Lords Sitting of 27 February 2001

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

Badgers and Bovine Tuberculosis
Lord Soulsby of Swaffham Prior Lord Soulsby of Swaffham Prior asked Her Majesty's Government:
Whether they have any plans to modify the present programme for the control of badgers with respect to the increasing incidence of bovine tuberculosis in cattle.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman): My Lords, TB in cattle is an extremely serious animal health problem. The Government are dealing with the disease on a broad front and on the basis of sound science. Bovine TB is, however, continuing to increase while our research, including the badger culling trial, is in progress. My right honourable friend the Minister of Agriculture has made clear that the Government are keeping the possibility of taking additional measures under review and will not hesitate to act if necessary.
Lord Soulsby of Swaffham Prior: My Lords, I thank the Minister for her reply. The Question was tabled some weeks before the present emergency. I apologise to the Minister if, for want of ministerial back-up, it places her in a difficult position. With regard to tuberculosis and badgers, does she agree that it will be some years before the Krebs-Bourne trials are completed? In the meantime, farmers—especially dairy farmers—and veterinarians are somewhat dissatisfied with the progress in the Krebs-Bourne trials. Indeed, the National Farmers Union has pulled out of the TB Forum set up in 1999. Does the Minister agree that it would be a good time, following the present emergency, to re-assess the Government's approach to badger control and tuberculosis in cattle?
Baroness Hayman: My Lords, the Government's approach to badger control and tuberculosis in cattle does not rely only on the Krebs-Bourne trials. We are making progress with those trials. All 10 trial areas are involved. In seven of them there has been proactive culling. Reactive culling and survey work has taken place in the other three areas. The noble Lord, Lord Soulsby, will be aware that the Select Committee on Agriculture in another place looked at the issue recently. The Government will shortly be responding to its report. The committee concluded that notwithstanding its support for the trials, carrying them through and getting the evidence we need, it was
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also important that we assess policy options so that we have policies ready as and when results come out of the trials.
Lord Acton: My Lords, I follow up the Question of the noble Lord, Lord Soulsby, by asking the question which he so carefully did not ask: can badgers in fact spread foot and mouth disease?
Baroness Hayman: My Lords, badgers are not a susceptible species for foot and mouth. Therefore, they cannot get it. Just as the noble Lord could spread foot and mouth on his shoes or anywhere else, badgers could do the same on their fur. But it is the movement of susceptible species that is the greatest danger.
Baroness Carnegy of Lour: My Lords, has the Minister any information about the possibility that an AIDS-type virus in cattle, which is prevalent in the South West, may be weakening cattle and making them more liable to tuberculosis? Might not that be more of a nuisance than badgers?
Baroness Hayman: My Lords, we have a wide research programme in place looking at husbandry issues, cattle to cattle transmission and other possible wildlife sectors. In any disease situation the issue of potential susceptibility to disease is one matter we have to take into account. Therefore, the survey work that comes out of TB99, which is being done on affected herds, will be important in that respect.
The Countess of Mar: My Lords, can the Minister confirm that it has been known for a long time that TB, both in humans and in animals, is a disease of malnutrition? There is a known selenium deficiency in the soils in this country. Selenium is closely associated with the immune system function. Dairy cattle, which seem to be most prone to TB, are under huge stresses with the amount of milk that they are expected to produce. Therefore, can she say what research is being done in this field?
Furthermore, I understand that there is a child in Scotland who is suffering from bovine TB which is resistant to all antibiotics. I do not expect an immediate answer to this question, but is the immune status of that child compromised by his diet?
Baroness Hayman: My Lords, the noble Countess, Lady Mar, is correct. I cannot answer that question immediately. There is close liaison between ourselves and the Department of Health. A liaison group is looking at the health implications of M. bovis. I stress that the number of cases of M. bovis in humans has remained constant for many years. It is not increasing. It is predominantly a disease among older people and is thought to be a recurrence of a disease that was contracted pre-pasteurisation. That is the current advice. The matter is being kept under review. So far as concerns the Scottish dimension, the Scottish Centre for Infection and Environmental Health sits on that liaison group.

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In relation to selenium deficiency, I am aware that that is one of the issues that has been raised as a potential factor in TB. We have vastly different incidences of TB in different parts of the country. There is a wide programme of research which has been extended. Details of that are available on our website. I hesitate to say that, but I am afraid that it is true.
Lord Hardy of Wath: My Lords, is my noble friend aware that it is 28 years since I took the Badgers Act through the House of Commons? The connection was known then and the measure took account of it. However, since that time, vast sums of money have been spent and large numbers of badgers have been destroyed. Perhaps it would have been wiser to have pursued a medical or veterinary alternative. Can my noble friend assure the House and make it clear that, in many parts of the country, this problem does not apply? In those areas, badgers ought not to be persecuted.
Baroness Hayman: My Lords, I do not think that badgers are persecuted in any area. We are trying to find out what are the necessary and appropriate disease control measures if it is clear that we have a wildlife vector such as the badger involved in the spread of bovine TB. I must remind my noble friend—although I know that he is aware of this—that 8,000 cattle are slaughtered every year because of bovine TB. It is a welfare issue for cattle as well as for wildlife. However, my noble friend is absolutely right to remind the House of what I said earlier in my remarks; namely, that different patterns of disease are seen in different parts of the country. The whole thrust of our work seeks to establish solutions and policy options that will allow badgers and cattle to coexist in good health.
Baroness Masham of Ilton: My Lords, can the Minister tell the House whether a vaccine is available for bovine TB and also a vaccine for foot and mouth disease, which is causing such concern at the moment?
Baroness Hayman: My Lords, I shall respond first to the second question put to me by the noble Baroness. A vaccine is available for foot and mouth disease. It is not used in this country or throughout the European Union because use of that vaccine would result in compromising fatally our disease-free status. It is then impossible to distinguish between animals with antibodies through vaccination and animals with antibodies through disease. For that reason, there are enormous trade ramifications. The advice of the Chief Veterinary Officer has been not to pursue a vaccination policy. However, obviously at this time we are taking every option into account, including vaccination.
No effective vaccination exists against bovine TB. A great deal of research is being carried out and considerable resources are being invested internationally to try to develop such a vaccine.

Victoria and Albert Museum
2.45 p.m.
Lord Pilkington of Oxenford Lord Pilkington of Oxenford asked Her Majesty's Government:
Whether it was appropriate for the trustees of the Victoria and Albert museum to announce to the press the appointment of a new director without first informing the present director and before the appointment had been confirmed by the Prime Minister.
Lord McIntosh of Haringey: My Lords, the trustees of the Victoria and Albert Museum have acted wholly appropriately in this matter. At no time before receipt of the Prime Minister's approval did the trustees make an announcement about the new director. An error, not committed by the trustees, resulted in the name of the new director becoming known to museum staff and the press. The current director knew that, at the expiry of his five-year term, he would be succeeded at the end of an extended term running until his 60th birthday. The recruitment campaign for his successor was also public knowledge.
Lord Pilkington of Oxenford: My Lords, I should first declare an interest, in that the present director, Dr Borg, is a friend of mine. I thank the Minister for that Answer, but I should like to press him as regards this error. Does he think that it is right that a public body—that is, the chairman and trustees of the Victoria and Albert Museum—should send, without thought, an open fax to the museum giving the name of the new director before informing the present incumbent? He learned the name of his successor from his staff. Surely that is not the behaviour that we expect from a public body. The chairman and trustees should be censured. The matter demonstrates the height of discourtesy. To describe this as a mere error made at the end of a long professional career is not something that I have ever seen happen before.
Lord McIntosh of Haringey: My Lords, I am very sorry that the noble Lord, Lord Pilkington, has thought fit to ask that question. I shall answer it. The error occurred because a fax sent from the Department of Culture, Media and Sport, which concerned the subject of the press release and included the name of the new director, was sent to Dr Borg himself. It was sent to him in error instead of the person to whom it was intended to be sent. It was sent to no one else. Subsequent to that, the name of the new director became known to museum staff and the press.
Lord Bramall: My Lords, as someone who has worked very closely with the present director, Dr Borg, when he was director-general of the Imperial War Museum—I had the highest opinion of him—does the Minister agree that, whatever interpretation is put on this rather odd sequence of events, it reflects the

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extremely cavalier way in which this very distinguished public servant has been treated by the trustees and, to some extent, by the department?
Lord McIntosh of Haringey: My Lords, I certainly agree with the noble and gallant Lord on the distinguished service given by Dr Borg. During his time as the director of the V&A he has overseen a number of successes. Recent highlights include the development of new audiences through critically acclaimed exhibitions such as the art of the Sikh kingdom last year, the introduction of an experimental contemporary programme, the opening of the new Canon photography gallery, the £31 million refurbishment of the British galleries, which will be completed and the galleries reopened by November of this year, along with others. So far as concerns that point, I go along entirely with the noble and gallant Lord, Lord Bramall. However, my answer has made it clear that Dr Borg has not been treated in a cavalier manner.
Lord Peyton of Yeovil: My Lords, is not the noble Lord in danger of defending the indefensible here? A great deal of ill feeling, disappointment and hurt have been generated by this series of events. Does the noble Lord agree that, in the circumstances, it would be sensible if Ministers, when appointing chairmen—in this case it was the Prime Minister—were to be careful and to advise the chairmen whom they appoint to behave towards those who serve them in a manner reflecting a high degree of courtesy and concern?
Lord McIntosh of Haringey: My Lords, I wholly reject both the implicit and the explicit criticisms made in the question put by the noble Lord, Lord Peyton.
Viscount Falkland: My Lords, can the Minister tell us why it took so long to decide this appointment? Surely the little spat taking place in the Chamber this afternoon might not have taken place had it not been for the fact that it took eight months to reach a decision. Can the Minister confirm whether it was the decision itself or the approval of the decision which took so long?
Lord McIntosh of Haringey: My Lords, no delay occurred in the approval of the decision. The recruitment process was conducted entirely properly. Interviews for the post were held in two stages: the first interviews of seven candidates were conducted in December; second interviews of four of those candidates were conducted in January 2001. This process was carried out after public advertisement of the post and the appointment of recruitment consultants. This is not a quick process, but it is a correct process.
Lord Elton: My Lords, I have taken an interest in the process since before the events just described by the Minister because I, too, am a friend of Dr Borg. May I ask how it was that the intention that his contract should not be renewed beyond his 60th birthday
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became public knowledge so very far in advance of that event? Has this not in fact reduced his ability to run the establishment even more effectively than the noble Lord has already rightly outlined?
Lord McIntosh of Haringey: My Lords, there was no question of Dr Borg's contract of appointment being renewed beyond his 60th birthday. His five-year contract expired in autumn 2000. At that time he was informed that his contract would be extended until January 2002, which would coincide with his 60th birthday. That had to become public knowledge because action had to be taken to recruit his successor.

Debt Relief and Poverty Reduction
2.52 p.m.
The Earl of Sandwich The Earl of Sandwich asked Her Majesty's Government:
How they will ensure that civil society organisations can monitor and evaluate progress in poverty reduction strategies in the poorest countries.
Baroness Amos: My Lords, the enhanced Heavily Indebted Poor Countries initiative (HIPC) makes a direct link between debt relief and poverty reduction. As a result, all countries that are eligible for World Bank or IMF concessional adjustment lending are producing national poverty reduction strategies. These strategies are being developed by national governments in wide consultation with civil society. Progress will be judged through the normal processes of democratic accountability.
The Earl of Sandwich: My Lords, I think we all agree that civil society has to be supported and I welcome the emphasis on that in the Government's White Paper. However, these are very large aid and debt relief funds coming into the different countries. How can nongovernmental organisations, especially the smaller ones, be expected to be equipped to monitor their government's progress as regards poverty strategies; and how can we expect those governments to tolerate their doing so?
Baroness Amos: My Lords, there are three different initiatives which will assist that process. First, we are mainstreaming work on poverty reduction and the monitoring of governments engaged in poverty reduction strategies through our work with the international financial institutions, governments and civil society. As part of that, we are working on a proposal with the World Bank to develop the capacity of southern civil society to engage governments in budgetary processes so that they will be able to monitor what their governments are doing with the money. We also contribute to the Paris 21 initiative, which aims to co-ordinate work on capacity building for poverty monitoring from a country-led perspective. As part of that, we are building the capacity of civil society to demand and use poverty

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information. The UN Development Group is producing new country reports focused on international development targets. The aim is to provide key information and indicators. Yesterday, at the international conference on child poverty, the first of the reports—on Tanzania—was launched.
Baroness Rawlings: My Lords, why has further lending or debt relief been extended to countries such as Zimbabwe, Nigeria and Zambia, which have not satisfied the criteria of economic and political reform?
Baroness Amos: My Lords, Zambia qualified for debt relief under the HIPC initiative in December last year. It secured new IMF/World Bank lending last year following the sale of the copper mine and renewed commitments to privatisation and macro-economic stabilisation. In all HIPC cases, including that of Zambia, debt relief at the decision point is on "flow" terms. That means that it can be suspended if the Government of Zambia fail to maintain an economic programme designed to restore growth and reduce poverty. Zimbabwe is not eligible for HIPC assistance and is not receiving any new lending or debt relief. In August last year, Nigeria entered into a one-year standby agreement with the IMF. This paves the way for a debt rescheduling agreement, not debt reduction.
Baroness Whitaker: My Lords, with reference to civil society, how can the Government ensure that northern NGOs do not dominate over southern NGOs, thus further disempowering them?
Baroness Amos: My Lords, we have what is called a civil society challenge fund: £11 million pounds has been allocated to the fund in the coming year. The criterion for funding is that UK-based non-profit making groups must have established links with civil society groups overseas. Those links must be more than merely a channel for transferring money; they must demonstrably add value in terms of the activity to be funded. As I mentioned in my reply to the noble Earl, the Paris 21 initiative aims to build the capacity of civil society to demand and use poverty information.
The Lord Bishop of Lichfield: My Lords, some of the poorest people in the world live under dictatorships. Will the Minister help us in thinking about how such people may be able to participate in programmes of aid and debt relief, which depend on economic reform, good governance and strong civil society?
Baroness Amos: My Lords, I entirely agree that it is difficult to deliver aid which benefits the poor in countries where the government are not committed to poverty reduction. We recognise that, and we have been trying to look at ways in which we can reduce poverty in such difficult circumstances. Debt relief is provided only to countries that have a programme of economic management funded by the IMF. That must be focused on economic growth and poverty
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reduction. For HIPC countries which are in conflict or which have a governance problem, the Chancellor of the Exchequer pledged that from 1st December last year all debt payments to the UK will be held in trust and will be returned to fund poverty reduction programmes when the country is able to enter the HIPC process.
Lord Redesdale: My Lords, the Minister mentioned democratic accountability. Does she agree that democratic accountability relies on strong opposition? Will the Government provide further funding for organisations such as the Westminster Foundation which promote democratic opposition?
Baroness Amos: My Lords, I agree with the noble Lord, Lord Redesdale, that it is important to have strong, democratic processes in-country. The Westminster Foundation has made a strong commitment and carried out good work in countries by way of promoting democratic processes. I shall write to the noble Lord with respect to the specific question on funding.
Lord Renton: My Lords, bearing in mind that these poorest countries have received funds either from governments or from charities in more prosperous countries, can the noble Baroness say to what extent those funds have been fully used for the relief of poverty?
Baroness Amos: My Lords, I should tell the noble Lord that in 1997 we made it absolutely clear in our White Paper that our development programme would be totally focused on the international development targets and the relief of poverty. We have been working with the international financial institutions, with the European Union and with others to try to ensure that they adopt a similar attitude in the programmes that they develop. We have been somewhat successful, especially with the EU, and through the HIPC process with the World Bank and the IMF.
In addition, given what happened last year at the millennium assembly when the countries of the UN agreed not only five of the seven international development targets but also another five targets to create the millennium development goals, the whole world community is coming together in terms of saying very clearly that the international development targets and the achievement of poverty reduction across the world is a priority.

Climate Change Objectives
3.1 p.m.
Lord Ezra Lord Ezra asked Her Majesty's Government:
Whether they consider that they will achieve their climate change objectives.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, the UK climate change programme that was published last November sets out in detail how we plan to deliver our climate change targets. We estimate that the policies in the programme could reduce our greenhouse gas emissions by 23 per cent below 1990 levels by 2010, and our carbon dioxide emissions by 19 per cent. We remain on course to meet these objectives, and we shall continue to evaluate our progress regularly.
Lord Ezra: My Lords, I thank the Minister for that reply. Is the noble Lord aware that in an independent survey published earlier this month it was estimated that a reduction of CO2 emissions compared with 1990 by the year 2010 would amount to only 6.5 per cent, compared with the 20 per cent targeted, unless further urgent action is taken? Will the noble Lord comment on that estimate? Can the noble Lord also tell the House when the suspended international talks in the Hague are likely to be resumed?
Lord Whitty: My Lords, I shall deal first with the noble Lord's latter point. At the request of the incoming United States Administration the resumption of these talks, which was scheduled for May, has now been postponed to some time between the middle of June and the end of July. Intensive negotiations are in train to establish that outcome.
Secondly, the estimate in the study to which the noble Lord referred, which, I believe, relates to Cambridge Econometrics, was based on policies already in train. We do not seriously disagree with that estimate. However, it did not include all of the policies to which this Government are committed. It included only the price effect of the climate change levy, not the effect of the establishment of the carbon trust or of the reaching of agreements with the high-energy user sectors. Moreover, it did not include emissions trading effects, the effects of new building regulations on energy requirements, or the effect of the voluntary agreement between the European car manufacturers on reducing CO2 emissions from transport. There are several other policies to which we are committed at national or European level that will contribute towards achieving the 20 per cent target.
Lord Palmer: My Lords, does the Minister agree that if Her Majesty's Government gave full support to a new British bio-diesel industry this would go a long way towards supporting their aims as regards climate change?
Lord Whitty: My Lords, as the noble Lord, Lord Palmer, will know, in response to his "green challenge" the Chancellor of the Exchequer is currently considering a number of proposals for favouring alternative fuels. However, the full benefit involved is likely to be felt to the back-end of this period and beyond 2010.
Lord Roberts of Conwy: My Lords, are the Government satisfied with the availability of low sulphur petrol supplies and the current pricing at petrol pumps?
Lord Whitty: My Lords, as the Treasury indicated on Friday, the presumption is that there will not be full availability of ULSP at the time of the Budget and that, therefore, some transitional arrangements have to be engaged in as regards pricing. However, by the end of that transitional period we are confident that ULSP will be available throughout the United Kingdom.
Baroness Williams of Crosby: My Lords, in view of the positive relations that we understand have been created between the Prime Minister and the new President of the United States, can the Minister say whether Her Majesty's Government will use every possible opportunity between now and next June to persuade the US of the importance of coming on board with regard to the Kyoto protocol, as they are in many ways the key in reducing the dangers of global warming at the present time?
Lord Whitty: My Lords, it is important that we impress upon the new US Administration the importance that we in the United Kingdom—and, indeed, in Europe—place on reaching agreement on climate change. There was a lengthy and positive discussion between the Foreign Secretary and Secretary of State Powell a few days ago.
Lord Carver: My Lords, does the Minister agree that the most effective way of reducing our CO2 emissions would be to build some more nuclear power stations?
Lord Whitty: My Lords, the target takes into account a reduction in the contributions made by nuclear power for the period to 2010. Beyond that, some assessment of the various sources of energy will need to be made in order to sustain the reduction in CO2 emissions that we are confident of achieving by 2010.
Baroness Byford: My Lords, although I accept the Government's wish to achieve their objectives, can the noble Lord comment on the whole position of the climate change levy, especially on horticulture? I realise that the Government have already given a 50 per cent reduction, but this obviously places those concerned at a disadvantage as regards their overseas competitors.
Lord Whitty: My Lords, the position of the horticultural industry was addressed by the 50 per cent reduction in the effect. We believe that the kind of competitive anxieties expressed by the industry at that time have largely been met. We recognise that the climate change levy will impose some costs on several sectors in industry. The high-energy users are, of course, now subject to discussion and conclusion of sector agreements. We believe that the anxieties of the

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horticulture sector have largely been met. The contribution of industry as a whole to the climate change levy will be a very positive one to reduction of the industrial emissions of CO2.

