whether a cost cutting regime is planned after privatisation; the failure to expand safety resources in the CAA for monitoring the performance of NATS after privatisation; the nature of the final agreement;

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the outcome of consultations with staff; the nature of the staff shareholding; the nature of the Civil Aviation Authority and NATS new, separated roles; and the position with regard to the golden share, national security and our national control over the management of air traffic control.
Above all, the Government need to reassure the public, pilots and passengers on issues of safety. The Deputy Prime Minister's response last night on these matters was hopelessly lacking. This House needs to be assured that the noble Lord, Lord Macdonald of Tradeston, will use this delay to deal with the details and to conduct a further review of these questions including the vitally important issue of safety. He must then come back to Parliament at the end of that time with a report and statement on the matters I have set out in a way which enables both Houses to discuss the issues again. If he can do that, then that may be a different matter. We all know that in life half a loaf is better than none. But it is bread we want from the Government not a fig leaf. The use proposed by the Deputy Prime Minister of the next three months did not begin to meet the concerns of this House or of many Members in another place or in the country.
I hope that the noble Lord, Lord Macdonald, can again give us much better and concrete assurances on these matters; otherwise I may have to invite noble Lords to insist on delay until after the election when the next government, whoever they are, will have a new mandate and will have given a full explanation of their policy to the public. I beg to move.
Moved, as an amendment to the Motion that this House do not insist on their Amendment No. 27 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 27C in lieu thereof, leave out the words after "House" and insert "do insist on their Amendment No. 27".—(Lord Brabazon of Tara.)
3.15 p.m.
Lord Richard: My Lords, I have said nothing on this issue in any of the debates that have taken place in this House. I would have said nothing today, too, and would have relaxed again into the comfortable stupor which one occasionally experiences when listening to the Opposition. However, I feel somewhat provoked. Noble Lords will know that I do not provoke easily; or I conceal the effect of the provocation. Only occasionally have I been known to erupt. But I found the speech to which we have just listened provoking and quite extraordinary in the circumstances. If I may say so to the noble Lord who made it, I found the speech well below what this occasion appears to demand.
What is the issue here? The issue is no longer NATS. It is the relationship of this House with another place. Perhaps I may say one thing on NATS. I have said nothing on the merits or otherwise of what the Government propose. I merely make this observation. It is very difficult indeed to find anyone on these Benches who is enthusiastic about the proposal, but
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that is not the issue. The most enthusiastic person who has spoken in your Lordships' House was the noble Baroness, Lady Hogg, from the Opposition Benches. There is a certain amount of cross-dressing on this issue which to a simple soul like myself—
Baroness Hogg: My Lords, I merely wish to say that if I have to cross-dress with the noble Lord I shall leave this House.
Lord Richard: My Lords, I can promise the noble Baroness that the skirt will be big enough for her.
The issue has been batted backwards and forwards between the two sides of the House with the Liberals panting behind the Conservatives, for some reason that I fail totally to appreciate. But that is not the issue. The issue now is the relationship of this House with the House of Commons.
We had a partial reform of this House last year. It was very partial and in the view of some of us who participated in those debates it did not go as far as we wished. It is no secret that I want a House which is predominantly, but not exclusively, elected. But that is not the issue. We have what we now have. I cannot forbear from observing, in view of what was said by the noble Lord who made the previous speech, that we still have 100 hereditary Peers. I do not suggest that they are any less legitimate than life Peers or that I am more credible than the noble Lord, Lord Strathclyde. But we now have a strange House; it is neither fish nor fowl. It is not democratic; it is not wholly appointed; it is certainly no longer wholly hereditary. It is a good old-fashioned British mish-mash. As part of that good old-fashioned British mish-mash I am concerned as to how this House now behaves.
Perhaps I may put some propositions to the House. First, it is right for this House to suggest but it is not right for this House to insist. The danger now is that we are insisting. We are not suggesting. We are saying to another place—the noble Lord said it today—"We will not give you this legislation unless you do certain things which we the Opposition say the Government should do". If that is not insisting, I do not know what is.
The relationship between this House and the other place depends on a series of understandings, some of which are choate, some of which are written down and some of which are almost miasmic understandings that nobody analyses but everybody knows how they work. One important understanding is that at the end of the day, the Government are entitled to get their business through. In these new circumstances after the reform of the House, we are in great danger of ignoring the previous set of understandings under which we all operated without thinking more clearly about what understandings we want in their place.
The fundamental point is that the Government are entitled to get their legislation if the House of Commons has been asked to look at something twice, as has happened in this case. In those circumstances, it would be frivolous of this House to insist that the issue be sent back down the corridor for a third time.

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That might be justified, but only if a major constitutional issue were at stake. Whatever else NATS is, it is not a major constitutional issue. I have nearly finished. I am about to subside, having erupted in my modest and moderate way. NATS may be quite an important issue, but it does not justify a major constitutional clash between the two Houses of Parliament. That is what we are in danger of getting into.
Earl Russell: My Lords, before the noble Lord sits down, does he agree that we are attempting to exercise the powers that another place gave us in the two Parliament Acts? If another place got it wrong, that is not our fault.
Lord Richard: My Lords, the noble Earl does not do himself justice. Of course we are entitled to do what we are doing. I am questioning the judgment, not the entitlement. The relationship between the two Houses cannot be viewed or made to work solely on the basis of the legal entitlement to do one thing in one House and something else in another House. Some flexibility and understanding between the two Houses is needed. We are in grave danger of tearing that up.
Baroness Thomas of Walliswood: My Lords, now that I have been reassured about our entitlement to continue in the course that we have set ourselves, I shall do just that. I support the amendment of the noble Lord, Lord Brabazon of Tara. I welcome his clear expose of some of the constitutional issues.
We clearly explained our position on Monday. We want the Government either to reconsider their commitment to the part-privatisation of NATS or to put the issue to the electorate at the next general election, since they certainly did not do so at the last one. I do not take very seriously the arguments suggesting that they did. I am willing to bet that the number of voters, or even Labour Party candidates, who thought that the party's references to improving public transport infrastructure via PPP deals should be interpreted as a determination to semi-privatise NATS was as near to zero as makes little difference. Dr Gavin Strang was certainly not among that number.
Given those clearly expressed views, it is not enough for the Government to offer to delay implementation of the NATS PPP for three months so that they can explain it more fully and even conduct the process properly. I share the astonishment of the noble Lord, Lord Brabazon, that they have not conducted the process properly before. The offer is a mere time delay, not a policy compromise.
We have explained often our support for a not-for-profit trust in place of a PPP. Until hearing the noble Lord, Lord Richard, I had thought it no longer necessary to explain our arguments further. However, as the noble Lord seems unaware—perhaps because he has not been in the Chamber during our discussions—that we have been leading a serious policy opposition to the Government's position, I shall briefly run through those policy points again.
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The option of a not-for-profit trust would relieve the burden otherwise accruing to the PSBR from the heavy investment required to keep NATS technology up to date. The option would involve a partnership between the Government, stakeholders and customers to ensure a safe, efficient operation. The airlines would be part of the directorship of the trust. The trust would be able to raise the required investment, but not subject to the demands of shareholders. Finally, it would be constructed in such a way as to exclude suppliers or foreign providers of air traffic control services from ownership, which seems at least doubtful in the case of a PPP. A trust might even be the most effective body to take part in a joint European air traffic control system.
Interestingly, I found that argument almost word for word in the top leader in today's Financial Times. It is not just we in our madness who are putting forward these arguments. They are shared by serious people across the press from the Financial Times to the Evening Standard—there could not be a much wider range than that—who are genuinely worried by or opposed to the Government's policy.
Last night, the Deputy Prime Minister claimed that on this issue the House of Commons was speaking for the people. Understandably, he refused the suggestion of a free vote. I would have done the same in his position. A majority of 87 in the main vote last night was hardly a ringing endorsement of his policy. I hope that that may encourage Labour Members in this House to join us in the Lobby once more today.
We are not convinced by the Government's argument, nor are we cowed by their threats. Our defiance may be what sometimes used to be called a forlorn hope, but defiance it remains.
Baroness Farrington of Ribbleton: My Lords, before any other noble Lord speaks, I remind the House that rehearsing arguments about options that are not included in the amendment before the House is not appropriate.
Lord Marshall of Knightsbridge: My Lords, it will come as no surprise that I have an interest to declare, as the chairman of British Airways. Further, despite the protocols of the process, it is no secret that British Airways is one of the eight United Kingdom airlines that make up the consortium bidding to become the private sector partner in NATS by operating the service on a not-for-commercial-return basis. Noble Lords will therefore understand my close interest in the issue. I have some salient points to make.
The debate on the future of NATS has been going on for more than five years. During that time, much-needed new capacity has failed to come on line as planned. The existing air traffic control systems are close to breaking point. The events of June this year served as a warning. The consequences of further, maybe more serious, collapses in the system may be too horrific to contemplate.
My first point is simply that enough is enough. The time has come to get firmly to grips with the situation before disruptive delays turn into disasters. The debate

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on NATS prompted by the Government's policy proposals has, for the most part, been reasoned, informed and constructive. Clearly, any fundamental change to a vital, safety-critical element in the national transport infrastructure warrants such consideration. There are obviously lessons to be learned from previous experience.
Important as the arguments are, your Lordships attention should not be diverted by arcane debate over corporate governance or financial structures. The main issue on today's agenda is whether we begin the process of repair and regeneration, or whether we allow the system to crack and crumble. Therefore, the second point that I want to make is: do not lose sight of the objective.
Some of the debate on the future of NATS has sought to illustrate the issue in the simplest of terms: profit versus safety. Those of us who have spent time running private sector airlines, for whom safety is unquestionably the paramount consideration, find these arguments difficult to understand, if not downright distasteful. I take issue particularly with the ill-judged comments made in your Lordships' House the other evening. It should be obvious that the airlines want more investment in more safety, not more profit from lack of it. To suggest otherwise is ludicrous and regrettable.
Nevertheless, we must recognise that where concerns exist, they have a right to be aired. This debate has provided that opportunity. The future of NATS does not have to be measured at a zero-sum calculation where profit is always the enemy of safety. Other models are available, and the Government's process, if allowed to proceed, will enable them to be explored.
In an attempt to place matters in perspective, I ask noble Lords to cast their minds back to the early 1980s when the privatisation of British Airways was proposed. The state-owned corporation of that day had become moribund and near bankrupt. Public-sector borrowing requirements constrained its ability to invest in sorely needed new equipment. A move to the private sector was the only sensible way forward; yet the policy faced opposition, some of it extremely fierce, from many groups in this House and in another place, from unions and from employees.
Objective argument and practical example overcame the aversion to change and fear of the unknown. By the time that British Airways was floated in February 1987, the airline's privatisation was universally judged to be a thoroughly good thing, especially for its customers, for its employees and for United Kingdom taxpayers. I venture to suggest that we have continued to fulfil our responsibilities in the airline to the highest possible standards, most notably in the area of safety and operational integrity.
When it comes to NATS, let us not forget that the force which drives the urgent need for substantial investment in the expansion of capacity is not only the airline industry; it is also the legitimate, increasing demand for airline service from the general public and
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from business and industry. Consumer demand is projected to grow at a rate of 4 per cent per annum compounded. That means that by the year 2015, which is not that far away in planning terms, the number of passengers who travel through United Kingdom airports will reach some 310 million per annum, if we have the professional wherewithal to serve them.
Finally, perhaps I may say that I have the highest regard for the outstanding performance of air traffic controllers, for pilots and for those who represent them, not all of whom oppose this piece of legislation because they want to see industry improvement based on world-class systems for this country. Therefore, I ask noble Lords to consider my points very carefully before condemning the United Kingdom to an increasingly obsolescent, unreliable air traffic control system for any longer than is absolutely necessary.
3.30 p.m.
Lord Phillips of Sudbury: My Lords, before the noble Lord sits down, given his vast experience in this area, will he tell the House whether he sees a serious flaw or drawback in the Canadian model?
Lord Marshall of Knightsbridge: My Lords, I believe that the Canadian trust system is obviously one alternative which could be available. However, I believe that we have advanced so far under the present proposals that it would be foolish to lose more time by going back to start all over again.
Lord Brett: My Lords, I am surprised to say that I agree with much of the contribution of the noble Lord, Lord Marshall of Knightsbridge. I did not speak in the debate on Monday because I had made your Lordships well aware of my belief in the defects of Part I of the Bill and to have bored your Lordships again would not have been helpful. Also, my noble friend Lord Clinton-Davis, in setting out his reasons for voting with the Government, had encapsulated the views of myself and several other colleagues.
I do not want to become involved in the argument about the constitution because that has been more than adequately acknowledged from these Benches. However, I want to explore precisely what the Government have said is to happen during the next three months. I certainly agree with the noble Lord, Lord Marshall of Knightsbridge, that the proposal for a three-month delay provides the opportunity to explore other alternatives. It is well known that I have much sympathy with the views of the noble Baroness, Lady Thomas of Walliswood, in relation to the not-for-profit trust.
I was captured by the Minister's phrase "willingness to listen". However, it begs the question, "Listen to whom and about what?". I hope that it is a willingness to listen not only to the interests of the staff, who have an important point to make, but also to the airline group.
In Monday's debate, assertions were made—a letter to The Times was referred to—that the airlines had a vested interest. That was not the important point that

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could have been made on that occasion. The important point was made by the noble Lord, Lord Marshall. A not-for-profit company is being proposed; that is, one which is not for commercial return. Therefore, a way exists to separate the emotive, although perhaps in some people's minds not necessarily accurate, collision course (pardon the pun!) between profit and safety.
Many Members on the Benches opposite have said that a not-for-profit trust would be a better way forward. The air traffic controllers and pilots have said that they would have greater faith in an airline group consortium because that would not put profit into the equation. We have the ingredients of staff willingness to talk about a new organisation which can incorporate the type of principles and practices suggested by the noble Lord, Lord Marshall, and their desire not to face a financial regime of RPI-minus five. I hope that when the Minister comes to make a decision, he will not go down that route. It is a recommendation of the CAA board which should be examined carefully before it is discarded because inevitably that regime would exacerbate the problem of a collision course in the long-term between investment in safety and in other areas.
Given that we have three months, even at this late stage we do not have to go back to square one. We do not have to consider a trust because we are told that that is not on the agenda. However, because the strategic partner agreement is not part of the act, we could consider the views of the airline group, the staff interests—which could include the pilots, who are not directly involved in any way—and the consumer interests. We could consider whether it is possible to put together a PPP which would encapsulate many of the proposals put forward in other fora and regain the confidence not only of the public, which is singularly lacking, but also of the staff.
I remind the House that a month ago my noble friend Lord Whitty made the point that the confidence of the staff and pilots is essential to the success of a PPP. I urge the Minister not to waste the opportunity of the next few months, but to listen to and talk to all those who have an interest in the matter. He should not be afraid to consider changes that perhaps a few months ago would have been viewed as driving us away from the model. I believe that the ingredients are there. It is for the Minister to cook up something which is acceptable to everyone.
Lord Clinton-Davis: My Lords, I want to follow on from what my noble friend Lord Brett said but I want to be more specific about what will happen over the next three months.
It is most important that the people who work in NATS should have confidence in what the Government do. So far, the noble Lord who opened the debate has not spoken about what he and his colleagues intend to do with regard to those people.
It is extremely important that he should pay a visit as soon as possible to the people who work in air traffic control. He should explain that the Government are going to listen very carefully to what they have to say.
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The Minister should not discard easily what has happened in Canada. Personally, I do not believe that the Canadian experience is necessarily right for us. I may be wrong about that, but it seems to me very important that we should put aside what has been said in this House once and for all. I am so sorry that the noble Lord, Lord Brabazon, has chosen different words to say what he has already said. There is an onus on the Opposition which he has failed to discharge, to say something new. He has refused to do that. He has refused to say whether the air traffic control service needs, as the noble Lord, Lord Marshall, said, to be revamped. How should that be done? I am not sure that that has been spelt out. The people most fitted to say what is required are the air traffic controllers.
A long time ago, I was a Minister for Aviation. It seems to me extremely important that the paramountcy of safety, which was underlined, should be repeated over and over again. When my noble friend approaches the air traffic control people, he will say that very clearly and he will hear what they have to say about it.
It seems to me that the Liberal Democrats are in great difficulty about this matter. They should not be. I have changed my vote. I have supported the Government. But, above all, I welcome the opportunity which the three months will give; and the Liberal Democrats should welcome that too. In those three months, my right honourable friend and his colleagues will visit the air traffic controllers and explain to them why this House has reservations, and, above all, why this House changed its mind, as I hope it will.
I hope that the noble Lord, Lord Brabazon, who has the interests of aviation at heart will change his mind too. I do not altogether believe that the issues are such that they should divide the two sides of the House. The Conservative Party must make up its mind as to whether it feels ideologically that it is obliged to wait until the general election and beyond. But it is very important that this issue does not become the plaything of politics. It should not become an issue to be put before the people in the next election because it is not sufficiently important overall. It is important for the air traffic controllers, for members of the union of which I happen to be the president—BALPA—and for members of the IPMS and so on. But it is not vital for the people of this country.
I go along with my noble friend Lord Richard. I plead with the House to put aside on this issue petty party points which are of no use at all.
Lord Bradshaw: My Lords, I must declare my position as a member of the Strategic Rail Authority and the Commission for Integrated Transport. In doing so, I make it clear that I have received no briefing from either organisation.
However, I have spent the whole of my career in transport—as director of operations for British Rail and as chairman of a bus company in Northern Ireland. I am very well acquainted with safety, which has always been at the forefront of my concern.

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Many of the arguments used by the noble Lord, Lord Marshall, were heard at the time of railway privatisation when many confident assessments were given of the state of the railways once private capital was brought in.
I want to speak about the inevitable conflicts between safety and profit now being displayed in Railtrack and the impotence of government once an activity has been fully privatised. In my opinion, we see in Railtrack a company which has failed to deliver a safe, efficient railway.
Perhaps I may divert to the accident which occurred in Scotland two nights ago. That was due to track spread. The track fell outwards and allowed the train to be derailed. In my days on British Rail, it would have led to a divisional engineer losing his job that night.
Lord Shepherd: My Lords, we are considering the message from the House of Commons. This is not a Second Reading. We have been over all these issues. I think it would be very much in the interests of the House and the decision which we must reach this afternoon that our debate should focus on the issues before us; that is, the message from the House of Commons and how we should react to it.
Lord Bradshaw: My Lords, if the House will permit me, I shall return quickly to the issue and speak very briefly.
Railtrack has for years been completely focused on its shareholders in negotiations with the regulator over the price review, over the exploitation of its property assets, in negotiations with contractors—
Lord Carter: My Lords, is the noble Lord aware of the words in the Companion which say that debate must be relevant to the Question before the House? At the moment, that is the Commons amendment in relation to a three-month deferment. It is certainly not about Railtrack.
Lord Rodgers of Quarry Bank: My Lords, we should be straightforward about this. The noble Lord, Lord Marshall, made a substantial and extremely interesting speech, as he was entitled to do. But it was no more directed against the amendment in a precise way than other speeches made in the House. I suggest to the Government Chief Whip that these are important issues about which the House feels deeply. We should have one rule for all Members and there should be a degree of latitude. Let common sense prevail and let us hear what others have to say.
Lord Bradshaw: My Lords, the Government showed, in answers given by the Deputy Prime Minister yesterday in another place, that they cannot intervene in railway matters. I want to make very clear that we are presenting the Government with an opportunity to ensure that any new arrangements embracing NATS will not be structured so that service is in any way subordinated to profit.
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Finally, it is essential that other parts of the Bill are enacted because we need an effective and powerful Strategic Rail Authority and the many other matters of which the noble Lord, Lord Macdonald, spoke in his introduction.
Lord Macdonald of Tradeston: My Lords, I have listened with great care to what has been said, as I have as regards all previous debates on this Bill. Most contributions were constructive and I listened with particular respect to the noble Lord, Lord Marshall of Knightsbridge, given his unrivalled experience of aviation and business generally through his work with the CBI.
We accept that there is concern about the timing of the PPP. The amendments introduced in another place last night provide an undertaking that we shall not rush that process. I am grateful for the practical approach taken by noble Lords opposite, particularly the noble Lord, Lord Brabazon of Tara.
Let me expand some of the issues about which I spoke earlier. We shall put in place new air aviation directions and ensure that the CAA is empowered to control airspace policy. That is a subject which should be discussed further. In response to my noble friends Lord Brett and Lord Clinton-Davis, yes, we shall continue to talk to staff representatives and to address their concerns. We shall facilitate meetings between the trade unions and the bidders so that they can talk about plans for the future organisation of NATS and the implications for staff. We shall talk further to the unions about the 5 per cent employee share scheme in order to inform our final decision on how tens of millions of pounds will in fact be dispersed to staff. We shall also discuss further with pension trustees any additional clarification that they may seek.
My noble friend Lord Brett asked about the scope that there may be for discussions around regulation or operational parameters in the next three-month period. As I have said, we remain open to constructive discussions about the operation of the PPP. The legislation lays down specific processes and the main criteria under which the PPP will be created and maintained. Since the beginning of this process we have made clear much of our thinking on the non-legislative framework for the PPP, both as part of the consultation process and during the passage of the Bill. That said, we are always willing to listen to constructive suggestions on the working of the PPP.
As to the question posed by the noble Lord, Lord Brett, about further reconsideration of the trust option, there have been lengthy debates here and in another place about the merits and otherwise of trust models. Consistently the Government have made it clear that we believe that the PPP offers a number of advantages over a trust model and for that reason remains our preferred option. However, we have made it clear all along that the PPP model in no way precludes it being run as a not-for-profit company, provided all the Government's criteria are met.
We shall ensure that both the Civil Aviation Authority and NATS are well organised for their new roles and that those roles are fully understood before

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they are separated. We shall take steps to ensure that the protections in relation to safety, which your Lordships have introduced, are understood. We shall also hold further discussions on any aspects of concern with users, including the general aviation community and other stakeholders, and on matters of airspace policy. The noble Lord, Lord Brabazon of Tara, touched on the dimensions of national security and the golden share, which will be brought within the process over the next three months.
I have listened carefully to the debate this afternoon. Therefore, to show how seriously we propose to make use of the three-month deferment, I am happy to undertake, as was requested, to come to your Lordships' House at the end of that period—around the end of February or the beginning of March—and to make a further Statement to the House. That will give an opportunity for noble Lords to hear about those further discussions and to hear our response to any concerns that may have been expressed.
I take to heart the injunction made by the noble Lord, Lord Brabazon, to ensure that the issues are better understood by the public. In the best interests of all involved, particularly the public interest, we shall work to build a well-informed consensus across air traffic services, across the aviation industry, and we shall do that over the next three months. That is our promise to the House. I believe that it is a reasonable way to move forward and that it reflects the spirit of this and recent debates here and in another place. Therefore, I commend the Commons amendments to the House.
Lord Brabazon of Tara: My Lords, this afternoon we have had a good debate on this subject. We have had the benefit of two new speakers on the Transport Bill in the form of the noble Lords, Lord Richard and Lord Marshall of Knightsbridge. I do not intend to comment on the constitutional arguments put forward by the noble Lord, Lord Richard. I felt that I had addressed those fairly well today and at previous stages of the Bill. We welcome to the debate the noble Lord, Lord Marshall of Knightsbridge, with his great hands-on experience in relation to this issue.
The Minister told the House something different from what was said in another place by the Deputy Prime Minister. Last night the Deputy Prime Minister added to my worries by saying that we needed to work on the detail. No wonder, therefore, that rebellion in another place rose to new levels. The public know all too well what it means when the Deputy Prime Minister has to work out the detail.
The Minister today has met this House in a different way. Where the Deputy Prime Minister revealed the holes in the policy, the Minister promised to fill in some of the gaps. As I understand it—and he will correct me if I am wrong—he promised that during the three-month period the Government will decide on the strategic partner and the nature of the final agreement. The Minister talked about the outcome of consultation with staff, with the unions, with the controllers and with the airline pilots. He talked about the nature of the employee shareholding; the nature of
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the new relationship between the Civil Aviation Authority and National Air Traffic Services; the way in which national control over air traffic control can be maintained, as I asked him to do; and the situation of the golden share, especially bearing in mind their position with regard to the BAA judgment. He has undertaken to return to Parliament in three months' time and to report on those matters in a Statement on which I hope that there can be a proper and full debate.
I also raised the issue of safety—
Lord Stoddart of Swindon: My Lords, the noble Lord has obviously had quite extensive discussions with the Minister about this matter. Did he also have a discussion with the Minister as to how the matter will return to this House? Will it be by means of a Motion, will the House simply take note, or will there be a debate?
Lord Brabazon of Tara: My Lords, I hope that we shall have a report and a Statement to the House on which we can have a full debate. I hope I am right in saying that that is what the Minister said we shall have. The Minister indicates that that is right. We will need a full report and a Statement covering those particular issues, which we have been promised in three months' time.
I turn to the matter of safety. Never during debates on this issue have I questioned the matter of safety. I agree with the noble Lord, Lord Marshall of Knightsbridge. I hope that what I said about safety and what the Minister has undertaken to do will satisfy the general public, the press, the media, the pilots and the controllers that safety is not an issue. Even if we may not regard it as an issue, certainly there are those outside, in the big wide world, who do. It is essential that those fears are allayed.
If I am right in what I have said and in what the Minister has undertaken to do, I believe that there has been a considerable shift in the position that was taken last night in another place. That will ensure full public and parliamentary debate to a greater extent than we have secured so far. In effect, the position is still maintained that nothing will be implemented much before the expected date of an election in the spring.
Lord Oakeshott of Seagrove Bay: My Lords, whether anything is implemented much before the election is not the point. It is a matter of whether it is implemented before or after the election. If the noble Lord is proposing not to press the amendment, can he make it clear whether the House will have an opportunity to vote on whatever is said in three months' time? Surely we need to know that key point before we vote tonight.
4 p.m.
Lord Brabazon of Tara: My Lords, I was about to deal with the first point made by the noble Lord, Lord Oakeshott. The amendment that we are considering today defers this for three months, which takes it to March. My original amendment deferred it until after

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the election. I can see some advantages to the Government's amendment, which means that this will be a live, hot issue until the time of the general election. Whether or not they want to, the Government will have to make decisions about it at the time of the general election.
As regards a debate, the House can vote on any kind of debate that we have. If the Minister tables a Motion for debate, any noble Lord can propose an amendment to that debate and a vote can take place at the end. That is the procedure of the House.
Lord Brabazon of Tara: My Lords, the amendment tabled today by the Government is a total vindication of the stand that this House has so far made on the issue. The Liberal Party may criticise this, but I believe that we have heard some very useful and wise concessions from the Government, to the extent that they will offer hope of reassuring the public and the staff about this policy. I am quite happy to give way as often as I am asked.
Lord Stoddart of Swindon: My Lords, I am most obliged to the noble Lord. I should like to seek some clarification. We have talked about a Statement. The noble Lord then said that we could debate a Motion. As I understand it, if the Minister returns to this House with a Statement, we cannot table a Motion to amend that Statement. The object of my original question is to find out whether we should have a Statement, a Motion, a "take-note" Motion or whatever, so that the House may have another bite at this particularly bitter cherry.
Lord Brabazon of Tara: My Lords, it would perhaps be preferable for the Government to answer this question. However, my understanding is that if a Motion for debate is tabled in this House, as we have been promised, any noble Lord may table an amendment to the Motion, whatever it happens to be. I do not know whether anybody from the Government Front Bench wishes to intervene at this stage. I shall certainly allow him the opportunity.
Lord Carter: My Lords, everything that has been said is entirely procedurally correct. There can be a Government Statement and there can be a debate. The Liberal Democrats are very impatient today but perhaps they will allow me to finish. There are opportunities for Wednesday debates and other debates. It is procedurally correct to table a "take-note" Motion, to which an amendment may be tabled. Nothing that has so far been said is procedurally incorrect.
Lord Brabazon of Tara: My Lords, I hope that the Government have agreed—I am convinced that they have—that there will be such a formal debate, to which any amendment can be tabled and voted on. We can therefore inform the Government at that time whether or not we approve of their policies.
We have asked the Government to think again about this matter and ensure that the details of the legislation are properly considered. I believe that that
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is the role of this House. When last night I read the words of the Deputy Prime Minister, I was not remotely satisfied on that point. Having listened to the Minister today, I am much more reassured. The Minister has again stepped in to save the Deputy Prime Minister's bacon and clear up at least some of the mess that he has left behind.
In the circumstances, I believe that we should give the noble Lord the opportunity to do that job, and not pursue something which, if we rejected these offers, might prove, as the noble Lord, Lord Richard, would say, to be a sterile confrontation between these two Houses. Therefore, I beg leave to withdraw my amendment.
The Chairman of Committees (Lord Boston of Faversham): My Lords, is it your Lordships' pleasure that the amendment be withdrawn?
Noble Lords: No!
The Chairman of Committees: My Lords, the Question was that this House do not insist on its Amendment No. 27 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 27C, since when an amendment has been moved to leave out the words after "House" and insert "do insist on its Amendment No. 27". The Question is that this amendment be agreed to?
On Question, whether the said amendment (No. 27D) shall be agreed to?
4.7 p.m.
Their Lordships divided: Contents, 57; Not-Contents, 157.

Division No. 1

CONTENTS

Addington, L.

Oakeshott of Seagrove Bay, L.

Avebury, L.

Phillips of Sudbury, L.

Barker, B.

Razzall, L.

Bradshaw, L.

Redesdale, L.

Clement-Jones, L.

Rennard, L.

Dholakia, L.

Rodgers of Quarry Bank, L.

Ezra, L.

Roper, L.

Falkland, V.

Russell, E.

Gilmour of Craigmillar, L.

St John of Fawsley, L.

Goodhart, L.

Sandberg, L.

Greaves, L.

Scott of Needham Market, B.

Hamwee, B. [Teller]

Sharman, L.

Harris of Greenwich, L.

Sharp of Guildford, B.

Harris of Richmond, B.

Shore of Stepney, L.

Holme of Cheltenham, L.

Shutt of Greetland, L.

Hooson, L.

Smith of Clifton, L.

Jacobs, L.

Stoddart of Swindon, L.

Jenkins of Putney, L.

Taverne, L.

Lester of Herne Hill, L.

Thomas of Gresford, L.

Linklater of Butterstone, B.

Thomas of Walliswood, B. [Teller]

Ludford, B.

Mackie of Benshie, L.

Thomson of Monifieth, L.

McNally, L.

Tope, L.

Maddock, B.

Tordoff, L.

Mar and Kellie, E.

Wallace of Saltaire, L.

Miller of Chilthorne Domer, B.

Walmsley, B.

Newby, L.

Watson of Richmond, L.

Nicholson of Winterbourne, B.

Wigoder, L.

Northover, B.

Williams of Crosby, B.

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NOT-CONTENTS

Acton, L.

Irvine of Lairg, L. (Lord Chancellor)

Ahmed, L.

Alli, L.

Janner of Braunstone, L.

Amos, B.

Jay of Paddington, B. (Lord Privy Seal)

Andrews, B.

Archer of Sandwell, L.

Kennedy of The Shaws, B.

Ashlev of Stoke, L.

King of West Bromwich, L.

Bitch, L.

Kirkhill, L.

Barnett, L.

Laird, L.

Bassam of Brighton, L.

Laming, L.

Bernstein of Craigweil, L.

Layard, L.

Birt, L.

Lea of Crondall, L.

Blackstone, B.

Lichfield, Bp.

Blease, L.

Lipsey, L.

Bledisloe, V.

Lockwood, B.

Borrie, L.

Longford, E.

Bragg, L.

Macdonald of Tradeston, L.

Brett, L.

McIntosh of Haringey, L. [Teller]

Brightman, L.

Brooke of Alverthorpe, L.

McIntosh of Hudnall, B.

Brookman, L.

MacKenzie of Culkein, L.

Burlison, L.

Mackenzie of Framwellgate, L.

Burns, L.

Mallalieu, B.

Carter, L. [Teller]

Marsh, L.

Chandos, V.

Marshall of Knightsbridge, L.

Clarke of Hampstead, L.

Massey of Darwen, B.

Clinton-Davis, L.

Merlyn-Rees, L.

Cocks of Hartcliffe, L.

Mishcon, L.

Cohen of Pimlico, B.

Mitchell, L.

Colville of Culross, V.

Molyneaux of Killead, L.

Craig of Radley, L.

Monson, L.

Crawley, B.

Morgan, L.

Darcy de Knayth, B.

Morris of Castle Morris, L.

David, B.

Morris of Manchester, L.

Davies of Coity, L.

Nicol, B.

Davies of Oldham, L.

O'Neill of Bengarve, B.

Dean of Thornton-le-Fylde, B.

Parekh, L.

Dearing, L

Patel, L.

Desai, L.

Peston, L.

Donoughue, L.

Plant of Highfield, L.

Dubs, L.

Ponsonby of Shulbrede, L.

Elder, L.

Prys-Davies, L.

Evans of Temple Guiting, L.

Puttnam, L.

Evans of Watford, L.

Ramsay of Cartvale, B.

Falconer of Thoroton, L.

Randall of St. Budeaux, L.

Farrington of Ribbleton, B.

Rendell of Babergh, B.

Faulkner of Worcester, L.

Renwick of Clifton, L.

Ferrers, E.

Richard, L.

Filkin, L.

Rogan, L

Fyfe of Fairfield, L.

Roll of Ipsden, L.

Gale, B.

Sainsbury of Turville, L.

Gibson of Market Rasen, B.

Sandwich, E.

Gladwin of Clee, L.

Sawyer, L.

Goldsmith, L.

Scotland of Asthal, B.

Gordon of Strathblane, L.

Serota, B.

Gould of Potternewton, B.

Shepherd, L.

Grabiner, L.

Simon, V.

Graham of Edmonton, L.

Slim, V.

Greengross, B.

Smith of Gilmorehill, B.

Gregson, L.

Stallard, L.

Grenfell, L.

Stone of Blackheath, L.

Hardy of Wath, L.

Strabolgi, L.

Harris of Haringey, L.

Symons of Vernham Dean, B.

Harris of High Cross, L.

Taylor of Blackburn, L.

Harrison, L.

Taylor of Gryfe, L.

Haskel, L.

Tenby, V.

Hayman, B.

Thornton, B.

Hilton of Eggardon, B.

Tomlinson, L.

Hollis of Heigham, B.

Turner of Camden, B.

Howells of St. Davids, B.

Uddin, B.

Howie of Troon, L.

Varley, L.

Hoyle, L.

Wallace of Coslany, L.

Hughes of Woodside, L.

Walpole, L.

Hunt of Kings Heath, L.

Warner, L.

Hylton, L.

Warwick of Undercliffe, B.

1342

Weatherill, L.

Williams of Elvel, L.

Wedderburn of Charlton, L.

Williams of Mostyn, L.

Whitaker, B.

Williamson of Horton, L.

Whitty, L.

Winston, L.

Wilkins, B.

Woolmer of Leeds, L.

Resolved in the negative, and Amendment No. 27D disagreed to accordingly.
4.16 p.m.
On Question, Amendment No. 27C agreed to.

Transport Bill
  MANUSCRIPT MOTIONS MOVED ON CONSIDERATION OF COMMONS AMENDMENTS IN LIEU OF CERTAIN LORDS AMENDMENTS TO WHICH THE COMMONS HAVE DISAGREED ON WHICH THE LORDS HAVE INSISTED
  [The page and line refer to HL Bill 64 as first printed for the Lords.]