Transport Act 2000 (Designation of Transferee) Order 2001
3.7 p.m.
The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston)The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston) rose to move, That the draft order laid before the House on 1st February be approved [6th Report from the Joint Committee].
The noble Lord said: My Lords, we are here today to consider a draft order that it is proposed to make under Section 51(2) of the Transport Act 2000. Under Section 103(6), a draft of the order must be laid before and approved by resolution of both Houses of Parliament. As your Lordships will no doubt be aware, the draft has already been approved in another place.
Those of your Lordships who took part in the many debates on Part I of the Transport Act 2000 will no doubt recall that Parliament took some time to persuade itself of the benefits of the provisions that it contains, which relate to air traffic services. However, Parliament did give its approval and in doing so gave government the authority in principle to proceed with the establishment of the public private partnership (PPP) for National Air Traffic Services Limited.
Noble Lords will also recall that the Government accepted amendments to defer the final stages of the preparations for the PPP for a period of three months after Royal Assent. We agreed to use that period for further discussion with stakeholders, not to re-open the principle of the PPP but to ensure that progress was as smooth as possible and addressed the many legitimate concerns that have been expressed. I undertook that at the end of that period I would come back to your Lordships' House and provide a further opportunity for debating the issues. I am happy to confirm that we shall honour that commitment in due course.
That debate will no doubt provide the opportunity for noble Lords to raise many aspects of this subject. Today's business is much narrower and more technical. In passing the Transport Act, Parliament was clear that it wanted the PPP to proceed hand in hand with a number of safeguards. The instrument that we are considering today is intended to give effect to those protections.
The draft order itself is a relatively simple document. It seeks to designate, for the purposes of Section 51 of the Act, a company named National Air Traffic Services (No 2) Ltd, which, for convenience, I shall call "NATS No 2". This company is a government-owned company that has been established for the purposes of holding the Secretary of State's shares in National Air Traffic Services Limited (NATS). It will be the vehicle for the NATS Public
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Private Partnership (PPP)—in other words, 46 per cent of the company's shareholding will be sold to the strategic partner; 5 per cent will be made available to employees and the Government will retain a 49 per cent stake.
For a company to be designated under this section, it must be in receipt of assets under a transfer scheme made under Section 43 of the Act. The shares in NATS, which are currently owned by the Civil Aviation Authority, are to be transferred to NATS No. 2 under a transfer scheme to be made on 31st March, the date on which it is proposed this order will come into effect.
A further requirement relates to public ownership of the transferee company. NATS No. 2 will meet this requirement, as at the time of the transfer it will continue to be wholly owned by the Government. I hope that that provides your Lordships with an explanation of the technical side of the order. I will now deal in a little more detail with its effects.
The designation of the company will apply the various protections in Section 51 to NATS No. 2, and I will look at each of these in turn. The first protection is one that was widely welcomed when it was first proposed. The Secretary of State must ensure that he does not dispose of any shares in NATS No. 2 unless he is satisfied that a scheme is in place to ensure the completion of major projects relating to the provision of air traffic services. The projects falling within this category are the New Scottish Centre at Prestwick and the New En Route Centre at Swanwick. Designation of the company will ensure that the Government's commitment to complete these projects will be honoured.
There are also further protections relating to the limits of the Government's shareholding in the PPP. They come in two forms—one relates to the Government's ability to sell shares and the other to what the Government may allow to happen to their shareholding in a situation where new shares are being issued, for example to fund a capital investment.
I will start with the Government's ability to sell shares. Any sale of shares in the designated company must not reduce the Crown's shareholding in that company below 49 per cent. As I have already explained, the Government do indeed intend to retain a 49 per cent stake. This level of government shareholding reflects the ongoing public interest in NATS, which we believe is essential for the future of the provision of air traffic services in this country. It will ensure that the taxpayer gets value for money, and the taxpayer will share in any dividends. Again, the introduction of these protections was widely welcomed in Parliament.
The second type of protection (enshrined in subsection (5) of Section 51) relates to a situation where, for whatever reason, the Government agreed with the chosen strategic partner that new shares should be issued, for example so as to allow a major capital investment or project to go ahead. In that case, there is a protection as to the minimum level of government shareholding; namely, that the Secretary

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of State is required to hold at least 25 per cent of the designated company's share capital at any given time. This limit has given rise to much discussion in previous debates. I am aware that concerns have been expressed that this limit gives the Government a free hand to reduce their shareholding, and consequently is a stepping stone to full privatisation. We dealt fully with those matters when the Bill was being considered, but I can again reassure your Lordships that this is not the case. The protections we have allow the Government only to sell 51 per cent of the shares in NATS—with the fall-back that if, at some time in the future, the Government were to agree to new shares being issued, they must not allow the effect of this to be that the Crown owns less than 25 per cent of the larger pool of shares. These are important protections and reassurances of the continuing role for the Government in this PPP.
The next protection contained in this order is that the Secretary of State must continue to hold a special share in the designated company. That requirement will be entrenched in the company's articles of association and will, along with the shareholders' agreement, be used to protect the Government's rights in certain key areas such as the issue of new shares and the company's dividend policy. In essence, it will enable the Government to maintain the public interest while allowing the private sector the freedom to run the business.
Noble Lords on the Benches opposite attached importance to the special share during our debates on the Bill for the protection it would afford for national security. They were quite right to do so. They also suggested that the European Commission might challenge the special share. However, the Government remain firmly of the view that our powers to hold such a share are robust in this case.
The final protection is that the company's articles of association must not be amended without the Secretary of State's consent. However, the Secretary of State cannot consent to any such alteration unless a statement of the proposed consent is approved by both Houses of Parliament. This is intended as a safeguard to ensure that the Secretary of State would not be able to consent, without parliamentary approval, to a reduction in the rights attaching to the special share.
I hope that I have explained to your Lordships with sufficient clarity the protections that this very short order will introduce. In passing the Transport Act, Parliament has given its approval to the Government's proposal to establish the PPP, subject to certain safeguards. I trust that your Lordships will now endorse this technical measure to give them effect. I beg to move.
Moved, That the draft order laid before the House on 1st February be approved [6th Report from the Joint Committee].—(Lord Macdonald of Tradeston.)
3.15 p.m.
Lord Brabazon of Tara: My Lords, I am grateful to the Minister for his explanation of the order, which, as he said, is not in itself controversial, dealing, as he
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explained, with the setting up of NATS No. 2 Ltd, as I suppose we must now get used to calling it. Indeed, I welcome the protections that the order gives to the special share and other measures. However, it also gives us the opportunity to question the Minister on the selection of the strategic partner for NATS No. 2.
Like no doubt other noble Lords, I have seen press reports of the progress, or rather lack of it, of choosing the preferred bidder for the PPP. Last week it was reported in the press that the Government had abandoned plans to select a preferred bidder. What does that mean? Originally the timetable was for the preferred bidder to be announced by the end of February; that is, tomorrow. What does it mean that there is now to be no preferred bidder? Further, press reports yesterday stated that one of the key partners of SERCO, one of the bidders, had pulled out under pressure from members of the airline group, another bidder. I hope that the Minister can clarify exactly what is going on and what now is the timetable for a decision and, indeed, how many runners are still in the frame.
I remind the Minister—the Minister has already referred to this—of the amendment that we made in this House that called for a three-month delay to any transfer and the undertaking from the Minister to make a report at the end of that time. Those three months were supposed to give the Government, among other things, time to select the strategic partner and announce it. That clearly will not now happen.
Whoever the bidder is, it is clear that safety must come first. I am sure that we are all agreed upon that. Can the Minister say what the views of the aviation safety group of the Civil Aviation Authority are? Is it true that it has serious doubts about at least one of the potential bidders? If that is so, will the Government not hesitate to take a lower bid for the sake of a safer bidder? Does the Minister want to take the opportunity now to revise downward the likely proceeds of the part sale from the figure of £350 million which was originally announced? Is it true that the Secretary of State only agreed to the PPP on the promise from the Chancellor that he could spend the proceeds on transport? Does the Minister now wonder whether that was in fact a worthwhile trade-off?
There are two other matters. First, when NATS No. 2 goes into the PPP will there be any mechanism for a clawback of any excess profits made by the strategic partner? In previous privatisations the Government were criticised for not having made such an arrangement. Secondly, I am puzzled as to the status of the employees' 5 per cent shareholding. When this order was discussed in another place the Minister stated that,
"When people retire, they will have to put their shares back into the pot so as to maintain the availability of the 5 per cent pot for the employee share issue".—[Official Report, Commons, Standing Committee on Delegated Legislation, 12/2/01; col. 20.]
If the employees cannot trade their shares and have to return them when they retire, and if they do not receive any dividends, which I presume would be the case if the not-for-profit partner was chosen, then what

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value is there to the employees' shareholding at all? I hope that the Minister can answer some of these questions today and that he can tell us when the fuller statement and report will be made and the form that it will take. The Minister has already referred to this and he said "in due course". Can the Minister be a little more specific it than that?
Baroness Thomas of Walliswood: My Lords, I believe that everyone agrees with the Minister that this order is not of itself of any great debatable value, but simply implements the Bill. I do not propose to go back on all the arguments that we have had. Neither do I believe that it would be very profitable to try to seek a great deal of detailed information about each of the bids. Efforts were made in Standing Committee in the other place, but achieved very little result. I shall not follow that line.
However, I support and add my queries to the questions put by the noble Lord, Lord Brabazon of Tara. They are extremely relevant and pertinent questions. We all look forward to a full answer from the Minister.
As the noble Lord said, there have been suggestions in the press that one or other of the three bidders left is no longer a favoured bidder. However, reports vary as to who that might be. Can the Minister tell the House whether they are still three, two or only one bidder? In the final resort I do not expect the Minister to tell us who it is because he has already said that when matters reach that stage he will return to the House. If there are only two bidders left perhaps he will be able to tell us their names. That will also help to concentrate our minds.
There is the question of the timetable. There is the mythical or magical date of 31st March. At some point there will be a debate in this House, which the Minister has confirmed. At the same time we are expecting the announcement of a preferred bidder. So at what point in the subsequent process will we have the debate? Shall we have it between the announcement of the name of the preferred bidder and the final signing of the contract or shall we not be able to discuss the matter until the contract has been signed?
As the noble Lord, Lord Brabazon, said, there are legitimate concerns about the safety aspects of the bid. I am sure that I do not need to remind the Minister of the amendment to the Bill which gave priority to the Secretary of State's duty to maintain a high standard of safety and the identical provision relating to the CAA and everything that it does as regards NATS. I do not in the least doubt the Secretary of State's commitment, but I would like to be assured that the Treasury is also under the same limitation, or is there a conflict between the requirement on the Secretary of State to put safety first in everything that he does and the natural tendency of the Treasury in these circumstances to wish to allocate the contract to the lowest bidder?
I hope that we shall receive a little more clarification about employee shares. As I understand it, any current employee of NATS will have to sell back, give back or
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get rid of their allocation of shares on leaving the company. However, that 5 per cent was a percentage of the total shareholding. One can appreciate that if each new employee were given a shareholding its amount would increase. But what if the number of shares in the company is increased? Does that automatically result in an increase in the number of shares allocated to the employees? At that point which employees are we talking about; those who were engaged at the beginning of the company or those in current employment?
Finally, as regards the special share, in this House and in another place we have received frequent reassurances, almost in the same words, that the share is robust. I ask the Minister to tell the House on what evidence the assurance of robustness is based? Have the Government been to the Commission and actually discussed the validity and the sound legal basis for the share before coming to this House and to the other place to reassure Parliament about the robustness of the share?
Lord Macdonald of Tradeston: My Lords, once again, the NATS PPP has provided us with a topical and interesting debate. I am grateful for the contributions that have been made, which have ensured that these very important matters relating to the PPP have been aired once more. Following this debate, I am sure that your Lordships will be aware of the importance of the issues that this order raises. The Government continue to believe that it provides some essential protection that will contribute to the success of the PPP.
I now deal with some of the particular points that have been made. As regards the identity of the bidders, the Government have received and evaluated three bids for the NATS PPP, as scheduled. The Government's objective remains to implement the PPP in the spring. The Government have not selected one preferred bidder at this stage, but they are in continuing discussions with the Nimbus consortium and the Airline Group. The third bidder, Novares, has not been eliminated from the process, but is being held in reserve. We expect the preferred bidder to be selected within the next month. We shall try to ensure that we drive that timetable through on time and that the PPP will come into effect as soon as possible thereafter.
The noble Lord, Lord Brabazon of Tara, asked about the agenda that we are working to as regards the delay period when we promised to hold discussions with the trade unions, the users, pension trustees and other stakeholders about the process for establishing the PPP. We have been doing that. Recently, we had the latest in a series of constructive meeting with the unions. We met representatives of the users, including General Aviation interests, last month, and we are in continuing dialogue with the pension trustees. We have received written comments from a range of other interested parties. My honourable friend, the Parliamentary Secretary in another place, and his predecessor, have both been to see the NATS operation at the London Centre at West Drayton at

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first hand. He and I have been to Swanwick to see the new en-route centre. At both locations we took the opportunity to have discussions with staff as well as with managers. I believe, therefore, that the discussion process is constructive. It will help, as has been suggested by noble Lords opposite, to ensure a smooth transition to the PPP. As promised, I shall make a full report to the House in due course. Noble Lords may recall that I said that we will report back by the end of February or early March.
As regards other questions which were raised and the clawback arrangements, the noble Lord, Lord Brabazon inquired whether the Government would be introducing such arrangements and how they would be consistent with the partner's incentive to increase NATS business. The PPP is structured to protect the taxpayer against an early sale of the assets leading to excessive profits, first, by retaining a 49 per cent equity stake in NATS. The taxpayer will share in the potential upside benefits created through the introduction of a strategic partner. Secondly, the strategic partnership agreement does not allow the partner to exit until the new Scottish centre is complete. That is presently scheduled to be around the year 2007. That would prevent a quick and profitable sale.
One of the Government's primary objective for the PPP has been to select a partner who will be committed to NATS for the long term. The Government believe that the PPP's structure will provide the right incentives for the partner to grow and develop NATS business while providing the appropriate protection for the taxpayer against excessive profits and windfall gains.
Another question was raised about the status of the opinion supposedly expressed by safety experts. I understand that the safety experts cited in one newspaper article were acting in an advisory capacity to the chairman of NATS and were not formally connected with the Civil Aviation Authority. I am sure that any concerns will be fed into the bidding process through the office of the chairman of NATS.
I was also asked about the relative priorities of the Treasury and the Department of the Environment, Transport and the Regions. I assure noble Lords that those imperatives are in close alignment and there is no threat that different priorities might put safety at risk. As your Lordships ensured in your amendment to the Transport Bill in its final stages, safety is paramount. That now has the force of legislation.
We are still in discussions about the arrangements for the 5 per cent of equity that will go to employees. It will depend on the nature of the equity structures of the successful bidder, whoever that is. If other relevant details emerge, I shall write to the noble Baroness, Lady Thomas, and to the noble Lord, Lord Brabazon, as soon as possible.
We believe that the special share is robust. It is only one part of a comprehensive range of safeguards. We believe that we have taken appropriate advice and that the special share proposals are consistent with the UK's obligations under the Treaty of Rome. Should
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any different interpretation emerge—although none has in all our discussions—I shall tell the noble Baroness.
I hope that I have responded to the most important points made in the debate. The debate has not been about the principle of the PPP. Parliament has already given its blessing to the Government's proposals to create a PPP by approving the necessary powers in the Transport Act 2000. The real subject of the debate is the activation of the safeguards that Parliament wanted. I invite your Lordships to approve the order.
Lord Oakeshott of Seagrove Bay: My Lords, the Minister did not answer the point made by my noble friend Lady Thomas on what stage will be reached before he reports back to the House. Can we have a clear undertaking that he will report back to the House before entering into any binding commitment with a so-called preferred bidder—a commitment that could lay the taxpayer open to substantial damages? If he is not prepared to give that commitment, surely at makes a mockery of the reporting back process. Can we have a clear answer on that, please?
Lord Macdonald of Tradeston: My Lords, let me be clear. The relationship of the report back was never for an approval of the bidder. If the noble Lord checks what I said in the debate, he will find that that is clear. We said that we would undertake the process that the noble Lord, Lord Brabazon of Tara, strongly encouraged to try to spread a broader understanding of what we were trying to achieve and to give the Government time to listen and make any amendments that might be beneficial to the operation of the PPP as we went forward. We are doing that. Were the timing to be such that the selection of a preferred bidder came before my report back, of course I would welcome that, but it has never been conditional.
On Question, Motion agreed to.