  LORDS AMENDMENT
  27 Clause 40, page 27, line 5, at end insert—
  ("() No direction to make a transfer scheme shall be given under subsection (1) before the first Session of the next Parliament after that in which this Act is passed.")
  The Commons disagreed with the Lords in their amendment but proposed the following amendment in lieu thereof—
  27C page 27, line 5, at end insert—
  ("() No direction may be given under this section before the end of the period of three months starting with the day on which this Act is passed.")
  Lord Macdonald of Tradeston: My Lords, I beg to move that the House do not insist on their Amendment No. 27 and do agree with the Commons in their Amendment. No 27C in lieu thereof.
  When this Bill was last before this House I gave a full explanation of the Government's reasons for not wishing to agree to Amendments Nos. 27 to 29. I shall not repeat those reasons at length, but perhaps I can give your Lordships a brief reminder.
  First, we do not agree that the public-private partnership needs to be deferred until after the next general election. We made our policy clear, before, during and after the previous election campaign. During that campaign the Prime Minister said that we needed public and private sectors in partnership in developing transport infrastructure and the Chancellor indicated that NATS was a candidate for a public-private partnership. Since the election we have consulted on the PPP proposal and listened carefully to the responses. All the issues have been debated at length. We remain convinced that the PPP is the right solution for NATS.
  Secondly, delay would be damaging to NATS and its users. There is an urgent need for new investment in NATS, especially to deliver the two centres at Swanwick and Prestwick on time. We also need the injection of new project management skills. We need to separate service provision from regulation. And perhaps most importantly there is an urgent need for certainty for the staff who have lived with uncertainty for so long.
  Thirdly, as I explained to your Lordships earlier this week, I do not believe that it is the role of this House to decide the timing of the legislation. This House is a revising Chamber and is very effective in that role. I do not wish to overstate the case on this issue, but I firmly believe that we should concentrate on that role.
  Perhaps I can return to the subject of safety which has been raised on many occasions during the debates on this part of the Bill. Of course safety is the first priority and your Lordships will recall the amendments introduced in this House to reaffirm our commitment to safety. I cannot accept that the private sector is unsafe—look at the British airline industry.
  1324
  The airlines are strongly in favour of the PPP, not just as bidders, but also as users whoever wins the bid. I am certain that they would not support the PPP if they thought that it would be unsafe. In the most recent debates on this Bill Members of both Houses have paid tribute to the safety of air traffic control and said that it need not be threatened by a PPP.
  I was pleased to hear two noble Baronesses on the Benches opposite declare on Monday night that they saw the merit in what we propose. The noble Baroness, Lady Hogg, spoke of the involvement of private enterprise in state activities. That is exactly what we are proposing—the involvement of private enterprise. We are not proposing a once-for-all sale. We do not want a continuation of total state ownership. We want private involvement through the PPP.
  But we recognise that there is a message underlying Amendments Nos. 27 to 29. We have listened to that message. We have listened throughout the passage of the Bill to what has been said in both Houses. We have held to the PPP policy because we believe it to be the right solution for NATS. But we have amended the detail in response to concerns. Most recently we have made changes to address concerns about safety and about the pensions of NATS' employees. Elsewhere in the Bill we have addressed concessionary fares for disabled people; lane rental for street works; the impounding of illegal lorries. Throughout the passage of the Bill the Government have listened to views, have met concerns, and have accepted changes proposed by all sides of both Houses.
  The amendments agreed in another place are further evidence of our willingness to listen. These amendments are an expression of good intent. We want to make it clear that if the Bill passes this week we shall not enter precipitately in to the PPP. These amendments are an undertaking that we shall take time to conduct the process properly. We shall work on the detail and make sure that we get it right. In short, we shall ensure that all concerned fully understand the proposals and that action is being taken to deal with real concerns expressed.
  I can assure noble Lords that this will be a carefully considered process, as, of course, we always intended that it would be. These amendments are our promise to this House. I believe that it is right to proceed with care. I firmly believe that this House should accept the Commons amendment.
  Moved, That the House do not insist on their Amendment No. 27 and do agree with the Commons in their Amendment No. 27C in lieu thereof.—(Lord Macdonald of Tradeston.)

  MOTION MOVED ON CONSIDERATION OF COMMONS AMENDMENT NO. 27C
  Lord Brabazon of Tara 27D Lord Brabazon of Tara rose to move, as an amendment to the Motion that this House do not insist on their Amendment No. 27 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 27C in lieu thereof, leave out the words after "House" and insert "do insist on their Amendment No. 27".

  LORDS AMENDMENT
  28 Clause 41 page 27, line 25, at end insert—
  ("() No approval of a transfer scheme shall be made under subsection (2) before the first Session of the next Parliament after that in which this Act is passed.")
  The Commons disagreed with the Lords in their amendment but proposed the following amendment in lieu thereof—
  28C Page 27, line 25, at end insert—
  ("() No approval may be given under this section before the end of the period of three months starting with the day on which this Act is passed.")
  Lord Macdonald of Tradeston: My Lords, I beg to move that the House do not insist on their Amendment No. 28 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 28C in lieu thereof.
  Moved, That the House do not insist on their Amendment No. 28 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 28C in lieu thereof.—(Lord Macdonald of Tradeston.)
  [Amendment No. 28D not moved.]
  On Question, Motion agreed to.

  LORDS AMENDMENT
  29 Clause 42, page 27, line 38, at end insert—
  ("() No transfer scheme shall be made under subsection (2) before the first Session of the next Parliament after that in which this Act is passed.")
  The Commons disagreed with the Lords in their amendment but proposed the following amendment in lieu thereof—
  29C Page 27, line 38, at end insert—
  ("() No scheme may be made under this section before the end of the period of three months starting with the day on which this Act is passed.")
  Lord Macdonald of Tradeston: My Lords, I beg to move that the House do not insist on their Amendment No. 29 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 29C in lieu thereof.
  Moved, That the House do not insist on their Amendment No. 29 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 29C in lieu thereof.—(Lord Macdonald of Tradeston.)
  [Amendment No. 29D not moved.]
  On Question, Motion agreed to.

Insolvency Bill
4.18 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.

Insolvency Bill
  COMMONS AMENDMENTS
  [The page and line refer to Bill 173 as first printed for the Commons.]
  COMMONS AMENDMENT
  1 Before Clause 9, insert the following new clause—

  ADMINISTRATION ORDERS
  (" .—(1) Part II of the Insolvency Act 1986 (administration orders) is amended as follows.
  (2) In section 10 (effect of application), after paragraph (a) of subsection (1) there is inserted—
  "(aa) no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the leave of the court and subject to such terms as the court may impose".
  (3) In section 11 (effect of order), after paragraph (b) of subsection (3) there is inserted—
  "(ba) no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose."").
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1. In speaking to this amendment I shall speak also to Amendments Nos. 13, 22, 23 and 24.
  These amendments deal mainly with a landlord's ability to forfeit a lease by way of peaceable re-entry, a matter which was raised by the noble Baroness, Lady Buscombe, and the noble Lord, Lord Razzall, in Committee. At that time I was able to inform them only that we were in the process of consulting on the matter.
  The purpose of these amendments is to provide that a landlord's right to effect peaceable re-entry and so terminate the tenancy in respect of premises rented by an insolvent is generally stayed while a company or an individual is the subject of a moratorium in the company and individual voluntary arrangement and administration procedures. Our recent consultation, started while the Bill was passing through this House, showed that there was a general agreement that that right should not be available to a landlord during statutory moratoria. Additionally, Amendments Nos. 23 and 24 make the individual voluntary arrangement moratorium effective against all forms of
  1344
  distress and provide that the court may stay the levying of distress while an application for a moratorium in that procedure is pending.
  Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord McIntosh of Haringey.)
  Baroness Buscombe: My Lords, I should like to speak to Amendment No. 1 which, with Amendments Nos. 13, 22 and 23, have become part of the Bill as a result of what I said at Second Reading. I said then that consideration had to be given to whether it was appropriate that a landlord should be able to forfeit a lease under which the company was a tenant during a moratorium. I pointed out that we could see no policy reason why a landlord should be in the privileged position of being able to re-enter premises let to a tenant during a moratorium, but all other creditors were restricted from exercising their rights. Even a landlord would be restricted from taking proceedings for possession but, curiously, would not be prevented from peaceably re-entering the premises. I also pointed out that if landlords were not restricted from exercising their right to re-enter premises the whole point of the moratorium and a proposal for a voluntary arrangement would be defeated.
  At Second Reading the Minister said that it was too complex a point for the Government to deal with in the context of the Bill. In Grand Committee the noble Lord changed his mind and said that it was an important matter. The Minister informed your Lordships' House that the Government had put in hand a consultation process, and we expected government amendments to be tabled in due course. We on this side of the House waited with bated breath for the amendments so that we could consider them properly and consult those whom the amendments would affect most. We waited and waited. I passed a couple of happy afternoons with the Minister in this Chamber on Report and at Third Reading. The surroundings were pleasant, as was the company of the Minister and others, but there was no sign of the amendments. The Bill went to another place. Towards the end of October the amendments finally appeared. In essence, it took six months for the Government to produce relatively straightforward amendments, and it is they who complain about delays in this House.
  The lateness of the amendments means that we cannot give them the consideration that they obviously merit. The amendments could be improved in one particular respect because, as presently drafted, they would prevent a landlord from peaceably re-entering the premises even if they were unoccupied. We believe that that is an unreasonable restriction. However, we on this side of the House are anxious that the Bill should be enacted as soon as possible, and in a spirit of compromise we have not tabled any amendments to these particular Commons amendments.
  Lord McIntosh of Haringey: My Lords, I do not begrudge the noble Baroness her gloat. I said in introducing the amendments that they had been tabled because the noble Baroness and the noble Lord,

  1345
  Lord Razzall, had raised the issue in the first place. I said, wrongly, that the matter had first been raised in Committee. The noble Baroness is quite right to remind noble Lords that she raised the matter at Second Reading. The noble Baroness is also right to say that the consultation took a certain amount of time. However, the amendments have been considered both in Committee and at Report stage in another place and have received parliamentary scrutiny.
  I am glad that the noble Baroness has only one remaining concern about the amendments. That concern is related to the case where a property which is leased is no longer needed for a rescue. If it is not needed for a rescue or occupied—they are related cases—surely it is in the interests of the tenant to see that the lease is surrendered because that will improve his financial position. Therefore, the boot is somewhat on the other foot. He may seek to surrender the lease to the landlord, but if he does not he is unlikely to defend any application by a landlord to forfeit the lease of premises that he no longer requires. In any case, peaceable entry is not a right that is used very often and applies almost exclusively to business premises. Without going back over all the arguments, the period of a moratorium is only short. In any case, there is the fallback that an application can be made to the court for leave to re-enter any premises whether or not they are necessary for the rescue; for example, if rent is unpaid.
  I accept the thrust of what the noble Baroness says about the way in which the issue has been dealt with, but we have come out right in the end.
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  2 Clause 11, page 7, line 12, at beginning insert ("After")
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 2. In moving this amendment I should like to speak also to Amendment No. 3. These amendments effectively introduce a completely new Clause 11. This arises because, if the clause had remained unamended, what would have been new subsection (5) of Section 421 of the Insolvency Act 1986 could have had an unfortunate and unintended effect. There was a risk that it could have prejudiced the marketability of property where on, and as a result of, his death the deceased person's interest in jointly-owned property had passed to the survivor, irrespective of whether he was solvent or insolvent. It was that particular point which was raised by noble Lords opposite, notably by the noble Lords, Lord Sharman and Lord Razzall. I note, however, that the noble Baroness, Lady Buscombe, was also concerned about this matter.
  In Grand Committee the noble Lord, Lord Sharman, said:
  "It is necessary that there should be no retrospective effect on any third party who might have acquired property in good faith".—[Official Report, 15/6/00, col. CWH 56.]
  1346
  I responded at col. CWH 57:
  "We understand the concern of the noble Lord, Lord Sharman, which he also raised at Second Reading. We agree that left as it is, this clause could prejudice the marketability of property where the deceased's interest in jointly-owned property has passed to the survivor on death, irrespective of whether the deceased is solvent or not. We would not wish an arm's length disposal of a property by a surviving partner to be made unnecessarily difficult because prospective purchasers were concerned that they might find they did not have good title if the deceased's estate became insolvent".
  These two amendments address just that point. In doing so, they will also ensure that the value of any interest in jointly-owned property, lost by the operation of the survivorship rules, is recoverable for the benefit of the insolvent estate and, therefore, for the creditors of the deceased insolvent.
  Clause 11, as amended by Amendment No. 3, which is the substantive amendment in this group, will enable the trustee of the insolvent estate to make application to the court for a monetary order against the survivor in such cases. The order would be for a sum to cover the debts and other liabilities of the deceased insolvent's estate. This sum could be smaller than the value of the former joint interest, but could not be greater. That approach would avoid the difficulties of the original clause which would have had the effect of treating the deceased insolvent as if he had been adjudged bankrupt on the day before he died and, by that route, making his interest in jointly-owned property part of his estate. Not only would that have overridden survivorship rules, but it would have taken effect without regard to the position of other joint-owners or any subsequent purchasers.
  Clause 11, as amended, will address the consequences of the decision of the Court of Appeal in Re Palmer (deceased) in a balanced and measured way which will allow the courts to have regard to all the competing interests in such cases. Although we have adopted a different way to achieve that aim, it will mean, so far as is reasonably possible, that the creditors of an insolvent will not be in a significantly worse position in a case where he has died than if he were living. I urge noble Lords to accept the amendments. I shall say something about Amendment No. 3A when it has been moved.
  Moved, That the House do agree with the Commons in their Amendment No. 2.—(Lord McIntosh of Haringey.)
  Lord Kingsland: My Lords, as our amendment is part of this group I should like to speak to it at this stage. The Minister explained that new Clause 11 will apply if an insolvent person dies in circumstances where, immediately before his death, he was a joint tenant. As your Lordships are aware, on the death of a joint tenant his interest automatically vests in the other joint tenant and does not become part of the deceased's estate. In particular, it is frequently the case that husband and wife are joint tenants of the matrimonial home; so, on the death of the husband, his interest passes automatically to his widow.
  The new provision does not prevent that happening but imposes a liability on the surviving spouse to pay to the deceased's creditors an amount up to the value

  1347
  of the deceased's previous interest in the property. In principle, that seems to be right. However, Clause 11 has been given retrospective effect. For example, it will apply to widows whose husbands have died insolvent before the new measure comes into force. That is bound to affect, adversely, many widows who have already organised their financial affairs in the knowledge that, at that time, they had at their disposal a certain sum of money.
  That problem has not only troubled your Lordships but Members of another place. Until Third Reading in another place, we thought it was agreed that the clause would not have a retrospective effect. We were reinforced in that view by paragraph 20 of the Government's response to the report of the Trade and Industry Select Committee, which stated that it would be made clear that provisions would not have a retrospective effect. Yet the new clause now states that, unless the circumstances are exceptional, the court must assume that the interests of the deceased's creditors outweigh all other considerations.
  But, for most widows the circumstances will not be exceptional. Indeed, their circumstances will normally be commonplace and what one would expect after a husband died insolvent. The automatic assumption in subsection (3) will apply. The widow will have to pay a substantial sum for the benefit of the creditors.
  There is a further objection to be found in the same section which provides that it only applies if the petition for the order was presented after the commencement of the section. That seems to us to be very odd—because the benefits of the section will be denied to the diligent creditor who obtains an insolvency administration order as soon as he can but before the commencement of the section, but will not apply to the idle creditor who does not apply for such an order until after the commencement of the section. Where is the sense in that? Why should the indolent be treated better than the vigilant?
  Therefore, we believe that the new section is fundamentally flawed. I make no apology whatever for pressing the amendment at this late stage. The noble Lords, Lord Sharman and Lord Razzall, both expressed their concerns as regards the retrospective effect of Clause 11 at Second Reading. Moreover, in another place, the amendment did not appear until the end of October, leaving little or no time for the serious defects in its drafting to be corrected.
  4.30 p.m.
  Lord Sharman: My Lords, Amendment No. 3 responds to a number of issues raised by my noble friend Lord Razzall and myself during the passage of the Bill. There is an element of retrospection included in the clause as it stands, which the amendment proposed by the noble Lord seeks to address. However, that element of retrospection is at the margin. Therefore, I cannot support the amendment proposed by the noble Lord.
  1348
  I thank the Minister for bringing forward these amendments in another place.
  Lord McIntosh of Haringey: My Lords, on behalf of my right honourable and honourable friends, I am grateful. The House of Commons started to debate the matter at the end of October. It was debated both in Committee and on Report. It would be desirable if a Bill is perfect when it comes before Parliament. But that is not the case. Doubts and worries were expressed in this House. They were given effect to by amendments in another place. We are rather pleased with ourselves about those kinds of matters.
  I know that the noble Lord, Lord Kingsland, thinks that the provision should apply only when a person dies after the new section has come into force. But we listened to the responses of those who were consulted on the draft clauses and to the concerns expressed in this House.
  Both on Second Reading and in Grand Committee, the point put to me was that the clause could prejudice the marketability of property because it revested the deceased insolvent's interest in former jointly owned property in his estate. As was correctly pointed out, that could have left those who wanted or needed to deal with such a property in some difficulty. There might be problems about giving good title. That is why Amendments Nos. 2 and 3 were made in the other place. As a consequence, the revised clause does not act to revest the property and does not have that retrospective effect.
  The noble Lord, Lord Kingsland, said that the clause imposes a liability on the survivor. The clause does not impose a liability. Where an insolvency administration order is made it allows the trustee to seek an order for a monetary sum. Only if such a monetary order is made will a liability be imposed. I would also point out that I did say quite clearly in Grand Committee that we intended the provision to apply to any case where the petition for the bankruptcy was presented after the new clause came into effect. The provision will not apply to what I shall call the "bankruptcy" of a deceased insolvent if the bankruptcy was started before the new provision comes into force. That is a very important condition.
  The clause, as amended, makes it clear that it will apply only to those bankruptcies which are started after the new clause has come into effect. The existing law will continue to apply in cases which are started before the new provision comes into effect. We said in response to the Commons Trade and Industry Select Committee that the provision did not have a retrospective effect. But the provision we were talking about was the original Clause 11 rather than the new Clause 11 which has replaced it.
  The new provision will allow the value lost to the estate as a result of the operation of the survivorship rules to be recovered by way of a monetary order. That is subject to an important limitation. Only as much as is needed to pay off the creditors and the costs of the proceedings can be recovered. A deceased insolvent's estate may contain other assets which can and should

  1349
  be applied to that purpose before interfering with the operation of survivorship rules. We believe that this amendment adopts the right approach. I repeat that the revised clause makes it clear whether the new provision will apply to a bankruptcy or not before that bankruptcy starts.
  We have to look at the issue in practical terms. Those who suggest that the clause should not apply unless the debtor dies after it has come into effect are not paying sufficient attention to the position of the creditors. The position of the survivor appears to have been considered, but it is assumed in every case that the interests of the survivor should be paramount. We believe that a balance needs to be struck.
  Let me give an example. Before his death a person may have had a substantial amount of building work on, say, the jointly owned matrimonial home. But he dies before paying the builder or at least leaving a hefty balance outstanding. Under survivorship rules, the deceased's interest in the property passes to his survivor. The builder has effectively contributed to the value of the property, but nothing may remain to pay him as the law stands. The likelihood is that the builder advanced the credit because he thought the debtor was creditworthy on account of his interest in the property. The consequence for the builder may be his own insolvency, with all that that means for him, his family, his employees and his creditors. His failure may even cause others to fail. That is one example of how a creditor might be affected. But I am sure the noble Lord. Lord Kingsland, with his fertile imagination, can think of many more. Surely we have the balance right: that the limited degree of retrospectivity provided for under these new provisions and Clause 11 as rewritten is the best way to approach the matter.
  Lord Kingsland: My Lords, before the noble Lord sits down, he referred to the question of balance. In looking at the proposed new Section 421A(3), if the subsection stopped at the semi-colon I would wholeheartedly agree with the noble Lord's analysis of the balanced approach of the Bill. However, after the semi-colon there is the following expression:
  "but, unless the circumstances are exceptional, the court must assume that the interests of the deceased's creditors outweigh all other considerations".
  That vastly skews, in a way which is wholly unfair to the survivor, the balance to which the noble Lord referred.
  Lord McIntosh of Haringey: My Lords, it does skew the balance but in the end it is left to the courts to decide on a case-by-case basis. That is surely the right way for these matters to be dealt with. We have provided for a balance. We have provided for an assumption which makes it easier for the courts to consider the matter. But, in the end, we have provided through the exceptional cases provision that the courts can make a decision which is fair in the circumstances of an individual case.
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  3 Clause 11, page 7, line 13, leave out from ("persons)") to end of line 28 and insert ("there is inserted—
  COMMONS AMENDMENT

    Insolvent estates: joint tenancies.
    421A.—(1) This section applies where—

    (a) an insolvency administration order has been made in respect of the insolvent estate of a deceased person,

    (b) the petition for the order was presented after the commencement of this section and within the period of five years beginning with the day on which he died, and

    (c) immediately before his death he was beneficially entitled to an interest in any property as joint tenant.

    (2) For the purpose of securing that debts and other liabilities to which the estate is subject are met, the court may, on an application by the trustee appointed pursuant to the insolvency administration order, make an order under this section requiring the survivor to pay to the trustee an amount not exceeding the value lost to the estate.
    (3) In determining whether to make an order under this section, and the terms of such an order, the court must have regard to all the circumstances of the case, including the interests of the deceased's creditors and of the survivor; but, unless the circumstances are exceptional, the court must assume that the interests of the deceased's creditors outweigh all other considerations.
    (4) The order may be made on such terms and conditions as the court thinks fit.
    (5) Any sums required to be paid to the trustee in accordance with an order under this section shall be comprised in the estate.
    (6) The modifications of this Act which may be made by an order under section 421 include any modifications which are necessary or expedient in consequence of this section.
    (7) In this section, "survivor" means the person who, immediately before the death, was beneficially entitled as joint tenant with the deceased or, if the person who was so entitled dies after the making of the insolvency administration order, his personal representatives.
    (8) If there is more than one survivor—

    (a) an order under this section may be made against all or any of them, but

    (b) no survivor shall be required to pay more than so much of the value lost to the estate as is properly attributable to him.

    (9) In this section—
    "insolvency administration order" has the same meaning as in any order under section 421 having effect for the time being,
    "value lost to the estate" means the amount which, if paid to the trustee, would in the court's opinion restore the position to what it would have been if the deceased had been adjudged bankrupt immediately before his death."
    (2) In subsection (1) of section 421, after "apply" there is inserted "in relation".")
    Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 3.
    Moved, That the House do agree with the Commons in their Amendment No. 3.—(Lord McIntosh of Haringey.)
    [Amendment No. 3A not moved.]
    On Question, Motion agreed to.

  COMMONS AMENDMENT
  4 Clause 14, page 8, line 32, at end insert—
  ("(2) For the purposes of the Financial Services and Markets Act 2000, the functions conferred on the Financial Services Authority by virtue of Schedules 1 and 2 are to be treated as conferred by that Act.
  (3) Section 356 of that Act (Authority's powers to participate in proceedings: company voluntary arrangements) is amended as follows—
  (a) for subsection (1), there is substituted—
  "(1) Where a voluntary arrangement has effect under Part I of the 1986 Act in respect of a company or insolvent partnership which is an authorised person, the Authority may apply to the court under section 6 or 7 of that Act.",
  (b) for subsection (2), there is substituted—
  "(2) Where a voluntary arrangement has been approved under Part II of the 1989 Order in respect of a company or insolvent partnership which is an authorised person, the Authority may apply to the court under Article 19 or 20 of that Order.",
  (c) in subsection (3), for "either" there is substituted "any".")
  Lord McIntosh of Haringey: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 4. I should like to speak also to Amendments Nos. 5, 19 and 29. The amendments deal with an issue which I brought to the attention of the House at Report stage when I explained that following the successful passage of the Financial Services and Markets Act 2000 through Parliament, we would need to consider whether there were any implications for this Bill.
  Part XXIV of the Financial Services and Markets Act sets out the rights of the Financial Services Authority to participate in insolvency procedures involving regulated persons, including companies doing financial services business. I am sure the House will agree that it would be both incongruous and create a gap in the authority's regulatory powers if the authority was not to have similar rights in respect of the new company voluntary arrangement provisions to those it has in other types of insolvency procedures. To omit such powers from the Bill may be potentially damaging to the interests of the consumers.
  We have also taken the opportunity to deal with a matter which was omitted from the Financial Services and Markets Act when it was passing through Parliament. Amendments Nos. 4 and 5 provide that the authority should be given the right to apply to the court on the ground that any of the company's creditors or any other person is dissatisfied by the actions of the supervisor, and for the authority to be heard if such an application is made by another. That applies whether or not the voluntary arrangement was preceded by a moratorium, or whether it is here or in Northern Ireland.
  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 Clause 16, page 9, line 1, after ("except") insert ("section 14(3),")
Lord McIntosh of Haringey: My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 5.
Moved, That the House do agree with the Commons in their Amendment No. 5.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.

COMMONS AMENDMENT
6 Schedule 1, page 10, line 17, after ("is") insert ("or has been")
Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 6. This amendment makes it explicit on the face of the Bill that Schedule AI will apply where there is or has been a moratorium in force. Previously, new Section 1A(2)(d) provided that the procedure would apply only while a moratorium was in force. However, the scheme set out in Schedule AI envisages that certain acts will necessarily take place after the moratorium has come to an end. This is because it relates not only to approval but also implementation of a voluntary arrangement which, by definition, takes place once a moratorium has ended.
Moved, That the House do agree with the Commons in their Amendment No. 6.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.

COMMONS AMENDMENT
7 Schedule 1, page 10, line 37, at end insert—
(""money market contract" and "money market charge" have the meanings given by the Financial Markets and Insolvency (Money Market) Regulations 1995 ("the 1995 regulations"),")
Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 7. I should like to speak also to Amendments Nos. 8 to 11 and 14 to 16. These amendments will ensure that the company voluntary arrangement moratorium does not prejudice the existing modifications of insolvency law relating to "money market contracts", "money market charges" and "related contracts" as defined in the Financial Markets and Insolvency (Money Market) Regulations 1995, and "system-charges" as defined in the Financial Markets and Insolvency Regulations 1996. The amendments are necessary to protect the status quo and to enable financial markets to continue to function in the event of the insolvency of one of the market participants.
Moved, That the House do agree with the Commons in their Amendment No. 7.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
8 Schedule 1, page 10, line 40, at end insert—
(""related contract" has the meaning given by the 1995 regulations,")
9 Page 10, line 42, at end insert—
(""system-charge" has the meaning given by the Financial Markets and Insolvency Regulations 1996,")
10 Page 11, line 11, after ("contract") insert (", a money market contract or a related contract")
11 Page 11, line 12, after ("charge") insert (", a money market charge or a system-charge")
Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 8 to 11.
Moved, That the House do agree with the Commons in their Amendments Nos. 8 to 11.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.

COMMONS AMENDMENT
12 Schedule 1, page 13, line 14, after second ("the") insert ("day on which those meetings were to be held (or, if those meetings were summoned to be held on different days, the later of those days), unless it is extended under paragraph 32.
() If the nominee fails to summon either meeting within the period required by paragraph 29(1), the moratorium ends at the end of the")
Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 12. I wish to speak also to Amendment No. 17. The amendments deal with an issue raised by the noble Baroness, Lady Buscombe, in Grand Committee on 15th June, on Report on 11th July and, I regret to say, also at Third Reading on 26th July. The noble Baroness was right to continue. The amendments will ensure that the wishes of the creditors' meeting to extend a moratorium will prevail in a situation where the company fails to hold a meeting. They also make it an express part of the nominee's duty to summon meetings of the company and its creditors to be held within the initial moratorium period. The moratorium will end at the end of that period if he does not. Currently, that period is 28 days but because it may be increased or reduced using the power in paragraph 8(7), the amendment does not specifically refer to the length of the moratorium period. I thank the noble Baroness, Lady Buscombe, for drawing this point to our attention. I urge the House to accept the amendment.
Moved, That the House do agree with the Commons in their Amendment No. 12.—(Lord McIntosh of Haringey.)
Baroness Buscombe: My Lords, I rise to speak to Amendment No. 12. I shall somewhat shorten my speech given that the Minister has been so gracious in saying that I was right to continue pressing the point. As he said, I began making the point in Grand Committee on 15th June. The amendment represents a complete U-turn by the Government. It has the desired
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effect that if the members of the company do not meet, the moratorium can still be extended by the creditors under paragraph 32. The government amendment meets all the criticisms which I made in Grand Committee and which were dismissed at that time. I am grateful for the amendment and I thank the Minister for it.
Lord McIntosh of Haringey: My Lords, I shall let the "U-turn" pass.
On Question, Motion agreed to.

COMMONS AMENDMENTS
13 Schedule 1, page 14, line 19, at end insert—
("() no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the leave of the court and subject to such terms as the court may impose")
14 Page 18, line 27, at end insert ("a money market contract or a related contract,")
15 Page 18, line 29, after ("charge") insert (", a money market charge or a system-charge")
16 Page 18, line 40, after first ("charge") insert (", a money market charge, a system-charge")
17 Page 21, line 7, after ("date") insert ("(within the period for the time being specified in paragraph 8(3))")
Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 13 to 17.
Moved, That the House do agree with the Commons in their Amendments Nos. 13 to 17.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.

COMMONS AMENDMENT
18 Schedule I, page 23, line 35, leave out from ("(3)") to end of line 36 and insert ("shall not be made after the end of the period of 28 days beginning with—

(a) the day on which the decision was taken by the creditors' meeting, or

(b) where the decision of the company meeting was taken on a later day, that day.")

Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 18. I should like to speak also to Amendment No. 20. It is the turn of the noble Lord, Lord Kingsland. The amendments deal with an issue raised by the noble Lord in Committee. The amendments provide that there should be a time limit on the ability of a member of the company to go to court if particular decisions taken at the creditors' meeting, which take effect under paragraph 36 of Schedule Al or paragraph 5 of Schedule 2, differ from those made by the company meeting. While we believe that the timing of such an application will be largely self-regulating, we consider that there would be an advantage in there being a cut-off point of 28 days beyond which such applications cannot be made. With due deference to the noble Lord, Lord Kingsland, I commend the amendment to the House.

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Moved, That the House do agree with the Commons in their Amendment No. 18.—(Lord McIntosh of Haringey.)
Lord Kingsland: My Lords, it falls to me to have the final gloat. As the noble Lord said, we first proposed a time limit to any application made by a member of a company as long ago as 15th June. After several months of cerebration, the noble Lord has finally come round to our point of view. I am very grateful to him for doing so.
Lord McIntosh of Haringey: My Lords, I shall let that "gloat" go by as well.
On Question, Motion agreed to.

COMMONS AMENDMENTS
19 Schedule 1, page 28, line 30, at end insert—
("Functions of the Financial Services Authority
43A.—(1) This Schedule has effect in relation to a moratorium for a regulated company with the modifications in sub-paragraphs (2) to (16) below.
(2) Any notice or other document required by virtue of this Schedule to be sent to a creditor of a regulated company must also be sent to the Authority.
(3) The Authority is entitled to be heard on any application to the court for leave under paragraph 20(2) or 20(3) (disposal of charged property, etc.).
(4) Where paragraph 26(1) (challenge of nominee's actions, etc.) applies, the persons who may apply to the court include the Authority.
(5) If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.
(6) Where paragraph 27(1) (challenge of nominee's actions, etc.) applies, the persons who may apply to the court include the Authority.
(7) If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.
(8) The persons to be summoned to a creditors' meeting under paragraph 29 include the Authority.
(9) A person appointed for the purpose by the Authority is entitled to attend and participate in (but not to vote at)—

(a) any creditors' meeting summoned under that paragraph,

(b) any meeting of a committee established under paragraph 35 (moratorium committee).

(10) The Authority is entitled to be heard on any application under paragraph 36(3) (effectiveness of decisions).
(11) Where paragraph 38(1) (challenge of decisions) applies, the persons who may apply to the court include the Authority.
(12) If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.
(13) Where paragraph 39(3) (implementation of voluntary arrangment) applies, the persons who may apply to the court include the Authority.
(14) If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.
(15) Where paragraph 40(2) (challenge of directors' actions) applies, the persons who may apply to the court include the Authority.
(16) If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.
(17) This paragraph does not prejudice any right the Authority has (apart from this paragraph) as a creditor of a regulated company.
(18) In this paragraph—
"the Authority" means the Financial Services Authority, and
"regulated company" means a company which—

(a) is, or has been, an authorised person within the meaning given by section 31 of the Financial Services and Markets Act 2000,

(b) is, or has been, an appointed representative within the meaning given by section 39 of that Act, or

(c) is carrying on, or has carried on, a regulated activity, within the meaning given by section 22 of that Act, in contravention of the general prohibition within the meaning given by section 19 of that Act.")

20 Schedule 2, page 32, line 9, at end insert—
("() An application under subsection (3) shall not be made after the end of the period of 28 days beginning with—

(a) the day on which the decision was taken by the creditors' meeting, or

(b) where the decision of the company meeting was taken on a later day, that day.")

21 Page 32, line 9, at end insert—
("() Where a member of a regulated company, within the meaning given by paragraph 43A of Schedule Al, applies to the court under subsection (3), the Financial Services Authority is entitled to be heard on the application.")
22 Schedule 3, page 36, line 4, after ("court)") insert—
("(a) in subsection (2)(a), after "with," there is inserted—
"(aa) no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the debtor in respect of a failure by the debtor to comply with any term or condition of his tenancy of such premises, except with the leave of the court,"
(b)")
23 Page 36, line 13, at end insert—
(" . In section 254 (effect of application), in subsection (1) —

(a) after "pending" there is inserted—

"(a) no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the debtor in respect of a failure by the debtor to comply with any term or condition of his tenancy of such premises, except with the leave of the court, and

(b)"

(b) after "may" there is inserted—

"forbid the levying of any distress on the debtor's property or its subsequent sale, or both, and"").
24 Page 39, line 21, at end insert—
(" . In section 347 (distress, etc.) —

(a) in subsection (1), after "(subject to" there is inserted "sections 252(2)(b) and 254(1) above and",

(b) in subsection (8), at the beginning there is inserted "Subject to sections 252(2)(b) and 254(1) above."")

Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 19 to 24.
Moved, That the House do agree with the Commons in their Amendments Nos. 19 to 24—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.