Social Security Fraud Bill [H.L.]
3.34 p.m.
Report received.
Clause 1 [Additional powers to obtain information]:
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham) moved Amendment No. 1:
Page 2, line 13, leave out from ("service") to end of line 15.
The noble Baroness said: My Lords, I shall speak also to Amendments Nos. 15, 16, 20 and 21. I hope that noble Lords will feel able to accept the amendments, which would enable investigators to obtain information about the identity of a person solely by reference to their telephone number or electronic address.
Our area benefit reviews show that fraud involving working and claiming cost nearly £300 million 1999–2000. It is the largest cause of fraud against the social security system. Working and claiming is most likely to

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occur in areas of employment where the hours are sufficiently flexible for a person to be able to attend the job centre to sign on, where a person is in and out of work over short periods, where work is seasonal, where earnings are erratic and where compliance with requirements such as VAT and income tax regulations is also erratic.
As we said in Committee, we already conduct investigations from time to time to flush out people who are committing fraud in such employment. For example, we have teams investigating gangmasters, who organise the employment of casual workers in the agricultural industry, such as pickers and packers. Almost 20 per cent of the agricultural workers investigated in the fraud drives in Lincolnshire had been committing benefit fraud. That is one in five.
Some groups of casual and self-employed workers advertise their services in newspapers and shop windows quoting only a telephone number. They include window cleaners, gardeners, hairdressers and builders. I am mindful that, as the noble Earl, Lord Russell, says, if I keep referring to window cleaners, there will not be any left in the country, so I have tried to find others with similarly erratic modes of employment.
By advertising by telephone number only, such people are able to evade inquiries under existing powers. We have no way of identifying them. We do not have the power to ask a telecommunications provider to tell us who owns a particular telephone number, yet we know from the evidence that we have picked up that quite a high proportion of those people are likely to be committing some form of benefit fraud.
Amendment No. 16 would allow us to do that. I pay tribute to my noble friend Lord Grabiner, who first highlighted the value of obtaining such information in his report on the informal economy. In chapter 5, he said that giving fraud investigators the right to reverse search telephone number databases would be a valuable extension of their powers. It would be a valuable tool for Inland Revenue investigators in particular, who would be able to follow up advertisements for goods and services that gave a contact number but no personal details, for example in local newspapers and newsagents. They could check whether a person who subscribed to a given number was registered for tax or was claiming benefit.
We are not talking about fishing trips. We would still need reasonable grounds for making the inquiries. Although the provisions in new Section 2C would not apply to the amendment, the provisions that already govern inquiries to employers would still apply. The provisions would be inserted in Section 109B of the Social Security Administration Act 1992, which provides that the powers may be used only when it is reasonable in relation to explicitly set out purposes, which can cover whether the benefit is paid, investigating and detecting benefit offences and contravening social security legislation. The Bill would not allow us to check a telephone number simply because it appeared in an advertisement. It would have to be an advertisement for a service that is at risk of
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fraud. To establish that, we would consider the issues that I mentioned earlier, such as seasonal factors or whether the service provides opportunities to nip out and sign on.
I emphasise that the powers would not allow us to obtain information on the content of communications. They are only reverse search powers to establish the name of the owner of the phone number. Obtaining information on the content of communications would be very intrusive and would not be reasonable, although, given the changing nature of the communications world and the sensitivities around the content of communications, we thought that it would be inappropriate to rely only on the test of reasonableness.
We wish to make it unequivocally clear that the powers could never be used to obtain information about the content of a communication. Amendment No. 15 would achieve that by limiting us to communications data, except for traffic data. I hope that your Lordships will recognise that we are honourably limiting the point to which the powers can be taken. I refer noble Lords to Section 21(4) of the Regulation of Investigatory Powers Act 2000, in which the definition of "communications data" contains the words,
"which includes none of the contents of a communication".
The other amendments—Amendments Nos. 20 and 21—tidy up the references in the Bill to telecommunications.
In conclusion, these amendments will enable us to obtain the identity of persons who advertise their services by telephone. That will enable us to detect and prevent people working and claiming benefit, which constitutes the largest area of fraud. The powers could be used only where we had reasonable grounds. They are akin to the powers which we already have to obtain information from employers. They could not be used to obtain information about the content of telephone calls or about the person to whom a call is made. Therefore, I hope that noble Lords will welcome the amendments, which, as I say, are strictly circumscribed. I beg to move.
Lord Astor of Hever: My Lords, we on these Benches are grateful to the noble Baroness for explaining so clearly this group of amendments. We welcome the amendments, which tidy up the definition of the telecommunications services. We believe them to be practical and useful. However, we wonder whether the Government's zeal for clarity has made the insertion of new subsection (2F) somewhat redundant, given that the phrase "communications data but not traffic data" in new subsection (2E) would in any case provide for new subsection (2F). This is not an important point, but I mention it in passing.
We are pleased that the definition has made it clear that only communications data and not traffic data are to be requested by the DSS for its inquiries. Dispensation of traffic data seems to be an excessive invasion of privacy when evidence of fraud could be obtained in other ways. This new definition assists the

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balancing act between the privacy of the individual and the need to access information as part of official inquiries.
Earl Russell: My Lords, I believe that Amendment No. 16 has great elegance. It meets a real and genuine need and, so far as I can see at present, it appears to attempt to do so in a constructive way. Next time the Minister has to defend it, she may see fit to quote Sherlock Holmes's maxim that,
"Honest men do not conceal their place of business".
If she wants to give window cleaners a rest, she might try tree fellers.
Baroness Hollis of Heigham: My Lords, I am extremely grateful for that hint, but I am not sure whether tree fellers will be. However, I appreciate it. I am grateful to the House for welcoming the amendment and the reassurances that I have been able to give.
With regard to the algebra quoted by the noble Lord, Lord Astor, I am assured that those words are both appropriate and necessary. However, if he wishes to follow up the matter, that can be done through correspondence. With that, I ask the House to accept the amendment.
On Question, amendment agreed to.
3.45 p.m.
Lord Higgins Lord Higgins moved Amendment No. 2:
Page 2, leave out lines 22 and 23.
The noble Lord said: My Lords, this amendment stands in my name and that of my noble friend Lord Astor of Hever. As your Lordships will see, the amendment seeks to eliminate from the list of people from whom the Government can ask for information,
"any servant or agent of any person mentioned in any of the preceding paragraphs".
We had a brief discussion about this in Committee. As on previous occasions, the noble Lord, Lord Grabiner, was extremely helpful in providing us with definitions of what "servants" or "agents" might be. Indeed, in subsequent correspondence, the noble Baroness gave rather more pedantic definitions which, none the less, are helpful. We are grateful to her for those.
I believe that it may be helpful if at this stage in the proceedings I say a word or two about the other extremely helpful action which the noble Baroness has taken; namely, to provide the House not only with an amendment which incorporates into the Bill the code of practice which will govern many of these clauses but also a draft of the code itself.
We shall come to a later amendment on which we shall be able to debate the code of practice. However, it may be helpful to refer to it at various points during the course of our deliberations this afternoon. I certainly do not intend to weary the House by referring to it both on an amendment to which it is relevant and when we come to debate the code as a whole, but I believe that it will be helpful to proceed in that way.
So far as concerns this amendment, paragraph 4.4 on pages 12 and 13 of the code of practice deals with this particular point. It is a question not only of whether it is appropriate for the Government to be able to ask the principal involved in any transaction for information about an individual who is suspected of fraud but also whether it is appropriate for them to ask for such information from the person's servant or agent.
The only reason that I return to this point at this stage is that I am a little puzzled as to what in practice the Government have in mind. The code of practice states that authorised officers should only address inquiries to an individual directly—that is, to either a servant or an agent—where it is not possible to identify the corporate body. I am not sure whether the officers are clear as to who the corporate body is, how they will know who the agent is or, in particular, who the servant is. If they are clear that the person in question is a servant, presumably they must know who employs that person.
In a helpful letter the noble Baroness said that the person may be an agent; for example, a newsagent may deal with money transactions and would be the agent of another financial organisation. However, again, I should have thought that it would be possible simply to return to the principal. I have a vague feeling at the back of my mind that, given that presumably a relationship of confidentiality exists between the agent and the principal, it would be undesirable for the Government to go to the individual concerned. Certainly, so far as concerns employees, if an employee were being awkward in not providing information, it would seem very odd for the Government to take action against him directly rather than against the company, which they can in any case ask to provide the information. I beg to move.
Lord Grabiner: My Lords, perhaps I may raise one matter in direct response to one of the points made by the noble Lord, Lord Higgins. Sometimes it is not possible to detect whether or not a business is a corporate person. A partnership is not a corporate body in English law. Almost certainly a local newsagent is not a corporate body; it is a one-person business. I believe that in a case of that kind. not only may it not be possible to identify the corporate body but a corporate body may simply not exist. Therefore, one can only talk to someone who may be the principal of the business or who may be an agent or servant of the principal.
Thus, the corner newsagent may simply operate under the rubric of a personal business without having any corporate structure. He may have an employee who works in the shop. That person will be an employee or agent for the purposes of the type of inquiry which we are now discussing. I suggest that that would be an appropriate case to come within the language of the paragraph of the code of practice to which the noble Lord drew attention a moment ago.

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In a case where the corporate body exists and can be identified, then, according to the draft of the code, in most circumstances it would not be appropriate to approach the individual; it would be appropriate to go direct to the corporate body.
Baroness Hollis of Heigham: My Lords, I could, if noble Lords wish, present a full argument about the amendment. However, in an effort to save time I shall home in on the concerns that were raised by the noble Lord, Lord Higgins, and add to the helpful points that were made by my noble friend.
The code states that we shall address an inquiry to an individual only when we cannot identify a corporate body. The noble Lord asked about the circumstances in which that would be the case. Some possibilities were outlined by my noble friend, but I shall give a couple of examples that may clarify the situation with regard to possible servants and possible agents. We will need to address a request for information to a servant only when we cannot identify a corporation to which to address the inquiry. For example, a language school operating in the UK may be a small part of a large international organisation and we may have difficulty establishing the legal identity of the UK part of the organisation. If the language school could not or would not provide sufficient information to enable us to address our inquiry to the corporate body, we should address it to the most senior appropriate person in the language school, such as the head of the school in the UK.
In another example, we may want to obtain information from a cheque shop because we believe that a claimant is cashing girocheques but reporting them as stolen. If the cheque shop was not a limited company—this point was made by my noble friend—there would be no corporate body to which to address the inquiry. If the staff in the cheque shop could not or would not provide sufficient information to enable us to identify the person carrying out the business, we would have to address the inquiry to the most senior appropriate person in the cheque shop, such as the manager. One could complicate the example further by suggesting that the manager might tell us that the owner of the company lived abroad.
Similar provisions apply to agents. For example, a large university might contract out its record-keeping duties to a commercial data management company and ask us to direct our inquiries about whether a claimant was one of its students to that company. The data management company would be the university's agent.
I could give other examples but the significant point is that we should go to an individual only when we cannot identify a corporate body. We do not expect that to happen often; it usually happens when complicated histories are associated with an organisation, perhaps because the owners are abroad or responsibilities have been delegated to a body to act as its agent. In such cases, it would be helpful to have those powers. The issue has been raised in discussions
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on the draft code of practice between business representatives and officials. Businesses generally want corporate liability rather than liability for individual employers and we are confident that our provisions will meet their concerns in that regard. We are happy to continue talking and if we need to strengthen the draft code in that respect, we should be happy to look at the matter. In the light of that, I hope that the noble Lord will feel able to withdraw the amendment.
Lord Higgins: My Lords, we shall certainly need to consider the matter carefully. With the Minister's undertaking, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins Lord Higgins moved Amendment No. 3:
Page 2, line 23, at end insert—
("( ) Any authorised officer wishing to obtain information under this section shall make an application to the person holding it through that section of the Department of Social Security responsible for the investigation of fraud:).
The noble Lord said: My Lords, the amendment, which stands in my name and that of my noble friend, is, in a way, the mirror image of Amendment No. 4. Amendment No. 3 relates to the way in which the department or local authorities will make inquiries of the kind that are described in the Bill. There is a strong case throughout for that being done through a centralised system rather than through a system that allows an authorised person to make a request for information from a bank or other body. Amendment No. 4 relates to what happens at the receiving end of the request, although it is helpful to consider Amendment Nos. 3 and 4 separately.
The provisions in the code of practice relating to structure are helpful in several respects. As we proceed, it may be helpful to try to establish how the code will operate. Paragraph 1.4 of the code, for example, states that people asking for information will be trained and will work either in one of the department's area intelligence units or in the national intelligence unit. I take that to mean that inquires will come from those working in the area intelligence unit or the national intelligence unit. If so, the point that we seek to establish in the amendment—there was some confusion about drafting at an earlier stage of the Bill's passage through the House—would not be pressing. I hope that the Minister will give an assurance that all inquiries will be made, as the draft code states in paragraph 1.4, through the area intelligence unit or the national intelligence unit.
Paragraph 4.19 states that all inquiries will be conducted through centralised intelligence units—I emphasise that that is in the plural. If I understand the situation correctly, the system will be centralised only to the extent that a request comes through a series of units rather than from a single unit. Perhaps the Minister will clarify the situation.
Another point arises in relation to paragraph 4.3, which sets out the information that may be asked for. It seems to suggest that, although the request for information will be made through a relatively—

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perhaps completely—centralised system, there may be a request to send the information back to a more diffused position, from which the inquiry originated. Later we shall discuss questions arising from the rather complicated structure that the Government seem to have in mind for the relationship between the various classes of official. At this stage, is it the intention that, even though a request has been channelled through a centralised organisation, it may be asked of a request, "Please send back the reply"—that is implied in paragraph 4.3—and that that should be sent to the individual who asked for the information in the first place? If that is the situation, it raises questions that we need to consider. Requests should come from the centralised system and the reply should be channelled back through the same system. When one views together the two paragraphs to which I referred, it is not clear whether that is the Government's intention. It would be helpful if the Minister would clarify exactly what the Government have in mind. I beg to move.
Baroness Hollis of Heigham: My Lords, I hope that I can be relatively brief. The code will be statutory and inquiries can come from only the 14 central points—there is one point in each of our 13 area directorates and one in our national intelligence unit. I confirm the noble Lord's expectations. The provision is in the code, which is statutory, and its provisions will be binding. Business need have no concerns about that.
The address to which the request will be sent back will be that from which it was sent. In other words, it will be sent back to one of the 14 units. We may need to clarify the wording in the code to make it clear that that is our intention. With those assurances, I hope that the noble Lord feels able to withdraw his amendment.
Lord Higgins: My Lords, the Minister is probably right; perhaps we should look at the second of the two paragraphs to which I referred. It gives the impression that replies may go back in a way that is different from that through which it was received. It was good of the Minister to provide the code in the first place. It will be helpful to pick up various points as we proceed, and although doing so may delay our proceedings a little, I hope that it will not do so by very much. No doubt later there will be wide-ranging consultations. The sooner that one picks up points, the earlier they can be corrected. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4 p.m.
Lord Higgins Lord Higgins moved Amendment No. 4:
Page 2, line 23, at end insert—
("( ) Requests for information made to any of the persons specified in subsection (2A)(a) to (m) above shall be made to a central department in the organisation.").
The noble Lord said: My Lords, Amendment No. 4 is a mirror image of the previous amendment. We are now told that inquiries will be made on a relatively centralised basis, albeit there are some 14 centres. But the question then arises whether they will be directed
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in some shotgun way to some given organisation—for example, a bank—or whether they will be concentrated on a single point.
This matter was discussed briefly in Committee and the Government were able to say that it will be possible for it to be done through a single part of the organisation from whom the information is being requested. We see again in paragraphs 422 and 423 of the code of practice that that will be done. The noble Baroness pointed out that my original amendment would have been too restrictive; it could only have been done through a single access point. However, she has fulfilled what she said in Committee and the code reflects that. However, perhaps she will once again confirm it. I beg to move.
Baroness Hollis of Heigham: My Lords, I am happy to give that confirmation. I agree with the noble Lord that it is helpful to cross-read amendments against the draft code in order to clarify any possible misunderstandings. We will go to the point to which businesses wish us to go, which will normally be a central department. That is what many organisations request when dealing with the police. Where an organisation does not wish to set up a central point—for example, a school—which may be too elaborate when dealing with a very occasional inquiry, we shall not force them to do so. Were this amendment to be carried, as the noble Lord admitted, the British Bankers' Association said that its effect would be to make the workings potentially inflexible.
I am happy to give the assurances that the noble Lord. Lord Higgins, seeks. We are working very positively with businesses to that effect. We shall do what business wishes. In the light of that assurance, I hope that the noble Lord, Lord Higgins, will feel able to withdraw his amendment.
Lord Higgins: My Lords, in the light of that response, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 5:
Page 2, line 24, leave out ("subsections (2C) and (2D) below") and insert ("the following provisions of this section")
The noble Baroness said: My Lords, in moving Amendment No. 5, I shall speak also to Amendments Nos. 8 and 13 and the grouped amendments that stand in my name. They refer to the circumstances in which authorised officers may obtain information—new subsections (2B) and (2C).
My noble friend Lord Grabiner led an extremely helpful debate on these provisions in Committee. During that debate concerns were expressed in the Chamber about the implications of these "unamended" phrases. Your Lordships expressed two concerns. The first was on the provisions to obtain information on persons falling within groups who are more likely than others to commit fraud. The second concern—particularly identified by the noble Earl, Lord Russell—was the concept of obtaining

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information on an individual who "is likely to" contravene social security legislation or commit a benefit offence. I agreed to consider how we could address those concerns.
Amendment No. 8 is the substantive amendment. It is a rather elegant piece of drafting. On the first of your Lordships' concerns, the amendment removes the provision regarding those in groups more likely than others to commit fraud—the old Section (2C)(c) which now goes. During Committee, I explained that through research we are finding out the characteristics of those people who commit fraud. I took heed of your Lordships' views. We felt that, given the reverse search of the telephone directories—the first amendment that we discussed today—some of our concerns about groups of people that we may wish to pursue (for example, tree fellers) can be met without the possible infringements that subsection (2C) might have opened up. We felt that we could meet the concern of the House and remove subsection (2C)(c).
I turn to the second area of concern and the amendment of the noble Earl, Lord Russell, which replaces the words, "is likely to" with the words, "intended to". I agreed to consider that amendment. As I indicated in Committee, the words "is likely to" were meant to cover circumstances where fraud was intended because we believe it is better to prevent fraud rather than to let it into the system and then have to set about detecting it. I accepted that the words "is likely to" had a more common meaning which might be unacceptable.
The suggestions of the noble Earl, Lord Russell, more or less retain the policy intention while addressing the concerns expressed by the House. Consequently, with the addition of the present tense to the provision—"is committing"—I have returned with an amendment along the lines suggested by the noble Earl. I decided that the suggestion regarding provisions relating to contraventions of social security legislation was in line with our policy intention. I felt that the fact that we could remove those provisions relating to contravention because they were subsumed in the broader category was in line with those statements.
Finally, I was able to go beyond what we agreed in Committee because, in talking subsequently with the noble Lord, Lord Goodhart, I was asked to consider removing the words "or may be" from the test of reasonableness that an authorised officer has to satisfy when considering whether or not to make an inquiry. Thus, an authorised officer would only be able to make an inquiry if it appeared to him that there were reasonable grounds for suspecting that a person "is" a person, as opposed to "may be", who has committed, is committing or intends to commit a benefit offence. It represents a slightly higher test of reasonableness for authorised officers to attain.
That would be sensible and prudent in the light of some of the concerns expressed by your Lordships that there could be ultimately the potential for abuse despite our checks. As a result of that, I accepted the suggestion that we should remove the words—"or may be"—thus tightening the clause even more.
Amendments Nos. 5 and 13 are consequential. So I hope that your Lordships will agree that the Government have listened to the concerns expressed—led by my noble friend Lord Grabiner in Committee—and, as promised, I have brought forward amendments not only to address those concerns but to go slightly further than I promised. I shall be deeply upset if your Lordships feel unable to support my amendments today. I beg to move.
Lord Higgins: My Lords, the Minister and the noble Earl, Lord Russell, on a previous occasion—although not for some years—have heard me quote a dictum by the late lain Macleod that we do not shoot Santa Claus. What he meant was that, if one had a concession from a government in response to representations, one did not then proceed to make a speech for three hours saying what it was all about in the first place. I intend to follow that practice. I learnt my trade at his feet and it always seemed a good dictum.
The Minister has fulfilled the commitment she gave in Committee to consider this matter, both with regard to the objectionable word "likely" and the extremely objectionable part in relation to groups of persons said to be in danger of committing fraud, even window cleaners. The noble Baroness met both those points admirably. I agree that the amendment is elegantly drafted. We are pleased that these amendments have been moved. It is entirely appropriate to leave unasked how the second of them ever entered the Bill in the first place. None the less, it is a great improvement and we are grateful for it.
Earl Russell: My Lords, we have here a model of the way Parliament ought to work—it sometimes does, and it is nice when it happens. I do not think that the Minister expected to be disappointed in this quarter. The Minister will have observed that I put my name to her amendments. The only reason why I have not put my name to the amendments from the noble Lords, Lord Higgins and Lord Astor of Hever—to which I had my name at the previous stage—is that the Minister's amendments have now rendered them redundant.
I thank noble Lords for what has come about; the Minister for master-minding the whole thing and for seeing an opportunity and taking it. The noble Lord, Lord Grabiner, offered more helpful contributions than we are ever likely to know. My noble friend Lord Goodhart makes me rather pleased I was not able to be present previously because he saw an opportunity and took it with his consummate skill. He produced a great improvement as a result. I thank the Minister's officials. We have a model of proceedings as envisaged in the committees chaired by the noble Earl, Lord Jellicoe, and Lord Rippon of Hexham in which a great deal of the work is done before we come into the Chamber. That work is vital. They played a vital part in it and the Bill is very much improved as a result. I welcome it.
On Question, amendment agreed to.
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 5A:
Page 2, line 29, at end insert ("and shall be exercisable only if there are reasonable grounds for believing that the information is likely to be of substantial value (whether by itself or together with other material) to the inquiry and does not consist of or include items subject to legal privilege").
The noble Lord said: My Lords, in moving Amendment No. 5A, with the leave of the House I shall speak also to the consequential Amendment No. 20A.
Amendment No. 5A ensures that an authorised officer can only require information which is likely to be of substantial value to the inquiry, and does not consist of items subject to legal privilege. Sufficient safeguards should be put in place to ensure that the new powers are proportionate to the intended outcome. Amendment No. 5A recognises the importance of an individual's right to privacy by ensuring that information will only be disclosed in circumstances where the information sought will be of substantial value to the investigation and does not consist of or include items which are subject to legal professional privilege. That will ensure that the same criteria as must be fulfilled before a court will grant production orders under other measures, will apply before a notice can be issued.
Article 8 of the European Convention on Human Rights enshrines the right to privacy. The law has shown a willingness to acknowledge that right through, inter alia, the doctrine of legal, professional privilege. To preserve that doctrine and ensure that communications between a solicitor and client are privileged, provision should be made on the face of the Bill to the effect that the power to require information under these provisions will not extend to disclosure of information subject to legal privilege. I beg to move.
Earl Russell: My Lords, these amendments cover similar ground to Amendments Nos. 17 to 19 tabled in my name and that of my noble friend Lord Goodhart.
The underlying issue here is that of privilege; under what circumstances privilege may justify the withholding of information and under what circumstances, without any government recognition that it so justifies, it may nevertheless be allowed quietly to do so.
People need professional advice of many kinds. That is not always recognised in law. For example, there is, I believe, no legal privilege attaching to confession to a Roman Catholic confessor. Yet I cannot in all my political experience recall a case of a confessor being subpoenaed to give evidence on the confessions of his penitent. Were such a case ever to arise, I might be found here standing shoulder to shoulder with Cardinal Winning in defence of the liberties of the Church. While that may be of great entertainment to the House, I doubt it would be quite so entertaining to the Minister. So if the Minister could indicate whether or not there are some cases where a government may be prepared to hold its hand—such indication of the most imprecise kind, as is the nature of the case—it may assist us.
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However, the question arises whether, as one is entitled to take advice from a lawyer with privilege, one may be entitled to take advice under some circumstances from a financial expert with perhaps some qualified form of privilege. The way the financial services industry is developing now, the boundary between those two categories is not quite as definite as it used to be. Where exactly the boundary comes between a tax lawyer and a tax adviser is something on which I do not believe there is any clear legal ruling. People even of the greatest innocence—in fact, most often people of the greatest innocence—may wish to ask their financial adviser, "Am I legally entitled to do this or will I be accidentally evading some obligation to which I am subject?"
I am sure very few of us are aware of all the obligations to which we are subject. We try, but success is not particularly common. So were we to discourage people from taking expert advice, we might, as with being faced with litigants in person in court, be letting ourselves in for a great deal of extra work.
A problem certainly exists. I do not pretend to see my way through it to a solution, but were we by any miracle able to bring to it the same sort of constructive thought we brought to the last group of amendments, we might possibly do some good.
4.15 p.m.
Baroness Hollis of Heigham: My Lords, Amendments Nos. 5A, 17, 18, 19 and 20A, all seek to place restrictions on the types and sources of information available to authorised officers. They seek to prevent us adding people that provide advice or professional assistance to the list of organisations that could be required to provide information.
I turn to Amendments Nos. 17 and 19 first. The noble Earl, Lord Russell, accepts that the broader amendment—I shall come to the narrower one in relation to legal privilege in a moment—contains a grey area of difficulty. Advice and professional assistance are rather wide terms. Their use in this amendment would restrict our power to add new organisations to the list at new subsection (2A). I shall not seek to provide examples because we do not intend to add anything further to the list; in any case, such additions would have to come before your Lordships' House. However, I can give the House examples of why that might be difficult.
As drafted, the amendment would cover the information given in order to receive advice from a building society in response to a mortgage application. Information given in respect of mortgage applications could include details of income and capital. It could also include information on properties already held and, of course, the property for which the mortgage was requested. A frequent source of social security fraud is that people claim housing benefit as though they were renting, whilst actually owning the property, and they mislead about their income and capital. I am sure the House can see therefore that information

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given to a building society in order to receive mortgage advice would be extremely pertinent to that area of crime.
As I say, there are grey areas. The term "advice" could also include advice that a bank might provide on investing income or transferring it overseas. We would similarly want to be able to obtain details of the information that somebody had supplied to receive that advice as that information might include details of money stolen from the benefit system, or income that was being hidden from the benefit system.
So following the amendment of the noble Earl, Lord Russell, if banks and building societies were not already on the list, they could not be added to it because, under certain circumstances, those organisations could be in the position of giving advice, even though the bulk of their activity relates to the giving of straightforward information.
Those are hypothetical examples. My point is that organisations which give advice to their customers may also have information which could assist us to detect fraud. But I share some of the noble Earl's concerns. There is a difference between asking an adviser what to do to avoid tax and asking a lawyer what is legally acceptable. I shall come to that in a moment.
I have already given an assurance in Committee; I am happy to give it again. We will not add organisations such as the CAB or lawyers to the list of those from whom we may require information. Should we seek to add any other organisations to that list, we shall of course bring them back before the House in any case and the House can decide whether or not it is appropriate to proceed.
I return to the core of the amendments. Since Committee I have been wondering whether we could do anything further to meet the concerns expressed, particularly those in relation to legal privilege, which is perhaps the one that really matters. Information subject to legal privilege can be argued to be a special case. We have made clear in paragraph 2.9 of the code that no information will be requested that is the subject of legal privilege. However, I am willing to consider tabling a government amendment at Third Reading specifically to exclude information subject to legal privilege from that which can be obtained under these powers because I accept that it is a particular case. I hope that that meets the issue.
Amendment No. 18 seeks to limit the organisations that we can add to the list of those required to provide information to those organisations that collect and store only financial information. The Bill does not restrict itself to only financial information. If we did that, again we would be unreasonably narrowing our ability to combat fraud. Much of the information that we seek is financial, but not all. The composition of a household is not financial information. The noble Earl, Lord Russell, will know that above all we need to have that information. The details of where the claimant lives is not financial information. The details of any employment may not be wholly financial
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information. The information provided to substantiate a person's identity is not financial. Whether or not someone is in education is relevant to benefit but it is not financial information. We need all that information and more in order to combat fraud.
With that explanation, I hope that the noble Lord will feel able not to pursue his amendment. I hope that my response to Amendments Nos. 17 and 19 addresses the point raised by the noble Lord, Lord Astor, on legal privilege embodied in Amendment No. 5A. In the expectation that I shall table an amendment at Third Reading to meet a concern which I accept may need more belt and braces than just the code of guidance, I hope that the noble Earl, Lord Russell, and the noble Lord, Lord Astor, will feel able to withdraw their amendment.
Earl Russell: My Lords, before the Minister sits down, I take the point she makes about Amendment No. 18 and give a limited but warm welcome to her comments on the forthcoming government amendment. She knows that it does not meet the whole problem. I suspect that it is all any of us could do in her shoes and I shall welcome it.
Lord Astor of Hever: My Lords, we on these Benches are grateful for the positive way in which the Minister reacted to this group of amendments and specifically to Amendment No. 5A. We feel that the issue of legal privilege is a special case. We look forward to seeing the amendment that she proposes to table at Third Reading. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins Lord Higgins moved Amendment No. 6:
Page 2, line 29, at end insert—
("( ) No investigation or inquiry under this section shall be made until the validity of the National Insurance number held by the individual concerned has been checked.").
The noble Lord said: My Lords, in moving Amendment No. 6 it may be helpful if I speak also to Amendments Nos. 46 and 49 which, in effect, seek to impose penalties for those who have an invalid or fraudulent national insurance number. This is an important area of the Bill, which we have not previously debated in Committee. The figures for national insurance numbers are, indeed, remarkable. I understand from a Written Answer on 13th March 2000 to a Question asked by my right honourable friend Mr Willetts in another place, that the number of national insurance numbers currently in issue is over 81 million, whereas the population is around 60 million.
There is a huge surplus of national insurance numbers floating round the system. Part of the reason for that is the fact that the number which are withdrawn as a result of death is relatively small. Clearly, there must be an initial assumption that if someone is using a false national insurance number, that in itself is a matter for concern and should be

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subject to penalties. Moreover, it is likely that the individual concerned will be engaging in fraud of one sort of another.
The amendment suggests, therefore, that the first step should be to check whether the national insurance number held by an individual is genuine. We think that that would be an efficient way to do it because at present the return which the department gets from carrying out investigations into fraud is far in excess of the cost. The Government have not pushed to the point where the cut in fraud is equal to the cost of ensuring that fraud does not take place. This would seem, therefore, to be an easy way to begin the search. Long before one gets to all the other questions of taking information from the whole list of bodies set out in Clause 1, the first step should be to check on the national insurance number.
Part of the situation is shrouded in mystery. It would be helpful if the Minister could clarify a number of points. I understand that information is held on two different computers, NIRS2 and the DSS computer, but no doubt she can clarify where the information is held. None the less, I assume that somewhere in government—she will no doubt tell us where—there is a list of national insurance numbers and against that list the name of the person to whom they were issued.
There seems to be some doubt as to the stage at which a national insurance number comes into existence. The noble Lord, Lord Grabiner, in his report, to which I shall shortly refer in detail, thought that it happened at the age of 16. Others say that it happens at birth. No doubt the noble Baroness can help, but I believe that the child benefit number is converted into a national insurance number at a later stage. However, at all events the number should have a clear relationship to a specific name. That should give us a lead.
The overall situation is rather confused, but all one must ask is whether the national insurance number which a given individual has is one which is related to the name. It may well be that there is extensive organised fraud in this area where people can have tailor-made national insurance numbers which fit their name precisely. However, I suspect that some such transactions in themselves may be somewhat fraudulent and perhaps the fit is not as good, as reference to the Government's records would immediately reveal. That is the first point that we need to clarify.
The noble Lord, Lord Grabiner, states in his summary of recommendations at (ii) that to combat identity fraud, which is the way he conveniently describes it, the procedures for issuing national insurance numbers should be tightened up in line with the regime already piloted by the Benefits Agency. He does not concern himself with tightening up those existing numbers. He is concerned in that summary with the issuance of new numbers.
The previous Conservative government introduced a series of measures to cut down on the prevalence of national insurance records, the most important of which was the data cleaning project, which was
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designed to identify anomalies and duplicate records. It began in November 1995 and will apparently end in March 2001, which is now. Can the Government confirm that that is the intention? It would seem to be a strange thing to do at this time, given that the Bill is now going through the House. Perhaps the Government can tell us exactly what their intentions are.
The noble Lord, Lord Grabiner, in his normal thorough way, goes into these matters of national insurance fraud in rather more detail. Indeed. he refers to the pilot study carried out in Balham—nothing to do with the late Tony Hancock who is, alas, no longer with us—and I believe an extremely high percentage of false national insurance numbers are located in the greater London area. At all events, the Balham study would seem to help in dealing with this. Again, before we get to Clause 1 of this Bill and from the point of view of rights and data protection measures, these measures would seem to be a better way, in the first instance, of dealing with the problem. That is what this amendment seeks to do.
The noble Lord, Lord Grabiner, goes into more elaborate matters. For instance, The Day of the Jackal fraud system is perpetrated by means of false birth certificates of people who have died, and so on. This needs to be cleaned up. Outsiders can go and look at people's birth certificates, but it is not at all clear whether the person recorded on the certificate as having been born is also recorded as having died. Here again we think, as the noble Lord recommended, that there should be stricter control over the issue of birth certificates as a proof of identity. This is a problem that needs to be tackled.
Overall, it seems to us clear that to write into the Bill the first part of our proposal, namely, Amendment No. 6, would be an efficient and probably more cost-effective way of checking up on national insurance numbers. It would be helpful if the noble Baroness would clarify for us the factual situation and comment on Amendments Nos. 46 and 49, which seek to impose an immediate penalty on someone with fraudulent intent who is in possession of a false national insurance number. I beg to move.
4.30 p.m.
Earl Russell: My Lords, I think we have here a serious problem to which the noble Lord, Lord Higgins, is right to call our attention. Also, of course, we have a need for balance. On the one hand, we must try to track down and pursue the fraudulent use of national insurance numbers. On the other hand, perfectly genuine law-abiding people—many of them the victims of theft, as of credit cards—continue to have legitimate needs and a legitimate right to build up a pension entitlement. The two things need to be kept in balance somehow.
Will the noble Baroness confirm, as I am sure she will, that so long as people have surviving dependants there may be an interest in maintaining national insurance numbers of people who are now dead? Secondly, can she tell us of the procedure which is

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followed when a national insurance card is reported to have been stolen? I appreciate this is a technical question, and apologise for not having given notice of it. If she would prefer to write to me, I would entirely understand.
Baroness Hollis of Heigham: My Lords, I accept that your Lordships are concerned about the issue of national insurance numbers, of which there have been significant reports. Perhaps I may start with the point made by the noble Earl, Lord Russell, partly in response to the noble Lord, Lord Higgins, as to the apparent discrepancy between the size of the population, which he estimates as around 60 million, and national insurance numbers, of which over 80 million are in circulation. The noble Earl is absolutely right in saying that not only are numbers given to individual citizens but that numbers are allocated to children at the child benefit point. When someone dies, his national insurance number needs to continue to exist; in other words, to be a live number, because widows' benefits depend on it. Also, an EC national for example, who has come to this country, worked only for 12 months and then gone back to, say, Spain or Germany, none the less maintains a live number even though not a UK citizen and a member of our population base, because at some point he or she may return to the UK and wish to resume national insurance. Equally, foreign students who are permitted to work part-time have a national insurance number, although not part of the home population.
There may be UK nationals who are entitled to retirement or winter fuel payments even though they may be living abroad. There are even extreme examples of people, like Gurkhas, who are entitled to claim working families' tax credit, or the foreign wives of UK servicemen. Given all that, your Lordships will see that there is an understandable gap between the live population and the number of necessary national insurance numbers in circulation.
Regarding the cleaning project, yes, we identified about 200,000 mis-matched, unacceptable dead numbers which have been cleaned from the system. We have completed that exercise. May I say that the numbers of national insurance numbers being issued each year have not changed since the early nineties: there is not some sudden crisis identified with national insurance numbers. If a number is suspected to have been stolen, it is marked on the computer and checks are carried out to verify this. I hope I have brought the matter into perspective.
The noble Lord, Lord Higgins, also asked about the computers. The basic information is held on the department's central index but there is also additional information, such as the amount of contribution which is held on NIRS2, as he said. Given that background information, I hope I may persuade your Lordships that these amendments, though they may be pegs on which to express wider concern about national insurance numbers, really do nothing at all to help us. They are redundant and may even make the situation worse.
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The first amendment would place a statutory duty on officers to check the validity of a person's national insurance number before initiating any enquiries under the powers of Clause 1; that is Amendment No. 6. We do this already. It is one of the basic building blocks before any further investigation into fraud can continue and therefore putting this on to the face of the Bill would achieve nothing at all. It is already absolutely standard practice. It is imperative that we establish at the outset the identity of the person suspected. I would ask the noble Lord to accept from me that this amendment is redundant, despite being useful as a peg on which to explain that we always do it. We do this already, and checking the national insurance number before we start on any serious investigation is an absolute requirement.
Turning now to Amendments Nos. 46 and 49, I would say to the noble Lord, Lord Higgins, that they would achieve nothing new. It is already an offence to make a false statement in order to obtain benefit. That is what happens when a false insurance number is used. Of course, there may be a genuine error. A person may have been allocated a number as a child, perhaps when living abroad with their parents who were UK nationals, and stayed abroad before returning home perhaps 30 years later and has then innocently sought another national insurance number when starting work here, without realising that a number had been already allocated to them. There will be occasions when people innocently but erroneously hold two national insurance numbers. The issue is whether they use those numbers to perpetuate fraud. That was part of the debate we had earlier. It is already an offence, so once again this amendment is redundant.
The proposal would create a penalty specific to that offence which would tie the hands of the magistrates to a maximum penalty of £500. However, the existing offence attracts a penalty of up to £5,000 or six months' imprisonment. Therefore the noble Lord—I am sure unwittingly, innocently and in error—seeks to weaken the effect of the offence and the punishment which already exists by law.
I hope that I have addressed the point about the gap between the population and the numbers in circulation. I hope that I have covered the point about computers. I hope that I have addressed the issue raised by the noble Earl, Lord Russell, about what happens if the number is stolen. I hope that I have addressed the issues underlying the amendment by suggesting not only that they are already part of departmental procedure but that they are already offences and the amendment would weaken the ability of the department to handle those offences. In the light of all that, I hope that the noble Lord will not wish to pursue the amendment.
Lord Higgins: My Lords, before the Minister sits down, can she confirm whether the cleaning project is continuing; and whether there is any extension of the Balham project?
Baroness Hollis of Heigham: My Lords, I thought that I had mentioned the cleaning project. We have