Inherited SERPS
4.50 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, I would like to repeat a Statement on inherited SERPS. The Statement is as follows:
"In my Statement to the House of 15th March this year I explained how millions of people were given wrong, misleading or incomplete information about rule changes introduced by the last government in 1986 which were due to come into effect earlier this year. As I told the House then, as a matter of principle when someone loses out because they were given the wrong information by a government department, they are entitled to expect the Government to put it right.
"In March, I announced that we would defer any changes in the inheritance rules by two-and-a-half years until 6th October 2002. That remains the position. I also said that I would consult the ombudsman, the National Audit Office and others on a protected rights scheme which was designed to provide redress to people who were given wrong or incomplete information. I have received a range of helpful and constructive representations from Members of this House, Select Committees and others. I have also received the advice of the Social Security Advisory Committee, whose report I am publishing today. Copies will be available in the Library and the Vote Office.
"As I have said before, the solution to this problem has to be both fair and workable and, as the ombudsman has said, it must provide a global remedy. I am determined to make sure that we do that. Over the past few months, I have become increasingly convinced that a protected rights scheme would not work in the way intended and therefore would not provide a fair and just solution to this problem. It would not be fair because we cannot be sure that it would reach all those affected, particularly the very elderly and vulnerable. It would be very difficult to safeguard the scheme against fraud and abuse. Its operation would inevitably cause injustice, and on that basis I do not intend to pursue it.
"There were two key problems with the decisions taken 14 years ago by the last Conservative government. First, they decided to implement the changes without any transitional arrangements. What is worse, they continued for years to give out wrong, misleading and incomplete information
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about what they planned to do. We have already deferred the change in the inheritance rules until 6th October 2002. No one at all will be affected by the policy change before that date.
"The proposals I am making today are designed to give full protection to every pensioner; to give younger people adequate notice of the change to SERPS rules; and to provide transitional arrangements for those approaching retirement age. First, men and women who are already over the state pension age cannot do anything to restore their position. I have therefore decided that all men and women who are over state pension age on 5th October 2002 will be exempt from the changes. That means every pensioner will keep their existing entitlement.
"Secondly, proper notice has to be given to those who are planning for their retirement. So I am proposing that the new rules will only apply to men and women who are now 10 years or more: away from their state pension age.
"Thirdly, those people who are approaching state pension age will have less time to plan for their retirement. So for those who are within 10 years of their state pension age, we will phase in the changes. For example, people who reach state pension age between 2002 and 2004 will be able to pass on 90 per cent of their SERPS; those reaching pension age between 2004 and 2006 will pass on up to 30 per cent, and so on.
"We intend to bring forward regulations in the new year to implement these changes and we will consult on the draft regulations in the usual way. We will also write this week to all those people who have contacted us already to set out the position.
"There is of course a very small number of people who have evidence that they were clearly misinformed by the department. For example, they have a letter from the Benefits Agency containing the wrong information. This small group will have access to the usual departmental procedures that deal with cases of maladministration to the extent that the proposals I am announcing today do not fully compensate them already.
"I have already taken steps to prevent this happening again. As I told the House in March, I am reorganising the DSS so that it can better serve its key customer groups. I am bringing together policy and operational responsibility into a single organisation dedicated to pensioners.
"As part of that process, we have already tightened up the procedures for checking leaflets and guidance. I want to ensure that in future people are told about changes in pension policy so they can plan for their retirement in full knowledge of their position. That is why, next year, we will begin to send out combined pension statements giving people more comprehensive information on their entitlements.
"The proposals I am making today will clear up the mess we inherited. Everybody who has reached state pension age in October 2002 will be unaffected

1359
by the new rules. My announcement today will remove any worry for pensioners about providing for their spouse. For men and women who are more than 10 years away from state pension age we are giving them the proper notice to which they are entitled. For those within 10 years of their state pension age we will phase in the changes.
"Due to the timing of these changes the costs will be comparable over the next three years. The reforms I have announced today will cost around an extra £1.5 billion over 10 years and an extra £4 billion over 50 years.
"This problem should have been sorted out 14 years ago. What happened in the years after 1986 was a series of colossal blunders which were inexcusable and caused untold distress to millions of people. The then Conservative government have to take full responsibility for what happened. We are now taking the responsibility for sorting it out. I commend this statement to the House."
My Lords, that concludes the Statement.
4.57 p.m.
Lord Higgins: My Lords, the House will be grateful to the Minister for repeating the Statement which was made in another place by the Secretary of State. This whole problem has been described as the most expensive act of maladministration since the war. I believe that it is probably true to say that it is the most expensive act of maladministration ever. It has been an extremely long-running saga. That saga is given in very great detail by the report of the Commons Select Committee on Public Administration entitled Administrative Failure: Inherited Serps published only a few days ago. When I first saw on the Annunciator that there was to be a Statement, I assumed that it would be a response by the Minister to that report. In fact, I now understand why it is not mentioned.
I very much regret the tone of the Minister's Statement in the other place; I do not refer to the Minister in this place. Discussions on this matter have shown that we on this side fully recognised responsibility for what happened in our period in office. But we have also recognised, as I believed the Minister had done, that there was a responsibility on the other side as well. That is set out very clearly indeed in the report to which I have just referred. It states:
"We believe that the failure of the department between 1996 and 1999 to take adequate action to inform their staff and the public perpetuated an already unsatisfactory situation".
So we do not accept what the Minister said in her final words, that then then Conservative government have to take full responsibility for what has happened.
Indeed, it is also the case that as regards responsibility, throughout there has been an appalling breakdown in communications, but that has not been deliberate. However, paragraph 17 of the report states:
"A Pensions Bulletin was issued in January 1999, which summarised the changes to inherited SERPS in four paragraphs. However, subsequent Bulletins only provided holding answers for
1360
staff to give to the public. Rachel Lomax [the Permanent secretary] told us that the failure to fully inform the public at this stage was a conscious ministerial decision".
There is a significant difference between a situation where there is an inadvertent breakdown in communications and one where there is a deliberate decision not to give the public full information.
I shall not detain the House by going into some of the other matters referred to by the Select Committee. This whole problem raises important issues as regards the relationship between officials and civil servants. I am glad that the report will do something to improve that because it is still impossible to find out who was responsible for what has happened. When I was the chairman of the Liaison Committee in another place, we dealt with this matter at great length. The report raises important questions—which I hope the Government will study carefully—as to the relationship in the House and in Parliament between officials and Ministers.
We spent many hours on previous Bills debating this issue. In particular, we commented on the ombudsman's report, which the Government said they accepted. The ombudsman recommended a global solution, which the Government's proposal for a protected rights scheme clearly was not. We now have a new situation which will, I hope, deal with the problems envisaged by the Select Committee.
The Select Committee was very concerned. It stated:
"Our fear is that the original maladministration in this case may well now be compounded by a redress scheme that has all the makings of an administrative disaster".
Given that the Select Committee expressed that fear, and given the matters that we raised during previous debates on this subject, I welcome what the Minister has now said.
This is certainly an improvement on the previous scheme, which clearly would not prove to be practical. It is extraordinary that it has taken the Government so long to realise that that is the case. None the less, what is now proposed is better than the procedures previously envisaged—on which the House spent so much time and which are now, willy-nilly, dropped at a moment's notice.
It is a complex proposal and it will take time to understand it. Therefore, other than saying it is better than the previous proposal, I should not like to comment in great detail until we have had an opportunity to study it.
Perhaps I may ask the Minister one or two specific questions. First, as to the question of cost, I am rather surprised that, given the Government's proposal, the cost is smaller—amounting only to billions and billions—than one might have expected. As a point of comparison, can the Minister tell the House how the costs now to be incurred compare with the costs of not going ahead with the proposal to reduce SERPS at all?
Secondly, the Minister referred to a very small group of people who have documentary evidence. So far as those matters are concerned, will it still be the case—as previously recommended by the

1361
ombudsman—that the onus of proof will rest with the Government and not, as now proposed, with the normal administrative procedures?
Finally, we welcome the statements made in regard to better information for pensioners. It has emerged clearly from this saga that private pension providers have onerous obligations to provide correct information. It appears still to be the case that the Government have only a duty of care to provide proper information. The two are very different. Are we to understand that the Government propose to strengthen that position and that there will be a more onerous obligation on them to provide correct information than has hitherto been the case?
5.4 p.m.
Lord Goodhart: My Lords, we welcome the Statement. The inherited SERPS disaster has been debated on several occasions in your Lordships' House, both in the present Session and in the previous one. This is clearly the most serious administrative failure for decades—although, in relation to its effect on pensioners, it is not as serious in the end as the disastrous pensions mis-selling scandal, which was introduced as a result of the unfortunate decision of the previous Conservative government to allow people in occupational schemes to opt out of them.
Any fair remedy for this disaster will be very expensive. The ultimate cost appears to be something of the order of £6.5 billion that is some £2.5 billion for the deferral to October 2002 and an additional £4 billion. The Government's preferred remedy before the Statement was made was deeply unsatisfactory. It proposed that compensation should be given only to those who had acted—or, more likely, failed to take action—in reliance on incorrect information.
The burden of disproving a claim, once made by a pensioner, was placed on the Government. This meant, first, that the burden of initiating the claim rested on the pensioner. Many pensioners were unlikely to make a claim; many would have failed to appreciate the need to take action at all; and many others would have been deterred by the consequent involvement in the bureaucracy of having to deal with the DSS. But, because the claim, once made, was difficult to disprove, the scheme could have been a charter for fraud, as the Select Committee on Public Administration pointed out.
The Government's new proposals are therefore a great improvement. We welcome the age-related exemption from the reduction in SERPS as a better solution than the further deferral of the change in the system. We also welcome the tapered exemption for those who will be within 10 years of the state pension age on 6th October 2002. We shall obviously want to look at the detail of the proposals, but we believe that, in principle, they are acceptable.
The only part of the Statement with which we disagree is the attempt to place full responsibility on the Conservative government. It took the present Government two years after they discovered the
1362
existence of this mess to sort it out, during which time serious distress was caused to many people because of uncertainty and the possible loss of an expected benefit.
The Statement is not the end of the matter. Two things need to be done. First, there is a need to ensure fair treatment for present and future pensioners; and, secondly, there is a need to prevent any similar disaster happening again. The Statement deals in a broadly satisfactory manner with the first of these issues; it does not deal at all with the second. That is not a criticism of the Statement. This is a wider issue. It is not a matter for the Department of Social Security alone; it concerns every government department.
This disaster may well have been due, as Sir Christopher France suggested in his answer to question 188, to something as elementary as a proofreading error. That should not have been possible. Plainly, the antiquated IT system in the DSS may well have played a part. Here I shall refer to the evidence of Mr Peter Mathison, who was the chief executive of the Benefits Agency from 1995 to 2000. At question 248 he stated:
"Most local offices, very few people in the local office network have access to the intranet or PC-based thing, it is all very old systems. When I came in, in August 1995, I had not seen a black and green screen for nearly eight or nine years. I could not believe the state of the IT support. In pensions, there are, I think it is, something like 14 guides of 50 volumes and they are all paper-based, and that is just on pensions. Across the whole range of benefit, there are 500 manuals and guides people need to refer to, to answer one of any million of questions, and all of them are paper-based".
Then he was asked:
"It must have depressed you enormously?".
He replied:
"And it depressed me that we could not get the investment to do something about it; and since I have been outside I would give my eye-teeth to have some of the stuff I have been using recently. I have got better IT support in the spare bedroom at home".
That is a devastating criticism of the failure of both the present and previous governments to invest properly in IT systems for the DSS.
Perhaps the most shocking passage in the Select Committee's report is the statement in paragraph 5 that,
"Government departments do not have a duty to provide information on changes in law".
We want an assurance from the Government that the whole system will be overhauled. We want an assurance that this and future governments will accept that they have a duty to provide full and accurate information on changes in law to anyone who may be affected by those changes. We also want an assurance that, so far as is humanly possible, this scandal will never be repeated.
5.11 p.m.
Baroness Hollis of Heigham: My Lords, I am glad to receive the words of welcome for the Statement from the noble Lord, Lord Goodhart. I was a little disappointed at the tone of the response from he noble Lord, Lord Higgins. I thought it unusually grudging

1363
and half-hearted, and I was sorry about that. I am sure that he, the noble Lord, Lord Goodhart, and other noble Lords will accept that there is a very real difference between the position of the previous government and the present one. In 1986 the previous government took responsibility for making a variety of significant changes to SERPS. They included the 20 best years, the calculation in terms of annual, as opposed to incremental, changes in valuation, as well as the change in terms of inherited SERPS.
Any government who develop new policies have the responsibility at least to ensure that their literature is consistent with those policies. It was the then government's responsibility to ensure that the information that they gave out was accurate. They did not do so. That was a major failure on the part of the previous administration. I suggest in all modesty that that was rather different from the approach taken by the current Government who inherited the situation. As soon as they were aware of the problem, they took measures in the Bill that came before the House in the summer of 1999; they followed that with consultation; they came up with proposals in March this year, on which they subsequently consulted; and they are now responding. It has taken a fair amount of time, not only to consult properly, but to come up with proposals that the Government believe to be workable.
I remind noble Lords of our statement in July 1999 that,
"no one has suffered any financial loss as a result of these changes, because they do not take effect until 2000".
We also said that we were,
"considering which of those two routes is the better to follow or whether there is a third route which we have not yet explored. Several different responses have been given this evening and a variety of other suggestions have been made".—[Official Report, 6/7/99; col. 847.]
and that we were reviewing those suggestions. That was a proper, decent and honourable response. It suggests that the noble Lord, Lord Higgins, would be well advised to think again about such a churlish response. As soon as we were aware of the issue we took action; we came up with proposals; we consulted; and we have now changed those proposals in the light of further consultation. If only the noble Lord's own government had taken on the same degree of responsibility, we should not now be in the mess that we are in.
The difficulty for this Government is that when we realised the nature of the problem we thought that we could redress the grievance that lay at the heart of it; namely, that people were suffering, either from misinformation or from a failure of information, and that that had either added to their financial detriment or failed to act to their financial advantage. That was the problem that we sought to address. That was the basis of the protected rights scheme that we brought before the House in March 2000.
Having listened to people and taken part in consultation, we have now been persuaded that the problem is deeper and that we cannot merely redress
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grievances: we have to return to the drawing-board and redesign the scheme. I should have thought that the noble Lord, Lord Higgins, could have joined the noble Lord, Lord Goodhart, in welcoming the decency and propriety of our response, which I am proud to bring to this House.
Three specific questions have arisen, two of them shared by noble Lords. The first relates to costs. For the original scheme—the protected rights scheme—£2.7 billion was the cost of deferring any change until October 2002; there was to be a further £5.5 billion, making a total of £8.2 billion for the protected rights scheme. The scheme that we have now produced involves the same £2.7 billion through to October, and a further £9.5 billion, which brings the figure to £12 billion. I was asked what would be the cost of not going ahead at all. It would be £20 billion in total over 50 years.
The noble Lord, Lord Higgins, raised a point about remedy and maladministration. We shall now resort to the customary position of the DSS; namely, that if there is a case of maladministration the responsibility is on the DSS to ensure that the person is put back into the situation in which he or she would have been had the maladministration not occurred. That means that we are returning to a more conventional situation in which the person who is subject to the maladministration must show evidence to that effect.
Lord Goodhart: My Lords, I am grateful to the Minister for giving way.
Baroness Hollis of Heigham: My Lords, I remind the noble Lord that I must finish my response to the Front Bench in two minutes.
Lord Goodhart: My Lords, I am sorry. I should merely like to ask why the Minister in the House of Commons referred to the cost as an extra £4 billion, rather than the £9 billion that has been mentioned.
Baroness Hollis of Heigham: My Lords, it is an extra £4 billion in total on the £8 billion of the protected rights scheme. That is the difference between the two schemes over 50 years.
Three points were raised about information. The first related to letters to individuals. As soon as the Secretary of State was aware of the problem early in 1999, he wrote further letters to people who had written to the department. The second question, raised by the noble Lord, Lord Goodhart, related to information for staff and the cascade of knowledge. The noble Lord was absolutely right; this has been a weakness within the DSS. We are strengthening the system as regards information: we have developed the IT system and it is being rolled out. However, the noble Lord is right—unless staff in local offices have the requisite information they cannot advise people accordingly. The third question associated with information was what knowledge would go to pensioners and prospective pensioners.

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First, we are writing to all those who contacted us—some 20,000—and giving them information. We are developing a campaign to ensure more widely that those who are affected will know about it. We shall work with Age Concern and the relevant organisations to ensure that that knowledge is as widely dispersed as possible. Secondly, we shall be producing an integrated pension statement. From next year people will receive information about both their state retirement pension and their SERPS. We hope that from the following year we shall also be able to provide them with information about their private pension, so that they will be able to see what their future expectations may he and whether they want to take additional action in order to build up their pension rights.
I hope that with that response on cost, on the question of remedy and on information, noble Lords opposite will feel that I have answered their questions.
5.17 p.m.
Lord Brett: My Lords, I rose to make a premature contribution because I, too, was taken aback by what I felt was a churlish response from the Opposition Front Bench. I have been concerned over the past months at our inability to arrive at a full solution in terms of removing the fear on the part of innocent people who have been subject to maladministration through no fault of their own. I am delighted to congratulate the Minister on the Statement and on finding a solution. My only advice to those on the Opposition Benches is to remember the comments of the noble Lord, Lord Healey, some years ago: "When in a hole, stop digging".
Baroness Greengross: My Lords, I thank the Minister for this welcome Statement. The Government have indeed listened to older people and to the organisations that work with them. This campaign has been hard-fought both for and by those people. I would mention in particular the All-Party Group on Ageing and Older People and the noble Lord. Lord Rix, who have done a great deal; as has my own organisation, Age Concern—both when I worked directly for it and since then.
I first wrote to the DSS in October 1998 and my letter set some alarm bells ringing. I am delighted that the new scheme is much more along the lines of what we suggested during debate on the Child Support, Pensions and Social Security Bill earlier this year. That is good news. I am very pleased that current pensions will be unaffected by the change to SERPS.
I hope that the Government will consider most carefully how the taper will work for new pensioners. Does the Minister agree that one of the most significant parts of the Statement relates to a point made by both noble Lords opposite who have spoken; namely, that future changes to state pensions will be better publicised. Changes to pensions are not the same as other changes to the law. I say that because they involve planning by people for their future. It is a long-term task. I believe that there is a moral, if not a legal, obligation to inform people about such changes.
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Of course, it might also be necessary for it to be a legal requirement. It is terribly important that this point should be taken on board for the future.
Can the Minister tell me what consultation will now take place? Can she say specifically whether this House will still consider the proposed regulations in detail and, if so, can she also say within what sort of timescale that might happen?
Baroness Amos: My Lords, before my noble friend the Minister replies, perhaps I may remind the House that, in order to maximise the time available to deal with Statements, noble Lords should confine their remarks to questions rather than making general comments.
5.21 p.m.
Baroness Hollis of Heigham: My Lords, I very much welcome the thanks and support expressed by my noble friend Lord Brett and, indeed, the generous welcome given to the Statement by the noble Baroness, Lady Greengross. I should like to pay tribute to the noble Baroness for her efforts in this respect. That applies also to the noble Lord, Lord Rix, who, I am sorry to say, is not present in the Chamber. I pay tribute to him for his supportive and constructive but, none the less, terrier-like campaign on these issues. As I say, I believe that we have achieved an outcome that is decent, honourable, fair and, above all, workable.
As the noble Baroness identified in her remarks, the advantage in our scheme is that there are no cliff edges; it is a taper. I am delighted about that. I can tell the noble Baroness that the regulations will be produced in draft form. They will, therefore, go to the Social Security Advisory Committee and be made available to the Select Committees, and so on. As a result, there will be ample opportunity for further consultation about the detail of this implementation.
Baroness Carnegy of Lour: My Lords, my noble friend asked the Minister whether the Government still have only the duty of care or whether there will now be greater responsibility placed upon them. Can the Minister say whether the issue of combined pensions statements mentioned in the Statement, which she subsequently explained and to which the noble Baroness, Lady Greengross, referred, mean that the Government are now taking greater responsibility in this respect?
Baroness Hollis of Heigham: My Lords, it is not so much a matter of responsibility; it is a question of providing information. In the light of available information, we are—absolutely rightly, in my view— trying to help people plan for their retirement by giving them the best forecast that we can as to what their contributions so far in a possible variety of pension schemes may produce for their future. We hope to start issuing such statements on an annual basis from next year for retirement pensions and SERPS. We shall also include information in that statement about occupational pensions. However, these are forecasts: they are future projections, with all the relevant health

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warnings attached. We are trying to ensure that people have the fullest possible knowledge to enable them to plan for their future old age.
Baroness Turner of Camden: My Lords, I thank my noble friend for repeating the Statement. As she knows, I have not always been fully supportive of the Government's policies on pensions. However, on this occasion, I welcome the Statement with great pleasure. As noble Lords know, I have been present in the Chamber on every occasion upon which there has been discussion about inherited SERPS and the problems that have arisen because of the failure of the previous government to see through the decision that they made in 1986. Indeed, reference has been made to the latter by noble Lords on this side of the House and by noble Lords opposite.
I am particularly glad that the position of present pensioners is to be fully safeguarded and that proper transitional arrangements are in place. An important consideration in pension matters is that people ought to know about their entitlements. They have to plan for their future and they must know about their pension provision. I was especially pleased to hear that it is intended to issue combined pension statements. That will serve to focus people's attention on pension provision. If this is to be done on an annual basis, with mention being made of occupational provision, as I believe my noble friend said, that will also be a very valuable aid to people when planning their pensions.
This is an excellent Statement. I am most grateful to my noble friend for the announcement. I am sure that she had a great deal to do with these measures behind the scenes. I thank my noble friend most sincerely for having secured such a satisfactory settlement.

Millennium Dome
5.25 p.m.
The Minister of State, Cabinet Office (Lord Falconer of Thoroton)The Minister of State, Cabinet Office (Lord Falconer of Thoroton) rose to move, That this House takes note of the planning, management and operation of the Millennium Dome, and of its future.
The noble and learned Lord said: My Lords, I welcome this debate. Indeed, I have always wanted a detailed debate in relation to the Dome, and this is the first opportunity to do so since the recent Third Readings of various Bills in this House. It is right that this project has been the subject of sustained and detailed parliamentary scrutiny throughout its life. It has been the subject of more than 1,200 parliamentary Questions, eight debates, including today's, five Select Committee inquiries, a National Audit Office report and a PAC inquiry.
Today's debate will inevitably cover material similar to that considered by the NAO report. But it will go wider. This debate will cover the planning and the building of the Dome, not just its year of operation. It will also, rightly, look forward to the future. It is not appropriate for the Government to respond in detail to
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the recommendations of the NAO report; that must await publication by the PAC of its conclusions. However, the NAO report can provide a mine of factual information on the year of operation and the history of the Dome. In this debate, I shall seek to cover all the main issues on the Dome and answer specific points raised.
In many respects, the Dome is a remarkable achievement. It has become the UK's top pay-to-visit attraction. It has been at the centre of the drive to revitalise the once contaminated and abandoned North Greenwich peninsula, bringing jobs and opportunities to thousands. And yet, in truth, the Dome has not lived up to the expectations of those who supported and initiated it. At the heart of its unpopularity is the additional lottery funding of £179 million over that budgeted which it has required during 2000.
As the NAO concludes:
"The main cause of the financial difficulties is the failure to achieve the visitor numbers and the income required".
These visitor numbers were ambitious and inherently risky. It was the failure to meet those numbers which caused the need for the additional lottery funding. We need to learn lessons from the experience, in particular about what the public sector can and cannot do. But we also need to ensure that the problems that the Dome has faced do not obscure its very real achievements. Relative to its target of 12 million visitors, the Dome has not succeeded. Relative to every other pay-to-visit attraction in the UK, it has succeeded. It has received more than any other rival this year. It has made a significant contribution to the Thames Gateway and will bring a substantial legacy in jobs and regeneration to the area.
The story of the Dome starts in 1994, when the then Heritage Secretary, the right honourable Peter Brooke, said that he supported the idea of a millennium festival with a substantial exhibition at its heart. Right from the start the idea was driven by politicians, not the commercial or business sector. The previous government recognised this. The coordination of decisions in relation to arrangements for the millennium, including the Dome, were taken at Cabinet Committee level. The Cabinet Committee, Gen 36, was set up in February 1996, the same month as Greenwich was chosen for the site of the exhibition. The committee was chaired by the then Deputy Prime Minister. Among its members was the present Leader of the Opposition.
At the time of its selection, the North Greenwich site had negligible transport infrastructure and extensive contamination. It was selected, as the Select Committee in another place found,
"because it offered … an opportunity to provide economic and environmental regenerations'.
Although private-sector operators were sought, it became apparent during 1996 that no such operator could be found. The risks and demands associated with the project meant that it would never be attractive to a private operator: an immovable deadline; and a year to start, run, finish and make a profit out of an

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entirely new visitor attraction. Although it was not attractive to private-sector operators, it is, nevertheless, a venture that has had to trade as effectively as its well-experienced competition; namely, the museums, the waxworks, theme parks and attractions, which are competing for visitors throughout the year.
The previous government set up a structure which involved a private company running the exhibition. This company had, rightly, all the restrictions which apply to limited liability companies. It was also a non-departmental public body, so it had all the bureaucracy and transparency which, rightly, go with those bodies. All its funding which did not come from visitors or sponsorship came from the Millennium Commission. That body, rightly, was responsible for ensuring that the substantial sums it granted to the Dome were properly spent.
The sole shareholder in the private company (which was also a non-departmental public body) was a Minister, the then Chancellor of the Duchy of Lancaster, the noble Lord, Lord Freeman. The chairman of the Millennium Commission was also another Minister, the right honourable Member for South West Surrey, Virginia Bottomley. The arrangements for building and running the Dome involved two Ministers, a chairman, chief executive and board of directors, three accounting officers and nine millennium commissioners.
The final part of the jigsaw required in the planning stage was to determine how much of the funding was to come from the lottery. This depended, in large measure, on the number of visitors expected. The figure on which the final budget was based was 12 million. In 1995, when the idea of the exhibition was being developed, the figure of 12 to 30 million visitors had been proposed by the Millennium Commission. By the time the budget was being prepared before the previous election, the figure, having veered around, had been put at 12 million. The Millennium Commission, on which the primary duty for appraising the business plan fell, believed that the 12 million figure would be achieved.
The proposal for the project was ambitious and impressive in its vision. But, in 1996 and early 1997 when the planning was going ahead and significant sums were being spent in the preparatory stages, it would have had no chance of progressing in time unless the then Opposition indicated that they were willing to support it in principle. Without our support in principle there would not have been that degree of certainty which comes from a bipartisan project. We considered it very carefully. We recognised the risks. We also saw the regeneration gains and the benefits to be obtained from a successful exhibition.
In January 1997, we agreed the terms of an announcement with the then Heritage Secretary, the right honourable Virginia Bottomley, in which we indicated that, subject to a review if we were elected, we supported the idea of a national exhibition. The announcement which we agreed specifically drew attention to the fact that the decontamination and
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regeneration of the 300 acre site—the largest derelict site in southern England, just six miles from Westminster—would be one of the great legacies of the event. We completed our review within eight weeks of coming into office and the project proceeded. We accept full responsibility for that decision. We think that the prize was worth fighting for.
In the period between June 1997, when we decided to go ahead, and 31st December 1999, a major capital project had to be completed, a huge exhibition mounted and a large, complicated show written, rehearsed and opened. The project, as is well known, was delivered on time. Not only was the building completed, but also all the zones and the central show. There is a multitude of views about the contents of the Millennium Dome. Some, but not all, are had. Many of them are good. I quote what Jon Snow wrote in the Evening Standard on 9th June:
"Spectacular from all quarters, vast and dramatic on arrival, and last week, crammed with people of all shapes, ages and conditions actually enjoying themselves".
He continued,
"We in the media have gone to unparalleled lengths to rubbish the thing. And we have failed".
Charles Spencer, the theatrical correspondent of the Daily Telegraph, wrote in that paper on 3rd January of this year:
"I saw it through the eyes of my six-year old son, who was completely gobsmacked by the Dome and all its works … It's not often that one shares in a moment of communal, uncomplicated, good-natured joy but this was one of them".
We never expected everybody to like all of it. But equally we never expected the very high levels of visitor satisfaction which the Dome has enjoyed throughout the year.
In the course of 1999, the Dome company decided that 1 million free school places should be made available in the pricing structure. This was an idea that the Government advanced and supported. The Dome was keen to reach as many people as possible, particularly young people, who might not otherwise go. We did not want the schools which organised trips to be only those which would not be put off by a charge of £8 per head. It has cost us some revenue—the NAO estimates £7 million—but it has probably also generated some. The number of children who bring their parents because they liked it when they visited with their school is unquantifiable.
As the Select Committee in another place pointed out in its 5th report, the Dome company has been criticised for providing free school tickets, but would undoubtedly have been criticised if it had not. I believe that we were and are right to have made that decision on free school places. In a letter to the Prime Minister from Eastburn Junior and Infant School, Bradford, a teacher wrote:
"I took a party of 40 Year 5 and 6 children to the Dome. Without exception every child thoroughly enjoyed the experience. I have never known such an enthusiastic response from children".
I move to the year 2000. On four occasions throughout 2000 the Dome company was awarded further grant by the Millennium Commission. The total value of the additional grant was £179 million.

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The vast majority of this money was not allocated to deal with additional costs but to replace estimated income which did not materialise. As the NAO report states:
"The financial difficulties were largely the result of the shortfall in income".
This is the view of the National Audit Office, the Dome company, the Millennium Commission and those advising them. These problems have not pushed up the money spent by the Dome (though the budget has gone up for other reasons by 4.6 per cent), but they have meant that a greater proportion of the Dome's budget has had to be provided by the Millennium Commission rather than by revenue from visitors.
Once the Dome had been constructed and much of the project cost had been incurred, the room for manoeuvre in the face of low visitor numbers was, in the words of the NAO, "very restricted". Its view is that closing the Dome or liquidating the company during the year of operation
"would not have made financial sense".
This is a view shared by the Dome company, the Millennium Commission, David James, the accountants advising the Millennium Commission and PricewaterhouseCooper. The only people who do not share this view appear to be those in the Conservative Party.
On 6th September 2000, Mr Peter Ainsworth said,
"We believe the Dome should close".
This, despite the fact that by then David James had made public the figures for how much more expensive it would have been to close the Dome early.
The right honourable William Hague, the Leader of the Opposition, seeing the passing bandwagon and ignoring the figures, said the next day that the plug should be pulled. It is not realistic, I suppose, to expect financial sense from the Conservatives, but surely it is reasonable to expect some degree of honour and consistency. We supported the scheme when they asked for our support. I pay tribute to the right honourable Michael Heseltine who has supported the project through thick and thin. He said:
"Our task is to maximise the national gain and recognise that this is a non-party-controversial issue; it is an all-party endeavour".
Those on the Opposition Front Bench, on the other hand, have washed their hands of any responsibility. The electorate are angry about the extra lottery money involved. We accept our responsibility for it. But it was a bipartisan project from its inception. The idea was conceived under the Tories. They selected the site. They set up the company to build the Dome. They devised the complex management structure highlighted in the NAO report. They set the visitor numbers. They persuaded people to work on the project on the basis they supported it. They knew the risks. But at the first sign of trouble they abandoned the project. There can be no more depressing sight than the right honourable Leader of the Opposition standing outside the Dome with his spin doctor and a camera crew denouncing the project he and his
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government started. There was a no-car policy at the Dome, but that did not stop the right honourable Leader of the Opposition parking his bandwagon there. The gutless hypocrisy of the party opposite impresses no one.
Throughout the year, the New Millennium Experience Company (NMEC) and the Millennium Commission have worked closely together on solving the problems which have come from the shortfall in income. The NMEC has, rightly, been concerned to ensure that the quality of the experience and the stability of the company should be preserved. The Millennium Commission has rightly been concerned that costs should be kept to a minimum. It has provided staff and had its own accountants and consultants to help and inform them throughout this period. That is an appropriate and healthy tension.
The NMEC is a company which has been under considerable pressure during these 11 months. Any company which had just completed a massive capital project and had then opened a huge and novel visitor attraction would be.
As was agreed in February 2000 with the Millennium Commission, the NMEC's strategic priorities during the year have been to maximise revenue and keep cost to a minimum. Its financial systems have needed, and have had, improvement. As the NAO report pointed out, its record keeping of contracts, assets and invoices was at the beginning of the year unsatisfactory. But a thorough study of its contracts revealed no net increase in liabilities; that the failure in relation to invoices was delays in recording rather than missing debts, and that the asset register is well on the way to being prepared. Paragraph 3.4 of the NAO report sets out the detailed improvements which have gone on throughout the year in record keeping and financial management.
David James, the present executive chairman, confirmed during his evidence to the Public Accounts Committee on 15th November that,
"NMEC has not lost money as a result of inefficiency".
We go back, as ever, to the visitor number estimates which, as the NAO found, was the cause of the problem. The problems should not have occurred, but I think that it is fair to give a company going through the experience which the NMEC was going through some extra time to get its record keeping up to date.
Whatever may be going on among the politicians about the Dome, there is a complex and difficult business which needs running down in Greenwich. Throughout the months of operations, the Dome company has been doing that. That has required a high degree of determination and leadership from the people running the business. To ensure the effective management of the Dome, changes at board level have been required. In February, it was plain that the Dome needed experienced visitor-attraction leadership. The appointment of PY Gerbeau as chief executive provided that. At the same time, the Dome and the Millennium Commission agreed priorities for the board to pursue and some new structures. The issues of corporate governance were very thoroughly

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discussed at this time between myself, the Millennium Commission and the NMEC. We all shared the same goals.
In May 2000, Bob Ayling, who had overseen the delivery of the Dome on 31st December and who had been instrumental in bringing in the new chief executive in February, resigned and was replaced by David Quarmby. Shortly before that, Malcolm Hutchinson joined the board in an executive capacity to oversee cost-cutting strategies. At David Quarmby's suggestion, in early August 2000 David James was brought in, first in a consultancy capacity and then as executive chairman.
Throughout this year the company has remained focused and upright. It has changed its management in response to events and has survived a battering to which less strong companies would have succumbed. The company is running the most popular pay-to-visit attraction in the UK. It has a highly committed staff despite the exhibition ending in a month. It has competent and confident management. It is doing the right thing in operational and financial terms. It has responded to problems and crises appropriately and quickly. That it did not get everything right from the outset is hardly surprising. Hindsight is a wonderful thing.
The failure to meet the visitor targets on which its budget was based has meant that the Dome's solvency has depended primarily on replacing the lost revenues with additional grant from the Millennium Commission. Throughout the year of operations the NMEC has been in detailed touch with the commission. The commission has always been required to be satisfied on every penny of extra grant— and rightly so. As the board and its advisers have always recognised, it can only continue to trade when it is solvent, or it can within a very short time make an application to the Millennium Commission for additional funds. With the exception of the period between the delivery of the PricewaterhouseCooper report on 22nd August and the application to the Millennium Commission on 5th September the board always believed that it was trading solvently. During that short period I have mentioned, it rightly continued to trade pending the application to the Millennium Commission.
In answering Questions in Parliament about the solvency issue, I have always scrupulously reflected the views of the board and its advisers. On 27th July, I answered that the company was solvent because that was the view of the board. The company was entitled to a substantial share of the proceeds of the Nomura deal and it was reasonable to suppose the Millennium Commission would advance money again against those proceeds, which it duly did on 4th August 2000. The board had, since May, received independent legal advice from a City firm on solvency issues. On the basis of that view, I considered the company to be solvent. It would have been wrong of me to have given any other answer than the one I gave on 27th July.
The PWC report delivered on 22nd August identified certain liabilities, in particular wind-down liabilities which had not been identified by the
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accounts department of the NMEC. This meant that the application made to the Millennium Commission was incomplete. It was necessary to make a further application to the Millennium Commission, which was done on 5th September. I informed the House of this error at the first opportunity; namely, on its first day back after the Summer Recess, on 27th September. I reject absolutely any criticism of my parliamentary conduct. While the error was sufficiently important to merit immediate correction at the first opportunity, it is important to recognise the reality. The Millennium Commission, after proper and detailed consideration, has recognised during the year 2000 the same point as the National Audit Office. It makes no financial sense to close early during the year of operation. It therefore decided that it would support the Dome during the year 2000. This meant that its creditors would be paid and possible insolvency avoided.
The exhibition continues for another month. So far 5.6 million visitors have attended. National programmes of worth and value have been running this year and were run last. Nineteen million pounds have been raised for the children's charities by the children's promise appeal. The "Our Town Story", in which every local education authority in the country took part, provided an opportunity for each community to tell its own story.
Legacy plc has been appointed preferred bidder in the competition to find a buyer for the Dome. There is work to be done before the contracts can be signed but there is an innovative and regenerating bid, backed by blue chip financial backers, which will produce a reasonable value-for-money return—comparable with any likely alternative use of the site, with or without the Dome.
The Dome is a building of distinction and worth. It has won architectural and design awards. It is world famous. It is a building we would be wrong to pull down. Six hundred and twenty-eight million pounds-worth of lottery money has or will be spent on the Dome. On the other side of the balance sheet, the Dome has contributed to the regeneration of the biggest derelict site in the south of England. In the next 10 years the investment by the public sector, including the "Dome Effect", is forecast to attract investment of around £1 billion: about £260 million by 2006 in relation to Legacy plc development; £250 million for the millennium village; £90 million for associated development such as Sainsbury's, cinema and hotel; and about £400 million on residential and mixed use between the village and Dome site.
We have stated that the Government should not run visitor attractions. We tried to deliver a visitor attraction within a budget—and to a degree of success which Disney could not manage. We should have realised that. But we have stayed in the arena fighting successfully to deliver a first-class visitor attraction which is well-managed and contributing to the legacy and future of the area for generations to come.
I hope that this debate will help us to learn lessons. I personally am very willing to accept them. But I also hope that the debate will recognise what has been