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identified something like 220,000 mismatched numbers. We have completed the exercise; it was finite. Perhaps I may write to the noble Lord on the Balham exercise. I can give him information about the local project.
However, on the basis of that exercise we have found significant areas of benefit fraud. It is not all associated with national insurance numbers. The project was set up in 1997. We have had validation trace units at seven of the sites within the offices. We have been looking at the allocation of ninos. As a result, there have been something like 166 arrests for identity fraud; a further six deportations; and by extending the initiative to neighbouring Benefits Agency offices in 1999 there were a further 46 arrests. We seek to make use nationally of the lessons learned from Balham. We now have specialist teams to combat identity fraud and the fraudulent use of ninos. From 1st April 2000 we are not only continuing the work in Balham but extending it nationally. We are going live across London inside the M.25 corridor and Wales from 1st April 2000 where 70 per cent of all nino applications are handled. We have gone live in the rest of the country from 1st October 2000. So, yes, we are continuing the Balham project. We extended it to the M.25 and Wales last summer. Last autumn we went live to the rest of the country. I hope that I have answered the noble Lord's point on Balham.
Lord Higgins: My Lords, I am grateful to the noble Baroness for the points she made. I understand what she says about some national insurance numbers continuing in operation with regard to widows' benefits and so on. Clearly that is necessary. None the less the extent of the surplus seems to be very large—80 million people as against 60 million would scarcely be covered by that. It could surely be argued that we withdraw the number with regard to the owner but perpetuate it as regards the widow or other related claimant.
None of these matters covers the basic point which the Balham project—I am glad to hear that it is being extended—seems to confirm: that it will be a relatively simple exercise, albeit large scale, to check up on the extent to which the national insurance numbers held by an individual coincide with those which appear on the Government's records. There is the feeling that a large number of invalid national insurance numbers are being held. Therefore, to clean up the matter by making the initial inquiry on a national basis has much to be said for it in terms of reducing benefit fraud.
The Minister's other points are very fair. I take the point that inquiries are already made at the first stage on national insurance numbers. But that is the present situation before the Bill comes into operation as an Act. We were concerned that this should be an upfront part of the exercise.
I concede the point the Minister makes on penalties. It merely demonstrates how important the issue has been considered in the past. The report of the noble Lord. Lord Grabiner, seems to bear out that point. It
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gives considerable cause for concern with regard to surplus numbers and the stringency with which new numbers are issued.
I shall study carefully the point the noble Baroness makes. Clearly I shall need to amend the second set of amendments, if not the first, and return to the matter at Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.45 p.m.
Lord Higgins Lord Higgins moved Amendment No. 7:
Page 2, line 29, at end insert—
("( ) Prior to the exercise of the power conferred on an authorised officer to obtain information under this section, that officer shall obtain in writing the consent to carry out an investigation.
( ) Consent shall be obtained from an official of seniority of "Band B" or above from the relevant department.").
The noble Lord said: My Lords, the amendment is concerned with the way in which the powers conferred on authorised officers to obtain information under the clause shall be authorised and the level at which the investigations take place.
There is still considerable concern about the way in which the investigations will be carried out, despite the excellent amendments moved by the noble Baroness earlier, with no external check on whether it is reasonable to investigate an individual. The British Bankers Association still feels that independent external checks should be made on the way in which the Government operate. It remains of the view that one should have independent judicial authorisations for specific inquiries. It stresses that it does not understand why those suspected of benefit fraud should have a lower standard of protection against the invasion of their privacy than those suspected of tax fraud or criminal offences.
The Minister has been kind enough to write to me and to others on this point. No doubt the noble Baroness will wish to put on record her arguments. The code of practice gives us more reassurance than we had in Committee. The protections which are built in seem to be more substantial than we had at first realised. On the other hand, it is not entirely clear how the system will operate in practice. We had understood that there were to be authorised officers. On page 10 of the code of practice we find a reference to a selection of individuals. There is reference to authorised officers; and we are clear about them. However, there will also be fraud investigators, decision makers, fraud specialists, responsible officers and accredited fraud officers. The relationship between each of these is not entirely clear.
Baroness Hollis of Heigham: My Lords, I thought that the example given at the bottom of page 10 clarified the relationship between them extremely well.
Lord Higgins:My Lords, the example given is:
"A Fraud Investigator is investigating a suspicion of undeclared savings. He considers all the relevant facts surrounding the case and decides that the information from a building society is

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necessary. He refers the matter to the Authorised Officer, together with the reasons for the request. The Authorised Officer makes sure these are valid reasons and, if so, makes the request of the Building Society and, upon receipt, passes the reply to the Fraud Investigator".
What gives cause for concern is that the whole argument turns upon whether it is reasonable to carry out the investigation. The initiative of the matter comes from the fraud investigator and then goes up to the fraud officer. The amendment seeks to establish at what level these decisions, which clearly involve an invasion of privacy and raise issues on human rights and so on, are likely to be carried out.
One of the other examples given is that the information is given on the basis of an anonymous tip-off. Perhaps the Minister can comment on that. If the tip-off received is anonymous rather than backed up by any further indication as to the source of the allegation or what has prompted it, do the Government regard that as a reasonable basis for carrying out an investigation. There may be all kinds of reasons why individuals make anonymous tip-offs; for example, they may not like the person.
If we look at that particular case, it appears that the person who has the ultimate say is not the authorised officer but the investigating officer. If that is so, it gives us some cause for concern.
Baroness Hollis of Heigham: My Lords, I do not see an investigating officer. I have "fraud specialist", I have "decision maker", who actually makes the benefit decision, and the "authorised officer". Where is the investigating officer?
Lord Higgins: My Lords, doing this on one's feet is not perhaps the easiest thing to do. I have a list. I have authorised officers, fraud investigators, decision makers, who, as the Minister has said, are related to the decision on the actual benefit question. I have a responsible officer who turned up at some point and an accredited fraud officer.
Baroness Hollis of Heigham: My Lords, but where is the investigating officer?
Lord Higgins: My Lords, it would have been easier perhaps in Committee to have found one, but then we did not have the draft code of practice. He is a fraud investigator. However, I am not clear whether sufficient protection is being given to ensure that the investigation is reasonable.
I turn to the related points on this matter. The code of practice at paragraph 4.7 sets out what reasonable grounds are. It states:
"An Authorised Officer can require information only where he has reasonable grounds for doing so. Reasonable grounds are where an officer has good reason to believe a person is either committing fraud (or is intending to do so). What is reasonable would vary, depending upon the circumstances of the case, and each case should be considered on its own merits".
That is a most extraordinarily circular paragraph. I am not clear how that answers the question, what are reasonable grounds, although the code of practice goes on to give further examples.
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What we are really concerned about here is whether, given that there is apparently to be no external approval as to whether or not an inquiry is justified, the level at which these inquiries are carried out is appropriate. Therefore, perhaps, given the various categories which we have now summarised, the Minister could tell us at what level in the Civil Service these particular offices will be filled. I beg to move.
Earl Russell: My Lords, this provides me with my first opportunity to thank the Minister for providing us with the draft code of practice. That was extremely helpful. It is an extremely well-drafted code. It shows all the typical excellence of the Department of Social Security at putting itself under restraint coming from its own good judgment, while at the same time maintaining a vehement objection to any restraint placed upon it from any other quarter.
Lord Higgins: My Lords, will the noble Earl allow me to respond on that point? In fact he will find that "fraud investigators" appears in paragraph 3.2, but that apparently has not been drawn to the attention of the noble Baroness. So the drafting is somewhat strange.
Earl Russell: My Lords, I thank the noble Lord, Lord Higgins. I thought that I remembered the phrase, but I did not succeed in finding it while he was speaking. I am sorry to have been so slow.
I return to the point. As a member of an institution, I sympathise with the objection to restraint from an outside quarter. On the other hand, most of us are subject to restraint and probably have to put up with it here and there. But although the draft code of practice tries to diminish the misgivings considerably, I agree with the noble Lord, Lord Higgins, that misgivings still remain. What, therefore, is the best thing to do is not necessarily a simple question.
Incidentally, I share the noble Lord's misgivings on the subject of anonymous tip-offs. They have been relied on in law enforcement in a variety of contexts at least since the Heresy Act of 1401, but they have led to a considerable number of miscarriages of justice. Having said that, I might remind the noble Lord, Lord Higgins, that the person who put anonymous tip-offs centre stage when he was Secretary of State was none other than Mr Peter Lilley. I expressed misgivings about it at the time. I express misgivings about it now. Those are no party misgivings; they are simply a matter of concern for justice.
However, I come back to the point that I made at Second Reading about proportion between legitimate objectives. The Minister was not entirely pleased with the point I made. If I remember her words right, she said that the proportions did not always appear to her as they appeared to me. Fair enough, I do not expect it. But on this occasion perhaps the point about proportion may tell in the Minister's favour. It is often essential for the prosecution of fraud that the fraudster or potential suspect fraudster should not know that he is being investigated until fairly late on in the proceedings. Fraudsters have a capacity sometimes,

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not merely for disappearing but for evaporating. If their identity is fictitious they can collapse it and may never be found again. So there may be a strong case indeed for making approaches under cover quietly.
It may be in terms of priority that the need for justice and the need for control justifies the use of a superior officer in the way that the amendment of the noble Lord, Lord Higgins, demands. I am capable of being persuaded of that point. However, I must say that the noble Lord has not yet so persuaded me.
Baroness Hollis of Heigham: My Lords, perhaps I may respond first to the point about the anonymous tip-offs. I understand noble Lords' concerns. I was asked whether anonymous tip-offs alone would be reasonable grounds for an investigation. The answer is no.
An example may be where someone is understood to be a lone parent but a tip-off says that she actually has a live-in partner. That may be the kind of tip-off that one gets from a neighbour when they do not have a good relationship. Tip-offs of that kind would usually be raised with the claimant. Occasionally, very detailed tip-offs might be regarded as reasonable grounds, but in all cases they would be checked against our records on the claimant.
As I have said, the general presumption would be to check first with the claimant. Only detailed and serious allegations might trigger the need to go under cover. I hope that this gives the noble Lord some reassurance on that point.
Secondly, the noble Lord asked about the relationship between the fraud specialist and the authorised official. At present, fraud specialists carry out investigations on the ground. Something in the order of half a million such investigations are carried out each year using current powers. Only a small number of authorised officials will be attached to each of the 13 units, usually between 10 and 50 officers. To use the additional, sensitive powers conferred by the Act, the fraud investigator would have to approach the authorised official in order that that official could make the inquiries on behalf of the fraud investigator. Given that many people are in the field carrying out work, we would not want such information "floating around the system", to borrow the phrase used by the noble Lord, Lord Higgins, when we discussed this matter in Committee. Sensitive inquiries utilising the new powers contained in the Act must be carried out by the authorised official, who, in turn, must have "reasonable grounds" to investigate, which in turn must be clarified with the fraud investigator. I hope that that has clarified our slightly teasing exchange on this matter.
The third question raised by the noble Lord concerned whether authorised officials will be sufficiently senior to have such powers entrusted to them. In Committee I said that such officials will be appointed at executive officer grade, grade B3 or its equivalent in a local authority. They will be authorised to act on behalf of the Secretary of State only once they have been given full professional training. I could give
1106
details of that training but I shall not take up the time of the House unless noble Lords would like me to do so.
The grade is a management grade equivalent to that of a flight lieutenant in the Royal Air Force or a second lieutenant in the Army. It would rank between a police sergeant and a police inspector, who similarly carry high levels of responsibility. The grade is the same as that required for officers who currently use departmental powers to inspect the records of employers about their employees. Most noble Lords would regard that work as equally sensitive. I have already indicated that management controls will be put in place to be implemented by sector managers.
Finally, if an individual or an information provider has a complaint or question about the manner in which these powers have been applied by the authorised official, they may direct their inquiry to the senior officer in the central intelligence unit or the investigation manager in the case of local authorities. The address will be included in all requests for information.
I have sought to establish that, first, anonymous tip-offs would not, as they stand, provide reasonable grounds for investigation. They would need to be checked with the claimant, although occasionally exceptions may be made. Secondly, the fraud specialist will carry out the day-to-day work on the ground of checking the integrity of benefits but the exercise of powers as regards data information conferred by the Bill must be handed to an authorised official who must demonstrate reasonable grounds so to act. Such authorised officials will be relatively senior members of staff, in the top quarter in terms of hierarchy of staff in the Benefits Agency. Thirdly, if a complaint is received about the inappropriate use of these powers, relevant information will be made widely available by the authorised officials.
I hope that, with those points, the noble Lord will feel that I have addressed his concerns.
5 p.m.
Lord Higgins: My Lords, I am grateful to the noble Baroness. I am not sure that I am impressed by the level at which these decisions are to be taken. Paragraph 3.7 of the code states that,
"Authorised Officers will receive their authorisation from the Fraud Area Manager acting on behalf of the Secretary of State. Authorised Officers will be of management grades not below that of Executive Officer. They will be managed by officers not below the grade of Higher Executive Officer".
It would seem that a person acting "on behalf of the Secretary of State" will not be below the rank of higher executive officer. The noble Baroness compared the grades with ranks in the Army and the Royal Air Force. However, they do not seem to be at a particularly high level. We shall need to consider that between now and Third Reading. We shall also need to consider the continuing concerns expressed by the banks and other organisations on the lack of external supervision.

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However, we have made considerable progress and the code of practice represents a substantial step forward. But, as the noble Earl, Lord Russell, pointed out, ultimately this is a matter of balance. We need to weigh the degree of power conferred on officials on the one hand and the lack of external supervision on the other. Nonetheless, I am grateful to the noble Baroness for her reassurances as regards anonymous tip-offs.
Baroness Hollis of Heigham: My Lords, I am happy to say that we shall review these procedures. The last thing the DSS wants to see is criticism from banks and building societies of the actions of its authorised officials. If we receive complaints, we shall either review the managerial supervision element or we shall review the training. If the fears expressed by the noble Lord turn out to be legitimate—I do not think that they will, because officers are already working with equal levels of responsibility in parallel fields; their behaviour is almost always exemplary—then we shall find that out. The code of practice offers plenty of opportunities to make adjustments through training and complaints procedures. Having said that, I should point out that, based on the body of experience from complaints officers currently working in the field, we believe that we have set these processes at the right level.
Lord Higgins: My Lords, I understand the point. Again, although I am reassured by the noble Baroness's comments on training and so forth, if someone is carrying out an investigation which is not reasonable, that is far more a question of an individual's attitude to the issues than it is a question of training. I shall bear in mind the points made by the noble Baroness. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Speaker (Lord Elton): My Lords, if Amendment No. 8 is agreed to, I shall not be able to call Amendments Nos. 9 to 11.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 8:
Page 2, line 34, leave out from ("is") to end of line 41 and insert—
("(a) a person who has committed, is committing or intends to commit a benefit offence; or").
On Question, amendment agreed to.
[Amendments Nos. 9 to 11 not moved.]
Lord Higgins Lord Higgins moved Amendment No. 12:
Page 2, leave out lines 42 to 44.
The noble Lord said: My Lords, this amendment relates to the provisions as regards members of the family of a suspect. Again, the code of practice has proved to be extremely helpful. In Committee I raised the question of whether it was appropriate to include in the list of those who might be investigated people who were simply members of the family of someone
1108
who was otherwise suspect. That part of the Bill has now been radically changed. This is the only section which, in effect, has survived the helpful innovations introduced by the noble Baroness.
The relevant paragraphs in the code of practice are paragraphs 2.11 and 2.12. That part of the code does seem to restrict the provision to inquiries about family members whose circumstances are directly relevant to the claim under investigation. For example, if a man is claiming a means-tested benefit but is not declaring his wife's earnings, inquiries may be made about her bank account in order to establish the truth. I have some doubts about the precise wording of paragraphs 2.11 and 2.12, but I think it would be helpful to discuss that when we discuss the code of practice as a whole.
This issue was raised in Committee. However, perhaps the Minister will state for the record precisely why she believes that the members of a family—defined precisely in the code of practice—may need to be investigated. Also, is she satisfied that there are adequate restraints on going beyond the particular cases where the fraudulent benefit claim immediately raises the question of family relationships?
Baroness Hollis of Heigham: My Lords, again I am happy to give the assurance that the noble Lord seeks. I explained in Committee that information about a person's family—the tightly defined nuclear family; in other words, the dependants who are covered by benefit—is needed by the department. People claim benefit not only for themselves but for their dependants.
The crucial point is that income-related benefits are based on household assessment; therefore, we need to know about the household. It is as simple as that. For example, people may be fraudulently claiming for children that they do not have; they may claim that they are single when they are a couple; or a man may be claiming a benefit when the woman is in work. The implication of the noble Lord's amendment is that if a single man were working and claiming benefit he would be prosecuted, but if a married man were claiming benefit when his wife was working—the same offence but within the household—we could not prosecute him. I am sure that that is not the noble Lord's intention.
So I am happy to give the noble Lord the assurance that he seeks. The notion of "family members" is tightly drawn. Because income-related benefits are household based, any claim is on behalf of the whole household; therefore, it is necessary to ensure that the information is correct and valid. That is why we need to retain the provision in paragraph (d).
Lord Higgins: My Lords, that is a helpful explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 13:
Page 2, line 44, leave out ("(b) or (c)").
On Question, amendment agreed to.
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 14:
Page 2, line 44, at end insert—
("( ) Nothing in this Act shall authorise an inquiry which contravenes any provision of the Data Protection Act 1998.").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendment No. 38.
Amendment No. 14 seeks to ensure that any inquiry initiated as a result of the Bill is pursued with the full knowledge of the data protection regulations and that the concerns expressed by the Information Commissioner about some provisions in the Bill have been taken into account.
The Minister assured us in Committee that if the Information Commissioner believed the Bill to be in breach of the Data Protection Act, she could issue the department with an enforcement notice. Would it not be preferable to smooth over any potential areas of conflict before the Bill becomes law and subject to the provisions of the Data Protection Act?
Although safeguards exist in the Bill and in the draft code of practice, as the noble Earl, Lord Russell, said in Committee, it is questionable whether the action can be proved to be necessary and, therefore, whether any inquiry is or will be within the bounds of the Data Protection Act. Will the Minister give the House an assurance that knowledge of the data protection regulations will be required as part of the training of the authorised officers who will exercise the powers provided under the Bill?
Turning to Amendment No. 38, the Minister was kind enough to say that she would confirm whether or not an individual could request information held on him by the DSS and under what circumstances there would be an opportunity to do so. We are grateful to the Minister for the confirmation set out within the code of practice that an individual will be able to access personal data in accordance with the Data Protection Act. However, although the draft code of practice has established that an individual has the right to subject access, and would be eligible without our amendment to access personal data held on him by the DSS, it does not confirm at what stage, if any, individuals may access that information if they are under investigation in accordance with the provisions of the Bill. I beg to move.
5.15 p.m.
Lord Grabiner: My Lords, I shall speak to Amendment No. 14. We examined this amendment on the first day of the Committee stage. My instinctive reaction then was that the amendment was unnecessary and that that is still my view.
I think that the source of the problem is that the Data Protection Act 1998 is widely misunderstood and that even experienced lawyers are a little nervous of it. I include myself in that category. The obscurities of the 1998 Act are driven by the fact that it has its origins in the human rights convention, and the legal concepts in the convention were then very novel, and still are quite novel, to English lawyers and legislators.
1110
The relevant provision of the convention is Article 8. The first paragraph of the article spells out the right to respect for private and family life, home and correspondence. Obviously, the right is not absolute or unlimited. The convention is carefully structured and makes a sensible balance. Accordingly, paragraph 2 of Article 8 makes it plain that a public authority may be entirely justified in interfering with that right provided that the interference,
"is in accordance with the law and is necessary … [for] the economic well-being of the country, for the prevention of… crime … or for the protection of the rights and freedoms of others".
Those two aspects of Article 8 are perfectly mirrored in the Data Protection Act. The right in paragraph 1 is covered by the so-called Data Protection Principles, especially the first principle. The limitation on the right is set out in Section 29 of the Act, which expressly exempts from the first data protection principle cases where personal data is processed for the purpose of preventing or detecting crime or for the purpose of apprehending or prosecuting offenders. It follows that in this context Article 8 of the convention is made effective in our domestic law by the Data Protection Act.
The next step in the argument is the Human Rights Act 1998. Section 3(1) of the Act requires that, so far as it is possible to do so, primary legislation must be read and given effect in a way which is compatible with the convention rights. The obligation to construe all legislation in this way is, therefore, cast squarely on the court.
It will immediately be obvious that it is entirely unnecessary and indeed circular to introduce any provision into this Bill of the kind that we are now discussing. In the first place, it adds nothing to the Data Protection Act, which cannot be excluded or side-stepped. Secondly, Section 3(1) of the Human Rights Act means that, if and when the Bill becomes law, it must be read and given effect in a way which is compatible with the convention rights.
I should like to emphasise one further point that I believe is sometimes under-rated in our debates, and, for the most part, ignored in the representations from some of the outside bodies, or pressure groups, that have given their views on this particular subject. The purpose of Clause 1 of the Bill is to enable the DSS to detect or prevent crime and to apprehend and prosecute benefit fraudsters. That is an entirely legitimate object in any civilised society. It is specifically authorised by the convention. That is especially the case where these powers are necessary as a check on whether a particular benefit claimant has, on a previous occasion, given honest answers to questions properly put to him or her and where the answers are to be relied upon for the purpose of deciding whether or not the claimant qualifies for the relevant benefit. We must always take full account of the convention right in paragraph 1 of Article 8, but there is absolutely no justification for disregarding or watering down the limits on that right that we find in paragraph 2 of Article 8.

1111
In the result, I believe that this amendment is unnecessary for at least two reasons. First, if and when these powers in Clause I are enacted, they will be exercisable only in accordance with the requirements of the Data Protection Act 1998; and, secondly, the provision will have to be construed by the court compatibly with the convention because Section 3 of the Human Rights Act 1998 says so.
Earl Russell: My Lords, that was an extremely helpful intervention, for which I am most grateful to the noble Lord, Lord Grabiner. If the noble Lord will forgive me, I should like to probe one or two of his assertions. First, I do not have the text of the Human Rights Act with me today, but it is my recollection that the requirement to construe existing statutes in the light of the convention is a requirement to do so as far as possible. It must be so, otherwise the whole provision for a certificate of incompatibility would be unnecessary.
Secondly, the noble Lord is clearly persuasive in arguing that Clause 1 of the Bill is a legitimate object within the terms of the convention. However, it has been argued by the Data Protection Registrar that this object is subject to the requirement of proportionality. That is a fairly major argument. There is probably some obligation on this House to consider how far that requirement of proportionality is met. We know that the registrar has had some fairly significant misgivings at earlier stages of the Bill. I understand that discussions have taken place since then. I have heard in the most general terms only about the results of those discussions. However, before we leave this amendment, perhaps we could be enlightened on how far the registrar is currently reassured. That would be extremely helpful to the House.
Lord Grabiner: My Lords, I shall respond briefly to the noble Earl's observations. He is absolutely right to draw attention to the opening words of Section 3(1), which read:
"So far as it is possible to do so".
Indeed, I believe that I referred to those words when I drew attention to the provision. However, if it is not possible to do so, the possible consequence is that there would have to be a certificate of, so to speak, non-compatibility. In that event, there would be a potential problem.
The noble Earl also referred to the issue of proportionality. The amendment now before us is one that would have the effect of making the operation of the powers contained in Clause 1 of the Bill expressly subject to the Data Protection Act 1998. The proportionality point does not arise by virtue of the Data Protection Act. It arises under that Act in any event, but it will also arise under this Bill, if and when it becomes law. Therefore, there is no need for this Bill to incorporate a provision that would make it in its operation subject to the Data Protection Act 1998, because the proportionality obligation will have to be satisfied under this legislation standing alone.
1112
We discussed this issue previously. I entirely agree that it must be necessary; and that means proportionate. The mere process of going through these proceedings—indeed, as we have done in previous debates—reveals most clearly that the product at which we are arriving is a proportionate response to a serious social and criminal problem.
Baroness Hollis of Heigham: My Lords, I am indebted to both my noble friend Lord Grabiner and to the noble Earl, Lord Russell, for expanding the point about the proportionality issue and the degree to which all legislation is subject to the Data Protection Act. That brings me to the first point raised by the noble Lord, Lord Astor. There is no need for amendment No. 14. There is nothing in the Bill that can enable us to contravene the Data Protection Act 1998. The noble Lord asked why we have not placed such a provision on the face of the Bill. I could respond and say that, equally, the Bill must not contravene the Human Rights Act 1998, the Race Relations Act 1976, the Sex Discrimination Act 1975, the Disability Discrimination Act 1995, the Police and Criminal Evidence Act 1984 or the freedom of information legislation. However, we do not seek to place them on the face of the Bill. The law is the law; and, by law, we cannot contravene the law. The Data Protection Act 1998 is the law. Therefore, putting a provision on the face of the Bill to the effect that we cannot contravene it would not change the fact that we cannot contravene it; in other words, the suggested provision would be otiose. Indeed, I believe that my noble friend Lord Grabiner put the case most succinctly.
The question was also raised as to whether the Data Protection Act and its obligations and responsibilities should form part of the training of authorised officers, which I believe to be a most helpful and pertinent question. Yes, indeed, it is important that they should understand that their actions must fall within that framework.
I turn now to Amendment No. 38, and the question of data. As I believe we made clear in Committee, we generally keep data for 14 months, unless it is needed for prosecution purposes. Anyone can ask for the data that is held upon himself at any stage, so long as that request would not jeopardise any investigation. For my own interest, I asked to have sight of a typical print-out of what might be held on a real but anonymised individual in the social security computers. This gives information about national insurance numbers, family, employment, and so on.
In the light of that, I was also asked whether it would be reasonable to reduce the time limit of 40 days down to 21. The reference in the amendment to,
"the relevant agencies or bodies".
which would include the DSS and local authorities, would also, presumably, include banks and other organisations listed in subsection (2A), as set out in Clause 1. That would mean that the noble Lord's amendment to restrict the time available to make such enquiries to 21 days would not only apply to the DSS but would also apply to banks, building societies, credit reference agencies, and everyone else. As a

1113
result, I believe that those organisations would be extremely unhappy. They are currently subject to the same 40-day requirement as applies to the DSS. However, as the amendment is framed, they, too, would be brought within the 21-day requirement. I am sure that they would find this very hobbling in terms of their ability to respond, because the time limit would be halved and could be seen as unreasonable.
Finally, I was asked whether the Data Protection Registrar was reassured in terms of what we propose. The truth is that we have not heard from the registrar recently on the subject. I understand that she has been sent the draft code of practice, but has not responded. I believe that it is fair to say that her original concerns have been addressed in part by the amendments that we have proposed, especially Amendment No. 8 that the House accepted earlier, and by the publication of a code of practice, which will be a statutory code of practice. If the registrar has other concerns, she will no doubt communicate them to us. However, I have checked the position. That was certainly the situation yesterday. I rechecked to confirm whether or not we had heard anything further today, but we had not. That is the best information that I can give to the House.
Having addressed some of the concerns that your Lordships expressed—one about the code of practice and the other about subsection (2A)(a), (b) and (c), which was dealt with by way of Amendment No. 8—I hope that my response will also allay the concerns that the Data Protection Registrar gave in response when the Bill was originally published.
5.30 p.m.
Lord Astor of Hever: My Lords, I am grateful for that clarification from the Minister. I cannot recollect saying anything in my short speech to either amendment about putting anything on the face of the Bill. I have checked my notes and I cannot recollect saying that.
The points made by the noble Lord, Lord Grabiner, were helpful, particularly as regards clarifying the Data Protection Act and the Human Rights Act as they relate to the two amendments.
Baroness Hollis of Heigham: My Lords, perhaps I have misunderstood the noble Lord. However, Amendment No. 14 states:
"Nothing in this Act shall authorise an inquiry which contravenes any provision of the Data Protection Act 1998".
In other words, the noble Lord asks for a provision on the face of the Bill that nothing we do can contravene any provision of the Data Protection Act. As I said, that cannot happen. We cannot contravene the provisions of the Data Protection Act because that is law, in the same way as we cannot contravene the Sex Discrimination Act, the Disability Discrimination Act and so on. As I say, perhaps I have misunderstood the noble Lord.
Lord Astor of Hever: My Lords, I accept the points that the noble Baroness makes. These are probing
1114
amendments to clarify points which we are grateful to have explained. On the subject of the Human Rights Act, normally there are various additional measures in the Bill. However, they are missing. Is there any specific reason for that?
Baroness Hollis of Heigham: My Lords, I do not know what additional measures the noble Lord has in mind. Perhaps he can help me.
Lord Astor of Hever: My Lords, normally the Bill states that it is in conformity with the convention. Is there any reason why that statement is missing?
Baroness Hollis of Heigham: My Lords, that statement was signed originally before the Second Reading. I believe that it was signed at the First Reading of the Bill. I signed that the Bill was compatible with human rights. I believe that on a couple of occasions the noble Lord, Lord Higgins, told me that I had signed that measure and that he held me personally responsible for that. It was certainly signed.
Lord Astor of Hever: My Lords, I take the Minister's word that it does not matter that the measure is not on the face of the Bill at all the other stages.
I return to the amendments. I am grateful for the detailed clarification both from the noble Lord, Lord Grabiner, and from the Minister. It is helpful that we have that detailed clarification. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 15 and 16:
Page 3, leave out lines 18 to 20 and insert ("any information other than information which (within the meaning of section 2I of the Regulation of Investigatory Powers Act 2000) is communications data but not traffic data." ").
Page 3, line 20, at end insert—
("(2F) Nothing in subsection (2B) or (2C) above shall prevent an authorised officer from exercising the powers contem,c1 by this section for requiring information, from a person who provides a telecommunications service, about the identity and postal address of a person identified by the authorised officer solely by reference to a telephone number or electronic address used in connection with the provision of such a service.").
On Question, amendments agreed to.
[Amendments Nos. 17 to 19 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 20:
Page 3, line 42, leave out ("and").
On Question, amendment agreed to.
[Amendment No. 20A not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 21:
Page 4, line 2, at end insert (", and
'telecommunications service' has the same meaning as in the Regulation of Investigatory Powers Act 2000." ").
On Question, amendment agreed to.
Clause 2 [Electronic access to information]:
Lord Astor of Hever Lord Astor of Hever moved Amendment No. 21A:
Page 7, line 9, after ("refuses") insert ("without reasonable excuse").
The noble Lord said: My Lords, this amendment inserts a defence of reasonable excuse into the offence provision under Clause 2.
There may be a number of valid reasons that a person cannot comply with a requirement under new Sections 109BA or 110AA. As currently drafted, the Bill takes no account of this and creates an offence of strict liability regardless of the circumstances of the particular case. We are of the view that every case should be considered on its own merits and that only wilful refusal to comply with a requirement under the Bill should be culpable. I beg to move.
Baroness Hollis of Heigham: My Lords, I am slightly puzzled as I had hoped that the noble Lord, Lord Astor, would have agreed that we had addressed this issue in paragraph 4.5 of the draft code of practice which has statutory weight. We inserted that measure in response to the concerns that the noble Lord expressed in Committee. Therefore I feel slightly miffed that we responded to those concerns in the draft code of practice but he has failed to acknowledge that. Paragraph 4.5 of the draft code of practice states:
"If information is not provided the Authorised Officer should explain the DSS statutory powers. and the potential consequences of non-compliance. Information providers will be expected to comply with reasonable requests and the DSS will take the matter further if an individual employee is being obstructive"—
I refer to the point about wilful refusal that the noble Lord, Lord Astor, made—
"Authorised officers must consider any reasonable excuse that a person may have for not providing the information. Examples may include industrial action, staff shortages or unforeseen sickness. The list is not exhaustive".
The example I gave in Committee was the breakdown of a computer. The code also refers to evidence that does not incriminate someone. I hope that I have addressed the concerns of the noble Lord, Lord Astor.
Earl Russell: My Lords, before the Minister sits down could she give us a little more clarification of the word "consider" in paragraph 4.5 of the code of practice? Is it fanciful of me or does that wording imply that an official could consider and turn down a reasonable excuse?
Baroness Hollis of Heigham: My Lords, in that case he would not be acting reasonably and the whole of the legislation is framed within the context of reasonableness. If it would be helpful, I am happy to strengthen the wording in the draft code to make it clear that authorised officers must not press for information where the information provider has a reasonable excuse and to cite more examples of what we would consider reasonable in the context of electronic access to data. We have a further meeting on 15th March with representatives of the information providers so we could review the code of practice that I quoted in the light of that meeting. I want to be
1116
helpful so that everyone understands exactly what we count as good cause, so to speak, and what would be reasonably regarded as wilful refusal. I hope that noble Lords will be content with those assurances.
Lord Astor of Hever: My Lords, in the light of the Minister's helpful and positive remarks I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 22:
After Clause 2, insert the following new clause—
CODE OF PRACTICE ABOUT USE OF INFORMATION POWERS
(".—(1) The Secretary of State shall issue a code of practice relating to the exercise of—

(a) the powers that are exercisable by an authorised officer under section 109B of the Administration Act in relation to the persons mentioned in subsection (2A) of that section; and

(b) the powers conferred on an authorised officer by sections 109BA and 110AA of that Act.

(2) The Secretary of State may from time to time—

(a) revise the whole or any part of the code for the time being in force under this section; and

(b) issue a revised code.