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achieved in this brave national project. The Tories can pretend that they never supported it. The Tories can abandon the people they persuaded to work for it. They can reduce public life by their short-term opportunism. They can run down a national project. But we will continue to work for and deliver the jobs and regeneration that North Greenwich so badly needs. I beg to move.
Moved, That this House takes note of the planning, management and operation of the Millennium Dome, and of its future. —(Lord Falconer of Thoroton.)
5.49 p.m.
Lord Crickhowell: My Lords, that was an amazing speech. I, too, shall take a great deal from the NAO report, described as a mine of factual information, rather than the Alice in Wonderland information which seems to be the noble and learned Lord's principal source.
Before I get to the meat of the matter I must declare not an interest but feelings of prejudice and irritation which arise from two episodes. The first was when the Millennium Commission took its deplorable decision to reject the bid of the Cardiff Bay Opera House Trust for what in comparison with the Dome expenditure was an almost ridiculously insignificant amount of money; and Jennie Page justified the decision on the ground that the commission did not have confidence in our business plan. The dome project then went ahead under Jennie Page's direction on the basis of a business plan that was deeply and fundamentally flawed from the outset.
The second episode began in July, when it appeared to me that the noble and learned Lord, Lord Falconer of Thoroton, had, at the very least, acted with an extreme lack of prudence when he repeatedly expressed confidence that the New Millennium Experience Company would deliver the project within its lifetime budget at precisely the moment when the company was warning in its annual report that there were significant risks that might prevent it from so doing and just after he had received a letter from the chairman advising him of a further deterioration in the company's finances. I had to wait two months for a reply to my letter on the subject, which, when it came, failed to answer my question.
We all know that the noble and learned Lord is a very nice man. I was going to say that, having put aside my irritation, it pained me to have to be critical of his role as a Minister and as the government shareholder of the New Millennium Experience Company. However, after hearing his speech, I feel much less embarrassed at my line of criticism.
I start with his defence that it was all just as much the fault of the previous Conservative Government because they began the project and gave it its initial structure. The noble and learned Lord is not only a very nice man, but, by all accounts, a very clever one. If he has a case, he ought to be able to do better than that.
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Let me remind the House of the timetable. As the National Audit Office report says, in January 1997 the Millennium Commission offered £200 million,
"to enable further development of the business case and preliminary work, including the letting of major contracts".
In May 1997—the month of the general election—the company submitted a revised business plan to the Millennium Commission and the incoming Blair government. At that time, final decisions had not been taken on the Dome's content, on ticket prices, on marketing strategies and on whether there would be access by car.
The new Government reviewed the project thoroughly, so we have been told. That review went far beyond the details of the business plan to ask the fundamental question of whether to continue with the project. The issue went to the Cabinet, where some members apparently thought that the answer should be "no". However, the collective decision was an emphatic "yes". The project was to be a symbol of new Labour. There is a ring of truth about the reported comment of one senior Cabinet Minister: "If Tony has made a decision, we will all have to support it". Tony had made a decision and they did support it.
Presumably the Cabinet had before it the Millennium Commission's written appreciation of the business plan which said that it lacked detail on commercial, operational and pricing strategies and that it contained no information on the key drivers for the company's business—the contents of the Dome.
Having taken the decision, the Government had two-and-a-half years to make sure that the business plan was sensibly developed and workable strategies were put in place. That is a long time. Ministers can hardly argue that they simply left in place the very preliminary arrangements that had been barely sketched in when the previous government left office. On the contrary, Ministers involved themselves to an extraordinary extent—probably unprecedented in the history of non-departmental public bodies. The coordinating group, chaired by the shareholder, met regularly from June 1997 until the opening of the Dome. Throughout 1999, the shareholder met weekly with officials from the Dome and the company. The noble and learned Lord became the shareholder in January 1999.
The NAO report reminds us that the shareholder is responsible, among other things,
"for setting the strategic direction of the company and for monitoring its programme in terms of cost, content, national impact, legacy and effective management".
The noble and learned Lord attended 16 of the company's 22 board meetings held between April 1999 and 12th September 2000 and was represented at two that he could not attend. Once he had been given the thankless task of acting as shareholder by his old friend the Prime Minister, he was in it up to his neck. He is a nice man and a clever lawyer, but he appears to have been totally out of his depth.
The extent of the noble and learned Lord's involvement was extraordinary and most unusual. The normal—and very wise—practice is for Ministers to

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stand back from non-departmental public bodies. That prevents them from becoming party to the decisions taken and puts them in a position from which they can form a dispassionate judgment and, if necessary, take effective remedial action. To act otherwise obscures where responsibility lies. That is particularly likely to be the case when the structure is highly complex, as the NAO report confirms is the case here.
The confusion created by those arrangements is startlingly revealed by the correspondence reproduced in the NAO report. The noble and learned Lord had got himself into a position in which he appeared to be acting as chairman of the company—or at least as joint chairman.
The letters exchanged in February and March are remarkable. Chris Smith, as chairman of the Millennium Commission, wrote a highly critical letter, insisting that corporate governance at NMEC would have to improve. The letter was addressed not to Robert Ayling, but to "Dear Charlie". It said:
"The NMEC board does not appear to have played the role we would have expected in confronting the problems and providing leadership. This is disquieting on issues relating to commercial and operational strategy and media handling, and extremely serious when it comes to solvency and financial management. Either the Board did not see or it chose to discount the warning signs of the cash flow difficulties. As a result it seems possible that it failed to take decisions until after a date when the company became technically insolvent".
Chris Smith went on:
"The Board must be encouraged to take responsibility for overall stewardship of the company and provide the clarity of direction any good management team needs".
The noble and learned Lord, not the chairman, replied, to be followed a week later by a reply from Robert Ayling rejecting the concerns that had been raised.
Neither response satisfied the Millennium Commission, which remained so concerned that Chris Smith arranged a meeting with the noble and learned Lord in May to discuss his anxieties. By all normal conventions, it is odd that Chris Smith's original letter about board conduct did not go to the chairman, even if, by his attendance at the majority of the board meetings, the noble and learned Lord had inevitably become associated with and party to the failure to provide leadership, to take decisive action until after a date when the company was technically insolvent and to provide the clarity of direction needed. Has a Minister ever written more devastatingly critical and damaging comments about a colleague?
There was a second, and equally remarkable, exchange of letters in September, between the Earl of Dalkeith, writing on behalf of the Millennium Commission, and the noble and learned Lord. Lord Dalkeith said that the PricewaterhouseCoopers report made salutary reading, with its conclusions that there were serious financial weaknesses in NMEC, that budgeting was inadequate, that an exit plan had not been properly thought about, costed or resourced and that any further funds given to NMEC would be at risk without,
"substantially enhancing the skill and resources of the company".
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The noble and learned Lord replied:
"Like you, I was shocked by what the PWC report implied about NMEC's financial management and corporate governance".
Why was he shocked? He had attended 16 of the 22 board meetings and been represented at two others. He had been repeatedly warned by the Millennium Commission. He had the full resources of the Cabinet Office behind him. How could he possibly have failed to observe those shortcomings? Did he never inquire about the adequacy of the budget, the cash and solvency position of the company, whether it had a proper assets register and what were the contractual liabilities and those likely to arise from closure?
As the months and years passed after the Government had concluded their initial thorough— we have had confirmation from the noble and learned Lord that it was thorough—review of the business plan, did he and his colleagues—Peter Mandelson, who was the initial shareholder, and Chris Smith— never question the reality of a plan which meant that the Dome had to attract more than four times the number of visitors as the next most popular UK pay-to-visit attraction achieved in 1999? Did they never inquire whether there was a clear plan in advance of how the company would respond if visitor income fell significantly below the required levels? Surely that would have been an obvious question, particularly after it became clear quite early on that sponsorship income was also much less than originally planned.
With a business plan so obviously highly risky, was it wise of the Government to insist that up to 1 million schoolchildren should be admitted free, at a cost of at least £7 million? The noble and learned Lord said that the idea had come from the company. The NAO report is quite specific that, having considered the request, the company accepted the Government's view.
One would have expected that the noble and learned Lord would have asked all those questions and taken appropriate action. As I pointed out, from January 1999 he was responsible for monitoring progress in terms of cost, content, national impact, legacy and effective management. It is difficult to avoid the conclusion that he failed to carry out his responsibilities effectively. The failure to achieve visitor numbers was not, as he appeared to suggest, an act of God. It was the result of a business plan that was from the outset fatally flawed. And it was the result of the grave deficiencies of management exposed by the NAO report—grave deficiencies with which the noble and learned Lord was so closely associated.
Lord Falconer of Thoroton: My Lords, could the noble Lord confirm that the date of the business plan was April 1997?
Lord Crickhowell: My Lords, I have already gone through the history and pointed out that the revised business plan was considered and approved by the Government when they came into power.
Lord Falconer of Thoroton: My Lords, will the noble Lord confirm that the date of the business plan was April 1997?
Lord Crickhowell: My Lords, the date of the original business plan, which, as the NAO report concludes, was updated as time went on, was April 1997. As the NAO report makes perfectly clear, it was reviewed by the Government and it continued to be reviewed by the Millennium Commission at regular intervals thereafter.
Lord Falconer of Thoroton: My Lords, will the noble Lord confirm that the grant of £449 million was approved by the Millennium Commission on the basis of the April 1997 business plan, which estimated the number of visitors at 12 million?
Lord Crickhowell: My Lords, I am not arguing about that at all. I merely point out that the scheme did not go ahead until the Government had a chance to drop the whole project. They could have abandoned it. As the noble and learned Lord told us, they reviewed the business plan thoroughly and went ahead with it. The way in which the noble and learned Lord, who was in it up to his neck, tries to avoid taking any responsibility for his actions is quite extraordinary.
The noble and learned Lord then came to the House in late July and told us that he was confident that the NMEC would deliver the project within its lifetime budget of £758 million. He stuck to that assertion, even when I reminded him that the company's annual report clearly identified the substantial risk of failure and despite the fact that he had just received a letter from the chairman of the company pointing out that the financial situation was deteriorating. Indeed, the Millennium Commission then produced a review which stated that it might run out of money in the space of two or three weeks.
By September, the cost had become £793 million. On 15th November David James told the Public Accounts Committee that, if one took account of the cost of the two sponsored zones not included in the original plan, the true cost was now £834 million. Is that the final cost?
I shall leave others to raise questions about a possible sale. I use the word "possible" because there is no contract, and the last time that the noble and learned Lord announced a sale, it fell through. However, I want to ask what is the current estimate of the total cost of dismantling the contents of the Dome and whether that total cost is included in the overall total. On this occasion is there to be, as there was to be with Nomura, an early payment of £105 million, with £53 million of it going to NMEC, and, if so, when? I hope that I can have an answer to those questions before the debate ends.
I conclude by saying that I thought I had a good deal of sympathy for the noble and learned Lord—at least I did before the debate began. He was told by his friend the Prime Minister to do a job that he did not ask for, that I suspect he did not want and for which he was in no way qualified. However, Ministers must accept responsibility for the way in which they carry out the jobs that they have been given.
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The noble and learned Lord acknowledges that all has not gone well but says that he wishes to see the project through to the end. On the basis of what has happened so far, it is hard to see why that would be of benefit to anyone. Would it not be better if he added to his considerable reputation as a man of integrity by acknowledging failure and going, leaving it to others who may well be better qualified to clear up the mess?
6.7 p.m.
Lord Sharman: My Lords, I welcome the opportunity to debate the situation at the Dome. I begin by declaring both an interest and a prejudice. My interest is that for many years I was the financial adviser to the London Docklands Development Corporation where this site was manifestly evident as a dereliction that needed to be addressed. My prejudice is that I was never a supporter of the Dome as a millennium commemoration vehicle. I believed that other things could have been done. Indeed, when I was chairman of a company before I retired, on two separate occasions we were asked to contribute financially to the Dome. We declined to do so on both occasions.
Having said that, I recognise that the Dome has many, many supporters, who must be somewhat disappointed at the nature of the media attention which it has attracted. I also recognise clearly the regenerative effect that the project has had on Greenwich and the surrounding area.
Before going further into an examination of the planning, management, operation and future of the Dome, which this Motion invites us to consider, I say at the outset that I do not intend to spend my time singling out any individual to whom to ascribe blame for the events that have taken place. I am content to wait for the conclusions of the PAC to do that. In any event, in my opinion the cast of culpable characters in this tragedy is so large that I would spend all my time trying to ascribe blame rather than, I hope, trying to establish one or two lessons that we might learn from what has occurred.
First, let us consider the planning. As the Minister said, we should always remember that this started as a private sector project. The intention was that it would be delivered by the private sector and bids were invited. I believe it is fair to say that at the end of the day it came down to a two-horse race—Birmingham against Greenwich. In the end, for sensible reasons Greenwich was selected. However, when the Government tried to sell the project to the private sector, there were no takers. The private sector considered that the risk outranked the reward. Here, I believe, is lesson number one for the Government. If the private sector does not want to run a commercial venture, what business do government have trying to run it? That is the prime lesson which comes from this and I believe that the Minister acknowledged that.
Once it was constituted as a non-departmental public body, however dressed up as a limited company, with a separate board of directors and so on, it is my view that that decision resulted in a

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commitment to open-ended funding. The only issue once that decision was made was who was going to pick up the tab: was it going to be the Exchequer or the millennium commissioners? The indemnities which were taken later by the directors only formalised the position; they did not do anything about changing it.
It seems to me that the only point in time at which a credible decision could have been made as to whether or not to proceed was at the time of the review by this Government. In the in-depth review to which the noble and learned Lord referred, were the costs evaluated of cancellation of the project at that point in time? Was an evaluation made of what it would have cost to call it off in April/May of 1997? If so, what were those costs?
Following the decision to create this as a non-departmental public body, we have what the NAO describes in its report as "complex organisational arrangements". In my experience, these are not complex; they are positively Byzantine—three bodies, three accounting officers and two Ministers, one of whom reports to himself. I have been lectured by members of legislatures about conflicts of interest in the profession to which I belong and I have to say that I am breathless as regards what went on here.
That leads me on to the execution because I believe that the execution of the project has inevitably been hampered by this complex arrangement. It may be large-scale and complex in terms of what goes in it, but this is a relatively simple, single-purpose project. And yet we end up with a scheme of arrangements which is breathtaking.
The construction phase was completed on time and, when I first looked at it, I thought on-budget too. I was quite encouraged by that. But then I looked again and read the report in more depth and it seems to me that there is what we might call in accounting terms a dangling debit of about £40 million. So that when you compare apples with apples or pears with pears, it looks to me—and I should be grateful if the Minister will confirm whether or not this is so—as though there is a construction overrun of about £40 million which is covered by contributions in kind and it is offset in that way.
Even so, to construct the project on time, reasonably close to budget is good. And it seems to me that a great deal of time and effort was spent on that, so much so that the people involved took their eye off the ball in terms of having to run what had been constructed.
The NAO report lists four principal causes of failure: the failure to attract visitor numbers, a lack of operational expertise, poor marketing and weak financial management.
I deal first with the lack of operational expertise. In that regard, again, I believe there is a very important lesson for us. This project was to plan, build and operate an asset, exactly the same as we have in many PFI and public-private partnership initiatives. I repeat, plan, build and operate. It is no good planning it and building it extremely well if you then forget to put in place the appropriate provisions for operation. When you look at the different skill-sets which are needed for each of those, it is incredibly important to
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understand that you start to build the operational capability as soon as you start to plan and build the asset. I suspect that that was lost sight of in this case.
The Minister said that hindsight is a wonderful thing. It is wonderful, particularly when you are looking at forecasts. But if you look back to what was available at the time the business plan was constructed and look in particular at the consultants' reports that gave indications of the likely visitor numbers, the number that was selected for planning purposes was at the upper end of the parameter. In my experience, that is unusual to say the least. It is much more usual to have a greater degree of prudence.
It seems to me that you should be looking for the same degree of prudence in these forecasts as you would look for in a prospectus of a company issuing shares. In view of what was then available, particularly the lack of information with regard to the content of the Dome, there was no chance at that time that a sensible financial adviser would have signed off on that forecast had this been a public prospectus. In the future, we need to look for that degree of prudence in relation to such projects.
In terms of poor marketing, I was astonished to read that the marketing plan was initially based on the notion that the Dome would sell itself. I acknowledge that that was quickly overturned. But again, I fail to understand how anyone could construct a plan on the basis of something selling itself when it was not possible to sell it to the private sector in the first instance. It seems to me that that was naive at best.
As regards the weak financial management, yes, there is always a case for saying that with new, one-off projects, there are sometimes what I would describe as problems which arise by moving up the learning curve. But not tracking your liabilities and commitments on a major capital project is simply inexcusable. That should not have happened.
Before moving to the future, perhaps I may make one or two comments about the solvency issue because that has attracted a lot of attention. The PricewaterhouseCooper report commences its executive summary with the words, "The company is insolvent". It does not say that it might be or may be but that "the company is insolvent". In continuing to trade, the directors had to take account of the likelihood of future funds being available.
To me, the most worrying aspect of the whole solvency issue is not so much the failure to attract the visitors. It was known that that was happening and something was being done to try to address that matter. But there is the additional £30 million which was identified only by Price Waterhouse at the time of its review. In my judgment, competent financial management should have had that on the agenda.
And so to the future. We understand that there is a preferred buyer and that the project involves the creation of what may loosely be described as an indoor science park. I have absolutely no doubt that in David James, we have a chairman of this entity who is well

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equipped to see it through to completion. I hope that he will be successful because regeneration of that area of London is very important to our capital city.
However, I say from my experience of urban regeneration that a leverage of £1 billion on government expenditure, if I can describe it as that, of £600 million is not a very good leverage. We should be looking for much greater leverage in terms of the money that has been spent already. I hope that that will be pursued.
6.19 p.m.
The Lord Bishop of Southwark: My Lords, we, too, on these Benches welcome this debate. The Dome lies in my diocese so I hope that your Lordships will forgive me if I share a few thoughts about its past, its present and its future.
The Dome was, of course, to be the statement of the millennium. The Minister has reminded us that millions of pounds of public money were spent on it. Businesses were sought as official sponsors. Advertising ran at a high level. The Queen would greet the new millennium under its roof; the Archbishop of Canterbury would pray it in. That all happened but with hardly the aplomb that was planned.
That is partly because of the power of the media. On 31st December it was not a good idea to keep newspaper editors, with their guests, standing in the drizzle at an Underground station so that they missed the Dome's opening party. After the debacle of that opening night the press never gave the Dome a chance. I feel that the media treatment of the Dome has ill served the public by seeking to persuade people that it was not worth visiting. I believe that those who have not visited the Dome have missed something significant. I have visited the Dome several times, usually in the company of children, who have never failed to enjoy it.
I first visited the Dome when it had just been completed. It was light, airy, a wonderful open space, a miracle of architectural grace. Then we spoiled it; we put things in it. Perhaps it is a perfect symbol of our times: we can do anything, we can build anything, we have the skills, the computing power and the imagination, but we do not know what it is for because we do not know what we are for and we do not know what we truly value.
When the other great dome of London, St Paul's Cathedral, was built it was an equal miracle of architecture. The cathedral is a wonderful open space, but the builders knew what it was for: the honour and worship of God. They also knew what to put in it: the finest music and art to lift hearts and souls to the wonder of heaven. There is nowhere near the same coherence of purpose in the contents of the Dome.
Of course, there are some magnificent zones, but overall the quality is pretty mixed. I believe that even the spirit zone was at its best during its creation, when people of all faiths worked together in a way that had never been seen in Britain before. In my view, even the result of their labours was worthy rather than
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exhilarating. Nevertheless, there have been spin-offs from that co-operation. The inter-faith network has been greatly strengthened and has helped to launch and set up the great inter-faith celebration that launched the millennium in the Palace of Westminster.
Surely that is the point. Now is the time to turn the legacy around and get things right for the future. So far I have been a little disappointed that the focus of the debate has been almost totally on the past rather than on the future. The Dome could still be a major flagship building. In that part of London we need a flagship use for that flagship building on its flagship site. After all, there has already been much gain in the locality. Industrial land has been decontaminated; we have new transport systems, new highways, a new pier, a riverside walk and 50 acres of new parkland. There are arguments about whether the site would be more valuable with or without the Dome, but I believe that that is a little like saying that land in Sydney would be more valuable without the Opera House. True, not everybody likes the Dome, but in 1900 not everybody liked the Eiffel Tower. I still experience a thrill when I see the Dome from either side of the river.
What of the future use of the Dome? The borough has always believed that the Legacy plc bid is the one worth pursuing. The leader of the council has said so publicly. What do the local people think? As a diocesan bishop I have the advantage of being able to consult clergy in every area to find out what the local people are saying. In Greenwich I hear that the local people are mostly concerned about what the future proposals may mean in relation to jobs and housing. We are told that the Legacy plc proposal may create about 10,000 new jobs, which would be a great gain.
We are told that a major advantage of the bid is that it would create better quality jobs. If so, perhaps lessons can be learned from what has happened previously at the Dome, where whatever else they have done or not done, the New Millennium Experience Company has made every effort to employ local people. A policy was worked out and well implemented between the borough and the company so that a local skills base could be developed to match the skills levels required at the Dome.
If the bid of Legacy plc is the preferred bid, I believe that it should be a condition of the bid that every effort must be made to put in programmes of skills training in collaboration with local universities and colleges, so that Greenwich people can gain maximum benefits from the developments.
New jobs would bring new prosperity and a need for new housing, and it is vital that a good proportion of those are affordable, particularly for local young people and key workers. I know that the borough is trying to insist that at least a quarter of available accommodation must be affordable housing. It is hoped that what is being proposed will add to the energy of regeneration not only in the Dome peninsula but throughout the Thames gateway.
South London is changing rapidly. Recently, I held a brief staff meeting of my bishops and archdeacons in a pod of the London Eye, the wheel just across the

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river. Each of the pods has a guide assigned to it, and our guide was a young woman from Australia who knew her London, at least she knew her north London. As we faced south and kept asking questions, she eventually became irritated by us and said, "Why do you keep asking questions about south London? Nobody is interested in south London". We are and the people of south London are and people of London in general are increasingly interested in south London because they see the possibilities for developments south of the river.
However, that must not be at the expense of the local people or their environment. I am alarmed, for example, at Railtrack's plans for driving a new railway viaduct across the Borough market conservation zone, demolishing listed buildings as it goes and passing within yards of the most ancient cathedral church in London. South London needs regeneration but not at the expense of its communities and heritage.
That need not be the story of the Dome. Indeed, already badly polluted land has been cleaned up. Lasting improvements have been made to transport links. In the millennium year the Dome has provided much needed local employment and it has given millions of people something to remember. South London is proud of its Dome, but it will be prouder of it still if it can become a true sign of regeneration and hope for the future. There is no reason why it should not.
6.28 p.m.
Lord Puttnam: My Lords, I am grateful to my noble and learned friend Lord Falconer for initiating this debate. I start by declaring a long-time interest, indeed a passionate enthusiasm for the Dome. I also remain unashamedly and unequivocally proud of my own contribution to a project which I believe, if treated constructively, could still come to be seen as a significant national asset.
Funded largely by lottery money, derided in the national media as "a disintegrating circus tent" and as "the joke of the century", it has an interior that is as unremarkable as the outside is remarkable; its costs have repeatedly spiralled out of control; its design has been praised and excoriated in roughly equal measure; there are constant rumours of insolvency; endless arguments about its future with some serious suggestions that it should be abandoned as a "romantic ruin" and, in short, it is a public laughing stock.
I refer of course, not to our Millennium Dome, but to the Sydney Opera House, or at least to the opera house as it was perceived in the mid-1960s. A generation later, it is widely acknowledged as one of the great architectural and artistic triumphs of the 20th century. Known locally as the "Eighth Wonder", it has become a potent symbol of Australian confidence and courage, the same confidence and courage that in recent years has brought about a brilliantly mounted Olympic Games, a thorough-going cultural renaissance and the ability to thrash us, and most other nations, at just about any sport you care to mention.
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In short, the once-derided Sydney Opera House is now a national icon of modernity, recognised across the world. Did ever an ugly duckling turn into such a swan?
It is difficult, if not impossible, to imagine such a transformation taking place in this country, for the simple reason that in our national pastime we have developed a culture of blame, with quite devastating consequences to our collective self-confidence. Given the traditions of this House, it would be generous and accurate to acknowledge that everyone involved with this most challenging and complex modern day project threw every scrap of their energy into trying hard to make it a success. It is to their enormous credit that the Dome opened on time and almost on budget, albeit somewhat on its knees, the victim of a dozen mutually contradictory agendas.
The genuinely unique structure has been widely and rightly celebrated as one of the great architectural achievements of our time—one that can truly rival the grands projets so beloved of the French. Many of my generation spent years gazing across the Channel, bemoaning what we regarded as a national lack of vision. Now that we, thanks to revenues from the National Lottery, have finally realised some sense of national ambition, what do we do? We fall back on what we know best—our bizarre affection for self-flagellation.
Overseas cultural and business delegations visiting the Dome, especially from the "can do" culture of the United States, are truly amazed at the way in which we obsessively seek scapegoats for what they regard as a quite remarkable achievement. In my judgment, we may well come to be proud of the Dome in a number of ways. First, the project's contribution to London's future development will, unquestionably, come to be perceived as of immense and enduring significance. Here was a vast tract of land that had been left literally contaminated and dying, the victim of an age when industrial efficiency was measured by the sheer volume of polluting smoke that belched from our factory chimneys. Thanks to English Partnerships, 300 acres of land have been reclaimed, over a thousand homes will be built, a new primary school, a health centre and a hotel have been opened. It is forecast that, together with other developments, these projects will eventually create over 30,000 jobs. Much of the credit for this physical regeneration must go to my admirable acquaintance in another place, Michael Heseltine, who at an early stage had the energy, vision and imagination to understand the potential for this all but forgotten corner of south-east London.
Anyone in this Chamber who has visited it must admit that that once benighted peninsula has been utterly transformed. I sometimes wonder how many of the more critical voices on the Benches opposite and elsewhere have visited the Dome. I surmise that the answer is remarkably few. Your Lordships may have noticed that the most extraordinary polarisation exists between those who have visited the Dome, the vast majority of whom have enjoyed it immensely, and those who have yet to "find the time", defending their apathy or their ignorance by the sheer volume of their

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lacerating criticism. The unpleasant smell that used to seep from the gas works across the Greenwich peninsula has been replaced by the unmistakable stench of schadenfreude. It is a stench that has drifted across from the other side of the River Thames, from a not wholly unexpected source—the printing presses of Wapping, West Ferry and well beyond. While almost 6 million people will have enthusiastically strolled through the gates of the Dome by the year end, much of our national press still prefer to gloat and pick over the failures and the disappointments. I wonder how many million more visitors have been deterred by this obsessive negativity?
There have undoubtedly been failures and disappointments. Some aspects of the Dome were hopelessly over ambitious, others not ambitious enough. The decision to accept approximately £160 million from the private sector removed any possibility of the contents having an overall coherence. But even that decision was just an unfortunate consequence of earlier public squabbling, which in turn led to an ill-fated mismatch between private and public objectives. An uncomfortable hybrid was created and the overall quality of the experience undoubtedly suffered accordingly.
However, some of the contents have unquestionably been triumphs. Consider Our Town Story, which has generated wonderfully imaginative grassroots activity in 250 communities across the country, engaging an incredible array of schools, youth groups and pensioners. For all of them, the Dome is now a part of their collective memory. Earlier this month the Dome's national programme produced a quite extraordinary Remembrance Day ceremony, involving thousands of children, which successfully reinterpreted that occasion in a way that made it relevant to children who knew nothing of either of the two great world wars. The Tesco SchoolNet 2000 project, associated with the Learning Zone, now holds the world record for the largest school internet site, with over 134,000 pupils having actively taken part.
In one very crucial respect, the Dome continues to represent a defining moment for this country. Do we wish to present ourselves as a nation that has the courage to take risks and the intelligence calmly to assess what went wrong, and even to learn from it, or do we simply wish to cut and run, preferring to avoid any possibility of risk or embarrassment? We should remember that this nation created the Industrial Revolution through daring and lengthy processes of trial and error.
The idea that "fitting up" a culprit, tearing down or even blowing up the Dome will somehow wipe the slate clean is simply fatuous. It represents either wilful stupidity or serious ignorance of the way in which, through the global media, we are perceived by other nations. As the right reverend Prelate has suggested, we must approach the future with the same boldness of conviction as we unquestionably displayed in the past. If not, we shall become mere spectators, condemned to stand by and watch as other nations, such as Australia, sail past us—young, energetic, confident nations
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sailing past a timid, geriatric Britain. If, through our neurotic attachment to blame, we allow that to happen, the joke of the century will most certainly be on us. Our entire nation, irrespective of the Dome, will risk becoming a romantic ruin, fit only for its role as a heritage trail of faded glories.
I do not know how long it will take for the Millennium Dome to find its justified place in history. But I do not for a moment apologise for my belief that the Dome will be remembered as one of the defining projects of our age. It is now entirely up to us either to roll up our sleeves, assess the damage and set out to make a success of it, or to carve its failure on the epitaph of a nation that has lost its way and could appear to have lost its will and its nerve. I find it very difficult to believe that that is what the party opposite wants. By their present actions, that is what they are in real danger of achieving.
6.37 p.m.
Lord Marlesford: My Lords, it is not disputed that the Dome enterprise has been a financial disaster. It was almost admitted by the noble and learned Lord, Lord Falconer; it was brilliantly demonstrated by the forensic skills of my noble friend Lord Crickhowell. That it has been inexcusably badly managed has been demonstrated, equally skilfully, by the noble Lord, Lord Sharman.
I want to suggest why it went wrong. We all know that the word "hubris" means "an excess of ambition, pride—ultimately leading to the transgressor's ruin". It is a word that might have been invented for the conception and birth of the Dome. I do not disagree with the description of the building given by the noble Lord, Lord Puttnam. However, the construction of such a gigantic edifice, however splendid, without the slightest idea of what to put in it, is a folly worthy of any Greek tragedy. I remember that in the early days of its gestation we were told that what it was to contain was so exciting that it could not yet be revealed. I am reminded of the South Sea Bubble of 1720. Your Lordships will recall from your history books that this culminated in one particular investment prospectus for, "a company for carrying on an undertaking of great advantage but nobody to know what it is"—not so very different from the words of the Prime Minister about the Dome, that, "it will be the envy of the world".
The idea of celebration was fine. The idea of developing Greenwich was fine. Indeed, the idea of developing the River Thames through London would have been even finer. Before I come to the Dome itself, I should like to express my profound regret that so little has been done in recent years to make the beauty of the Thames available to the people. Indeed, far from developing it in such a way as to emulate the beauty of the Seine in Paris, we are at this moment allowing a fresh generation of utterly undistinguished buildings to be erected on both banks.
Just to give one example, there have already been constructed on the north bank of the Thames between Vauxhall and Chelsea Bridges private palaces of

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supreme vulgarity—others are under construction—in some cases commissioned and paid for by minor foreign potentates. They will wall off the Thames from the people for the next 100 years. In the meanwhile, the river continues to flow virtually empty of all passenger traffic, while the roads on either side every day are a scene of extreme and polluting congestion. What a missed opportunity. And yet even today, in their recent urban White Paper, the Government do not seem to regard the Thames in London as even worth mentioning in its own right.
However, to return to the Dome, it is the ultimate and most costly victim of political correctness. The presentation, let alone the celebration, of Britain's history over the past 1,000 years was considered far too excluding, far too divisive; indeed, far too shameful to be allowed to be under starter's orders as a theme for what was to go into the Dome.
Instead, such is the arrogance of our ruling establishment—I direct this attack to the chattering classes of all three of the major political parties and of none—that they presumed to use our money (that is, the £628 million from all of us who take a flutter on the National Lottery) to reveal their vision of our future. Was it surprising that they could not come up with the goods?
I have of course been to the Dome. In January, along with several hundred other parliamentarians, I went by kind invitation of British Telecom. I was appalled at the vacuity of what I saw in the Dome. By far the best part of the day was the trip there by river; the general impression of the site, which is very good indeed; and the journey back by the new Jubilee Line. By far the most striking exhibit in the Dome was the purely commercial celebration in the De Beers Diamond Pavilion. Its contents were indeed thrilling, and they appear to have been the only things that anybody has made a serious attempt to take away.
The Black Adder film, to which we were subjected as the introduction to our heritage, was hugely embarrassing. It might just have justified an hour of TV viewing on a dull winter evening after supper. The money zone, with its tunnel of £1 million in £50 notes, was a vulgar gimmick. The talk zone, until one could escape from it, was a torture tunnel. The actor who cycled round the Dome dressed as a pastiche of an RAF pilot from the Battle of Britain might have been an amusing contribution at a village fete, but in the context of the Dome it was an insult to the recollection of "our finest hour". Much of the science section fell well short of what is now on view in the Science and Natural History Museums in South Kensington. Quite frankly, in some ways when I visited the Dome before they started putting in exhibits, I thought it was much more impressive than when up and running.
Those are the reasons it has not succeeded. Those are the reasons it failed every financial test set for it by this governing body. Like the game of Old Maid, the responsibility for the Dome has been shuffled from hand to hand and for the present has ended up in the hands of the noble and learned Lord, Lord Falconer. I wonder whether he is proud of it. We shall see
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whether he adds it to his Who's Who entry. He has some sympathy from me and today I seek to help him. I want to make a specific proposal for the rebirth of the Dome.
To illustrate what we should have had in the Dome, I refer to the tiny former Portuguese colony of Macao, a pimple on the coast of southern China. Before they left, the Portuguese created a small museum to illustrate the social, political and cultural history of Macao since earliest times. I visited it this year and it is superb. It relates the history of Macao to the history of the world at the same time, in that case over several millennia. It thus gives a perspective of great educational value to children of all ages, including myself. I strongly recommend those noble Lords, and particularly the noble and learned Lord, Lord Falconer, who are visiting Hong Kong or China to go to Macao and look at it.
It is not too late to do the same sort of thing in the Dome. Of course, it would be a year or two later than it might have been. But to illustrate Britain's role in the world from the time of the last invasion of these islands by Europeans from the mainland to the prospect—like it or not—of ever closer European Union would, I believe, draw millions. It would become an essential part of the educational programme for school children and students of all ages from all over the United Kingdom, and of course a "must" for tourists. In short, it could become as great an innovation and opportunity for the people of this country as has been the Open University, which is still flourishing after 30 years.
Lord Falconer of Thoroton: My Lords, before the noble Lord sits down, he opened his remarks by a rather unfair reference to a lack of focus on the Thames. Does he agree that various offshoots of the Millennium Commission or the Lottery Fund have regenerated Somerset House, the Globe, Bankside, Southwark Cathedral, the "Wobbly Bridge" and Hungerford Bridge all in the course of this year? Many millions have been spent in enhancing those buildings on the Thames.
Lord Marlesford: My Lords, I am happy to agree in relation to Somerset House and many of the other fine buildings. But we should be doing much more. I am complaining that this Government, above all governments—rather like the failure of Melina Mercouri, the Greek Minister for Culture, who allowed so many awful things to happen in Greece— to protect the Thames and make full use of it throughout its length in London. That is my complaint.
6.47 p.m.
Lord Grabiner: My Lords, as has been said by a number of noble Lords, hindsight is a useful forensic tool. Indeed, the noble Lord, Lord Sharman, made a distinguished professional career almost exclusively based upon making himself an expert on the subject. It enables the investigator, with the benefit of perfect

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vision, to examine the relevant sequence of events and then to provide an expert opinion as to what went wrong.
In relation to the Dome, hindsight has taught us a number of important lessons. First, the successes of the Great Exhibition of 1851 and the Festival of Britain of 1951 were entirely irrelevant precedents. In those days there was no competition for a pay-to-visit attraction. Today the public have extremely sophisticated requirements.
People have been to Disney in Paris, Florida and California. If they want to, and I have no doubt a number of noble Lords have done so and will continue to do so on a daily basis, they can play console games such as Nintendo 64 and Playstation. They can play Internet games with limitless numbers of players or opponents. That is the reason why it has proved so difficult to create the so-called "Wow!" factor; or the notion in the minds of the public that the Dome is a "must-see" attraction.
Secondly—and on this point I entirely agree with what was said by the noble Lord, Lord Sharman—we now know for sure that if the private sector will not touch a proposition, then it should not be touched by governments with a barge pole. Certainly, they would be well advised to tread with great caution.
In the case of the Dome, it was plain as early as June 1996 that the private sector would not accept the risks. Nevertheless, in January 1997 the then Conservative government decided to deliver the project in the public sector using the vehicle of a limited liability company whose sole shareholder would be a government Minister accountable to Parliament. I am confident that we shall never see such an absurd and (to borrow the noble Lord's expression) Byzantine structure again.
Thirdly, this is not a case of serious miscalculation on the expenditure side. The current forecast is that expenditure will be about 5 per cent over budget. The real problem is that all the sums and the key decision to award a lottery grant of £449 million in 1997 were done, or made, on the basis of 12 million visitors to the Dome in the year 2000. We now know that the actual figure will be about 6 million. It is the shortfall in visitor numbers which has given rise to the problem.
I should like to deal with the target of 12 million. The facts are that in January 1997 the Millennium Commission adopted a plan with a visitor target of 10 million. In May 1997, just five months later, the New Millennium Experience Company produced a business plan which assumed that there would be 12 million visitors and that the budget would balance with about 11 million visitors. The commission promptly asked Deloitte & Touche Consulting Group to review the figures which had been forecast by the company. It concluded that 12 million was at the upper end of the range and, as the noble Lord, Lord Sharman, rightly pointed out, that the worst case scenario was 8 million. The noble Lord did not refer to that figure specifically, but that was the range anticipated by the experts. In the event, the company
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stood by its target of 12 million. That was the basis of the business plan and budget which were duly approved by the commissioners. With hindsight, we know that there were not enough visitors, which turned out to be the critical point.
The Dome is the most successful pay-to-visit attraction that we have ever had. It has easily beaten the previous record set in 1999 by Alton Towers. Further, in exit polls the overwhelming majority of visitors said that it was a satisfactory experience. Mr Gore may have his own views about exit polls, but that is another matter.
There are one or two other aspects of the story which need to be emphasised because they are of importance in arriving at an overall judgment about the whole episode. First, the site at Greenwich was selected as long ago as March 1996. The choice of Greenwich was in part driven by its historic association with time. It was also chosen because it was recognised as an area badly in need of economic regeneration. It had previously been the site of a gasworks: it was derelict and contaminated. The strategic objective of the commission was the regeneration of the whole of what became known as the Greenwich peninsula.
The site was duly purchased for £20 million in February 1997 and the structure was completed in February 1999. I have seen figures to suggest that over the next seven years approximately 30,000 new jobs will be created as a direct result of the Dome project. Perhaps when he comes to reply my noble and learned friend Lord Falconer can confirm the accuracy of that prediction and tell us something about it. I believe that the regeneration of Greenwich and the new jobs represent real social gains with which we should all be pleased.
I should like to comment on the involvement of my noble and learned friend Lord Falconer. My noble and learned friend has been the target of some criticism by the noble Lord, Lord Crickhowell, who I note is not in his place. My noble and learned friend became the shareholder in January 1999. He specifically did not have responsibility for the day-to-day management of the Dome, and paragraph 26b of the report of the National Audit Office is to that effect.
There are two important sentences in the report of the Comptroller and Auditor General which bear directly on this part of the story. The first is as follows:
"19. Once the Dome had been constructed and much of the project cost already incurred, the room for manoeuvre in the face of low visitor numbers was very restricted".
The second states:
"20. As the financial situation deteriorated the only options, short of closing the Dome and liquidating the company, which in the light of knowledge about the company's commitments would not have made financial sense during the year of operation, were to rely on receipts from the planned sale of the Dome and further grant from the commission".
Next, reference has been made to solvency. I leave aside the technical point that my noble and learned friend was not a director but shareholder and so had no day-to-day responsibilities for the affairs of the company. However, on four occasions in the course of

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this year additional awards totalling £179 million were made by the commission to support the project. The accounts were regularly and independently audited, insolvency practitioners were retained and the commission's own auditors were sent into the company. My noble and learned friend was at all times in receipt of advice from outside professionals. I believe that he was perfectly entitled to conclude that the money would be forthcoming, and it was. I also note that no criticism is made of my noble and learned friend in the report of the Comptroller and Auditor General.
What emerges from all of this? I believe that I can summarise it in three short propositions. First, it should be borne in mind that we now have the benefit of hindsight. It is very easy to be judgmental after the event, especially when the critical events cover a very short and fast-moving period of time, as was the case here. Secondly, this was a cross-party initiative and attempts to point the finger at my noble and learned friend in order to make him a scapegoat are entirely misguided and utterly unfair. Thirdly, the report of the National Audit Office makes it quite plain that by the time my noble and learned friend became the shareholder in January 1999 the die was cast and there was little or nothing that he could have done about it.
6.58 p.m.
Baroness Greengross: My Lords, we must all acknowledge that there have been failures and disappointments with regard to the Dome. Certainly, the Dome has not met our very high expectations, some of which may have been unrealistic in terms of visitor numbers. That was a mistake. I should like to underline the importance of regeneration, to which several noble Lords have already referred. We are all aware of the dire consequences of urban decay and neglect and what happens to very unfortunate members of society who live in such areas. We have already heard about the number of jobs which have already been created and are predicted. For once, we got the infrastructure right with the introduction of a very good transport system that will be of immense benefit to the whole of London and beyond.
There are other important points about the site. The site provides excellent access for disabled and older people. Such access has been neglected in the past. The Dome also provides a very good example of what may be called customer care. The mainly young people looking after visitors to the Dome have been exceptionally good at caring for people who are sometimes marginalised. I hope the future will provide opportunities for many of those marginalised people to benefit from the experience and that new avenues of employment and entrepreunership will include them in the future business park and development site. It is terribly important that they are included. In IT development it is especially important that the over-fifties and disabled people are targeted to benefit from the development.
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The opportunities that are available, and will become more available as the years go by, would not have existed without the decision to go ahead with the Dome.
7.1 p.m.
Lord Lea of Crondall: My Lords, two years ago the TUC—of which I was then an official—decided to join with Tesco's and others in the creation of the learning zone. The TUC has no hesitation in saying that it is very glad to have been involved.
Three main points have emerged from the debate. First, April and May 1997 was just about the worst time to have received a carefully considered answer to the strategic question. But that is how the cards were dealt. Secondly, it is clear that the National Audit Office is far from lending support to the idea that the Government should have pulled the plug on the Dome half-way through the year. My noble and learned friend in paragraph 20 stated:
"Closing the Dome and liquidating the company would not have made financial sense during the year of operation".
Some of us who have not been the greatest enthusiasts for the Dome and all its works have concluded that the attacks on the handling of it in recent months—in particular on the actions of my noble and learned friend the Minister—have been way over the top.
The third point is to refute the fallacy that 12 million as a visitor plan assumption is a recent act of madness. Even today we have heard the noble Lord, Lord Crickhowell, saying that, with the logic of hindsight, the figure is four times higher than any other visitor attraction, as if any fool could have seen that the figure of 12 million was wrong. But, going back to April 1997, if that figure was then a "tent of fools", we were all of us in the same tent.
Talking of tents—big tents in particular—it is the Labour Party which has found itself occupying this big tent, but it does not mean that the Conservative Party would not have happily occupied it themselves. Indeed, at the present time I suggest that if the Conservative Party could find any big tent to get into they would be in it like a flash.
It is a well-known phenomenon to all noble Lords who have tried to run a village fete when not enough people have turned up and one has spent £400 to hire the marquee. Many people around the country can identify rather precisely with this situation at a number of levels. The British people will not have much difficulty in seeing that there is an upside to the matter. The local village fête does not give one the immense spin-offs that we are now realising will come out of this.
Let us go back to the beginning, to Michael Heseltine. He was the one who supported—I come from the north of England originally—the idea that Liverpool and many other places should have a regeneration idea on which to work. It is very important that they do. I should be happy on a different occasion to argue—I have argued this before—that there is a regional question here. Let us stick to the Thames gateway for a moment. It was

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Michael Heseltine's imagination that led to the London Docklands Development Corporation and the emerging new reality of the Thames gateway for the whole of the estuarial area. We must give credit where it is due.
Perhaps I may also say in a non-partisan spirit that some of the Labour local authorities in east London, and to some extent in south London at that time, were rather parochial in not accepting the need for strategic growth points in the whole of east London. We need strategic growth points in London. The same argument would apply with west London, if Brent, or some area like it, could pose itself as an alternative to the Heathrow airport economy for the west London corridor.
The aim of the project partners, with the full backing of the Government, has been to ensure that the regeneration of the peninsula delivers a high quality environment that is suited to people's needs and which is innovative and sustainable, both environmentally and commercially. Construction contracts worth £300 million have been awarded as a result of the Dome. The vast majority of those have been to UK companies: 13,000 employees have gained work in construction and the operation of projects on the Greenwich peninsula. There has been a boost to the UK economy which has benefited the whole country.
The transport strategy has been very important. The transport access to the Dome is a model of integrated public transport. These days that is something that is not often said. It provides access to the Dome via a variety of public transport. The North Greenwich Underground station adjacent to the Dome—one of nine new stations on the new Jubilee Line extension—has not only encouraged the use of public transport to the Dome but also provides a major boost for east London as a whole. There is the Millennium transit link which was constructed to take state of the art guided buses from Charlton and Greenwich mainline railway stations to the Dome. Finally, there is the new £2 million pier to the east of the Dome, helping to bring the Thames back to life and become one of London's main transport arteries again. There has also been the construction of a river walk and cycle way right the way around the peninsula which links into the existing river walkway and the expanding national network for cyclists.
We can look forward with confidence. We can look to the news, which we hope will come to fruition, that Legacy plc is at an advanced stage of negotiation. We can look to an exciting future for the Dome, with £1 billion investment expected in the area as a whole. That will further change the mindset. That is why public investments are not the same as private sector economics. We have changed the whole mindset towards the Thames gateway. That is not something one can measure on a narrow private sector accountancy approach. I see that the noble Lord, Lord Sharman, is nodding in agreement.
Just as when we rescued Canary Wharf—I say "we" because it was the public sector, through the diversion of the London Transport investment plan towards
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building the extension of the Jubilee Line in preference to CrossRail, which had the greater return—I predict that north Greenwich too will join Canary Wharf as a £400 million jewel in the Thames gateway corridor.
7.9 p.m.
Baroness McIntosh of Hudnall: My Lords, I intend to keep my remarks brief not least because, at this stage in the debate when so much of substance has been said, it is difficult to avoid the possibility of repetition. I hope I will be forgiven if some of what I say has already been said by other noble Lords.
From its inception, the Dome was always liable to be controversial because new and interesting things very often are, as my noble friend Lord Puttnam eloquently pointed out. The Government have, as is proper, accepted responsibility for what has been by common consent a complex and difficult project. My noble and learned friend the Minister is the man left holding the parcel when the music stops. That is usually a winning position, but I hope he will not mind if I suggest that on this occasion it has been something of a mixed blessing. Let us not forget that there were a number of others in this game when it began back in 1996 and decisions taken then are still reverberating.
Unlike other noble Lords, I can claim no expertise in project management on this scale. But I do know a little about the entertainment industry and from that perspective I want to make two points about, as it were, putting on a show. First, making an accurate and robust assessment of the likely capital costs of a major creative enterprise is exceptionally difficult. I spend a good deal of my life trying to do that in a small way. Getting the project within 5 per cent of original estimates and on time, as has been achieved with the Dome, is fairly sharp shooting, as any producer of a big West End musical will testify.
Secondly, a great deal has been made in the press and in the House of the fact that 12 million visitors were predicted and only 5 million will have been. Five million sounds like a hell of a lot to me. I am sure that I would be grateful for that number of visitors. The most vexed issue with regard to putting on any entertainment, regardless of the kind and scale of that entertainment, is whether anyone will come. Almost everyone in the theatre business would admit to having occasionally miscalculated—sometimes quite significantly—the likely appeal of something which they believed on quite reasonable grounds would be popular. Initial estimates of potential visitor numbers to the Dome were clearly optimistic, but they were not imprudently so, as my noble friend Lord Lea of Crondall pointed out.
The implication lurking behind a good deal of the discussion on this issue—that any fool could have predicted that 12 million was an unachievable target and that no one in his right mind could have imagined that 12 million people would want to see what the Dome had to offer—is misguided. It is really not that simple. An audience of any kind for any event is a strange and recalcitrant beast, as I know to my cost. It sometimes resists what it has liked before and often goes where no one has tried to lead it. The gift of

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discerning accurately in advance what will please is given only intermittently even to the most successful of cultural entrepreneurs. The fact that well over 5 million people, many of them young, will have been to the Dome by the end of the year is a major achievement, particularly in view of the relentless negativity of the press comment about the Dome. The great majority of those who go like what they see. That is a lot of satisfied customers, something of which everyone concerned should be proud.
Finally, I join those who have already called attention to the remarkable qualities of the building itself. It is architecturally and aesthetically innovative and very beautiful, particularly at night. In fact, it is beautiful at all times of the day. It makes a distinguished and distinctive contribution to our urban landscape and it has brought in its wake the regeneration of a formerly blighted tract of land. I hope we can agree that at the very least the vision it represents and the courage of those of all persuasions who backed it deserve to be celebrated and built upon.
7.14 p.m.
Lord Trefgarne: My Lords, like many noble Lords, I came to the debate with a considerable degree of sympathy for the position of the noble and learned Lord, Lord Falconer. Many of us have been in the position of receiving a constant barrage of criticism for some task that we have undertaken in public life. The noble and learned Lord said that he had been asked 1,100 parliamentary Questions on this matter. I remember receiving 650 parliamentary Questions on one defence procurement project from one Member of the other place, who is now a distinguished Member of your Lordships' House and sits on these Benches. Answering those Questions involved a great deal of work and I dare say that the noble and learned Lord has been similarly preoccupied.
However, I must confess that my sympathy for the noble and learned Lord began to evaporate as I listened to his speech, which, frankly, was a little OTT. The speech of the noble Lord, Lord Puttnam, was slightly in the same vein. Perhaps one point has been overlooked. Whatever may have been the inspiration behind the project—no doubt well intentioned inspiration—the plain fact is that public money was being used. Some people say that it was not public money; that it all came from the lottery and that is not public money. It is public money. It is subscribed by the public. I agree that a certain amount of corporate money was used to support some of the attractions inside the Dome, but basically it was a public money project. That is why the criticism has been so intense, and rightly so.
I intend to moderate my criticism on this matter and deal with just four points. First, the estimate of 12 million visitors was by any standards optimistic. When intervening towards the end of the speech of my noble friend Lord Crickhowell, the noble and learned Lord, Lord Falconer, said that the estimate came from the business plan of April 1997. That is not so.
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Paragraphs 1.30 and 1.31 of the NAO report state that the business plan was approved in the following month.
Lord Falconer of Thoroton: My Lords, in April 1997 the business plan was approved by the hoard of the New Millennium Experience Company. The noble Lord, Lord Crickhowell, is shaking his head. The facts are that in April 1997 the business plan was approved by the New Millennium Experience Company If the noble Lords, Lord Trefgarne and Lord Crickhowell, have any evidence to the contrary, I should be glad to hear it.
Lord Trefgarne: My Lords, all I can do is read from paragraph 1.31 of the NAO report, where the company's May 1997 business plan is referred to. The month is May, not April, by which time a different party had come into government.
It is the case that when in power both parties have given a degree of approval to the estimate of 12 million. Sadly, it has proved to be an overestimate. But it is no good the noble and learned Lord saying that it was entirely the construction of his predecessors that caused the plan to be agreed. That is not so. The noble and learned Lord is just as much in it up to his neck, as my noble friend Lord Crickhowell said, as anyone else.
I turn to my second point. Another area of disappointment was the creation of all the internal attractions. I have been to the Dome on three or four occasions and I must say that they are really very, very disappointing. I am told that the gentleman who was principally responsible for them has a name which will be familiar to noble Lords because his mother sits on the Government Front Bench in your Lordships' House. So perhaps he will take the view that his career has not been advanced by the project.
Lord Puttnam: My Lords, I worked with Ben Evans. He was responsible for three of the zones. That is far from being the majority.
Lord Trefgarne: My Lords, I am grateful for that clarification. I understand that he was the so-called "editor" of the attractions. I am not quite sure what that means.
Lord Puttnam: My Lords, he was one of four editors.
Lord Trefgarne: My Lords, I am glad to hear that he was not exclusively to blame for all the problems that have emanated from those attractions. But I do not think that anyone seriously claims that, taken together, the attractions have not been a considerable disappointment.
The next point that needs to be dealt with is that the noble and learned Lord has not sufficiently answered the questions raised, particularly those put to him by my noble friend Lord Crickhowell both in the form of parliamentary Questions, letters and in his speech today. I refer to the noble and learned Lord's

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responses to the allegation that at various points during the programme, and particularly in July of this year, the project was seriously insolvent and by any standards unable to meet its future debts.
I have to accept that the legal position in these matters is almost certainly not as simple as many people would have us believe. I wonder whether the noble and learned Lord had received some assurances from sources other than the Lottery Fund—for example, from the Government— that they would stand by the debts if the need arose. That would not be a disreputable thing for the Government to do, but they must tell us whether that was the case. I do not know whether it was or not and perhaps the noble and learned Lord will say whether he received at the time any assurances from the Government in that regard.
I have addressed these questions to the noble and learned Lord as the principal shareholder in the project. Like my noble friend Lord Crickhowell, I am puzzled that questions were not more frequently asked and answered by the board of the company itself. Although we know that the noble and learned Lord attended many of the board meetings, it was the duty of the directors of the company, presided over by the chairman, to address these matters and to answer these questions. But they seem to have been extraordinarily silent leaving the noble and learned Lord to take the criticism and the flak.
I come to what I consider to be the most serious allegation; namely, that it is clear that there has been almost a complete failure by the New Millennium Experience Company to keep proper books of account. The plain fact is that throughout the time it has been conducting this programme, not only after the disastrous opening at the turn of the millennium, but also in the run up to that time, it is clear that it has not kept proper books and records of the money received and going out and also of the various contractual arrangements that have been put in place. I am not saying that there has been misappropriation of funds; I am not aware of any evidence of that. But it really is a disgrace that this vast sum of public money approaching, we are told, £800 million, has not been properly accounted for—not yet, anyway—and was being spent with gay abandon at a time when—
Lord Grabiner: My Lords, I am grateful to the noble Lord for giving way. It would be very interesting to see any passage in the report of the Comptroller and Auditor General which supports the proposition that the company did not keep proper books, which I believe is the allegation that the noble Lord makes.
Lord Trefgarne: My Lords, the allegation has been made quite widely, not only in this report, but elsewhere. If the noble Lord would like to study that document and others with a little more care, I believe he will find the difficulties to which I have referred.
The noble and learned Lord said that this matter is now being put right. I welcome that assurance. It is rather late in the day. What a pity that it was not done earlier. So much for the criticisms.
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I turn now to the final matter that I wish to address; namely, the future use of the Dome itself. Nobody doubts that it is a great building. I readily accept that. As I have said, I have visited it on several occasions and I am easily persuaded that that is the case. I am sorry that it is to be something modest in the form of a business park. Perhaps that is not modest. No doubt the noble and learned Lord would welcome any financially sound proposal that is put to him or anyone with a cheque for £100 million or more. I wonder whether the Dome could not be better used as a centre for international trade fairs. London is singularly lacking in such facility. We have Earls Court and Olympia, but they are both very old and in many ways unsatisfactory by modern standards. I believe that the Millennium Dome would be an admirable venue for activity of that kind.
I am glad to hear from the noble and learned Lord that the books of account at least are now being put in order. It is about time, too. I am sorry that the noble and learned Lord has suffered so much criticism and attack during the time he has held responsibility in this matter. Let us hope that it can all now be brought to a glorious conclusion as the noble learned Lord hopes.
7.25 p.m.
Lord Dubs: My Lords, I shall be brief because I believe that virtually all the points that could be made have already been made. The original concept of the Dome under the previous government embodied vision. It was exciting and it has led to important regeneration. It has resulted in a project which has attracted in one year 6 million visitors. Even Manchester United would be envious of that number of visitors in a year. It is possible that if the life of the Dome were extended for, say, two or three years, the project would become financially viable. Other projects, such as Disney, took well over a year before becoming viable. There was a great deal of ambition in trying to accomplish so much within 12 months.
Mistakes were made by both Governments, although listening to some of the speeches from the Benches opposite it seems as though only the present Government made mistakes. That is simply not the case. Mistakes were made on all sides. Under the previous government the decision was taken to build the Dome; to choose Greenwich; to appoint the chief executive and the chairman; to develop the corporate structure; to use Lottery money; to develop the Dome's structure; to split job responsibilities between different Government departments; and to develop the forecast of 12 million visitors. All those decisions were made under the previous government and they were inherited by this Government. In those circumstances, it would have been difficult for this Government to say that, despite all the excitement and enthusiasm generated by the previous government, the project should have been dropped. That is difficult to do except with the wisdom of hindsight.
However, I believe that over the years the Dome will be seen as a more successful venture than some of the speeches from the Benches opposite suggest. In a few years time when we see Greenwich regenerated and the

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Dome being used for positive purposes, I believe that we shall forget this "Let's have a go, Charlie" atmosphere in this debate. We shall remember the positive things that have been achieved on that Greenwich site.
I regret that this debate is becoming a series of attacks, verging on the very personal, against my noble friend the Minister. I do not believe that that is called for. It is not appropriate given the previous government's record. The noble Lord is waving his hand at me. Does he want to intervene or is he simply gesturing?
Lord Trefgarne: My Lords, the noble Lord said that this debate was becoming rather personal. The noble and learned Lord, Lord Falconer, is the Minister responsible for this matter and naturally we are addressing our questions and criticisms to him.
Lord Dubs: My Lords, nevertheless there is an element of personal attack on my noble and learned friend which I believe is inappropriate. It is not justified by the facts, but only by party political rhetoric coming from the other side of the House.
Lord Trefgarne: My Lords, the noble and learned Lord is a much admired, even a loved, Member of this House. He is one of the most effective Members of the Government Front Bench. I regret very much that, with others, I have had to criticise some of his actions and policies as regards this matter. But he is the responsible Minister and I do not believe that even he would wish to duck that particular point.
Lord Dubs: My Lords, he is not ducking it. I have listened carefully and read in Hansard the comments made by my noble and learned friend. I have also listened to his opening speech. He is not ducking his responsibilities at all. It is a little mischievous to suggest that he is. He is taking the valid criticisms on the chin, but he has no reason to take on the chin criticisms which are not valid and which should be directed at those on the other side of the House who made the decisions when the Conservatives were in government.
I turn to a more positive note. There are many lessons to be learnt and perhaps I may pick on three. The first is the better forecasting of numbers. Clearly, had the forecast for the number of visitors been 6 million we would all be celebrating a success, but because the forecast was 12 million, people say that the project has not succeeded. Frankly, at the outset a figure of 6 million visitors would have been a successful achievement for the Dome. We would have all said that that was a good sign of popular support, as indeed it was.
The second point I wish to make in terms of lessons to be learnt is this. My right honourable friend the Prime Minister made the point some little while ago that there is a difficulty for governments in knowing how far at arm's length they should be from important projects. I fear that governments tend to get too close to projects when they should keep further away.
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Governments are not good—I say this as a long-time member of the Labour Party—at managing certain kinds of projects. Not that this one is managed by the Government, but if they had taken a few steps further away from it we might not be having this debate. Certainly there would not have been some of the criticisms that have been made. It is a challenge to governments to know when to take a step away rather than to get too closely involved.
My third point concerns the system that was set up by the previous government and continued by this Government. I have a feeling that there has not been quite the clarity of departmental responsibility that there might have been as between the DCMS and other departments of government. Had there been, it may have been easier to manage as things went on.
Above all—and I finish with the point with which I began—the project was exciting and showed vision. We should not be churlish about something which history will judge as being more positive than some of the speeches made today.
7.31 p.m.
Lord Tomlinson: My Lords, the noble Lord, Lord Trefgarne, criticised my noble and learned friend for being over the top. I shall begin my speech with my criticism of my noble and learned friend. If I have any criticism of him at all, it is for his excessive equanimity and courtesy in the light of the unnecessary, politically motivated and quite outrageous attacks that have been made upon him, not only in this House but in another place, over far too long a period of time.
The National Audit Office report has been seriously misquoted by the noble Lord, Lord Trefgarne. I challenge him to show where it talks about "spending money with gay abandon". However, the report performs a singular service by giving a precise genesis of the Dome project. The Greenwich project—selected, as we all know, in February 1996—was quite clearly chosen for two purposes: because of its historic association with time, on the one hand, and the regenerative capacity of the project on the other. Those objectives were quite clear; they were there from the start and they were realised in the Dome project.
Greenwich never was selected by the previous government as an objective choice on the basis of the adequacy of its funding, its clear coherent business plan or its economic viability. If those had been the bases of choice, the previous government would have been forced to choose the alternative Birmingham project. I do not criticise them for not choosing it. However, they chose the Greenwich project for clearly political rather than economic reasons. To its credit, Birmingham did not do anything to rubbish the Greenwich project, although it felt a deep sense of grievance at the partisan nature of the discussion when there had been the pretence of an open competition based on proper financial viability. Were there to have been that choice, this debate would not be taking place.
Greenwich was a political choice on criteria other than financial viability, and we saw examples of it time and time again. Let me give the noble Lord, Lord

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Trefgarne, a real quotation from the National Audit Office report. At pages 12 and 13 it shows, for example, that the accounting officer of the then Department of the Environment considered the advance acquisition of land at Greenwich to represent less than good value for money. He sought, and received, a direction from the Secretary of State for the Department of the Environment to commit the funds, even though the accounting officer said very clearly that it did not represent sound value for money. That was done because of the political nature of the decision.
Clearly the Dome has not been a success. It has not been the success it was stated it was going to be in a number of respects. To that end, we should heed very clearly the sound advice of the noble Lord, Lord Sharman, and my noble friend Lord Grabiner, in relation to the basis on which the public sector should get involved in projects where the private sector has decided that there is not a sufficient basis of viability for it to get involved.
From the initial conception of the Dome, the forecasts of visitor numbers were wildly wrong. A target of 10 million became 10.9 million to 16 million; then it was reduced to 13.5 million. Those targets were set on 18th January 1996, February 1996 and 11 th December 1996. They were acknowledged by the person who created those targets as being "all over the place". Those are the words of Mr Peter Ainsworth. When he was talking about the inaccuracy of his estimates he described them as being "all over the place", but now, as the Front Bench spokesman in another place, he seems to want to wash his hands more thoroughly than Pontius Pilate could manage to do.
If the Government have made any major error of judgment in relation to the saga of the Dome it is that they trusted members of the previous government. They believed their words of commitment and accepted that they could be relied upon to act with honour. That was the decision made by the Official Opposition, at the behest of the previous government, to guarantee the continuity of the project. Events concerning the Dome have shown that the official spokespersons of the Conservative Party have proved themselves to be totally untrustworthy, unreliable and with no sense of honour in respect of the agreements that were made with them when they were in government.
The record is clear. The noble Lord, Lord Dubs, listed the decisions that were the responsibility of the previous government, from the decision to build the Dome right through to the decision to use lottery money on the basis of the business plan on which those lottery funds were committed. "Hypocrisy" and "hypocritical" are much over-used words in what sometimes purports to be political debate. In the saga of the Dome over recent months, some of the people who have participated in what seems like an increasingly frequent and politically motivated vendetta against the noble and learned Lord, Lord
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Falconer, appear to be acting deliberately, as if they wish to attract those words as descriptions of their deeds.
The noble and learned Lord, Lord Falconer has behaved with total integrity in relation to the public and to the House. He has pursued the project that was created by the previous government and followed by this government at the behest of the previous Conservative administration. My noble and learned friend has earned the support of your Lordships' House. He deserves that support. As far as I and my noble friends are concerned, he will continue to receive it.
7.39 p.m.
Lord Jacobs: My Lords, with hindsight it is always too easy to make penetrating comments about what should or should not have been done to make the Dome a success. I shall confine my remarks mainly to what I believe were the mistakes made when the Dome project was launched.
I seem to be one of a rapidly diminishing band of supporters of the Dome project at its commencement. Now, many people seemed to be certain that the Dome project would fail, but apparently were silent at the time of its launch. My own confidence in the Dome evaporated rapidly when I discovered, to my astonishment, that there was no clear idea of what was go inside it. It was never suggested that the Dome would be an architectural marvel sufficient to draw millions of visitors—although I must agree that it is an exceptional building architecturally. Clearly, the attraction had to be based on what was inside.
It appears that the originators of the concept did not even consider the possibility that, without the right attractions, the Dome could never succeed. It is like a successful industrialist deciding to build the most modern or futuristic factory in a development area such as Tyneside, and when the question is posed as to what the factory will produce, responding that he will work that out in the fullness of time. No entrepreneur would adopt such a course. Yet the creators of the Dome saw nothing unusual in not having decided what would go inside it. It seems that they believed that the concept was strong enough to stand alone even if the contents were of no great merit or attraction.
Let us consider for a moment why the Great Exhibition of 1851 was such a success. For the three preceding years, public consultations were held in all the main cities of Britain to discover what people wanted to see in the exhibition. The consultations were led by no less than Prince Albert and Sir Robert Peel. Perhaps in our time, the Duke of Edinburgh and Mr Prescott—who are renowned for their diplomatic skills—could have carried out a similar public consultation.
In one sense the Dome project was a success, for it came within 5 per cent of its budget. So the usual complaint that the Government and civil servants can never manage capital projects successfully has been refuted in this case. But that is not to say that they are equipped to manage operational businesses on a day-to-day basis.

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Where, then, did the project go wrong, apart from the obvious failure to make an attraction so exciting that vast numbers of people would demand to visit it? One can fairly compare the Dome project with another millennium project, the Tate Modern on Bankside. The Tate has the good fortune to be managed, directed and led by Sir Nicholas Serota—whose mother sits on the government Benches—who, in addition to having great artistic skills and judgment, is an exceptionally talented chief executive. That is one of the reasons why the Tate Modern has become a world-wide success. The Tate project cost just £234 million, of which only £70 million was public money, compared with the £600 million or £700 million that the Dome has cost.
Everyone in the UK knew that the Dome would be open for just 12 months. The public could not, therefore, delay their visit. The Dome secured 3 million visitors in its first seven months of operation, while the Tate Modern—which should be open for the next 200 years—secured 3½ million visitors in the first seven months after opening.
One can argue that entry to the Tate is free. That is true. On the other hand, in one year of operation the Dome has needed a subsidy of £179 million to cover its operating losses. As entry to the Tate is free, it has been granted an annual subsidy of £6 million, which, regrettably, is not sufficient. Those who run the Tate will no doubt be on their hands and knees begging for an additional sum, which I am informed is about £2 million a year. For me, that puts the whole Dome project in perspective. One can be sure that the Tate's claim for an extra £2 million will be examined rigorously, and probably argued over, while the Millennium Dome unfortunately burnt £179 million in more or less the blink of an eyelid.
Content is clearly important, but there are other factors. Location is also of vital importance. The decision—no doubt made for the usual environmental reasons—that access to the Dome would be by train or boat rather than by car or coach would very likely have caused a significant drop in visitors, particularly in the numbers from up north. The cost of travelling was an important factor for visitors to the Dome. It would have been immensely encouraging if they could have embarked on a coach in their local town and emerged from it at the entrance to the Dome. Disembarking from a coach in London and then going on by Underground is not a very attractive proposition, particularly for families with children—not to mention the difficulty for disabled people. I say nothing of the number who would have come by car or taxi.
Alton Towers, the most successful comparable project in Britain, has parking spaces for 3,000 cars and 300 coaches. Alton Towers is a commercial operation which understands what is necessary to maximise the number of visitors. Its average daily attendance amounts to 12,000 visitors, but for special events it receives up to 25,000 visitors.
A great deal has been said about the estimate for the number of visitors to the Dome, which ranged between 8 million and 17 million. As one who has examined numerous commercial projects, I have invariably
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found that while the estimate of costs may be accurately arrived at, the suspect figure is always the sales figure. The estimate of sales—or in this case the number of visitors—is invariably sufficient to cover the cost of the project. Many plausible reasons are given as to why a particular estimate is chosen, but I am certain that the key reason for choosing any particular estimate is based on a calculation that goes as follows. The cost of running a project for 12 months is estimated, usually fairly accurately; an estimate is then made of the price that can be charged for entry, and the second figure is divided into the first figure. The answer—surprise, surprise—is a number sufficient to break even: in this case 12 million.
Everyone connected with the Dome project will deny with their last breath that that was how a particular estimate for the number of visitors was chosen. Yet if one looks at other millennium projects one finds that the estimate for total revenue is always sufficient to cover the costs. Unless that is the case, they do not get the money. That is when the estimates are prepared. However, when a millennium project then incurs a huge loss, it will be found immediately that the number of visitors will have fallen well below the estimate. Just look at the Armoury in Leeds.
One may well ask why the lower estimate of 8 million was not chosen—even though it turned out that this was significantly above the actual numbers. The answer is to be found in the arithmetic. If 8 million was considered to be the likely number of visitors, the project would be making a loss; the whole project would be in jeopardy and the Dome might have been stopped in mid-stream. That was politically unacceptable.
There is no getting away from this issue; and it arises from the absence of professional commercial management. If professional management, such as those who run Madame Tussauds and Alton Towers, or even a company such as Bechtel, had been engaged for a fair fee but a very large bonus if the project did not make a loss, there would have been some very hard-headed analysis as to likely visitor numbers and no doubt other changes such as improvements in transport arrangements. However, I think it is fair to point out that, had that course been followed, the Government would have been faced with the reality of the situation—which was that it would have been impossible for the Dome to complete one year of operation without making a huge loss. So presumably the project would not have been completed. As usual, politics wins the day, and, the UK citizens pick up the bill by using lottery money to make good the losses rather than use such money for improvement of amenities elsewhere in the country.
I do not believe that governments or civil servants understand the reality of the difference between a commercially operated project which has to try to make a profit, or at worst break even, and a government-operated project for which there is in reality unlimited funding. Sadly, very few politicians have business experience and probably even fewer civil servants. No doubt everyone is claiming that lessons can be drawn from the calamity that befell the Dome.

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However, I remain uncertain whether politicians or civil servants will learn the correct lessons from this sad financial fiasco.
However, I should like to end on a slightly more cheerful note. I believe that the Dome project has been a very exciting one; indeed, in many ways it has been worth while. If the lessons that I enumerated can be drawn from the experience and changes are made when we are faced with similar projects in the future, then it will be doubly worth while.
7.50 p.m.
Baroness Gibson of Market Rasen: My Lords, if I had a title to my speech tonight it would be, "Voices from Greenwich". I have spoken on the subject of the Dome on a number of occasions in your Lordships' House and I am pleased to do so again, to give a positive approach to the Dome experience and to the future.
Before the Dome was built, the Greenwich peninsula was certainly very derelict and, as such, it reflected how run-down the whole area had become. But, more importantly, it reflected in its dereliction the lack of hope and opportunity experienced by many of those living in the area. Today the regeneration of Greenwich and of the wider Thames Gateway, as well as the development of the peninsula, are acting as a genuine catalyst for additional business, development and enthusiastic support for Greenwich and its residents.
We have heard much of the regeneration of the area and I shall not repeat what has been said. However, in relation to the river, as well developments already mentioned, I should like to emphasise that there has been a start on the infrastructures for water front transit. Two miles of the river front has been opened up to the public, the Cutty Sark Gardens have been greatly improved and an innovative river terracing scheme has been established.
The developments in the area have already provided 9,000 jobs in construction and over 6,000 jobs in other areas of work, as well as work in the Dome itself. This has benefited, in particular, younger and older workers, people with disabilities and those who have either not worked previously or not worked for many years. Many of them are young black people who are now training for future careers, rather than just gaining jobs. Employment has already been halved from its 1994 level and, for the first time in a generation, the job gap is closing between Greenwich and the rest of London.
All that has happened because of the Dome. This is recognised in Greenwich. In giving oral evidence to the Select Committee in June, Bob Harris, lead executive member for regeneration on Greenwich Council, said:
"If you look at pre-Dome and then post-Dome you are talking about two completely different pictures. Yes, these changes may have happened in time, but there is no doubt as far as I am concerned that the National Exhibition has absolutely made them work and accelerated that process, and that Greenwich is becoming a prosperous and attractive place to be and to live in".
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The Dome, therefore, has already generated for so many people a better quality of life and hope for their future.
There has been a lot of what my father would have described as "bunkum" talked about the Dome, which began even before it was completed. Indeed, it has become almost a national sport to attack it. And not always, but often, the attacks come from those who have never been anywhere near the Dome and are even hazy about where it is actually situated. I am sorry that those noble Lords who visited the Dome did not enjoy it, but I am pleased to say that they are in the minority. A staggering 88 per cent of people enjoy their Dome day, and that figure rises to 94 per cent when the millennium show is discussed. Moreover, 73 per cent of visitors think it good value for money, and 79 per cent would recommend others to visit it.
What a pity that those statistics have not been stressed, rather than the constant "moaning Minnie" attitude illustrated by many who should know better. Currently, discussions are taking place with the staff of the Dome to ensure their future—an action that I am sure everyone in this House welcomes. Recruitment advice sessions and open days are being held with advisors from Jobnet, aimed at securing redeployment opportunities for staff of all grades, ages and skills. The new bidders for the Dome are also playing their part. Legacy plc aims to spend a further £125 million developing the site and is set to create thousands of new jobs. It will be a high-tech business at the forefront of developments of the 21st century economy.
I can tell the House that the people working at the Dome and the local authority, the Greenwich Borough Council, as well as many people who live in the area, have no doubts about the building of the Dome in Greenwich. Indeed, many of the workers are both bewildered and hurt by the constant carping against the Dome, which has fed and fuelled the vitriolic press outbursts against it.
I can also tell the House that there is a great deal of anger in Greenwich about the Conservative Party's attitude to the Dome. The blame for many of the Dome's problems is being laid fairly and squarely at the door of those who have deliberately encouraged and taken part in the bad publicity for the Dome. That is not the Government and it is certainly not my noble and learned friend Lord Falconer, whose commitment to working for and supporting the Dome and its workforce has been second to none. Indeed, the recent involvement of Legacy plc with the Dome is seen by many Greenwich residents as yet one more positive step that my noble and learned friend the Minister has taken.
Finally, I can do no better to illustrate the positive local attitude to the Dome than by quoting the leader of Greenwich Council, Chris Roberts, who said this week:
"Our bid to host the Dome in Greenwich was always based upon the long term legacy that it offered the Borough, and the recent news about the Legacy bid confirms that we were justified in that vision. The Council will be working with Legacy to ensure that Greenwich residents are well placed to make the most of these new opportunities".