(3) Before issuing or revising the code of practice under this section, the Secretary of State shall—

(a) prepare and publish a draft of the code, or of the revised code; and

(b) consider any representations made to him about the draft;

and the Secretary of State may incorporate in the code he issues any modifications made by him to his proposals after their publication.
(4) The Secretary of State shall lay before each House of Parliament the code of practice, and every revised code, issued by him under this section.
(5) The code of practice issued under this section and any revisions of the code shall come into force at the time at which the code or, as the case may be, the revised code is issued by the Secretary of State.
(6) An authorised officer exercising any power in relation to which provision must be made by the code of practice under this section shall have regard, in doing so, to the provisions (so far as they are applicable) of the code for the time being in force under this section.
(7) A failure on the part of any person to comply with any provision of the code of practice for the time being in force under this section shall not of itself render him liable to any civil or criminal proceedings.
(8) The code of practice for the time being in force under this section shall be admissible in evidence in any civil or criminal proceedings.
(9) In this section "authorised officer" has the same meaning as in Part VI of the Administration Act.").
The noble Baroness said: My Lords, I should like to speak to Amendments Nos. 22 and 54 which are pivotal. They concern the matter of the code of practice governing the provisions of Clauses 1 and 2 of the Bill.
We had a lengthy debate in Committee regarding whether or not the Bill should make provision for a code of practice. I explained that it had always been the Government's intention to have a code of practice regarding the use of provisions under Clauses 1 and 2 of the Bill—the powers to obtain information. I also explained that we did not intend to commence using those provisions until the code had been published. I recognised, however, that the House, and organisations in the private sector, wanted greater certainty on this point, and I agreed to consider whether we could bring forward a government amendment to make provision on the face of the Bill for a code of practice, which is what we have done. The detail of the proposed provision is in Amendment No. 22.
This amendment provides that the Secretary of State must consult on a draft of the code before it is published. We have already met with representatives from business and local authorities to discuss what should be in it and we shall continue to hold dialogue with them further to develop the draft code which has already been provided to your Lordships. Additionally, this provision provides for formal consultation both on a first draft after the Bill receives Roy al Assent and on subsequent revisions of the code following its publication.
This amendment provides that the Secretary of State shall issue a code of practice relating to the provisions at Clauses I and 2. The House can thus be certain that the powers in Clauses I and 2 will always be exercised within its framework.
The amendment provides that the Secretary of State may revise the code of practice from time to time. The private sector organisations have suggested to us that they would find it helpful if the code of practice were regularly reviewed. A suggestion of three years has been made. We think that that might be beneficial to all concerned. It would enable private sector organisations to provide feedback—the sort of research that we discussed earlier as regards any complaints about how things were working. It would give both the private sector organisations and authorised officers in both DSS and local authorities an opportunity to say whether or not they find the code helpful. Consequently, I give an assurance to the House that we would review the code of practice within three years of its publication and that the code would be revised, if necessary, in accordance with that review.
The amendment also provides that the final version of the code of practice be laid before both Houses of Parliament and, above all, that authorised officers must have regard to the code, where it is relevant, when they exercise the powers in Clauses 1 and 2. The code of practice shall be admissible in criminal and civil proceedings. So if an authorised officer fails to comply with the code of practice that could be taken into account by a court of law.
Amendment No. 54 amends the commencement provisions of the Bill. It provides that Clauses 1 and 2 may not be commenced until the code of practice has
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been published. Our discussions with the Information Commissioner, which is the Data Protection Registrar, and representatives from business indicate that this would be a welcome addition to the Bill's provisions.
Perhaps I may say a word or two about the code of practice. I emphasise that the work is in draft. Negotiations are ongoing. A document may go through many stages before it is published. At the moment it makes no reference to local authorities because we are currently in consultation. We had a helpful meeting last week, but we still have to do further work with them as to what shape the code will take. We plan to provide the next draft before the Bill reaches the Committee Stage in another place, subject to the rest of the consultations, particularly with the local authorities, proceeding satisfactorily.
I believe that in the code we have addressed the key issues of what the powers are, who will use them and how they will be used. There is an introductory chapter setting out its purposes and a specific chapter setting out the various safeguards pertaining to the use of the powers. We have tried to include examples as we have proceeded as to how the powers might be exercised.
It is a code which is primarily aimed at authorised officers. It is designed to instruct them on how they must use the powers. But we also want it to be intelligible and legible to business and to any private individual who wishes to find out more. We have endeavoured to set out what is and what is not reasonable in the exercise of the information powers. For example, we have stated that authorised officers should always consider the option of making a direct approach to the customer if they need information about them. Unless there are grounds for thinking that an investigation would be compromised by approaching the customers direct, this would be our immediate route for obtaining information. We would only make an approach to the information provider if there is no other feasible option available. At paragraph 2.9 the code makes clear that information subject to legal privilege may not be obtained under these powers. I have given a commitment that I shall return to this matter at Third Reading with an amendment to that effect because it is such an important and sensitive issue.
I hope that your Lordships will find the draft code helpful. I will, of course, take on board your Lordships' comments including those made in correspondence, if that might be helpful subsequently because, as I say, such a draft code goes through many stages of revision before it is laid before Parliament. These amendments make provision on the face of the Bill for a code of practice governing the use of provisions in Clauses 1 and 2. They also ensure that the measures in those two clauses cannot begin until the code of practice has been published and laid before both Houses of Parliament and that, before publishing the code, the Secretary of State must consult on a draft of it. We shall have further consultations in order to review the draft within three years. I hope that your Lordships will welcome these amendments. I beg to move.
5.45 p.m.
Lord Higgins: My Lords, I believe that the whole House will be very grateful for the extremely constructive and flexible attitude which the Minister has adopted throughout our proceedings on this Bill. We certainly welcome the amendment which puts the code of practice on a statutory basis. Already in the course of our debates we have picked up various points in the draft code of practice. At this stage of the proceedings I do not intend to repeat them.
However, there are one or two points which are worth questioning. The first arises from an exchange which took place a moment or two ago between the noble Baroness and my noble friend Lord Astor of Hever. I had not previously noticed that the Bill, as printed at Report stage, does not include, as it did when published at Committee stage, an assurance by the Minister that the Bill conforms to the European Convention. It is possible, although unlikely, that the form of the Bill may change during the course of its proceedings through this House and the other place in such a way that it is inconsistent with the convention.
Baroness Hollis of Heigham: My Lords, was it on the original Bill as published for the Committee stage?
Lord Higgins: My Lords, the original Bill has an undertaking from the noble Baroness giving an assurance that it is in conformity with the convention. Suddenly, it has disappeared.
Baroness Hollis of Heigham: My Lords, I am sure that it has already been given. It may well be a printing error which has been well spotted for its omission. The crucial issue is the undertaking that was given in writing when the Bill was originally published and that stands.
Lord Higgins: My Lords, I understand that very well. I have never noticed it before. It is possible that an amendment has been made which is not in conformity with the convention. However, the noble Baroness says that that is not so, but it is possible. What is relevant to the present debate is that it seems possible now that we are putting the matter on a statutory basis, that there is something in the code of practice which does not conform. I do not believe that that is stretching the matter too much. The assurance that has been given needs to be considered by the House. Perhaps in a more general sense—and it is not appropriate to discuss it at this point—the House should consider whether the way in which we handle this particular issue is the best way of doing so.
Perhaps I may return to one other point as regards the amendment before making one or two general points on the draft code of practice. I am not quite clear how subsections (7) and (8)in the new clause interact. Subsection (7) states,
"A failure on the part of any person to comply with any provision of the code of practice for the time being in force under this section shall not of itself render him liable to any civil or criminal proceedings".
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Subsection (8) states,
"The code of practice for the time being in force under this section shall be admissible in evidence in any civil or criminal proceedings".
If those subsections interact in any way, and if we are going to make a statutory code, then if someone has failed to do something which is in the code there is an argument for saying that that should not render them liable to civil or criminal proceedings. The fact that such matters can be used in evidence in respect of another offence not related to the code does not appear to be right. Obviously, this is a highly technical matter. It would be helpful if we could have an indication as to how those two subsections interact.
I have covered most of the points that I need to make. As regards the pure drafting of the code, it appears that no-one has read it straight through. For example, I refer to paragraph 2.4 which begins,
"However, any authorised officer shall not ask for information"
and so forth. Then it states,
"For example, we will not ask a utility company to obtain a current meter reading".
There appears to be a change from first to third person. There are similar examples in paragraphs 2.11 and 2.12.
As regards the local government code of practice, in correspondence the noble Baroness has indicated that it will be available in March. Will we have it before Third Reading?
Baroness Hollis of Heigham: My Lords, I thought I had made that point clear in my original remarks, but perhaps I was speaking too rapidly. I said that we were still in discussion with local authorities. That code will be incorporated into the other and we hope that it will be in place, subject to discussion and agreement, in time for the Committee stage in another place. We have gone further and faster in our discussions with business than with local authorities, although they are in parallel track.
Lord Higgins: My Lords, I am grateful for that information. Because of the imminence of a general election it is very important that the code is available before then.
I have one extremely important point which arises at paragraph 4.13. It states that,
"Authorised officers will not make enquiries in person by means of a visit. The power to inspect promises only relates to enquiries made to an organisation about their employees".
I believe the word should be "premises".
Lord Mackay of Clashfern: My Lords, I welcome the amendment, which provides for a statutory code. I think that I am right in saying that the provisions to which my noble friend Lord Higgins has drawn attention are very similar to, if not exactly the same as, the provisions about the Highway Code, which have existed for some considerable time. The important thing is that the definition of offences has to be in the Bill. I wondered whether that was absolutely plain when the Minister was responding to the previous

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amendment. It must be right that the definition of offences has to be in the Bill. The code cannot create offences.
On the other hand, a failure to comply with the provisions of the code might be evidence that an offence defined under the statute has been committed. It is important that the statute defines the offences. One cannot use the code to modify or reduce the scope of the statutory provision for offences. I should be glad to have that confirmed.
Earl Russell: My Lords, I listened to that intervention with great interest. I shall re-read the code of practice with that question in mind between now and Third Reading, as I am sure the Minister and many others will also do.
On the whole, it seemed to me that the code was concerned with creating defences rather than offences. In the very short time available to me, I have not seen anything in the wording of the code to which I wish to object. I warmly congratulate the Minister on the work that she has done on the subject. In our preliminary meeting, she made encouraging noises about the code of practice and its time of appearance. She has performed a great deal more than she has promised. That is entirely the right way round. I take her point that consultation is still in progress. We saw it in progress a few minutes ago and I very much welcomed its operation. I am in no position to complain about that.
It is highly unlikely that we have done anything contrary to the European Convention on Human Rights that was observed by neither the noble Lord, Lord Grabiner, nor my noble friend Lord Goodhart. I am inclined to fall back on Locke's remark when he saw the proofs of his Second Treatise of Civil Government—that printers have ways all their own, not united by the general fairness that cements mankind.
Lord Grabiner: My Lords, on the point about the certificate of endorsement, for the sake of the record the first version of the Bill carried the endorsement by my noble friend the Minister to the effect that the provisions of the Bill were compatible with the convention rights. The current version, produced after Committee stage, does not carry that endorsement. Section 19(1) of the Human Rights Act 1998, which contains the obligation to produce the statement, provides that before Second Reading the Minister must,
"make a statement to the effect that in his view the provisions of the Bill are compatible with the Convention rights".
That obligation has been complied with. The Act also says:
"The statement must be in writing and be published in such manner as the Minister making it considers appropriate".
The statutory obligation has been satisfied.
Baroness Hollis of Heigham: Yes, my Lords. I have had similar advice from the Table, which is that the endorsement appears after the First Reading and only
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once in each House and does not have to be repeated at each stage of the Bill. I was wrongfooted and thought that maybe it had been left off accidentally. The basic point is that the original certification casts its halo over all subsequent proceedings and does not need to be repeated. I am intrigued that we have spent longer on that today than on many of the other issues in the Bill.
The second point that has been raised was on the code. I welcome the welcome that has been given around the House to the code. The noble Lord, Lord Higgins, referred to an apparent incompatibility between subsections (7) and (8) on what was liable. Subsection (7) says that a failure to comply with the provision will not render a person liable to civil or criminal proceedings. That is a standard in statute providing for codes of practice. It ensures that the authorised officer will not incur personal liability merely for breaching the code. It will not prevent him being prosecuted for an offence committed in connection with his duties. Subsection (8) provides that the code shall be admissible as evidence in any civil or criminal proceedings. In other words, a court may have regard to the code when considering whether an authorised officer has acted properly in his exercise of the information powers set out in the Bill. If the noble Lord wants further elaboration, I shall be happy to write to him.
On the point about "premises" and "promises", all that I can say is, "Promises, promises, thank you very much".
Finally, in response to the thoughtful speech of the noble and learned Lord, Lord Mackay of Clashfern—we would expect nothing less—I shall re-read his comments and see whether we need to take any further action, but we agree with what he said.
In the light of that, I hope that your Lordships will again feel able to withdraw the amendment.
Noble Lords: It is your amendment.
Baroness Hollis of Heigham: Ouch! I hope that your Lordships will be able to withdraw any objections and will accept my amendments.
On Question, amendment agreed to.
Clause 3 [Arrangements for payments in respect of information]:
The Deputy Speaker (Lord Murton of Lindisfarne): My Lords, before I call Amendment No. 23, I remind noble Lords that if it is agreed to, I shall be unable to call Amendment No. 24, owing to pre-emption.
Baroness Noakes Baroness Noakes moved Amendment No. 23:
Page 7, line 18, leave out from ("authorising") to the end of line 38 and insert ("payments to be made to any person for information obtained by virtue of the powers contained in subsection (2A) of section 109B.").
The noble Baroness said: My Lords, I shall speak also to Amendment No. 25. Amendment No. 23 has two objectives. First, it would widen the categories of persons who may be recompensed by the Secretary of State in return for providing information under the

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new powers. Secondly, it would remove the Secretary of State's discretion on who is to be paid and the amount of such payment.
Clause 3 restricts the potential recipients of payment to credit reference agencies, telecommunications providers and, to a limited extent, water, gas and electricity suppliers. It therefore excludes a number of other organisations from the possibility of payment, notably banks and insurance companies. It also restricts the amount that can be paid to utility companies. Those organisations will bear the majority of the inquiries as a consequence of the Bill—around 55 per cent on the department's estimate.
This is fundamentally a question of equity. The Bill would create a large number of potential information providers to help in the fight against social security fraud. That has not been challenged. The issue is the fairness of the burden of compliance. The Government, who will be the beneficiary of the inquiries, hope to save at least £200 million through lower benefit payments.
In Committee, the Minister explained that there was a general principle that the Government do not pay for information that they are authorised by law to collect. Past practice does not necessarily make that a good principle when we consider the burdens on business. We also know that the general principle is not absolute. It was ignored in the Regulation of Investigatory Powers Act 2000 and is ignored again to an extent in this Bill in relation to credit reference agencies and telecoms providers.
The Minister also argued in Committee that businesses could afford to pay. She read out some profit figures from some major banks. I am troubled by that. If businesses have legitimately made profits in the UK or elsewhere and paid tax on them, that does not create a reservoir into which the Government can dip as they choose.
Those net profits belong to the shareholders. We should not assume that strong profits are made by all the companies that the Government intend to bring within these new information powers. I cite Equitable Life as an example of an insurance company where extra costs would impact on policy holders. The banking sector is also diverse in scale and profitability. We can not assume ability to pay.
I accept that if Government estimates of up to £7.6 million in additional costs are correct, that would not be a large burden on business; but those estimates may be incorrect. Against the background of increasing regulatory burdens on businesses, we should draw a line somewhere.
I hope noble Lords will agree that with this small amendment we can send a positive message about regulatory burdens to the business community.
Amendment No.23 removes the discretion to pay whatever the Secretary of State thinks fit. Amendment No.25 defines that in terms of the costs that are reasonably incurred. Costs will need to be defined, and I hope that they will include the opportunity cost of capital, so that the ability to pay a profit-inclusive
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price to the credit references agencies, which is a matter that concerned the Minister at Committee stage, would not be affected.
I do not believe that this provision would plunge the Department of Social Security into an administrative quagmire, nor do I believe that businesses would haggle and thereby delay the use of the powers, as suggested by the Minister in Committee. It is unlikely to be in their interests to do so.
I note that the department is prepared to negotiate constructively with credit reference agencies and telecommunications providers, and I hope that the same spirit would prevail in relation to other information providers. I am confident that their representative bodies could present practical solutions that would not create an excessive burden as a result of the amendment.
The amendment requires fair payment to be made to those drawn within the net of information providers.
I hope that noble Lords will therefore support the amendment.
6 p.m.
Earl Russell: My Lords, the noble Baroness, Lady Noakes, has raised an issue that goes way beyond the confines of the Bill. It is a big and an important issue. Therefore, it is not entirely proper to seek resolution tonight because we can only resolve a small part of it. Nevertheless, she has placed noble Lords in her debt by raising the issue, and I hope that the thought she has provoked will spread beyond those here present.
There is an ongoing general argument about the division of cost between government and business. It not only arises in the context of administration undertaken by business on behalf of the Government but it arises constantly in all the debates on social costs and regulation. I should like to see all those issues considered together in a process of negotiation in which we might be able to work out, on some intelligent general principles, who pays for what.
What I would not be so happy with is a process of slow, administrative creep, in which, bit by bit, administration is passed over to private companies and private bodies and carried out on behalf of the department. It began in the Student Loans Bill 1990, when universities were required to take on the day-to-day administration of student loans. That involved taking on a considerable number of staff, running an office, and paying costs that in many cases could have been used to employ one member of teaching staff, and probably two. During the passage of that Bill the Government, purely voluntarily, chose to make a concession. It was not, of course, the full cost—it never is—but it was extremely welcome.
In Committee the Minister resisted the idea that the full cost should be met. She said that the Secretary of State should pay what appeared to him to be appropriate, a power that could be curbed or curtailed, where necessary, by judicial review. I am not aware that the Treasury is as easily controlled by judicial review as perhaps some other departments of state.

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The principle that public funds are adequate for the purpose for which they are voted seems to be regarded in certain Whitehall quarters as a tautology. This is an issue that should be considered in a wider context than the Bill.
I read the Minister's arguments in Committee because I was unable to be present. She argued that the Government do not pay for information that people are required to supply by law, but do pay firms that make their living out of supplying information for money. That approach has a coherence and an intelligibility in the short term, as a stop-gap measure, and is not an inadequate resolution of the problem. However, in saying that, I do not suggest that we should happily leave the situation as it is.
I remember the protests of British Airways against the charges imposed on it under carriers' liability. It seemed to me that those points were very well taken. An enormous administrative burden was being placed on a body that was not particularly well trained for it, and not equipped with the necessary powers of interpretation and knowledge of immigration law. The idea that administration is part of the majesty of the state., and should be so taken, is not one lightly to be lost sight of.
I hope that, after the little local business outside Westminster is over some time in the next few months, whoever is then in office will be prepared to sit down with representatives of finance and business and enter into a genuine, serious process of consultation about how the general issue of who pays for what should be resolved. It is in that hope that I am prepared in the short term to see the Bill remain as it is.
Lord Astor of Hever: My Lords, I also support the amendment tabled by the noble Baroness, Lady Noakes. Businesses today already face a torrent of red tape, while at the same time trying to remain enterprising and thriving. On their shoulders lie the responsibility of creating the wealth of the nation, and they are competing with foreign companies.
In responding to the two amendments, can the Minister clarify the position of mutuals and other non profit-making organisations?
Baroness Hollis of Heigham: My Lords, Amendment No.23 strikes out the categories of organisation that receive payment for supplying information and substitute a duty on the Secretary of State to ensure that arrangements are in place, as he thinks appropriate, for requiring authorised payments to be made to any persons in the list in Clause 109B(2A) in respect of information obtained under the new powers.
Amendment No.25 inserts a new subsection requiring that payments made to information providers should be equivalent to their costs.
We debated the amendments in Committee. Our starting point, as stated so elegantly by the noble Earl, Lord Russell, is that where organisations are required by law to provide information to Government, we do not pay for it. I gave the Committee various examples.
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Committees have to provide extensive information to Inland Revenue and Companies House, for example, but they are not reimbursed.
The Information Commissioner—Data Protection Registrar—requires organisations to complete detailed registrations of their data holdings, purposes, suppliers and recipients, but she does not pay them for this information. Banks are required to report suspicions of money laundering to the National Criminal Intelligence Service. Utilities are required to provide information to the regulator to enable him to carry out his statutory duties. I do not wish to labour the point, but I simply repeat what I said in Committee: the DSS has had powers since the 1940s to require information from employers about their employees. Again, we do not pay for this, and it was not something that was proposed by the preceding government in the previous 20 years.
This is a good country in which to do business. Multi-national companies are setting up in business in the UK because of our stable economy and benevolent regulatory regime. At the other end of the scale, as I am sure the noble Baroness will know, small French companies are relocating to Kent because the regulatory burden is less and the incentives greater. I could go on to expand on what the Government have done to reduce burdens on business.
With regard to regulation, we have the lowest level of product market regulation of any OECD country. The labour market is less heavily regulated than in other EU countries. The non-wage ongoing labour costs are among the lowest in the OECD and the European Union. The Regulatory Reform Bill will allow us to enact important reforms that otherwise would not take place because of pressure on parliamentary time. Those reforms will be beneficial to business. Each department now has a Minister who is responsible for regulatory reform. We have cut taxes on business. We have cut corporation taxes by a full 3 per cent, and the main rate is now the lowest ever in the UK.
Lord Higgins: My Lords, what is product market regulation?
Baroness Hollis of Heigham: My Lords, it is an attempt to control standards and the like, as opposed to labour regulation.
The main rate of corporation tax is now the lowest ever in the UK and the lowest in any major industrialised country. We have cut the small companies' rate by 3 percentage points from 23p to 20p. We have introduced a 10p starter rate of corporation tax, and so on. The Chancellor announced in the pre-Budget report that the Government are considering other ways in which to provide a more competitive environment for business, including the abolition of outdated requirements for withholding tax on intra-UK interest and royalty payments, reform of the tax treatment of intellectual property, goodwill and other intangible assets, regimes for the tax treatment of gains on the disposal of substantial shareholdings, and extending the on-shore