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Thank goodness for positive thinking. If every politician, press mogul and the private sector had been as positive towards the Dome as my noble and learned friend Lord Falconer has been, they would have served this country better in its millennium year.
7.56 p.m.
Lord Harris of Haringey: My Lords, I believe that I speak more or less at the mid-point of this debate. Therefore, I intend to be brief, which will no doubt be a relief to all noble Lords. As my noble friend Lady Gibson pointed out, it has been fashionable throughout this year to run down the Millennium Dome. I believe that that is part of a wider disease in this country, which means that we are dismissive of anything new or different.
The Dome had a difficult opening and it did not help its subsequent coverage in the media that so many distinguished—and perhaps a number of not-so distinguished—newspaper editors and columnists, media moguls and other assorted opinion-formers had excessive waits for security clearance at Stratford Underground station. But the Dome was also subjected to a lot of negative sniping in advance of that from those MPs and others who did not believe that the country's celebration of the millennium should be centred on London. Indeed, the same people seem to object to anything being based in the capital city.
I have to say that I am saddened by the anti-London attitudes in the rest of the United Kingdom. After all, London is our capital city. It is the capital for everyone in the country as well as Londoners. We should all be proud of it and not try to knock it or starve it of funds. The Dome debate outside your Lordships' House has been coloured by the many anti-London voices who think that London gets too much. Indeed, we heard something similar in a few of today's contributions.
It is sad that so many politicians from outside London find it difficult to celebrate the Dome, the new Tate Modern or the Globe Theatre. These are national monuments—achievements of which everyone in the country should be proud. Yet those who knock London cannot accept it if anyone suggests that their areas are less than perfect, however much the remarks are made tongue in cheek. Today, for example, I find myself attacked in the Evening Standard by the former Lord Mayor of Birmingham for saying that I am a fan of this great capital city of ours. I subscribe to Dr Johnson's view: if you are tired of London, you are tired of life. Admittedly, I went on to say that I also subscribe to his lesser known dictum that if you are tired of Birmingham, you are absolutely right—
Noble Lords: Oh!
Lord Harris of Haringey: But that does not mean that London is threatened by Birmingham's success; indeed, quite the contrary. I should also make the point that this is not so much a criticism of Birmingham but perhaps of a number of places slightly further north. This jealousy of London which has so undermined the Dome is very damaging. It rests on the incorrect view that London has received and continues
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to receive more than its fair share of resources. The decision to site the Millennium Dome here was, for such people, yet further proof of that incorrect belief.
Yet the facts are rather different. It is not the case that London receives more than its fair share of resources. The opposite is the case: London subsidises the rest of the UK. It contributes nearly £20 billion more in taxes than the Government allow to be spent in London. What is more, London acts as the engine for the UK economy. The fortunes of the country as a whole are entwined with the fortunes of London. London is not only an employer on a massive scale accounting for 15 per cent of the workforce, but also a vital domestic market. Each year the city imports goods and services worth £53 billion from the rest of the UK and more than 4 million jobs outside London depend directly or indirectly on supplying those goods and services.
London is a magnet for the whole world. It is the main gateway to the UK and possibly the premier gateway to the European Union. Some 23 million visitors come to London each year, spending £7 billion, and many go on to the rest of the country. My point is that the UK's prosperity depends on London and its prosperity and security.
That is why the Dome and its visitors—even the more realistic visitor figures that everyone today accepts—were an important investment in locating London, and continuing to locate London, as a prime visitor attraction. It is to be hoped that not too many overseas visitors were put off by the sniping.
I conclude by echoing the words of my noble friend Lady Gibson. The Dome has also been a vital contributor to the development of the Greenwich peninsula and the wider Thames gateway. The galvanising effect of the 1996 decision to locate the Millennium Experience in Greenwich prompted a huge amount of regeneration activity that has begun to lift the whole area out of the economic decline it had been in for a generation.
The direct impact of the Dome has resulted in the 8,700 construction jobs that my noble friend mentioned, 9 per cent of them going to Greenwich residents, and the 5,700 operational jobs, 40 per cent of them going to Greenwich residents. We have seen the decontamination of 300 acres of derelict land; the creation of 50 acres of new parkland; new leisure facilities; a new primary school and health centre; 1,400 new homes and an expanded industrial estate. There are the transport improvements attributable to the Dome. I refer to the completion of the Jubilee Line extension, which I rather suspect would never have happened without the Dome; the new millennium pier at Greenwich; the widening of the Woolwich Road; the Cutty Sark station on the Docklands] Light Railway and so on.
All of this has kick-started the wider economic, environmental and social regeneration of the entire area. The expected outcome of this over the next 10 years is 30,000 new jobs, increasing the jobs base in the borough by 60 per cent; 10,000 to 15,000 new homes and major improvements in existing housing;

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1,000 acres of land decontaminated; and a general raising of skills and educational achievement among local residents and an improvement in their health status.
Those will be real and lasting achievements and, if noble Lords want to draw up a balance sheet for the entire Dome enterprise, the impact on the local economy must be properly recognised, as should the impact on London and the beneficial effect that that will have on the nation as a whole.
8.2 p.m.
Lord Lyell: My Lords, noble Lords will have heard many interests declared. I shall start with that, not that I have been to the Dome. However, the noble and learned Lord who is to reply to the debate will know that I am a compatriot of his; I am a Scot. Most Sunday evenings I am fortunate enough to obtain a window seat on one of the flights from Edinburgh to Heathrow when I am able to look down upon a marvellous structure in east London. It is a striking and impressive structure and is broadly similar in outlook to some of the structures that I viewed earlier this month, St Peter's in Rome and, indeed, the lovely cupola of St Paul's in London.
The structure is beautiful from above but I think that even the noble and learned Lord and all noble Lords who have spoken this evening might admit that the events at that site on 1st January 2000 were not the most glorious debut for the project. Many reasons have been put forward for that which I may mention later. The Motion that we are discussing this evening concerns the,
"planning, management and operation of the Millennium Dome, and of its future".
I concentrate my remarks briefly and humbly on the financial management and control of the Dome. I declare my interest as a member of the Chartered Accountants of Scotland. Many years ago when I undertook my apprenticeship in Glasgow and then in London I was taught as a young apprentice auditor to ask questions. The noble and learned Lord, Lord Falconer, may have considered a career with that wonderful institute north of the Border. Certainly many of the remarks that he has made over the year—we await his reply tonight with eager anticipation—might have benefited from an apprenticeship in our perhaps slightly narrower and, I dare say, less lucrative profession.
However, in this debate I take cover behind the excellent speech of the noble Lord, Lord Sharman, who, alas, has had to slip out of the Chamber, no doubt briefly. He used the marvellous terms "breathtaking" and "byzantine". He is a man of enormous experience, far greater than mine as an accountant. I await with great anticipation the speech of my noble friend Lady Noakes. It was nice to hear the speech of the noble Lord, Lord Jacobs. The noble and learned Lord will no doubt appreciate the wisdom and the trenchant remarks of the noble Lord, Lord Bruce of Donington, who for many years has been a representative of the accountancy profession.
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Many years ago I sat roughly in the same position as the noble and learned Lord, Lord Falconer. When any trouble was directed at me I used to invite the Opposition to play what I called a game of Bingo. I used to direct noble Lords' attention to various Acts. That worked wonders. I ask noble Lords to glance briefly at the National Audit Office report. The first provision that attracted my attention is to be found on page 31 at paragraph 2.52. That paragraph states—perhaps not in the language of my noble friend Lord Trefgarne which caused the noble Lord, Lord Tomlinson, some difficulty—
"the Commission's own assessment, based on 4.4 million paying visitors, was that the Company might run out of money within two weeks and might require an additional",
sum of money. The notion of paying visitors is important to an accountant. When the report came to the attention of the noble and learned Lord, let alone any of his advisers—I understand that he has many responsibilities—I believe that it would have triggered a trip wire. However, I have never had the responsibilities of the noble and learned Lord.
Paragraph 3.7 of the report on page 40 refers to what I shall term the "forecasts" which are part of the major business plan. The paragraph refers to the run up to the opening of the Dome. The paragraph states:
"The Company used this data in November 1998 to estimate that some 8.74 million people were 'likely' to visit the Dome and that a further 3.65 million 'could be persuaded'"
to visit the Dome. I am only an accountant. We have to leave this to the marketing people. But that might cause me to stub my little toe on a trip wire.
I apologise for directing the Minister's attention back to paragraph 3.3 on page 39. There it mentions the vast range of visitors and those who might appear. But certainly there is an interesting figure mentioned in that paragraph which hints that 11 million people might visit the Dome. Paragraph 3.13 states that I million schoolchildren would obtain free entry.
There will be many reasons for that. I am a humble auditing accountant. Can we differentiate between paying visitors and those with free entry? It will be nice if there will have been 6 million visitors by the end of the year. But does that figure include 5 million paying visitors and 1 million free entry visitors? The 1 million school children with free entry might have to be included in the financial forecast. Visitor numbers seem to be rather like my skiing and that of my noble friend Lord Selsdon, downhill very quickly, with figures decreasing from 12 million to 10 million to 6 million and now to 4.5 million. According to the NAO report, the figures at the end of August were 3.8 million. It is hoped that the figure will be 6 million at the end of the year. I hope that that will include 5 million paying visitors and 1 million free entry visitors, or thereabouts.
The original figure of £199 million was presented in the business plan of May 1997. That is stated at the end of the report in large capital letters.
Lord Falconer of Thoroton: My Lords, perhaps I may deal with that point. The May-April issue was raised with the noble Lord, Lord Crickhowell. I have

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had produced the evidence given by Miss Jennie Page to the Select Committee. It makes clear that the 12 million visitor figure came from the NMEC board meeting in April 1997. What the National Audit Office report indicates is that the business plan was put to the Government in May 1997 for the purposes of the review. That is why it is called the May business plan in the MAO report. It was in fact approved in April 1997 by the NMEC board.
Lord Lyell: My Lords, perhaps I may I continue. The figure was accepted by the noble and learned Lord with alacrity. Perhaps he had the number 15 jersey at Twickenham; or perhaps one of his predecessors accepted the figure. But the noble and learned Lord is a traditional lawyer; I am not. I leave the matter there.
I was somewhat scared when I found on page 52 of the National Audit Office report a note addressed to "Dear Charlie". I suddenly thought, "Good heavens, is that something I should have answered?" However, I was delighted to note that at the top left-hand corner of the page the letter is addressed to "Lord Falconer of Thoroton QC". My noble friend Lord Crickhowell pointed out that the third paragraph of the PWC report makes salutary reading. However, a slight bruising of my little toe was caused by page 53. The second sentence of the reply of the noble and learned Lord to the noble Earl, Lord Dalkeith, states,
"Like you, I was shocked by what the PWC report implied".
This is nearly nine months into the year. I hope that I am not being impudent; it was perhaps at the end of a holiday season when matters in Whitehall tend to ease off somewhat. Perhaps the noble and learned Lord had other matters to consider. He made a fair statement in July. If the noble and learned Lord had used the word "startled" I might have understood but he says that he was "shocked" to receive the news. It seems odd that no one in his department had presented to him those serious figures relating to the budget. That startled me and caused me some amusement.
The noble Baroness, Lady Gibson, made a valid point, as did the noble Lord, Lord Harris of Haringey, with regard to London. It is excellent stuff; I enjoy it greatly. However, I travel about the furthest distance to this House. The Official Report of today's debate may go down well in the glens of Angus, Kirriemuir and Forfar. The reports I have received from those who have visited the Dome have not been too harsh. Nor have they been as glowing as those of that eminent institution in the north-west referred to by the noble Lord, Lord Dubs. I wonder whether the noble Baroness and the noble Lord, Lord Harris, are suffering from a case of what some call "BSE"—blame someone else. I hope that that statement is not over the top.
At paragraph 3.23 on page 44, noble Lords will note that in February 2000 the company reviewed its marketing approach, and so on. The original reason for setting the level of budget was,
"that ticket sales would be driven by: massive free media exposure; word of mouth recommendation; [and] a traditional fascination with 'Expo'-style events".
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I am fascinated by paragraph 3.25. It states that the company considered that several factors had not helped the finances. First, there was,
"negative media coverage which undermined people's confidence …; word of mouth had not spread the message to the extent anticipated".
That is somewhat at variance with what the noble Baroness, Lady Gibson, said. It states thirdly that,
"the Dome's content had not been explained".
and so on, and that,
"there was a perception that travel costs were high and travel times long".
That was referred to by the noble Lord, Lord Jacobs. The report is from an austere, correct, middle-of-the road organisation. It is not from the Conservative Party; it is not from this side of the House. I hope that I can align myself as a simple accountant. I do not think that all the people who have not visited can be wrong all of the time. That may be carping. It is in the past and perhaps should justifiably remain there.
The Minister may have much to say in winding up. Perhaps he will write to me. The word "May 1997" is written in large letters on page 71.
Lord Tomlinson: My Lords, if the noble Lord wishes to quote the whole of the report, perhaps he would like to cite the final paragraph on page 75. He has nearly reached it, but in case he missed it, it states:
"It is unsatisfactory that procurement processes operated in October to December 1996 did not conform to those agreed with the Commission".
Lord Lyell: My Lords, I am a simple accountant. Perhaps we can discuss the matter at the bar. Perhaps I may finish my own speech. The issue to which I refer is on page 71. We have heard a great deal about a 5 per cent overrun. Can the noble and learned Lord explain this to me? In the business plan there was due to be a shortfall of £199 million. Is 5 per cent of that to be £10 million or thereabouts? How is that figure arrived at? What is this figure of 5 per cent over budget? I am not entirely clear.
I conclude—I am sure that that will give the noble and learned Lord much pleasure—that the contents of the Dome have not given entire satisfaction. Paragraphs 3.23 and 3.25 demonstrate that the contents of the Dome have not been entirely what the public wanted. I do not know whose fault it was. Perhaps the matter goes back to April 1997 or the year 1996.
I have taken two sets of visitors round your Lordships' House. They would have paid a great deal more to go round the House than the cost of entry to the Dome. One visitor was the wife of the head of the Australian army. The others were a bunch of "Miss World" people. They had never seen anything like it.
I have a great deal of sympathy for the noble and learned Lord but if he can be of help I shall be grateful.
Lord Grabiner: My Lords, I do not want to detain the noble Lord any longer, because we have already had 17 minutes from him. I apologise to the House, but

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I cannot resist asking him a question. He drew our attention to paragraph 2.52 of the report and appeared to criticise my noble and learned friend because one sentence in that paragraph says that it was estimated that the company might need an additional £45 million. The next paragraph says that an application was very promptly made for £53 million. Paragraph 2.58 records the fact that on 4th August, an additional grant of £43 million was made. I do not understand the force of any criticism that he may be seeking to make.
Lord Lyell: My Lords, I have said enough. My remarks rest.
8.20 p.m.
Lord Sawyer: My Lords, I have a simple point to make and I shall try to make it simply and briefly. I congratulate the previous Conservative government on having the vision and foresight to build the Dome. Their decision was right in principle and they were right to choose the Greenwich site, which will now fulfil its potential as an important and vibrant part of our capital city. They were right to make decisions about senior management and business planning. With hindsight, those decisions were not perfect, but they had vision and took us forward in the right direction. They were right to take decisions about lottery finance and to be bold about visitor projections.
The previous government took risks to achieve a big vision. Nothing of significance has been achieved on that scale in our history without risks being taken to achieve a big vision. My party was right to take the project forward in government. Yes, we should have changed course sooner on a number of aspects, such as visitor projections, management structures and financial control, but we were right in principle to keep going and to take forward the procedures that had been put in place by the previous government.
The politicians and the journalists who used the management failures to undermine public confidence in the project were wrong, not the people who chose to take it forward—and they were wrong in a major way. There is another side to the balance sheet or the story of the Dome, which has been ignored by most of those who have spoken—with one or two notable exceptions, such as my noble friend Lady Gibson—or distorted by the Conservatives. That is due to the under-representation in the Chamber of the millions of people who have had a damned good day at the Dome and will remember it for the rest of their lives.
The figures have already been given, but I do not mind repeating them, because repetition is a requirement for political success. The latest figures, produced by MORI between August and September, show that 88 per cent of visitors were satisfied with the Dome, 68 per cent thought that it was something that they should be proud of, 79 per cent would welcome a day at the Dome and 94 per cent enjoyed the millennium experience. Those figures should be on the record, along with the contributions made by the doubters, the managers and the accountants. The
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Dome debate has been dominated by cynical journalists, point-scoring Opposition politicians, accountants and businessmen. There needs to be a little balance. We should remember that most of those who went to the Dome loved it and enjoyed the experience. Their voices have been absent.
The trade union movement organised a day at the Dome—on May Day, understandably. Some 35,000 trade union members attended on 1st May this year. That is not quite the same audience that the noble Lord, Lord Jacobs, might find attending the Tate Modern. They were working class families from all over Britain who travelled by train and coach. Their comments are important and need to be on the record: John Churchill, "Excellent"; Carolyne Burten, "Fantastico"; Julie Underwood, "Excellent; better than was told"; Cameran Day, "At last"; Valerie no surname, "What a day"; Mary Whelan, "A wonderful day"; Annie Thompson, "Get better pens—hope York Health is better"—she must have worked in the National Health Service; Rosalind Alexander, "Keep up the good work"; June Thomas, "Super day—super way to get the message across. Well done".
Those voices and many more of them need to be on the record, so that when we come to pass our eminent verdict on the Dome, the people's verdict of, "Thank you and well done", is not forgotten. When the people's verdict is recorded, of course they will note the failures in leadership and financial management, but they will not condemn one person for those failures. They will rightly hold the negative attitudes of opposition politicians and all their journalistic courtiers responsible for much of what went wrong. I think that they will hope against hope that the next time that we need to mark a momentous occasion in our history, there might just be a possibility that the classes who govern, manage and comment on our affairs will for once pull together and make a success of something that the people love and enjoy.
8.26 p.m.
Baroness O'Cathain: My Lords, when I saw the speakers' list for the debate, I had a feeling that it was going to be a long, hard night with endless repetition and recrimination. There has not been too much repetition, but there has been quite a lot of recrimination, some of it misplaced.
If I am listened to at all in this place, may I make a plea that we try to get away from the insidious and demeaning blame culture that is so much a part of our civilisation nowadays? I am sorry that the noble Lord, Lord Puttnam, is not in his place, because I pay tribute to him for mentioning the same point.
The blame culture is one of the most disfiguring aspects of what we like to think of as civilised society. I have always thought that ever since, as a small child, I was told that the worst sentence in the English language was, "It broke". I am determined not to be a practitioner of the blame culture. Trading insults has never had any place in our House and I hope that it is not being introduced. I gently suggest that the Minister might think again about saying that the Tories have no

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financial sense and no honour and show gutless hypocrisy. I do not think that he really meant that. He is too honourable a man for that
The four aspects of the Dome that the debate is intended to focus on are its planning, management, operation and future. I shall try to stick to those headings and not talk about the great developments in Greenwich, including the widening of the local road, improvements in existing houses and the uprating of the skills of the local population. Such comments have been impressive and informative, but do not relate to the planning, management, operation and future of the Dome.
Looking at those four headings makes me realise that the Dome started with a huge disadvantage. That list contains all the rational, tactical processes of big businesses, but I suspect that it is not the normal tactical process list of governments. Can governments of whatever political persuasion produce experts in the planning, management and operation of a massive project? Almost certainly not. I know that the French have a successful record of grands projets, but France has a very different training and career structure in its public service. At the upper echelons of the French civil service are people who have been commercial engineers, financiers or marketing experts. That is not true in this country. The Minister has already acknowledged that by saying that the lesson that governments cannot manage such projects has been learned.
We all have the benefit of PhDs in hindsight. I guess that many people, besides those who have already mentioned it in your Lordships' House this evening, now say that such a large and complicated project should not have been driven primarily by the public sector.
When the project was first mooted, many were sceptical, particularly from a planning point of view, but I fear that scepticism is a national characteristic. As the project gained momentum, another problem emergecl—one that most of those involved still do not want to talk about and one that I have never seen described in the endless acres of newsprint about the Dome.
The problem was the attitude of British business. British business was leaned upon in the most heavy-handed way to support the Dome. Both the previous government and this Government were determined that British business should play a major role in the financing of the content of the Dome. I looked on aghast when I saw the huge sums of money involved and felt that, in all conscience, shareholders' money was not going to be well spent.
For some of our huge global companies and our big and prosperous national companies the monies involved were not a large part of their profits. However, the pressure applied was something else. A hundred and sixty million pounds of sponsorship was given grudgingly and thousands of man-hours of senior management time were wasted in trying to justify the amount of money spent by interfering in the
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content decisions. At a rough estimate, I believe that the cost to British business was probably at least £200 million.
Why was British business so gullible? I believe it is a fact that business has always been closer to the Conservative Party than to the Labour Party. There were some difficult moments when in May 1997 business began to realise that it had few friends among the politicians who were now in power. That, of course, is a generalisation. But every business needs to have good relationships with those close to the policymakers, if only to have a "way in" to ensure that it can get its message across. Requests to stump up large sums of money to sponsor the Dome were gulped at but acceded to. I firmly believe that an amount of arm-twisting went on. That was not good enough but it was not resisted.
My personal view of all that is that not enough thought was given by business to the requests. Business should have realised that the attendance figures could never materialise at the high entrance price. The Dome never had more than four times the pulling power of Alton Towers. Therefore, business should been much more forthcoming in saying, "We don't think you'll make it and therefore we could not justify £160 million plus masses of senior management time just to put our name before 4.6 million people". I am taking the noble and learned Lord's figures of 5.6 million, less the one million schoolchildren. However, businesses wanted to curry favour. They were seduced.
Perhaps I may ask the Minister a question. Whatever happened to the great fund-raising abilities of IMG? Did it get paid handsomely for its efforts? As I recall, we had quite a skirmish on the Floor of this House when the announcement about the IMG involvement was made, but there has been no mention of it since. I fear that the Government must have been encouraged by the monies pouring in from big business. They probably believed that a huge wave of enthusiasm was being generated for the Dome. As a result, they went on planning blithely. That was obviously a mistake.
The second issue in the wording of the title of this debate is "operation". The operation of the Dome is a completely different area, and I am absolutely sure that all involved did their level best with great enthusiasm. However, the marketing of the Dome left a lot to be desired. The noble Lord, Lord Sharman, has already referred to that. I simply wonder when large companies will resist the urge to become famous TV stars by allowing fly-on-the-wall documentaries to be made about their organisation. One has only to think of the harm done to the Royal Opera House and St Paul's Cathedral. The fly-on-the-wall documentary about the Dome was not good news. It must have put off very many people and contributed to the "anti" feeling that abounded right from the opening of the place. I wonder where the marketing director was when that decision was made. I hope that he is not still in place.
Those points have not been aired. Both may seem inconsequential but they did nothing to endear the project to potential visitors. Perhaps I may remind

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your Lordships that responsibility for both those actions does not lie at the feet of the Minister. They happened long before the Dome opened and before he loyally took on the job that none of us would have wanted.
Many contributors this evening have concentrated on the subject of finance. I shall not add to the points already made.
The fourth area to be debated relates to the future of the Dome. I cannot understand how any of us has the vision to say that this, that or the other should happen. I only hope that whatever happens, it will be successful. By the law of averages, it should be. There could hardly be more catastrophe around that site.
I ask the Minister what will happen to the exhibits. Are they to be sold or destroyed, or are they to be returned to the sponsors to be sold or destroyed? Many of them could embellish a local amenity in other parts of the country. It would be good if a place outside London could finally benefit from part of the expenditure entrusted to the Dome, bearing in mind that much of that expenditure was contributed to by men and women throughout the country through the National Lottery.
8.35 p.m.
Lord Bruce of Donington: My Lords, I say at the outset that from the beginning, and until and including now, I speak to your Lordships as a supporter of the building of the Dome and of the establishment of the various facilities, and so on.
In another place in the late 1940s and early 1950s I had the experience of being present during the establishment of the Jubilee Exhibition on the other side of the Thames. I well remember that at that time there was a good deal of furore about the amount of government expense involved. Government expenditure had a certain significance, even in those days. Yet, many of us felt—I believe that the feeling was common throughout the nation—that, after the experiences that we had all endured in one way or another during the war, we were entitled to have a celebration. The economic grounds really did not matter so long as we could celebrate.
It is a fact that the 1951 exhibition was a success. I spoke to the Minister, Peter Mandelson, about this only a few months ago when we were discussing the role of his grandfather, the late Lord Morrison, in the establishment of that particular celebration. He was surprised to learn from me that Herbert Morrison, as he then was, took very much for granted the success of the Jubilee celebrations. He always regarded as the most important thing in his career the building of Waterloo Bridge. That was an extraordinary thing, but it shows what the climate of opinion was in those days.
Now we come to the Dome. Although the title of the debate concerns the various events that have taken place, I gather that by common assent it has been agreed—unofficially or otherwise—that it could provide a debate upon the report of the Comptroller
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and Auditor General which has been widely quoted this afternoon, and rightly so. Perhaps I may say that, although the accusation may be made that the National Audit Office has made observations on the basis of hindsight, in the circumstances it is very difficult to know on what other basis they could be made. Anything that happens after the event is hindsight.
For myself, I wish to congratulate the Comptroller and Auditor General and his staff. Although full of findings as to fact and certain guarded observations as to opinion, they have produced a report of such validity and neutrality as to make it very difficult for any political party, including my own, to make capital at the expense of its opponents. Voices more skilled than mine can give an opinion on that. However, it is quite clear that they sought to present a report which was as objective and as free from political partisanship as it possibly could be.
Your Lordships will not be surprised to learn that I have not been to the Dome. Unfortunately, a physical affliction in my spine has prevented my walking more than a few yards to the end of the other place. Undoubtedly, I shall go to it in due course. But I must say that there has been an extraordinary outburst by, I regret to say, some of my own people—and I still regard them as my own people—as to the cost of all this. Estimates have been made that we may lose some £900 million. How enormous. Indeed, the noble Lord, Lord Trefgarne, who is unfortunately not in his seat at the moment, thundered to your Lordships that this was public expenditure and there had to be the utmost examination and rigour applied to the application of public funds. I regard the amount of public funds involved in this as peanuts.
I have good reason to say that. Why should I be indignant about it? I hope that there will be no groans when I say that for the past 20 years, I have been drawing your Lordships' attention to fraud and irregularity on a massive scale in Europe. As my reward, I have received somewhat unwelcome observations as to my advancing years and how they may have affected my judgment, observations about my partisanship, my ignorance and so on. And yet I was ultimately proved to be right after some 20 years.
Perhaps I may make this observation on a topical matter about which, no doubt, I shall be reproached again and again and again. At this time we are really tearing our hair out about the possible loss of as much as £900 million. And yet only three days ago the Court of Auditors' report on European finances in the year ending 31st December 1999 announced losses of £5 billion without any outrage spreading anywhere in the House.
That strikes me as being slightly incongruous. Of course, the £5 billion that we have lost in that regard and many billions in the years before is irrecoverable. But it is virtually certain that the £900 million, which has been mentioned this afternoon with some accuracy, and more, will be recovered for the very reasons which have been brought to the notice of your Lordships' House by the noble Baroness, Lady Gibson, and my noble friend Lord Sawyer.

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The amount that we shall lose, about which there is all this outrage, will be recoverable and will be recoverable again and again and again whereas what has been lost and what your Lordships in your wisdom have chosen to ignore when I have mentioned it—the various losses through fraud and irregularity—is irrecoverable.
Therefore, I believe that we are approaching the matter from a slightly dishonest standpoint if we try to make any party capital out of it at all. I am a good party man, I think, and to my credit, I have many years of complete loyalty to my party, which I joined in 1935. That is longer than some of your Lordships have been alive.
What can we learn from the report? As your Lordships would expect, I have read the report two or three times. It mentions two rather new phenomena. It mentions the degree of reliance which managers of business and even civil servants—or should I say more particularly civil servants—place on the services of so-called experts.
One of the leading matters on which they were advised—whether they were in the Tory government of the time or Labour is quite immaterial—was an estimate of £12 million turnover per year. It was accepted thereafter that that was at the higher end of the advice of the expert management consultants—note the word "expert" and note the words "management consultants".
Those who have been in the accountancy profession for a long time, as I have, know perfectly well that there is certain information the accuracy or near accuracy of which is vital; that is, the estimate of future business. Everything depends on it. Once you have determined a reasonable view, then your capital investment follows; your whole apparatus of trade follows; your whole profitability follows; the entire effect of your financial circumstances in terms of required finance and phasing all depend on that.
Why, oh why, oh why did those responsible or those who succeeded them accept the higher estimate of 12 million turnover? Why did they do that? That is one of the mysteries which that most admirable report does not seek to address.
There was an additional difficulty which any prudent management, whether it be Tory, Conservative or maybe Liberal, might care to take into account. The proposed exhibition in the Docklands, the Dome, had to be so phased that the phasing, once fixed, remained fixed.
In the 1951 exhibition, for example, if the weather forecasts, such as they were, had predicted anything like the inclement weather and deluges which we have had in the earlier months of this year, the project could have been moved forward. But the Dome had to be tied to an anniversary—1st January 2000, for the millennium year. All had to be phased accordingly. There was no room at all for variation.
When I mention that, I trust that the House will agree with me—and I am quite sure that the Minister will agree—that we owe a lot to Miss Jennifer Page for having delivered the Dome on time. For whatever
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reason she may have been discharged, and I am not quite sure about that, nobody can blame that upon her.
What is the lesson? The lesson is that we can all make mistakes. We must all admit the feasibility of error, even those dogmatic among us, including possibly myself.
Noble Lords: No, no!
Lord Bruce of Donington: My Lords, we must all accept the feasibility of error. From that it flows once again, as though it came from Aneurin Bevan himself: the experts should be on tap, never on top.
For my part, I wish the Dome every success. As soon as the doctors have manoeuvred me enough, I hope to be able to go and see it. In the meantime all of us, including myself, can pray that we ourselves will never make any larger mistakes either in our business, professional or political careers.
8.52 p.m.
Baroness Noakes: My Lords, one of the most shocking things that I have heard during this debate is the noble Lord, Lord Bruce of Donington, commenting that £900 million is peanuts and, furthermore, going on to make a wholly unsubstantiated forecast that the whole of it will be recoverable many times over.
The noble Lord is a member of the Institute of Chartered Accountants, of which I was president last year. As a much honoured member of my institute, I believe I shall have to recommend him for continuing professional development so that he can get straight in his mind matters relating to numbers. We are talking about very large sums of money.
I read the NAO's report with incredulity. If we found the levels of financial and operational expertise that seem to have existed in NMEC in any commercial company, that company would have imploded or, to be more technical, would have gone into insolvent liquidation. I want to touch on one or two of the financial aspects of this matter.
The NAO report, somewhat inaccurately, tells us that the financial difficulties were largely as the result of shortfall in income. Today we have heard much about those shortfalls in income. Remember that ticket sales and associated visitor income will fall short of the original budget by a staggering 70 per cent. We are talking about large orders of magnitude in terms of getting estimates wrong.
I shall not go through the sequence of the 10 million and the 12 million, although I support the noble Lord, Lord Bruce, in being surprised at the figure of 12 million being adhered to notwithstanding that a prudent estimate of a lower figure—namely, 8 million—had been produced. We can all view matters with hindsight, as a number of noble Lords have mentioned.
In business one learns that success or failure often comes down to how well risks are recognised and managed and not how well the predictable parts of the business are managed. Identifying risks and managing

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them effectively is part of modern corporate government. At the time that these forecasts were being used for the purposes of approving significant sums of lottery money being handed over, there appeared to be a lack of appreciation of the fact that there should have been significant contingency planning around an area of major uncertainty; namely, visitor income.
There was still much to play for. We knew that the content was not settled; access was not settled; marketing plans were not settled; and pricing was not settled. People should have been focusing on many matters in a detailed way. Sound business planning and sound business management are about identifying those areas, thinking the unthinkable in terms of what could go wrong and producing sound plans in response; not waiting until the year starts and we find that advance sales have fallen massively short of budget and saying, "There is not much we can do about it". Much should have been done a lot earlier.
I do not believe that it mattered that the plan was dated April 1997. The fact is that it was not submitted until after April 1997 and, therefore, no government decision could have been made until May 1997. When that plan was submitted for decision it should not have been approved and the project should not have been given the go ahead as it was without serious consideration being given to detailed contingency plans. My reading of the NAO report, and anything else that I have read, does not display that there was ever any appreciation that this was a major risk area which should have been dealt with. The project was simply given the approval to go ahead. That is not a decision made by the former government; it is a decision made by the current Government.
I shall now say a little about directors and the role of directors in NMEC. My noble friend Lord Trefgarne talked about whether proper accounting records had been kept and there was a query raised by a noble Lord on the Benches opposite. If one looks at the PricewaterhouseCoopers' report—project Mozart—one will see that the systems were poor, did not record all the liabilities and some of the assets were not really assets at all. We have learned that the company did not have a proper asset register. I suspect that one could not have said that the financial position of the company could have been disclosed with reasonable accuracy and, therefore, proper accounting records could not have been kept. That is one important area of the responsibilities of directors under company law, and this is a company that comes under company law.
Another point is that directors must not trade while insolvent. The PricewaterhouseCoopers' report reported that in August 1997, as we have heard, the company was insolvent. The NAO report says that—
Lord Falconer of Thoroton: My Lords, the noble Baroness will be aware that the reason why the PricewaterhouseCoopers' report said that was because of the unidentified wind-down liabilities. She will also agree that the directors would have been bound, as a matter of law, to continue trading until they made the
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application to the Millennium Commission because that would be in the best interests of the creditors. She will also agree that within four days of making that application, it was granted.
Baroness Noakes: My Lords, I hear what the noble and learned Lord has said. Perhaps I can continue. The NAO report also gives the view of the current chairman of NMEC that the company was probably insolvent back in February 2000. The question is: was there a responsibility on the directors to respond once they knew about that? There are bigger questions about when the directors should have known that the company was insolvent. If the company had been insolvent for most of the year, the grant applications—
Lord Falconer of Thoroton: My Lords, I apologise for intervening again. The noble Baroness is making quite significant allegations against the directors, who are not here to defend themselves. To be fair to them, she should perhaps speak to the following matters: first, the PWC report identified the company as being insolvent because of the unidentified liabilities; secondly, the directors would be bound to go on trading until they made the application to the Millennium Commission; and, thirdly, the Millennium Commission granted the application within days.
Baroness Noakes: My Lords, the most important point is the view of the company chairman that the company had been insolvent for most of the year. One has to query whether any of those grant applications were properly made in order to deal with that matter.
Lord Falconer of Thoroton: My Lords, the people against whom the noble Baroness makes those allegations are not present. It is important that she answers my point.
Lord Grabiner: My Lords, I am grateful to the noble Baroness for giving way.
Baroness Anelay of St Johns: My Lords, will the noble Lord give way? Members on the government side may care to reflect upon the way in which we normally conduct our debates in this House. The Government are here to answer questions. When a Member of the Opposition makes a point, and when he or she is able to check the facts outwith the House, I am sure that he or she will wish to write to the noble Lords concerned. If the noble Lord, Lord Grabiner, wants to ask a question of my noble friend, perhaps he will give her the courtesy of the opportunity to make another point first.
Lord Grabiner: My Lords, with great respect, whether or not the noble Baroness wishes to give way is a matter for her. My understanding is that she did give way.
Lord Trefgarne: My Lords, the noble Lord is a comparatively new Member of your Lordships' House. His intervention is not in accordance with the traditions of this place.
Baroness Noakes: My Lords, perhaps I may continue. Under company law, if it is proved that

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directors have traded while insolvent, or not kept proper accounting records, there are penalties. However, it is unlikely that that would ever now be a relevant issue because we have heard that the Government have given full indemnity to all the directors for any civil liability, including for wrongful trading. Indeed, the noble and learned Lord gave an undertaking that there would be no actual insolvency, which is what usually triggers such examinations, because the Government would bail out the Dome company one way or another.
I am trying to make the point that the Government have totally excused the directors for their part in governing the company's affairs.
Lord Falconer of Thoroton: My Lords, the Government have given no indemnity in respect of wrongful trading. As the noble Baroness knows full well, wrongful trading involves knowing that one is trading wrongfully and no such suggestion is made here unless the noble Baroness is making it. If she has material to suggest that such indemnity has been given, she should point to it.
Baroness Noakes: My Lords, my understanding was that the indemnity that was given in the earlier part of this year covered all such matters.
Lord Falconer of Thoroton: My Lords, the indemnity did not cover knowingly trading or fraudulently trading in a way that one knows to be wrongful. The facts are important.
Baroness Noakes: My Lords, I apologise if I did not use the correct legal language.
Lord Falconer of Thoroton: My Lords, it is a much more fundamental point than simply fact. It concerns ensuring that what one says when referring to people who are not here is accurate.
Baroness Noakes: My Lords, perhaps I can turn to the role of the shareholder. The NAO report shows how closely involved the shareholder was in the affairs of the company, attending most of the board meetings, the weekly meetings and receiving all the reports. He got the company to accept the 1 million free visits for schoolchildren to the Dome, notwithstanding that that would put another hole in the finances. The directors seemed to act in accordance with his instructions, which may or may not make him a shadow director and, therefore, fully within the points that I have already raised in respect of the normal liabilities of directors. If one asks where the directors were in looking at what went wrong with the financial affairs of NMEC, we should also ask where the shareholder was, if not because he was a shadow director, because he entered into a very detailed financial memorandum with the company, not all of which appears to have been kept. For example, one of the conditions is that the company has to meet its debts as they fall due. There were certainly instances referred to in the NAO report and PricewaterhouseCoopers' report of that
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not happening. The question has to be asked as to where the shareholder and the directors were when all these things were happening. That is what I am trying to establish.
I invite the noble and learned Lord to agree that a model which purports to use a Companies Act company, but then so undermines it that the checks and balances in that framework do not work, becomes a deeply flawed model to carry out this kind of project. It pretends to have the face of a commercial operation but it does not have any of the counterweights. That results in everybody who is involved in the project not bearing any of the responsibilities that would normally be expected to attach to such projects in the private sector.
I should be grateful for the noble and learned Lord's views on the adequacy of this model for projects such as the Dome. I should also be interested in his view as to what the consequences would have been if this project had been carried out by a Government department reporting to a Minister, had the project been as badly managed as it has.
I have two final questions for the noble and learned Lord. I am still unclear about the final financial outcome. Will the noble and learned Lord say how much money he expects to be paid to the company by Legacy and how much will be repaid by the Millennium Commission? Will he also say whether the final drain on Lottery funds of £628 million set out in the NAO report, which I would remind noble Lords amounts to a subsidy of about £140 per paying visitor to the Dome, will be reduced?
Will the noble and learned Lord also explain what expert advice he received before Legacy was proclaimed the preferred bidder, whether that advice was accepted and, if not, why not? Finally, will he explain what further risks remain before this project is brought to a final conclusion?
9.3 p.m.
Lord Varley: My Lords, coming in to bat at number 22, or whatever, in a list such as this—
Lord Graham of Edmonton: I am number 29.
Lord Varley: My noble friend is number 29. I am sure that he will slog a few around when he gets in. Coming in at this stage reminds me of what was reported as having been said by a noble Lord many years ago in a debate with as many speakers as this. He said:
"Everything has been said in this debate that needs to be said, but it has not been said by me".
I do not intend to follow the line of the National Audit Office report. I am quite prepared to wait until the Public Accounts Committee in another place has come to its recommendation. It would be easy to select quotations from the National Audit Office report. It has been done quite often. The noble Lord, Lord Crickhowell, is not in his place. I had intended to say

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something about him but I shall postpone it in the hope that he may return. I should prefer him to hear it rather than read it in Hansard tomorrow.
This has been a strange debate. Every speech made from the Conservative Benches, with the exception of that of the noble Baroness, Lady O'Cathain, has looked at this project from the day when the Labour Government came into office; it did not exist before then. The noble Baroness was very fair. She said words to the effect that everybody is to blame.
I should like to make one or two points for the record. The project was conceived by the last government. The Millennium Commission included people from all political parties and none. The Cabinet Committee that took the decision in 1996 to build the Dome included Mr William Hague, the then Secretary of State for Wales, now the Leader of the Conservative Party. The Cabinet Committee agreed the method of funding the financial structure of the company and those to be appointed to it. They approved the site and the way in which it should be designed. They appointed Miss Jennie Page. That was an extremely good appointment. She did an exceptional job while she was there. When the election was about to take place, the Deputy Prime Minister, Michael Heseltine, was so concerned about the future of the Dome that he sought a meeting with the then Leader of the Opposition and asked for his support.
It is strange that we have not today heard a speech from the Conservative Benches mentioning Mr Michael Heseltine. I know that he is now persona non grata as far as the Conservative Party is concerned. He is a bad boy and no one likes to mention him. Only 16 days ago in another place Michael Heseltine said that it seemed reasonable to back expert advice that around to 10 to 12 million visitors were possible. The right reverend Prelate the Bishop of Southwark was right to lambast the press about how they behaved in connection with the Dome. On 13th November, Mr Michael Heseltine said:
"I have been engaged in the development of many controversial public projects but I have never known one so undermined and vilified by the national press from the moment it was announced".
That was a speech made by someone committed to the Dome. I pay credit to Michael Heseltine for the work that he did.
When Labour won the election, there was some hesitation about whether the project should go ahead. But I believe that if they had not decided to go ahead, the cry from the Conservative Party would have been deafening. Perhaps they would have been screaming from the rooftops that this wonderful, imaginative project, on which the Deputy Prime Minister had set his heart, had been abandoned by the Conservative Party. Labour won and the Dome was constructed, employing thousands of people. It became the largest building project in Europe. It was finished on time, unlike the building of the British Library, the completion of which was delayed by many years and cost millions of pounds. I do not make any complaint about that. But nobody has mentioned that and that took place during almost the whole of the period when
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the Conservatives were in office. There was no great tirade at that time from the noble Lord, Lord Crickhowell, when he was a Cabinet Minister in that administration. There were no cries from other members of the Conservative Party. The noble Baroness, Lady O'Cathain, is nodding her head to say that she criticised it. Does she want to intervene to say her hands are clean?
Baroness O'Cathain: My Lords, I simply wish to say that there was a massive amount of criticism about the project management of the British Library. The noble Lord should go back to the official record. We have a wonderful Library here which will dig up all the stuff for him. It came from all sectors of the House.
Lord Varley: My Lords, who resigned over that project? Whose head were they calling for? Who did they pillory? Who did they hound? Nobody. They simply decided that when the Dome came along they would hound my noble and learned friend Lord Falconer. Those are the facts.
Baroness Blatch: My Lords, is the noble Lord really suggesting that this Government were so feeble that they were afraid that if they abandoned the Dome, after all the advice they received at the beginning of this project when they took office, the Conservatives might make a bit of a fuss?
Lord Varley: My Lords, if they had wanted to abandon it, they could have done so. But the noble Baroness would have been the first person charging up and down the country saying that it had been abandoned. That is my belief. Others would have done so also. They would not have dared not to support the Deputy Prime Minister at the time. I wonder whether the noble Baroness sat on one of those Cabinet Committees with Mr Michael Heseltine. She shakes her head. That is her misfortune. If she had, she would not be making the comment she is making today.
The reason for the controversy which caused this debate is that insufficient people visited the Dome. I only hope that my noble friend Lord Bruce, when the doctors get to work on him, will be able to visit it. I am sure he would enjoy it. I and my family have been. We enjoyed it, particularly my grandchildren. They loved every moment they spent there. Of course, as others have said in the course of this debate, that is in common with the majority of people who have visited the Dome.
All the financial difficulties stem from the shortfall in visitor numbers. The visitor figures on which the financial calculations were made were accepted long before the Labour Government came into office. To blame the present Government alone for the shortfall in revenue, and my noble and learned friend Lord Falconer in particular, is preposterous.
I know that the noble Lord, Lord Crickhowell, is not in his place. But that should not restrain me. I did not ask him to leave. It is sometimes said that Members who come to this place from the House of Commons mellow; they do not enter into the spirit of

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politics as they did previously. No such charge can be made against the noble Lord. He is still as nasty and disagreeable as he was when he was in the other place. I am sure that he will not mellow for the whole of the period he is in this House.
The way in which leading Conservatives have behaved is absurd and their antics do them no credit. I know that they are in a bit of difficulty in the country. There were three by-elections last week, all of which Labour won. I do not believe any elector refused to go to the polls until my noble and learned friend resigned. The House will recall that the Conservative Party tried to do the same to my noble friend Lord Simon of Highbury as they are doing to my noble and learned friend. When my noble friend Lord Simon left BP to become a Labour Minister, they went after him in the same way. John Redwood spent every waking minute attacking him. The same happened when my noble friend Lord Sainsbury of Turville became a Minister. Both he and my noble friend Lord Simon came through those onslaughts with their reputations and dignity intact and enhanced.
Those of us who have looked at this matter objectively have every confidence in my noble and learned friend Lord Falconer. He has the confidence of all those who are prepared to look at the facts. He should take no lessons from a Conservative Party that gave us the poll tax, mishandled the BSE crisis, invented Railtrack and caused all the chaos on the railways. My noble and learned friend will come through this period with credit and go on to play a much greater role in government. I wish him every success.
9.14 p.m.
Earl Attlee: My Lords, I hope to be a little less aggressive, perhaps even mellow. I am grateful to the noble and learned Lord, Lord Falconer, for introducing this debate and defending his position so spiritedly. I do not intend to speak at great length but shall concentrate on the visitor projections and leave the report of the National Audit Office and other matters to your Lordships.
In answer to the noble Lord, Lord Varley, my right honourable friend Mr Heseltine does feature in my notes. In answer to the noble Lord, Lord Puttnam, who made a skilful speech, I worked on the Greenwich peninsula in the late 1980s and have also visited the Dome. Apparently, I was stunned. I shall not say what stunned me, but I enjoyed the "BlackAdder" film. I was definitely struck by the extravagant design of the structures of each zone. Like many noble Lords, I agree that the Dome itself is, and will continue to be, a very impressive building. I also agree with the comment of the noble Lord, Lord Puttnam, about comparisons with the Sydney Opera House.
I do not profess to be an expert on property. However, like my noble friend Lord Trefgarne, I hope that the Dome will be kept for exhibitions. I believe that it would be wasted if it were used purely as a tent over prefab offices. To knock down the Dome may well be better value for money, but London will be
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better off if it is kept. I hope that a comment of that kind from the Back Benches is not too much at variance with the views of my noble friends on the Front Bench.
The Minister referred to my right honourable friend Mr Heseltine. If I inherited a project from my right honourable friend, be it a helicopter or single currency project, I would exercise a certain amount of caution. A target of 12 million people requires a substantial proportion (about 20 per cent) of the population of the United Kingdom to visit the Dome. Some noble Lords have asked at what point the Dome's budget will go into balance in terms of attendance. We must not forget that visitors to the Dome finance the running of the Millennium Experience, not the whole project. Only £200 million of the budget comes from commercial receipts, including visitors. I do not argue with the arithmetic. However, the total budget is about £758 million, which appears to equate to a planned subsidy of about £80 per visitor. That point seems to have been missed by many noble Lords.
My difficulty with the whole project is that most families cannot afford the discretionary expenditure required to visit the Dome. That expenditure includes the cost of travel to the Dome and sustaining them, normally by way of fairly expensive fast food outlets. Think of an ordinary family of four in Newcastle upon Tyne, or some other great northern city. Even if use is made of a family railcard, the cost is £60 per adult and £15.75 per child. In addition, a family ticket for the Dome is £57. Therefore, the total cost per family is £200. I do not believe that many families can afford that discretionary expenditure, and perhaps that is the underlying cause of the lack of attendance. I do not understand why the consultants to the Dome did not foresee the problem.
In addition to travel costs, there is transit time. A family from the north may spend six hours in a train. Young children will become very tired during a journey of that length. For families who travel from northern cities, there must be many places which are easier to reach and perhaps more interesting. The noble Lord, Lord Jacobs, referred to the use of coaches. The problem of tiredness will be made worse with coaches because of the longer travelling time required. It may even involve an overnight stay, which will result in yet further cost. Your Lordships can pop over to the Dome any day of the week. However, would we take the trouble to go all the way to Liverpool or Edinburgh if the Dome was sited there?
The noble and learned Lord said that the Dome was the most successful UK visitor attraction, but with a subsidy of £80 per person it should be.
There is one further difficulty. Two weeks ago I visited the Dome late on the Sunday night. I would certainly not like to go there when it was any busier. There was a 30 minute wait for the journey zone and a 40 minute wait for the body zone. Even with the low attendance figures that we are sadly experiencing I understand that those are not unusual delays. If there were a 100 per cent greater attendance figure at the Dome, the whole experience would be unbearably busy.

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Finally, I have a question for the Minister. Can he say whether there are any other visitor attractions in the UK which are subsidised to the extent of £80 per visitor?
9.21 p.m.
Baroness Crawley: My Lords, I am grateful to my noble and learned friend Lord Falconer for introducing the debate and for his unending good humour in the face of scurrilous scape-goating and blame-seeking by the media and their friends.
Having listened for several hours today, and not just today, to some noble Lords opposite decrying the Dome, I have come to the not unsurprising conclusion that an unhealthy amount of pleasure is being taken in exaggerating the admitted shortcomings of the Dome project and in minimising its undoubted successes, not least to the wonder and satisfaction of up to 6 million people.
Those noble Lords who would be first off the starting blocks in calling themselves patriots in a debate on so-called European superstates—I do not refer to my noble friend Lord Bruce of Donington—suddenly lose all sense of patriotism and national pride when it comes to sharing collective responsibility over our major national millennium project, the Dome.
There appears to be a media feeding frenzy of failure when it comes to the Dome—almost an exultation in searching for failure of any kind—which masks three important issues. First, the Dome was the centrepiece for a wonderful range of millennium projects throughout the regions of the United Kingdom. The Birmingham Millennium Point is one such project. Secondly, it masks the fact that the risk venture which is the Dome—many noble Lords here today agree that it is a risk venture and was from the start—had its genesis in the previous Conservative government. Thirdly, there are those who never wanted the project to succeed in the first place and are taking prurient pleasure in a media-fuelled controversy. They see it as an early Christmas present. No wonder people get cynical about politicians.
The Dome was a risk venture. No noble Lord on this side of the House is claiming that it is an outrageous success. But what we are saying is that as the country's number one visitor attraction it has brought considerable pleasure to millions of families across the United Kingdom. Through its exhibits, zones and performances it has redefined what millions of British families can expect in the future from a great day out.
In the cold light of dawn, I believe that the Dome experience will have altered families' expectations of what standards a national visitor attraction needs to reach to ensure satisfaction in the future. That is in addition to all the benefits that noble Lords have identified, such as the strong regeneration benefits and the marvellous employment benefits that the Dome has brought.
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Finally, perhaps I may set the accusations that we keep hearing into some kind of context by comparing the records of the Dome with those of our most popular tourist attractions. According to the latest figures from the Office of National Statistics Social Trends publication, the Dome is attracting similar numbers of people to Blackpool pleasure beach, without the candy-floss and the donkeys. It has had double the number of visitors of Alton Towers and the Tower of London and far more than the Natural History Museum and the Science Museum put together. Those are figures to celebrate, not figures to be condemned in negative terms.
While willing to understand and learn the lessons highlighted for the future by the National Audit Office report, the Government are not willing to devalue the experience of millions of families, the exciting benefits of a huge regeneration project on the Greenwich peninsula or the security of employment of thousands of people, especially young people. That is a legacy from the Dome which will endure and of which we should all be proud.
9.26 p.m.
Viscount Chandos: My Lords, I shall try to be brief at this hour, after a long and, I believe, revealing debate, out of which, with the exception of the contributions of a few noble Lords, has come a balanced picture of the successes and failures of the Dome and, even more clearly, an overwhelming endorsement of the integrity of my noble and learned friend Lord Falconer.
The exceptions have been concentrated, to a statistically—but perhaps not politically—extraordinary extent, on the Conservative Benches opposite, whose occupants, with the noble exception of the noble Baroness, Lady O'Cathain, seemed to have approached the issue with a rare mix of condescension towards popular taste and enthusiasm, surprising ignorance and a selective amnesia verging on Alzheimer's of the Ernest Saunders variant. For what it is worth, my own assessment of the project endorses the near universal admiration of the building itself and the recognition of the invaluable benefits of the resulting urban regeneration. If the contents of the building, on the harshest criteria, have scored, overall, as solid performers, rather than smash-hit blockbusters, my noble friend Lady McIntosh has already testified to how creditable that result is in even the best-run creative businesses. At least as important as the quality of the Dome's contents during this year is the decision as to its future. It seems to me that the benefits from a successful new use of the Dome have the capability of dwarfing whatever mistakes and disappointments, as the noble Baroness, Lady Greengross, even-handedly described them, that have arisen in its short life to date.
In that context, I was surprised by the rather deprecating terms used by the noble Lord, Lord Trefgarne, to describe the Legacy consortium's proposed use of the Dome as a science and technology business park. Perhaps that accurately reflects his party's attitude towards the new business on which our

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future employment and prosperity depend. Like Southwark Council, I intuitively favour such a use of the Dome rather than as a continuing entertainment venue. I shall keep my fingers firmly crossed that the designation of Legacy as preferred bidder now leads swiftly to a successful sale. I think that the preference of the noble Lord, Lord Trefgarne—and, if I understood him right, that of the noble Earl, Lord Attlee—for an international exhibition centre may have been formed without any awareness of the major new such centre opened close to the Dome in the past few weeks.
Many noble Lords have referred back to the decision in June 1996 by the previous government to pursue the project as a public sector one, following the failure of any private-sector operator to come forward. This, remember, from a government which had elevated the worship of privatisation and the degeneration of the public sector to an ideological fetish. As the noble Lord, Lord Sharman, and others have emphasised, the reticence of the private sector signalled clearly and powerfully one thing: beware, high risk. As the noble Baroness, Lady Noakes, suggested, the identification of risk is a key issue for businesses and indeed all organisations. When the then Conservative government made the decision to proceed despite the signals from the private sector, it must implicitly have acknowledged the high risks of the project. When, in opposition, senior members of the Conservative Party from their Front Benches and Back Benches gave support, and in some cases strong encouragement, to the project's continuation, they must have recognised that those high risks remained.
It is for that reason that the sanctimonious strictures from the Benches opposite—even when they are based on accurate matters of implementation where acknowledged mistakes may have been made—are so offensive to those of us on these Benches.
In looking for lessons to learn, I would be sad if a blanket conclusion were reached that the Government should shun completely the active promotion of popular cultural and entertainment projects, particularly those with significant regenerative aspects. Rather, I believe the cumbersome structure and other handicaps to the Dome's optimal management that other noble Lords have analysed should clearly be avoided if and when future projects are pursued.
The noble Lord, Lord Marlesford, suggested that the Dome was conceived out of hubris. If it was, I find it difficult to attribute that hubris other than to the government in office at the time of the project's conception. In fact, I believe the conception was based not on hubris, but on a brave, possibly excessively brave, aspiration to mark the new millennium on a widespread, popular basis. Since May 1997, and not least since January 1999 when my noble and learned friend Lord Falconer assumed responsibility, a remarkably challenging and difficult situation has been managed with persistence, patience, skill and integrity. We owe him, and all others who have worked on the Dome, a vote of thanks, not of censure.
9.32 pm
Lord Selsdon: My Lords, I am probably an unnecessary appendix in this debate. When I looked at the list of speakers today I could not understand why there were names of so many noble Lords on the Benches opposite. I suppose it is a Parliament of Crows where they are all cawing together because the senior crow has a wing down at the bottom of the tree.
I wonder whether the Dome may not become the kind of dimpled chad of the Labour party. I know not. I intend to go back a little. I have always ended up appointed to difficult jobs by the Labour Party, because it always appointed hereditary Peers to unpaid jobs. The one I intend to talk about now was when the present noble Lord, Lord Shore, appointed me to be chairman of the Greater London and South East Councils Sport and Recreation body. It was to prepare a plan for sport and recreation for the future.
Tonight I have listened to the biggest example of short-term thinking and short-termism that I have ever heard in this House. People seem to be attacking each other with absolutely no knowledge or understanding. The preparation of a regional recreational strategy was a non-party task. We came to the very simple conclusion that we must look after people when they are not working or sleeping. One needed a very careful plan. We had the help of many trade union leaders and my executive committee of 152, including the Army, the Navy and the Royal Parks. Some wonderful people were involved. There was Clive Jenkins who wrote an excellent book called The Collapse of Work. There was another one called, I believe, The Leisure Shock.
We decided that it was a good idea to make people happy. But, when the report was produced, somebody said, "Wait a moment. You'd better do something about it". But half way through the proposal Michael Heseltine appeared. He then reappointed me. I found myself in the most difficult situation of all, in that we needed a really big venue in inner London for multipurpose activities. This led to one of the most embarrassing moments of my life. I learned later that I had only been appointed because someone had looked me up in Who's Who and found my father instead.
My father had an interesting career in many ways, apart from wartime and so on, and he decided that he would be a boxer and an all-in wrestler for charity down the East End and the Isle of Dogs. It was a very good idea. He was told that he must lose because everyone liked to beat up a Peer. This seems to be what is happening to the noble and learned Lord, Lord Falconer. I thank him for being in his place all day. He has had nothing to eat. Should he wish to leave while I am speaking I shall be very happy that he should do so. I have nothing to say against him personally. As a good Celt—I, too, am a Celt—we have a lot in common, whereas many Members of his own Benches are slightly different from him.
People seem to get hung up with this business called "PR". The Labour Party calls it "public relations", or the presentation of something. The twitters from the Liberal Democrat Party—if that is what a collection of

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starlings is called—talk about "proportional representation". I have always used it for the phrase "protecting your rear". I detect that this gathering on the other side has a certain guilt feeling that someone will be unfairly attacked for having done something wrong. That may be the case—but we are talking about the most extraordinary project I have ever come across.
I want to explain my own project. We were asked whether we could find a big, multi-purpose venue. We had a study carried out by very good people and it was decided that it could be at Greenwich, in an old shed at Brooklands in Woking, at the Alexandra Palace or in a banana shed in Docklands. The banana shed in Docklands was chosen.
I was asked—I was young, the same age as the noble and learned Lord, Lord Falconer, and not very experienced in these matters—if I would be chairman of this body. The Government were kindly going to give us the building—the banana shed—and the DOE were going to give us a grant. But we had not got any money to start with and it was back to the business of rooks or crows. As many people know, the Docklands symbol was a crow. We managed to arrange for the marathon to run past this part of Docklands, and my cousins, friends and others, on roller-skates and dressed up in crow uniforms, collected £200—and we formed a charity to start this great event.
The plan was for the structure to be as big as a football pitch inside, with a single span. We had the great and the good there. The company of the noble Lord, Lord Sharman, instead of jobbing backwards after the event, produced the budget. We had the great GEC as one of the partners, and the great P&O Group and the great Grand Metropolitan, who were to manage it. We also had the Sports Council, the representatives of 41 different sports and the London Borough of Tower Hamlets—you name it, they were there.
This was a remarkable achievement. It was going to be on budget; it was practically finished. Then, in 1986, a rival emerged on the scene—a dome. The London dome was to be built. Sponsored in a way by Americans, it was to be a 25,000-seater stadium which looked remarkably like the current Dome. That appeared on the day we were seeking to raise some more money with Kleinwort Benson and it caused a bit of difficulty.
There was then a fire—the Bradford fire. You would not have thought that the Bradford fire would have anything to do with Docklands, but it did. The fire chiefs came along and said, "We are terribly sorry, you cannot have any people in your building. The 10,000 people you were going to have cannot come in. You have got to completely re-roof it". The reason for that was that the building belonged to the Port of London Authority, not to the local authority. Therefore it did not exist. So when the new legislation came in, it had to be deemed to exist and comply with the new legislation.
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We liked the London Borough of Tower Hamlets; it was a good Labour council. Peter Shore was the Member of Parliament who appointed me and, although I was never paid anything or received any expenses, I felt that I owed him something, and I owed Tower Hamlets something because that is where my father had lost most of his fights. The London Borough of Tower Hamlets then had a problem—the Labour Party was kicked out. Its recreational strategy, which led to support, was not able to be implemented because it had a young councillor who held the balance of power who was under age. So it was defunct.
Then, much to my regret, the GLC, which was a very good supporter and was going to provide an annual subvention to ensure that we kept our head above water, decided that, as I was a Conservative, I was persona non grata and that unless I voted to retain the GLC it would withdraw its support. It then said that I must stand up and speak in its favour. This was difficult for me because my mother was the Lord Mayor of Westminster and was opposed to the GLC, and my cousin was doing the PR for the GLC. So I went to see the Leader of the House and the Leader of the Opposition. It was placed on record and it was thought that the Sergeant-at-Arms should properly go over the bridge and take the person concerned because he was trying to influence Parliament. But we lost the grant. We then found to our surprise that we had to get full private sector money. With the help of the organisation of the noble Lord, Lord Sharman, a new budget was produced. It was decided to have many more entertainments, in particular pop concerts and music festivals. The ICA was there, promoting new arts. It had headless chickens falling around, and the local Jamaican community got upset and the project lost support.
At the end of the day we had a major problem. We ran out of money and found that there were directors' liabilities. As chairman of the charity, I said that we must go into receivership and must protect the relatively small amount of public money that had been put in. I resigned, but the directors who remained were all disqualified from being directors thereafter.
What I am trying to say is that when we are dealing with public money—and 66 per cent of all expenditure is public—the public sector often makes the mistake that it is not a single body but a collection of many bodies, which must obtain the necessary permissions and observe the necessary rules and regulations. One cannot think short-term.
Let us look at what happened. My right honourable friend Michael Heseltine did a remarkable job on inner-city regeneration. But even then there was short-termism. Look at the City airport in Docklands, which very nearly went under. Look at Canary Wharf—the biggest development of its kind—which very nearly went under. Look at Alton Towers, which decided that it would try to take on Battersea power station. That practically killed it. All major projects of this kind need at least 10 years; no profit will be made for five years, and the capital cost has to be written off.

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The original proposals for the London Dome were remark ably similar. The project was rejected at the time because of the pollution on the Greenwich site. It was thought that it could be in the Royal Docks. But it was rejected for another reason: it was impossible, without the right infrastructure, to make that kind of project work. At the end of the day, we are not talking merely about a building. The Dome is another venue. We are desperately short of venues in this country. Look at the crap that was around in terms of football stadiums until they were sorted out recently. Look at Wembley. We have fewer facilities than any other country in the OECD. We have always failed to look at the need for the infrastructure that goes with them.
Let us take the simple issue of car parking. One car parking space is needed for each 60 visitors. The Dome would need 3,000 car parking spaces if it were to be a proper venue, accepted internationally and with local planning policy. A project cannot succeed if people cannot get there. I regard the Dome as a remarkable building. It is a brilliant design concept. There is bitching, if I may so describe it—at least, men do not bitch; they do something else—but there is this complaining about each other. We know what happened. This was to be a landmark project on the right site and the design concept was good. The fault lay in the simple fact that no one bothered to work out what would have go inside the Dome in order to make it work. That is the truth. The Dome is not a short-term project—it cannot be. It cannot be made to pay for itself. Incidentally, the subsidy is £102 per person, not £80 as my noble friend Lord Attlee said.
It is a question of what we do. I feel very sorry for the noble and learned Lord, Lord Falconer. He has been left as tail-end Charlie—perhaps that is the wrong phrase; I am tail-end Charlie in this debate. It is difficult to find a solution. I should be inclined to write off every single item of expenditure and start again from scratch. It will be a pity if the Dome is turned into a high-tech business park—the idea applied to any building when it does not work. It needs some thought. It needs the infrastructure that goes with such projects. It is an outstanding building, but it is like so many things that we get wrong: we do not think them through.
I declare an interest in relation to the Tate Modern. I am president of the Anglo-Swiss Society. That building was Swiss-designed at the end and it worked extremely well. The bridge is not as good as the bridge in Newcastle. But if we look at some of the engineering projects that we have advanced in this country—whether it be the Severn Bridge, or others—most of them have not been thought through far enough so as to link up all the infrastructure. It is infrastructure and lack of access that kills many such projects.
I wish the Dome project well; and, indeed, the noble and learned Lord, Lord Falconer. I heard about his success on the Dome in Switzerland, and his role in "Cool Britannia"—which, I gather, is now dead and things are hotting up. The world was waiting and assuming that the Dome would be the symbol of modern Britain. In the end, the outside is; but I do not think that that can be said for the inside of the Dome.
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However, the inside does not matter. It is a great building. I hope that someone will find something proper to do with it in the future.
9.45 p.m.
Lord Graham of Edmonton: My Lords, it is a pleasure to follow the noble Lord, Lord Selsdon. I have listened to him on many occasions and he is always entertaining. The noble Lord began his speech by asking the rhetorical question as to why there were so many Labour colleagues present in the Chamber sitting behind the Minister. I shall tell him why I am here. Having witnessed the attempt to crucify my noble and learned friend over the past three months at least for matters that he defended excellently tonight, I was determined to be here to show solidarity with him and with what both he and the Government have been trying to do. I believe that he has done that very well.
My noble friend Lord Varley said that there was once a Peer who said, "Everything that can be said has been said, but not by me". I do not intend to go over the ground that has already been covered because I believe that all of the facts have been exposed. But my noble friend also said something with which I completely agree; namely, that the nastiest speech that we heard tonight came from the noble Lord, Lord Crickhowell. He pleaded in aid the fact that the noble Lord, Lord Crickhowell, had changed. I had the experience—I nearly said "the pleasure"—of being in another place. I can vouch for the fact that the nasty, shabby and shoddy speech given by the noble Lord, Lord Crickhowell, is on a par with the speeches that he has made previously both in this Chamber and in another place.
The other speech that I should like to comment upon is that made by my noble friend Lord Puttnam. To me, my noble friend was able to put into a well-prepared case the reason why the Labour Government are proud of what they did. They have learned from the experience. My noble friend painted for me a picture of the practical value of the Dome, as he saw it from his eminent position, to the school children and the communities who have visited it. I have not yet had the pleasure, but I intend to visit the Dome before the year is out.
The noble Earl, Lord Attlee, used as an analogy the fact that it is costly for people to come from Newcastle upon Tyne, which is my home town, to visit the Dome. Years ago, I did what I suggest not many people did: I travelled from Newcastle to see the 1951 exhibition. Wherever the exhibition was sited, there were bound to be people who were disadvantaged. Of course, the costs are greater now than they were at that time. In 1997, the Government were faced with the decision of whether they wished to mark the millennium. All of the available evidence, and the work that had been carried out prior to them coming into office, led the Government to believe that the right decisions had been made as regards the site, the concept and the vision.

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In my view, my noble and learned friend has acknowledged where there have been derelictions and where there have been mistakes. However, at the same time, I believe that he has kept us on the straight and narrow as far as concerns the main issue. Members opposite have been champing at the bit for months to have my noble and learned friend before them to defend his case. They would not wait; indeed, the proper time to do that would have been after the committee in the other place had examined the matter. But, no, they would not wait—and they have not stayed to listen to his response.
I do not wish to enter into the issue of criticism because the House must move on. However, our noble and learned friend the Minister has not only done his best—his very, very good best—for his party and his Government; he has, more importantly, also done his best for the people who will benefit in years to come. Indeed, there was similar criticism in 1951 about the whole concept of the exhibition; for example, there we were in the days of austerity spending much public money on remembering the Great Exhibition in 1851 as something of which we could be proud.
Fifty years after the 1951 exhibition I look across at Festival Hall. I remember visiting the Festival Gardens and the South Bank. As the noble Lord, Lord Selsdon, said, it takes a long time for such a project to come to fruition. It discredits the leadership of the party opposite that they should believe that they can manipulate this issue to their credit over the next few months. It is my humble opinion that when the people of this country have all the facts—they do not have all of them yet—and have heard all the debate, they will not only consider that the decision we are discussing was the correct one, but they will also consider that my noble and learned friend Lord Falconer served not only his party and the Government but also his country very well indeed.
9.51 p.m.
Baroness Dean of Thornton-le-Fylde: My Lords, I too thank my noble and learned friend Lord Falconer for initiating the debate this evening. It constitutes one step in the long process of the demonstration of his accountability as a Minister. Many noble Lords will be aware of the number of Questions and debates he has replied to on this subject. There have been three debates in this House on the subject, the most recent on 12th July. He was anxious to initiate the debate this evening, which I welcome.
Many positive comments have been made about the Dome. I do not intend to repeat them, as in the debates I mentioned I recognised the regeneration that has taken place in the deprived area of Greenwich where the Dome is located. I hope that the Dome is not pulled down. It is certainly a London landmark whether one flies in or sees it from the road. It stands out like a beacon. It is something to be proud of.
Paragraphs 14 and 15 of the executive summary in the National Audit Office report identify the failure to achieve the visitor numbers and income required and
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the complex organisational arrangements as being responsible for many of the Dome's financial difficulties.
I am not one of those who blame the press for things that go wrong, but I think that they do have an influence. Paragraph 23 of the executive summary states:
"The Company estimates that each time the Dome received tad press' sales enquiries dropped by 30 per cent to 50 per cent in the following week".
That is a substantial percentage. Unfortunately, today people believe much of what they read in the press.
The noble Lord, Lord Selsdon, wondered why so many noble Lords were present on this side of the Chamber. I believe that my noble friend Lord Graham answered that point. Many of us who are present this evening have attended not just this debate but have also been present when Questions have been asked and when debates have taken place on the Dome and have attended Select Committee hearings when evidence has been heard on the Dome.
Like others on these Benches, I too wonder why, after the Leader of Her Majesty's Opposition and his supporting shadow Ministers in another place made such a song and dance on this issue, the noble Baroness, Lady Anelay, is so poorly supported in terms of numbers on the opposite side of the House. I wonder whether a reason for that is that some noble Lords opposite are more interested in the vote that is taking place at the Carlton Club this evening on whether women should be admitted as members. Perhaps they consider that that has a higher priority than the matter we are discussing.
Lord Selsdon: My Lords, it used to be the practice in this House that only people who knew about a subject would speak on it in Wednesday debates.
Baroness Dean of Thornton-le-Fylde: My Lords, I have been a Member of this House since 1993 and from my observation of many of the debates in this House I have never considered that to be a criterion for taking part in one!
When I worked in Fleet Street I was often the only woman taking part in negotiations. When I saw employers and trade union men run for cover when the going got tough and when they might be blamed for something, I developed the theme that the world was full of males but few men! Over the past month that thought came to me time and time again as I heard and read about Opposition spokespeople in another place and some noble Lords in this House trying to paint out their role in the development of the Dome. I agree with the right honourable Member, Mr Heseltine, that it is a role to be proud of. But listening to some of the statements one would think that those people were trying to rewrite history; and that is not possible.
I wonder what the leader of Her Majesty's Opposition thought that he was doing when, in support of the shadow Minister Mr Peter Ainsworth, he said on 7th September, "Shut the Dome, and now". What did the people employed there, the businesses

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with investment in the Dome and the people of Greenwich think when that statement was made? I believe that when he made it the right honourable Member the Leader of the Opposition knew that it would cost more to close the Dome then than to keep it open until the end of the year.
The noble Lord, Lord Sharman, was right in his approach. I congratulate him on dealing with the issue by following the traditions of this House. The noble Lord talked a lot of sense. I do not say that in a patronising way. I respect his vast business experience. He was right to deal with the issues that he did. However, he also said that he would not blame any one individual, because it would take all his allocated time in the debate to name all the individuals concerned. He is absolutely right. Mistakes have been made. Much needs to be learned for the future. But the mistakes have not been made by one person or one party. The noble Baroness, Lady O'Cathain, and my noble friend Lord Puttnam are right. We are in grave danger of developing a blame culture in this country. This Government have made mistakes; the Minister admitted that mistakes were made. I just wish that those other males would become proper men and admit their role in the whole process.
Perhaps I may say this in a friendly way to the noble Baroness, Lady Noakes. She mentioned the reference of my noble friend Lord Bruce of Donington to £900 million and said in what I took as a friendly comment that he probably needed some vocational training. The noble Baroness may not call it that but that is how I term it. The noble Baroness is a new Member of the House. When she has been around a little longer she will know that the noble Lord, Lord Bruce of Donington, needs no vocational training on accountancy from anyone—not even, with respect, from someone who was last year the president of a professional institute. My noble friend runs circles around most people when it comes to knowing facts. I congratulate him on his ingenious way of bringing his pet subject into the debate.
Let us get the matter into perspective. Before the debate began, I, with other noble Lords, listened to a Statement about inherited SERPS. It referred not to millions but billions of pounds which people lost because of the policy and inaction of the previous government. So let us get this issue into perspective.
I think that in the longer-term future the inheritance from the Dome will be judged more fairly than by today's generation. It is self-evident that it has contributed a great deal. The figure of £900 million has been mentioned. It is not £900 million down the drain. There are houses, jobs and the regeneration of the whole area. I suggest that the Dome has been a major contribution to the regeneration of the heart of the City, the River Thames. It is a pleasure today to travel down the Thames; it was not so a few years ago. That was because of the vision of the previous government and the courage of this Government to carry that vision forward.
The noble Lord, Lord Trefgarne, said that he thought that the noble and learned Lord, Lord
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Falconer, had gone over the top. I do not agree, because, with respect, he and the noble Lord, Lord Crickhowell, before him, who was the first to speak after the Minister's introduction, called for my noble and learned friend's resignation. Some might think that it is going over the top to answer vigorously, but if someone calls for another's resignation they should mean it seriously and we should examine the issues and defend the person who is being attacked, if necessary.
In closing, I urge my noble and learned friend to take no lessons from the noble Lord, Lord Crickhowell, about what he should do and how he should do it. His record on accountability is clear. I remember the noble Lord, Lord Crickhowell, as Secretary of State for Wales between 1979 and 1987. He presided over the biggest job losses and the greatest increase in deprivation that the Principality of Wales had seen for a long time. The people of Wales recognised that, and the action of one of his successors, who is now the Leader of the Opposition, by ensuring that at the following election not one Tory MP was elected from Wales. My noble and learned friend has no lessons to take from the noble Lord, Lord Crickhowell.
10.1 p.m.
The Lord Bishop of Lichfield: My Lords, in the four minutes of this gap moment, dare I offer a thought that I hope will encourage us all? I simply remind the House again of the neighbouring, massive cultural assets sited near to the Dome in Greenwich. I have not heard them being underlined. There is the superb Greenwich Park, where Henry VIII went hunting and hawking; there is Greenwich Palace, where Queen Elizabeth I was born and where James I died; there is Greenwich Hospital—latterly the Royal Naval College—which is one of the supreme masterpieces of Sir Christopher Wren, one of the great architects of enduring influence in this city. The painted hall in Wren's complex is becoming a great centre for concerts. In this Bach anniversary year, Sir John Eliot Gardiner and the Monteverdi choir took their orchestra and their cantatas there just the other week. There are wonderful riverscapes and views across the river—such a contrast to the views of the past.
I am a 66 year-old south Londoner whose family was bombed out in 1940, but I have witnessed the regenerative energies of our city. I therefore ask the Minister to assure us that the next occupants of the Dome, whoever they may be, will be committed to joined-up thinking for those other historic assets in the Greenwich area, bringing cultural and spiritual regeneration to that place. We should unite in support of the Government to ensure the Dome's contribution to that future in the richly cultural area of Greenwich. That will be done by joined-up thinking with the other people involved.
10.3 p.m.
Baroness Hamwee: My Lords, it is useful to have current problems put into geographical and historical context. I welcome the contribution of the right reverend Prelate the Bishop of Lichfield.

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I expected a large number of speakers in the debate. I was startled to see the heavyweight presence on the Government Front Bench at the beginning of the debate. It is highly appropriate that his ministerial colleagues were supporting the noble and learned Lord, who has found himself pitched into such a controversial position. I leave it to the public to judge whether the large number of speeches from the Labour Back-Benches were made out of admirable loyalty and solidarity, as the noble Lord, Lord Graham, said, or whether they might have protested a little too much.
The debate started on a very personal note. The Liberal Democrats have deliberately chosen not to personalise the issue. The Minister rightly started by asking what lessons should be learned. I shall resist the temptation to ask what the Conservatives would have done and when they would have done it had they remained in office. However, at some point I should be interested to know what lessons they might have learned from this exercise.
The Secretary of State, the right honourable Chris Smith, in a debate in another place earlier this month identified what he called "four key lessons". Those were: to adopt a clear management structure; to bring in the experts; to make prudent estimates at the outset; and to improve, he said, everyone's performance on risk analysis. I was glad to hear the noble and learned Lord extend that to the issue of whether governments should try to run projects. I believe that the consensus of this House is that that is a risky business for a government to get into.
However, if politicians are to run projects—politicians, after all, should be particularly nimblefooted—I believe it is a little odd if they do not have a plan B in case things start to go wrong. Of course, plan B may always have been to play Oliver Twist.
As has been pointed out, as early as 1996, or perhaps earlier, it was clear that the private sector would not accept the risks. Why was that not treated, in the current jargon, as a wake-up call, as my noble friend Lord Sharman, who knows Byzantium when he sees it, might have said? As the noble Viscount, Lord Chandos, and the noble Baroness, Lady Noakes, indicated, the risks must have been accepted. That must be the logic.
If the Government run a project—I understand the distinction from managing a company—I believe that it is unbecoming of them to make scapegoats of those who are not politicians. At any rate, it is unbecoming of them to have allowed the succession of postholders, who left their posts in a manner that began to be reminiscent of the programme "Big Brother", to be cast as scapegoats. As the noble Lord, Lord Bruce of Donington, and others said, one of them—Jennie Page—brought the project to fruition. I believe that she deserves enormous credit and praise. It was tough on her that the world seemed to assume that the same talents could be used to run the project as those which were used to complete the project. I am glad that her contribution is now being acknowledged.
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Several noble Lords referred to the projected visitor figures fitting the funding required in order to achieve the funding. I believe that my noble friend Lord Jacobs is probably correct that, while that may be our analysis, it will never be acknowledged. However, we know that in June 1997 the Millennium Commission was concerned about the business plan. I cannot understand why later no one said, or at least said with any force, "How can we ever again believe a forecast? Each time a transfusion of cash is requested, the public is led to believe that that is the last transfusion". Were there no conditions attached to each grant? As my noble friend said, perhaps it is a little byzantine.
The National Audit Office report stated that sponsorship income was received more slowly than NMEC expected. Surely enforceable contractual commitments were in place; and, if not, why not? Perhaps I may also raise a point which I do not believe has been referred to tonight; that is, the question of contracts and the payment of contractors and especially small contractors. I hope that the noble and learned Lord can confirm that tales that they have not been paid on time are not correct.
I have had difficulty in believing not only the visitor numbers and the cash amounts required, but also, like the noble Baroness, Lady Dean, the apparent effect on sales figures of what the press said—a drop of 30 to 50 per cent in the following week. I agree with the noble Lord, Lord Puttnam, who talked about the press's obsessive negativity. Members of the press who queued with increasing impatience at Stratford last New Year's Eve have treated that bit of revenge as a dish not only to be eaten cold but to be eaten several times over.
Is there a lesson too in relation to the negotiating skills required? I mention that this evening in particular, given that we now have a single preferred bidder for the Dome. At least I understand that that is the case. I read today that briefly within No. 10 there was a suggestion that it might prove a new home for Arsenal. I am not sure whether the Prime Minister is a Spurs supporter and floated that one. At any rate, we are now left with the Legacy bid.
Before coming to this debate, I was asked what step the Government would take if the Legacy deal falls through. But that is a plan B which I really do not expect the Minister to share with us this evening.
Another question that is in my mind is how best the Comptroller and Auditor-General can play his part. Audit, by its very nature, is after the event. But how effective can it be? The report is intensely interesting but, inevitably, rather late.
The Dome project is, as has been said, not just a national project. It is also a major regional project. I refer, of course, to the regeneration of the Greenwich peninsula. If central government become involved in projects which have both national and regional aspects, a point for the future may be how Ministers will relate to regional government on such issues. I declare an interest as a member of the Greater London Assembly and I know that the noble and learned Lord is sympathetic to having a dialogue with

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London's government on the issue, although we have still not resolved how formally and publicly we can do that.
The regeneration is certainly to be applauded, although it has been trumpeted relatively recently. To me, the justification is just a little bit post hoc ergo propter hoc. But I ask: how good is that return? We have heard about the number of jobs and about the housing. But how good is that proportionate to the investment? Will the Minister tell the House what objectives were set for regeneration, both in 1994 and in 1997; how far those objectives have been met; and to what extent the regeneration compares with other major schemes in the sense of the return obtained? The noble Lord, Lord Grabiner, talked about the real social gains but we also need to know about the real cost, so that any lessons in that regard can be applied. Regeneration is expensive, but I should like to know quite how expensive.
The noble Baroness, Lady Greengross, and others referred to transport and the Jubilee Line in particular. That is certainly a success, in sharp contrast to the order in which things were done across the river. But as my noble friend Lord Jacobs said—and the noble Earl, Lord Attlee, also referred to this—there was scope for integrated ticketing and more imaginative transport arrangements.
The right reverend Prelate gave us wise words about employment, skills development and the amount of affordable housing. He referred to the proportion of affordable housing as being 25 per cent. I hope that we shall soon see a higher proportion of affordable housing in the new development achieved within London, including for people on moderate incomes.
Like others, when I see the building, my spirits lift. I love the building. But I am not sure that I can agree with the comparison with the Sydney Opera House whose function was planned from the start. I agree with the noble Lord, Lord Marlesford, that a building without a function is poorer for that. I should feel more comfortable where I knew that the function preceded the form.
The noble Lord, Lord Marlesford, referred to the Thames and criticised the private palaces which have been built on some parts on its banks. That must be due to the planning policies of some, but happily not all, London boroughs. In others, there have been huge successes including most recently, the Thames Barrier Park, which is a terrific facility.
Finally, the NAO report says that there should be a full understanding of the project from cradle to grave. That is an unfortunate expression. Many of us were happy to celebrate 11 months ago, but some of us took the view that the new millennium would start on 1st January 2001. There may be some connection there with what has happened with the Dome but I shall not pursue it. I merely say that I wish the Dome and the Greenwich peninsula well in the second millennium.
10.15 p.m.
Baroness Anelay of St Johns: My Lords, my noble friend Lady O'Cathain was absolutely right when she
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said that tonight we should not be looking at the person behind the office and attaching blame to that individual, although we should expect high standards of public accountability from our Ministers. I shall concentrate on that aspect. I cannot play fine games with fine words. I simply have to look at what the public outwith this Chamber see; how they understand what has been said here; what has been understood here; and what picture has been painted for them.
It is always interesting to listen to the noble and learned Lord plead a case with the consummate skill of a lawyer even when that case is flawed. Let us get some of the misunderstandings out of the way. Yes, of course, there was all-party support for building the Dome. Nobody has hidden from that fact; no one has run away from it, despite what some noble Lords have said today. The bipartisan support was for the celebration of the millennium in the best way possible, for all that is best about this country and with the regeneration of Greenwich as a welcome consequence. However, that consequence should be within a budgeted forecast, not one that simply happens regardless of cost and regardless of outcome.
The fact that we supported that bipartisan project does not mean that as a result we should be expected to support the financial mismanagement of the Dome that has occurred under the guardianship of this Government. As the Minister said, the Government reviewed the entire project after the election in 1997. We have had a lot of to-ing and fro-ing about who said what and when about particular visitor forecasts.
On several occasions we have been directed to the NAO report and noble Lords disagreed about the month in which a budget was adopted. The simple fact is that in the NAO report there is reference in paragraph 3.1 to the fact that the project was a provisional one that would be amended as time went on. I shall be delighted to give way to the noble and learned Lord. Perhaps he wants me to read out paragraph 3.1 and in so doing extend my speech.
Lord Falconer of Thoroton: My Lords, does the noble Baroness eschew the proposition that the figures first offered when the Conservatives were in power were between 15 million and 30 million visitors?
Baroness Anelay of St Johns: My Lords, that is an extraordinary question. Why should one dispute what is in the NAO report? I hope that, if ever the PAC comes to a united report, noble Lords on Opposition Benches will accept without question what is in that report. My point is that throughout all this the Government, when they took office, had the figures presented to them. There was a thorough review of those figures and they made a decision, but, as we understand from leaked matters in the press, perhaps the Prime Minister made the decision.
Noble Lords: Oh!
Baroness Anelay of St Johns: My Lords, like noble Lords on Benches opposite who are making such

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braying sounds, I too suspect what I read in the press and I take it with a pinch of salt. I can report only what I have read in the press.
On visitor numbers, the figures have to be set against the background that my noble friends Lord Crickhowell and Lady Noakes pointed out so well, that the Government made the really crucial decisions after that about what went into the Dome; about the ticket prices, as my noble friend Lord Attlee pointed out, and about the ban on car access. Those were all contributory factors to the low visitor numbers.
We have heard tonight that the management structure that the Government inherited was complex. It says so in the NAO report. Surely, just because a job is difficult to do, it does not mean that it has to be done badly. As far as I can see by watching what has happened within the Chamber—I refer strictly to ministerial accountability within this Chamber—the problem is that the work has been carried out with an element of secrecy. That is a word that at one point even the Minister used on the Floor of the House. I believe that has created many problems and much mistrust here and outside the Chamber.
As long ago as February 1999, my noble friend Lord Peyton of Yeovil asked the Minister to,
"undertake … to produce a document which will make clear to members of the public the Government's plans … for the cost of the project, its contents, access, parking and traffic".—[Official Report, 8/2/99; col. 2.]
My noble friend Lord Luke repeated that request. We got nowhere. We were led to believe that the New Millennium Experience Company was working well and that the finances were fine. We believed the Minister. The unfolding crisis was hidden from the view of the public and Parliament. On 12th January this year, when my noble friend Lord Elton asked what would be the shareholder's position if the Dome were sold at a loss, the Minister's reassuring responses gave no hint of the financial problems to which it now appears he had been alerted. I shall detail those. At that stage he implied that he could personally bear any financial consequences of a shortfall. I have a copy of Hansard with me and should be delighted to quote it to the Minister.
At Question Time on 10th February, the Minister joked about the fact that the Deputy Chief Whip was organising a whip-round behind him among Charlie's Angels to help him pay up if there were a shortfall. Despite all the good humour, the impression that was given was that there were no financial worries, and we were reassured. But we now know that what was happening was very different. We know that on 11th November 1999 the Minister was advised by the Dome company's accounting officer, and on 21st December 2000 by the department's accounting officer, of the probability that the Commission would need to provide further cash flow funding to the company. On 7th January 2000 the department informed the shareholder that there was no alternative but to go back to the Millennium Commission for more money. Having tried to explore other alternatives, they said "We shall have to go back to
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them". On 28th January the commissioners were advised by their own staff of a serious concern about the company's solvency. That was discussed with NMEC, a company whose board meetings the Minister attended, as he has told us in this House. While that was happening, we in this House believed that all was well. We were given no indication on the Floor of this House that it could be otherwise.
My noble friend Lord Crickhowell referred to the fact that in February the right honourable Chris Smith wrote to the Minister. He said:
"Either the Board did not see or it chose to discount the warning signs of the cash flow difficulties. As a result, it seems possible that it failed to take decisive action until after a date when the company became technically insolvent".
They are his words, not mine. The right honourable Chris Smith continued:
"Clearly it is for you and the Chairman to decide what needs to be done to improve corporate governance".
The Minister did not reply until 24th March.
In May the board of the company engaged solicitors to advise them on the directors' responsibilities because of the danger of insolvency. I should have thought that that was rather an important point for the shareholder to notice when he attended meetings.
Lord Falconer of Thoroton: My Lords, I apologise for interrupting. The noble Baroness will, of course, confirm to the House that it was made public in February, when the first application was made to the Millennium Commission.
Baroness Anelay of St Johns: My Lords, I am pleased that the Minister has referred to that. Prior to that application to the Millennium Commission, the Minister had appeared on the Floor of the House on 12th January, knowing that at that stage an application would have to be made, and yet he chose not to make any mention of it to this House. When I later learned of that, I found it quite extraordinary and I felt let down.
Lord Falconer of Thoroton: My Lords, perhaps the noble Baroness could answer the question.
Baroness Anelay of St Johns: My Lords, I believe that I have answered the question.
Lord Falconer of Thoroton: My Lords, the noble Baroness is trying to paint a picture of people not being kept informed. She has referred to the application that was made to the Millennium Commission at the beginning of February. Will she confirm that a public statement was made about that?
Baroness Anelay of St Johns: Unfortunately, a public statement was not made to this House. Furthermore, it appears that, until today, no Minister has come to this House of his own volition. Other so-called debates have taken place. One of my noble friends has asked an Unstarred Question; debates have

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been raised by my noble friends; statements and Private Notice Questions have been requested by the Opposition.
Lord Falconer of Thoroton: My Lords, those allegations are inaccurate; they are not based on fact. Let me take the example that Ministers have only come to this House when called. On 27th September I came here entirely of my own volition.
Baroness Anelay of St Johns: My Lords, I am delighted to hear that it was not in response to the letter sent by my noble friend the Leader of the Opposition to the Leader of the House. I was simply aware that the week before, my noble friend Lord Strathclyde wrote to the Leader of the House and requested that there should be a Statement. I assumed that the Statement came as a result of that request.
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, let me confirm what my noble and learned friend said. We offered a Statement on the first day the House returned. My noble and learned friend came to the Dispatch Box, as he has done on a regular basis throughout the year, to volunteer information.
Baroness Anelay of St Johns: My Lords, I thank the noble Baroness the Leader of the House for making that clear. To return to the matter, in February it was perhaps unfortunate that at that stage the Minister, after being made aware of the problems already accruing, was able still to joke about the fact, saying that his noble friends would have to have a whip-round to support any shortfall. It is unfortunate that the Minister joked about such matters, and that appears in Hansard.
Perhaps I can progress to other matters. I referred to the letter written by the right honourable Chris Smith to the Minister, and the fact that after the company engaged solicitors to advise them on the directors' responsibilities and the danger of insolvency, we heard nothing about that from the Minister. By 25th May the fear of insolvency was so great that the directors of the NMEC sought and obtained from the Government, on 21st June, indemnities against actions brought against them for wrongful trading.
Dispute across the Chamber arose earlier on that matter. All I can say is that when I read in an NAO report the full account, I could understand what the noble Lord, Lord Grabiner, was trying to achieve by his cross-examination. But he did not quite get the right result. Certainly when one reads the full report, one sees the legal points the noble Lord was trying to make. But this House did not know that any application had been made or granted about anything to do with indemnities. When indemnities are mentioned, people get worried about things like insolvency.
Then the Minister appeared on 12th July in front of the Select Committee. Questions were asked at that time about indemnities. I shall not go into a detailed examination of that because, quite frankly, I do not have the noble and learned Lord's legal expertise. I am
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sure that he will be able to show me that in some way what he said was technically correct. But if one is being an accountable, open, frank Minister, and one is asked by a Select Committee of the Commons a range of questions about indemnities, why does one not say in detail what had been granted by the Government to the directors, giving a full explanation? Why not say what happened on 21st June? Why leave the committee in the dark?
On 17th July the Minister wrote to my noble friend Lady Blatch saying,
"I am confident that NMEC will continue to trade solvently until 31st December 2000".
On 27th July he wrote to me saying,
"the New Millennium Experience Company was trading solvently on Monday 17th July".
That was a statement he later admitted was "technically incorrect".
The noble Lord, Lord Grabiner, was kind enough to remind the House that on 14th July the company's chairman had indeed sent the Minister a letter to advise him of the further deterioration in the Dome's finances and that more money would be needed, and soon. It said,
"[The] Company might run out of money within two weeks and might require an additional £45 million".
Unlike the noble and learned Lord, I am not a successful commercial barrister. But even I might have noticed that something was seriously wrong after all those warnings. But, as we have already been told tonight, on 21st September the Minister wrote to Lord Dalkeith at the Millennium Commission, saying,
"I was shocked by what the PWC report implied about NMEC's financial management and corporate governance".
After being warned by his right honourable friend Chris Smith at the beginning of the year, that is extraordinary.
There has been much comment about the budget. It certainly does seem to be a case of, "pick your date and pick your budget". The latest is that we are told by David James that the cost of the Dome may be at least £839 million. I shall be interested to know whether the Minister can comment on Mr James' estimate.
The point is that Parliament was repeatedly led to believe that each extra grant and draw-down would be the last. Can the Minister tonight give the House an assurance that the draw-down in September was the last amount of money that will go from the lottery to the Dome company, either directly or indirectly? We have heard tonight about parliamentary Answers. I have had a Question tabled for six weeks which has not yet been answered. Perhaps now I shall get an answer.
Our experience of the handling of the Dome project by the Government so far means that we must ask whether we can expect better guardianship of it as it winds down and is sold off. I was interested to hear the proposals of my noble friends Lord Trefgarne and Lord Marlesford for the future of the Dome. Whatever is done, there is public concern, expressed recently on the radio by the Minister's honourable friend Diane Abbott—perhaps the Minister does not regard her as

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his friend—that in their anxiety to offload the Dome as soon as possible the Government might not have achieved the best deal either for the public or Greenwich by naming Mr Robert Bourne's company as the preferred bidder.
Why has the Minister overruled warnings and advice about the risks involved in Legacy's plans from independent accountants appointed by Ministers to monitor the bid? Will the Government publish the risk assessments that they have made? What are the outstanding issues that need to be resolved with regard to Legacy? How much will be given to the Millennium Commission by the NMEC, and when? How much will go to English Partnerships, and when?
I have trespassed on the time of this House for more than the 15 minutes which are normally allowed, simply because I have given way to other noble Lords on several occasions. However, I should like to make one or two further points. I was intrigued that on 4th March 1999 the Minister wrote to his noble friend Lord Burlison, who I am delighted to see is on the Front Bench:
"The Government will wish to achieve good value for money from the disposal of the Dome and related land, and will have regard to whether the proposal would generate receipts which at least match those which could have been achieved if the site were clear and disposed of for ordinary commercial development".
Tonight the noble and learned Lord tells the House that that deal will deliver only reasonable value for money. Does that mean he no longer seeks good value for money, because earlier he used the word "reasonable"?
Lord Falconer of Thoroton: My Lords, I do not intend to make any distinction between reasonable and good value for money.
Baroness Anelay of St Johns: My Lords, I am genuinely grateful to the Minister for that clarification. Can the Minister also reassure me that Legacy's bid at least matches what could be achieved if the site were clear and disposed of for ordinary commercial development?
My observations throughout have been aimed solely at what is expected to be Ministers' accountability and clarity in presenting what they do on behalf of the public. At the beginning of the evening the Minister, uncharacteristically, referred to two of my right honourable friends and myself, as a Member of the Opposition Front Bench, as being dishonourable. I take the word "dishonour" very seriously, and I shall remember it. I have made mistakes, and one of them is to believe the honour of this Minister.
10.33 p.m.
Lord Falconer of Thoroton: My Lords, I am very grateful to all noble Lords who have taken part in the debate. We have had a good debate, and I believe that we have learnt a lot from it. Perhaps I may draw together a number of the strands. First, a large number of noble Lords have taken part in the debate on the Dome, and for the first time in such a debate not one
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noble Lord has said that it should be pulled down. Everybody who mentioned the Dome today said that it was a good building which should remain. I believe that that represents a change in people's views in relation to the Dome.
Secondly, everybody was united in the desire to achieve regeneration of the London Borough of Greenwich and to ensure that there was a proper legacy from the Dome in future. Equally, I believe that everyone in this House paid attention to the speech of my noble friend Lady Gibson, who made specific reference to the voice of Greenwich and what it wanted in relation to the future of the Dome.
Thirdly, everybody appeared to accept that there might be in excess of 5 million visitors to the Dome and that the vast majority who visited it enjoyed their time there. That was not a matter which subsequently appeared to be in dispute.
Therefore, I think we can all agree that there are quite a number of pluses. There was also a genuine consensus that the blame culture, to which my noble friend Lord Puttnam and the noble Baroness, Lady O'Cathain, referred in very powerful speeches, is a debilitating and negative aspect of matters. The fact that one has a no-blame culture does not mean that one should not look to learn lessons from what has happened. It is worth pointing out that everyone was impressed that the Dome was delivered on time as a capital project. The then chief executive, Jennie Page, said that the reason for that was because there was a no-blame culture down at the Dome in the course of the building of that great capital project. Everyone should be proud that we delivered it on time on 31st December 1999.
We have to learn lessons from it. We do not criticise the Conservative Party for supporting the Dome; trying to work out how many people would come; making arrangements for it to happen; and setting up a Cabinet sub-committee to look at the project. We do not criticise them for that because we, as the noble Baroness, Lady Anelay, has identified, reviewed and adopted the project and accepted the figure of 12 million. We made a mistake in so doing. Our difficulty is that the Conservatives now turn around, in what appears on the face of it to be opportunistic politics, and criticise the scheme. That is where the difficulty arises.
The noble Lord, Lord Sharman, asked what was the cost of cancellation at the time when we decided to go ahead with the project. The figure was about £50 million. We were aware of the figures because we had looked at them. They obviously were a factor in our decision, but they were not the major factor in deciding to go ahead.
There are many lessons to be learnt from the project. First, one has to have better risk management; secondly, one has to have better assessments of how many visitors there may be; thirdly, one needs to make provision for contingencies; fourthly, even though it will not be a private sector project, one has to see whether, in effect, one will be competing as a private sector project. One has to recognise that expertise is

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needed not just for the capital project but also for the visitor attraction projects. Those are matters that we have learnt from the project. There is a huge amount that we should learn from the project. I, for one, am willing and keen to learn from it because there are lessons that we should take into the future.
Perhaps I may go through the major points raised by individuals in their speeches. First, I turn to the speech of the noble Lord, Lord Crickhowell. I am sorry that the Cardiff opera house was not financed by the Millennium Commission. I do not think that Miss Jennie Page was necessarily to blame for that, as he suggested. I am told that there were flaws in the business plan. The Millennium Commission were keen to help in relation to it, but the flaws could not be put right despite the suggestions made by the Millennium Commission. That is why it did not go ahead.
The noble Lord made the following criticisms. First, he pointed out that I attended a significant number of board meetings. Yes, I did. He failed to point out that the NAO made it clear that I started to attend board meetings in August 1999 when, as the noble Baroness, Lady Anelay, rightly points out, the first financial difficulties began to arise. This body is not like many non-departmental public bodies which have an unlimited life, it is one with a limited life, where what was happening was very important and quick. Therefore, I needed to know what was going on. Therefore, it seemed appropriate to discover what was going on by attending board meetings.
The noble Lord then pointed out that the 12 million visitor figure was obviously and utterly wrong right from the beginning. He made a powerful and impassioned speech to indicate that it must have been obvious to everyone that it was wrong. Regrettably it was not obvious to everyone that it was wrong. There were a large number of experts who told us that it was right. My noble friend Lord Bruce of Donington may be right when he said that one should not pay so much attention to experts. There were many people who were not as clever as the noble Lord, Lord Crickhowell, and did not spot the error at the time. We made the mistake of believing them. If only the noble Lord, Lord Crickhowell, had made his views known so clearly at the time, it would have been of great assistance to the nation.
The noble Lord also referred to the letter dated 7th February 2000 which was sent to me by my right honourable friend Mr Chris Smith. That letter rightly pointed out that the corporate governance had to be improved. Indeed, the Millennium Commission had made it a condition of its grant at that time that corporate governance should be improved. On 12th April, after I had had considerable discussions with my right honourable friend and after he had discussed the matter with the chairman of the company, the Millennium Commission was then satisfied that the condition had been satisfied and it released the balance of its grant. I am slightly surprised that the noble Lord, Lord Crickhowell, did not mention that point in his forensic account of what the NAO said.
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The noble Lord then referred to the position in July. He rightly referred to the fact that I had received a letter on 14th July 2000 saying that the financial position was deteriorating and yet in the House on 27th July I said that the company was solvent on 17th July, a point also made with vigour by the noble Baroness, Lady Anelay. Every one of those points is absolutely true. The reason I thought the company was solvent was that that is what the board of directors thought the position was—a board of directors that contained such honourable and eminent men as Sir Brian Jenkins, Len Duvall and David Quarmby; honourable men advised by, as the noble Baroness pointed out, City solicitors and assisted by accountants put in by the Millennium Commission. I was wrong about that, but I would have regarded it as irresponsible to have said at that stage that the company was insolvent when all the people involved in the day-to-day management believed it to be solvent. They were wrong; and they were wrong because there were a number of wind-down liabilities that had not been taken into account which were identified by PricewaterhouseCoopers in its report which was sent to the board at the end of August. I was shocked when I discovered that, because no one knew about those liabilities.
Lord Crickhowell: My Lords, I want only to make the point that at Question Time in July I did not ask about the solvency of the company. It was not an issue that I pursued. I questioned the noble and learned Lord about his expressions of confidence that the project would be completed within budget at a time when the company was publishing its annual report setting out very properly the considerable risk as to why that would not be achieved. That was the question I put to him. That was the matter about which I wrote him a letter, to which he replied two months later without giving me an answer.
Lord Falconer of Thoroton: My Lords, as to whether the project would deliver within budget, the noble Lord will recall that the budget at that time was £758 million. The question of whether it would deliver within budget is one of whether it would deliver spending only those costs; it is not one of dealing with what was the source of those costs. The noble Lord will recall that the report and accounts specifically identified that an application might have to be made to the Millennium Commission in order for it to deliver within budget.
With respect to the noble Baroness, Lady Anelay, and to the noble Lord, the criticisms that have been made are completely unfounded. They are as much an attack on the board as they are on me. They are completely without foundation.
Lord Crickhowell: My Lords, that is a very serious charge. As, almost without exception, every criticism that I made in my speech was a direct quote either from

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the National Audit Office report or from the letter from the right honourable Chris Smith, I find that rather difficult to accept.
Lord Falconer of Thoroton: My Lords, that is the effect of the criticisms made by the noble Lord. If the noble Lord thought through a little more what he was saying, as the noble Baroness should have thought through a little more what she was saying, that is the inevitable consequence. I believe that on 27th July I answered questions entirely honestly and honourably. I was wrong, as I made clear because of what was disclosed in the report made by PricewaterhouseCooper.
I believe that I have dealt with the questions raised by the noble Lord, Lord Sharman. The right reverend Prelate the Bishop of Southwark congratulated us on the boldness of the vision and hoped that it would be taken through into the future as regards regeneration and jobs for the people of Greenwich. I agree with that sentiment. It would be wrong to impose specific conditions, but one of the factors applied in the competition for judging who is to take over the Dome has always been what the regenerative benefits will be.
I have mentioned the noble Lord, Lord Puttnam. In his speech the noble Lord, Lord Marlesford, referred to hubris. I would not accept that word as being right. I believe that there was real enthusiasm on both sides of the House for a project that we believed we could make work and would bring benefit to that part of London. I do not believe that that is hubris but a perfectly reasonable ambition for both sides of the House to hold.
I do not need to respond to the specific points of the noble Lord, Lord Grabiner. The noble Baroness, Lady Greengross, referred to the infrastructure and the excellent access for older and disabled people. I hope that the noble Lord, Lord Bruce of Donington, heard her remarks that there is very easy access for both elderly people and those who do not find it easy to get around.
The noble Lord, Lord Lea of Crondall, referred to the TUC's support for the Dome. The noble Baroness, Lady McIntosh, who is in her place, referred to the fact that it is very difficult to budget accurately as regards putting on entertainments. Our budget has been exceeded—on the basis that every single penny of the existing grant from the Millennium Commission is used—by 4.6 per cent. It is regrettable that it has been exceeded at all, but I believe that noble Lords should put that in perspective.
The noble Lord, Lord Trefgarne, described it as public money. It is lottery money, but the point is exactly the same. He was absolutely right to emphasise that, because so much lottery money is required, it is important that there should be proper scrutiny. He is right when he said that people are angry about the lottery money, particularly the extra money which has been spent during the course of this year. He said that proper accounts had not been kept. With respect to the noble Lord, that is a totally inaccurate account of the
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NAO report. It is right that it made criticism in relation to certain aspects of the record keeping, but nowhere does it say that proper accounts were not kept. If that were the position, the company's auditors would not have been able to give a certificate to the accounts in July 2000 as it did.
The noble Lord, Lord Tomlinson, referred to the fact that the estimate of visitor numbers before 1997 had been all over the place and that the Tories wished to wash their hands of the project. He also made a point about Birmingham, but that is a debate I do not want to become involved in at this moment.
The noble Lord, Lord Jacobs, referred to the fact that the contents were not known. Much has been said about the contents during the course of the debate. The best judges of the contents are the people who have been there. Between 5 million and 6 million people will have visited the Dome by the time the project ends. Independent opinion polls have been carried out and they show that the satisfaction level as regards the contents is very, very high. Noble Lords who go there will find that for the most part it is a very enjoyable experience. Indeed, I very much hope that before the end of the year I shall be able to arrange one more trip for noble Lords of all parties to visit the Dome before it closes on 31st December. No whip round will be required.
The noble Baroness, Lady Gibson, made a very powerful speech which resonated around the House. The noble Lord, Lord Harris of Haringey, was involved in the London v. Birmingham debate. I do not wish to become involved in it.
The noble Lord, Lord Lyell, referred to a number of specific points. He mentioned the letter of 14th July. That letter said that the finances had deteriorated, and that is absolutely right. Indeed, I was very aware of the position at that particular time. Noble Lords will recall that an application was then made to the Millennium Commission and a grant was given to cover the position as regards the deteriorating finances. The noble Lord also referred to marketing. He is right again in saying that there are problems there. They were identified by the noble Lord, Lord Sharman, in his speech and by the National Audit Office.
The marketing strategy was obviously wrong. The difficulty was that everyone involved did not have much experience of marketing domes. Even when an experienced visitor attraction manager was brought in, the marketing process was difficult to get right. That is perhaps not surprising. It is a unique, innovative project which has gone through an experience in the press that very few projects go through.
I join with the noble Lord, Lord Sawyer, in congratulating the previous government on the decision that they made to be bold and for going with that decision.
The noble Baroness, Lady O'Cathain, made a powerful speech, which resonated around the House, about the role and commitment of big business. She asked about IMG. Questions have been answered in the past in regard to IMG and the extent to which it brought in sponsorship. A confidential settlement was

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made with IMG and, therefore, I am not in a position to inform the House of the details of the arrangements made. As the noble Baroness is aware, much of the business sponsorship came through the company going directly to business and seeking sponsorship.
The noble Baroness asked what will happen to the exhibits. Some are owned by sponsors—for example, the talk zone is owned by British Telecom and the journey zone is owned by Ford—some are owned by third parties and some are owned by NMEC. I hope that proper homes will he found for them. The faith zone, for example, is a serious contributor to spiritual matters and I hope that a permanent home can be found for it outside the Dome.
The noble Baroness, Lady Noakes, picked up points in the NAO report about contingency planning, which I agree is very important. She seemed to be criticising the actions of the directors during the period between 22nd August and 6th September. That is totally unjustified by the terms of the NAO report. Indeed, the view that has been taken is that the directors were obliged to act in the way that they did between those two dates.
The noble Lord, Lord Varley, gave an impressive political speech, which indicated the strong and powerful position in which we find ourselves. The noble Earl, Lord Attlee, was one of those who enjoyed the Black Adder films—on which I congratulate him. The noble Baroness, Lady Crawley, emphasised the regenerative point.
The noble Viscount, Lord Chandos, spoke about the future. The position at the moment is that Legacy plc is the preferred bidder. There is a way to go before contracts are signed. There are a significant number of issues on which the Government have to be satisfied before they enter into the contract. No decision has yet been made as to the split in the proceeds between English Partnerships and NMEC. The advice that the Government received from the competition team was that they could appoint Legacy plc preferred bidder within the rules of the competition, which is the appropriate course to take. Ultimately a decision will have to be taken by the Government as to whether or not a contract should be exchanged. They will do so in accordance with the rules of the competition and the criteria set out therein.
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The speech of the noble Lord, Lord Selsdon, was informative and amusing. He described the project as a landmark project. He spoke favourably about the Dome building and his hope that it will stay there for a considerable time. I express my profound gratitude for the speech of the noble Lord, Lord Graham.
The noble Baroness, Lady Dean of Thornton-le-Fylde, made a significant contribution in relation to the press, particularly drawing attention to the fact that the report shows that every time there is a bad press about the Dome, visitor numbers fall between 30 per cent and 50 per cent in the following week. She also emphasised the point about the long-term future of the Dome and the fact that it will lever into the peninsula a large amount of private money. I think all noble Lords will agree that that is worthwhile.
The right reverend Prelate the Bishop of Lichfield hoped that there would be joined-up thinking between the new owners of the Dome and those who are presently involved in historic Greenwich. One of the criteria in the competition is the recognition of the Dome as an important architectural site. Again, it would be wrong to impose specific conditions, but I entirely endorse the sentiment expressed.
The noble Baroness, Lady Hamwee, made a sensible and constructive speech about the lessons that could be learnt. The noble Baroness, Lady Anelay, made specific criticisms in relation to, as she put it, "secrecy". That is unfair and untrue. I have always answered questions fully and openly in this House. The particulars given by the noble Baroness did not for one moment support such allegations.
The Dome has been a troubled project. Mistakes have been made. The NAO report is a worthwhile report from which many lessons can be learnt. Speaking entirely for myself, the Dome is a project that has had many difficulties, but it has also brought many, many gains which can still be won if we support it as a worthwhile project which has done good rather than bad.
On Question, Motion agreed to.

Countryside and Rights of Way Bill
Returned from the Commons with the amendments agreed to.
House adjourned at four minutes before eleven o'clock.