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pooling rules for double taxation relief. I should be glad not to be pressed further on what that might entail. I could go on, but I hope that the noble Baroness will accept that in relation to all those dimensions the Government are committed to establishing a regime in which business can thrive and be competitive.
Essentially, the noble Baroness is arguing that businesses should not incur any costs in helping the Government to fight benefit fraud. That is where we part company. Fraud is theft from the taxpayer. Businesses which operate in the UK enjoy an environment and infrastructure paid for by the UK taxpayer. The police, who protect businesses from crime, are funded by the taxpayer. The courts, where businesses defend their rights, are funded by the taxpayer. And businesses are taxpayers, too.
However, the fact remains that businesses enjoy the many benefits of trading in this country and, in so doing, make strong and handsome profits. The share of the cost of enacting these proposals in the case of, for example, Barclays would amount to approximately 75 minutes' profit for the whole year.
I have heard the argument that the costs would be passed on to customers in the form of higher charges. I do not accept that for one moment. The debates which we had in Committee about profits speak for themselves. I understand why businesses would seek not to carry that responsibility, but I believe that it is right that businesses should meet the costs for the greater good of the country.
Amendment No. 25 seeks to require the Secretary of State to pay information providers an amount equivalent to the costs that they have reasonably incurred rather than an amount which he considers appropriate. The point that I wish to make in this respect is that this amendment undermines the whole logic of paying credit reference agencies. As a result of this amendment, they would be worse off than they would be under the Government's proposals.
Credit reference agencies accumulate information in order to sell it. I believe that that point was made by the noble Earl, Lord Russell, in discussing where we should draw the line. That is their business and it is how they make their profit. We believe that it is only right for the DSS to pay them the market rate—
Baroness Noakes: My Lords, perhaps the Minister did not hear what I said when I talked about profit. I said that there was no reason why it should not include the opportunity cost of capital, which in ordinary accountancy language translates into profit when the books are made up at the end of the year. I did not say that using costs would deprive businesses of the ability to pay a profit-inclusive price. Indeed, that would be a possibility.
Baroness Hollis of Heigham: My Lords, I believe that the noble Baroness is saying that it would be a possibility, not an inevitability. Am I right?
Baroness Noakes: My Lords, I am saying that if the Government wanted to, they could do that.
6.15 p.m.
Baroness Hollis of Heigham: My Lords, certainly I would not wish to put words into the noble Baroness's speech which she did not intend to use.
I return to my substantive point. We are trying to distinguish organisations to which we seek to pay the going rate because they make their profit from that activity. This amendment, as pressed by the noble Baroness, would limit us to paying only their costs. The credit reference agencies might be surprised at that suggestion, particularly given the noble Baroness's experience in the business world and their expectation that she might speak on their behalf.
Although the noble Baroness says otherwise, we believe that the amendment would plunge the department into complex negotiations and renegotiations with specified suppliers of information about what they consider to be the reasonable costs of providing each and every piece of information. As I said, while that was happening the system would continue to be defrauded. I believe that the better way forward, as provided in the Bill, is for the Secretary of State to be able to meet the costs which he considers appropriate. Businesses can rely on the fact that the unreasonable use of the power would be curbed by judicial review.
I do not doubt that the utilities, the credit reference agencies and the telecommunications companies could afford to meet the costs of compliance. However, that is not the issue. We are seeking to make a distinction in paying those categories of business for those types of information. We were not motivated by whether or not they could afford to help us. It was a question of whether or not it was their task or job to help us.
The job of credit reference agencies is to sell information. If that information were made available free of charge, they would have no business. In the case of the utilities and telecommunications companies, in Committee I explained in detail why we considered it right to pay them for some of the information that they would provide—that is, for the purposes of electronic matching. Again, we consider that approach to be fully in line with the department's approach to the Royal Mail, which we also pay for providing electronic data for matching.
We included telecommunications companies because, for the purposes of data matching, they have invested in special technology to help to meet government inquiries. The House will note that those powers do not allow us to require organisations to alter their procedures or invest in special technology, and so on. That is why we believe that they are in a special position.
We do not believe that we are making unreasonable demands. We are seeking to make our inquiries in such a way that the costs are minimised. I have given commitments that businesses will not be required to invest in special software. They will not be required to obtain information especially in order to meet inquiries. They will not be required to store information differently or to store it for longer. Businesses need not fear these powers.

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I hope that I have reaffirmed the distinction that I tried to draw in Committee between paying for information which, on the one hand, it is the sole purpose of an organisation, such as a credit reference agency, to provide, or to pay for the additional costs that we may impose on telecommunications companies for the technology required for data matching. We consider it reasonable to meet those costs. However, we do not believe that we should pay banks and insurance companies and the like for information which we can reasonably expect them to provide in our combined effort to fight fraud, particularly financial fraud, of which they are almost as much the victim as is the DSS.
Finally, the noble Lord asked me a question about mutual companies. Mutuals and non-profit organisations are also liable to respond to our requests for help without payment. If they have information, we shall seek to pursue it.
In the light of those assurances, apart from the broader debate about regulatory burdens on industry, which may indeed be the subject of a proper Wednesday afternoon debate on some occasion, as the noble Earl, Lord Russell, suggested, I hope that the noble Baroness will feel able to withdraw her amendment.
Earl Russell: My Lords, before the Minister sits down, does she accept and share with her right honourable friend the view that this is not simply a particular problem but one part of a rather more general problem?
Baroness Hollis of Heigham: My Lords, I do not wish to trespass on debates that have already taken place on the Regulatory Reform Bill, in which these issues were addressed on a wider front. However, I certainly agree that the interaction of government with business takes place across a wide front of government activity. Therefore, it is important that there is an overview and that these interventions and interactions are coherent and reasonable. I believe that I am right in saying that my noble and learned friend Lord Falconer has responsibility in the Cabinet Office for that function. That is why in each department a Minister is appointed to ensure that the burdens are reasonable. They are overviewed by the Cabinet Office. Therefore, I hope that the noble Earl will accept that the Government are acting to ensure that an oversight of this information is held at a most senior level.
Baroness Noakes: My Lords, I thank the Minister for her response. It disappoints me but perhaps does not surprise me. Perhaps I may state for the record that I was not trying to propose an amendment which would have deprived the department of the ability to pay the credit reference agencies a price which included their normal profit. Indeed, if the words that I proposed were deemed to be seeking that, I should have considered amending them. That was not what I sought. I was seeking to make a general point about the increasing regulatory burdens and the need to draw the line as to when those burdens should be more fairly shared out. I accept that that is a bigger issue.
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The Minister recited many details to establish the competitiveness of the UK economy, including lower regulatory burdens compared with those In other countries. I do not deny that, but that advantage has been eroded in recent years. All of the surveys carried out by the Institute of Chartered Accountants, the Institute of Directors, the Confederation of British Industry and the British Chambers of Commerce constantly refer to the rising tide of regulation and the associated increasing costs. That was the motive behind my amendment. However, I accept that it is part of a larger issue and I shall not test the opinion of the House. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins Lord Higgins moved Amendment No. 24:
Page 7, line 38, at end insert—
("( ) any local authority").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendment No. 26.
Amendment No. 24 seeks to establish whether local authorities should be paid for operating the Bill's proposals and, if so, how much they should be paid. In Committee, the Minister discussed that and was courteous enough to write to me subsequently setting out details of the Government's weekly benefits savings anti-fraud incentive scheme and of the new anti-fraud incentive scheme. The first of those schemes involves a sliding scale, which changes depending on how much fraud the local authority prevented. However, it also imposes penalties on local authorities if they fail to meet individual thresholds by 75 per cent.
Our debate in Committee revealed considerable differences between the position of central government and that of the Local Government Association as regards the extent of the payment. The LGA has also written to me since the Bill's Committee stage. It continues to maintain that the support that central government give to local authorities in terms of housing benefit administration is inadequate and meets less than two-thirds of actual costs. It also points out that "the current incentive regimes" are not "sufficient" to meet the costs of tackling fraud and are ineffective. It states:
"Resources are insufficient and notice of funding is frequently given far too late to meet the local authority's budget cycle".
That is obviously an important consideration because it affects whether the scheme is likely to be operated with the degree of determination that noble Lords would wish. The LGA also states that the shortfall that results from the way in which central government allocate funds to local authorities means that any funding has to be made up through council tax Those are the reasons why it feels that the Bill's proposals are not compatible with a reasonable and equitable approach to the problem that the Bill seeks to address. The LGA is also concerned about the extent to which the so-called "two strikes and you're out" provisions

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might within three years have important implications for local authorities if specific benefits were withdrawn and the burden fell on local authorities.
Baroness Hollis of Heigham: My Lords, I take the noble Lord's first point about subsidy arrangements and I shall return to it. His second point was that local authorities feel that a burden will fall on them if benefits are withdrawn. Which bodies does he have in mind? People for whom a local authority has responsibility under housing legislation because they are vulnerable will have, almost by definition, only a partial arrangement involving either 20 per cent or 40 per cent of their personal allowance. They cannot therefore be left without benefit. The same definition of vulnerability applies to local authorities that have the relevant responsibilities and to those who are protected by the hardship regime under the DSS. I hope that the noble Lord can help me—I absolutely do not understand this point.
Lord Higgins: My Lords, that may make two of us!
My understanding is that the view of local authorities is that if a benefit is withdrawn under the "two strikes and you're out" principle, as set out in the provisions, the costs would have to be covered in another way. Unfortunately, the noble Earl, Lord Russell, who is expert in these matters, is no longer in the Chamber.
Baroness Hollis of Heigham: My Lords, the noble Lord's argument is not possible. Local authorities have responsibility under housing legislation and under social services legislation. Under housing legislation they have an obligation to house someone if he or she becomes homeless only if he or she is vulnerable. Anyone who is vulnerable is also protected by the hardship schemes that operate under the "two strikes and you're out" principle. In terms of social services, local authorities have a responsibility to intervene only when people are vulnerable through ill-health or disability—they may be an ex-prisoner—or if there are dependants and children. Those people are protected by the hardship clauses. There is not an overriding responsibility on local authorities; a path by which local authorities can pay money to single individuals who have no benefit does not exist. If people are vulnerable, they are protected under the DSS and the vulnerable are the responsibility of local authorities. I do not understand this point.
Lord Higgins: My Lords, I am stuck between two groups, both of which are obviously expert. As I understand it, local authorities argue that in some cases the local authority may have a homeless duty. If the applicant is deemed to be vulnerable, the local authority will not be able to recover the costs of rehousing the applicant. If the applicant has dependants who are likely to suffer hardship, social services authorities may also have to provide assistance. The Government have given no indication of the fact that they will reimburse local authorities for those additional costs.
Baroness Hollis of Heigham: My Lords, housing benefit is not affected by the Bill; it is not a sanctionable benefit. People cannot therefore become homeless in this regard even if they were cheating with regard to their housing benefit. The deductions would come from JSA or income support, not housing benefit. Therefore, people cannot become homeless because housing benefit would not have been withdrawn. There may be a profound misunderstanding in this context.
Lord Higgins: My Lords, local authorities will doubtless read our exchanges and the Minister's arguments and we shall see whether they come back to us. A similar situation arose in Committee, when the view of local authorities seemed to be at variance with that expressed by the Minister. They have come back to us about the extent to which there is a deficit with regard to meeting the relevant costs. Members of the House and local authorities should consider the Minister's comments. In the light of those further considerations we should carry out further consultations. I shall go into the matter in greater depth and consider how we might resolve what appears to be a conflict of understanding in this regard between the Minister and local authorities. Having said that, if she would spell out her response to my other points, we could take the matter further at a later stage. I beg to move.
Baroness Hollis of Heigham: My Lords, I am baffled by the noble Lord's argument. The concept of vulnerability, for which, as I said, local authorities take responsibility, affects precisely those groups of people for whom a hardship scheme is in place under the DSS. The relevant situation should not therefore arise. Housing benefit cannot be taken away if someone is on income support or JSA, which is a hardship benefit. It can be touched only if a person is not on income support or JSA, in which case he or she would have other sources of income. I do not understand this part of the argument.
I return to the first part of the noble Lord's argument. Essentially, the basis of his case was that the level of subsidy provided to local authorities was insufficient. We may have to disagree in this regard. I understand that local authorities may seek additional funding. In their place, I did exactly the same. However, they could not say that we have behaved unreasonably. We have increased the sums available to local authorities for the next three years.
The increase for 2000 to 2001 is 2.5 per cent in line with inflation, but the housing benefit case-load has decreased by approximately 6 per cent. That recognises that local authorities have transferred some of the housing stock to housing associations and that housing benefit cases now may be more complex. Local authorities have received increased resources in line with inflation to meet a reduced case- load. This can be probed further with the local authorities. I agree that it will not be even across the country. I have the statistics for each local authority's subsidy

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arrangements should the noble Lord wish to pursue it, including that for Wandsworth. From my knowledge of local government, these seem reasonable.
It was mentioned that local authorities may be under pressure because we are changing the subsidy arrangements which provide an incentive for them to detect fraud. We are changing the arrangement from the weekly verification scheme to the new verification framework. The changes will increase the emphasis on awareness, prevention and prosecution as well as detection and increase the incentive to prevent and detect fraud. The change is from April 2001. Precisely because local authorities said that they were under pressure to make these changes in the time-scale envisaged, we have agreed that they can continue to use their current scheme until April 2002 if they wish. We have a one-year transitional period that they can choose. Many local authorities are seeking to start the new scheme straightaway because they agree with us that in the long term it will be more advantageous for them to do so. Those local authorities not fully geared up have another year.
I believe that we have met the concerns of the local authorities. I realise that these concerns were raised by the noble Lord in Committee. I thought that I had replied by letter and sought to address them. Understandably, local authorities have come to him and said that they are not satisfied.
On the point about local authorities' responsibilities for those who might become homeless, I do not understand that argument from my experience. They are welcome to come back to us on the subsidy arrangement. It may be that we have to agree to disagree. I can understand local authorities wishing to augment their revenues. From the information I have it seems that they have been treated reasonably and fairly, particularly in terms of the overlap of one year in moving on to the new verification framework. I hope that in the light of that the noble Lord, Lord Higgins, will feel able to withdraw his amendment.
Lord Higgins: My Lords, I shall look at Hansard with interest because normally I propose the amendment at the beginning. I have found from experience that if I do not propose then, I forget to do so at the end. We will see what transpired. The amendment is still before us.
As far as concerns a difference of opinion on whether the finance provided by central government is adequate for local authorities, that may be a matter that is not wholly reconcilable. As regards the point about a possible misunderstanding, certainly we will have to go into matters further at Third Reading. That may be illuminating for the Minister or the local authorities but not both. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 25 and 26 not moved.]
Clause 5 [Exchange of information by authorities administering benefit]:
Lord Higgins Lord Higgins moved Amendment No. 27:
Page 10, line II. at end insert—
("(2) Any directions given by the Secretary of State under this section shall include such directions which place a duty on authorities to which this section applies to adopt a code of practice as the Secretary of State shall from time to time provide.").
The noble Lord said: My Lords, effectively this amendment argues that local authorities should have a standardised code of practice between them. In the light of what the noble Baroness, Lady Hollis, has said about this, it may be that we will have to wait until the matter arrives in another place at least as far as concerns the local authority aspects of the code of practice.
My understanding is that some local authorities farm out responsibility for some of these matters to organisations—one called Capita has been brought to my attention. It may be that they appear under the earlier debate on agents and servants, but I ask whether they will be required to provide information or whether information will only be required in the context of the local authorities themselves. I beg to move.
Baroness Hollis of Heigham: My Lords, I am pleased that the noble Lord, Lord Higgins, agrees given the earlier discussion on the code of practice and the fact that the terms or conditions under which local authorities handle their concerns on housing benefit will be shaped by the code. There will be ample opportunity to discuss that with those bodies.
Clause 5 deals with the manner and form in which information is obtained from authorities administering housing benefit. We use this information to make decisions about the administration and design of the housing benefit scheme. I was a little baffled as to how we could put this into the Bill or into the code or practice as laid out.
Did the noble Lord have any further concerns? It is the case that Capita is an agent. The noble Lord is right to assume that Capita would be required to supply information as shaped by our previous discussion. Those were the points that he raised, and I hope that I have addressed them.
Lord Higgins: My Lords, on that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 28 not moved.]
Lord Higgins Lord Higgins moved Amendment No. 28A:
After Clause 5, insert the following new clause—
HOUSING BENEFIT DOCUMENTATION
(". The Secretary of State, or the relevant Minister, shall revise and review the current documentation for an application to be made for housing benefit to ensure that the information provided will facilitate any inquiry to detect fraud, and following consultation with such relevant bodies as he thinks fit, issue a draft document which shall be used by each relevant administering authority.").
The noble Lord said: My Lords, I have pursued this matter with the noble Baroness, Lady Hollis, for some years. It relates to the documentation that local authorities use for housing benefit claims and operations in the housing benefit scheme. It seems to be extraordinarily diverse. Some documentation is a great deal better and more helpful in preventing fraud than other kinds. There does not seem to be any argument for different local authorities using significantly different forms. This amendment suggests that the Secretary of State, or relevant Minister, shall revise and review the current documentation and that a standard system should be employed which is specifically designed by the department to ensure that the commitments and statements made, perhaps with reference to national insurance numbers, may be as appropriate as possible for this purpose. I do not understand why there is diversity. No doubt, the noble Baroness, Lady Hollis, can tell us why or alternatively accept the amendment. I beg to move.
Baroness Hollis of Heigham: My Lords, the short answer as to why there is diversity is history. The amendment seeks to introduce a standard claim form for housing benefit to be used by all authorities. Currently, local authorities have some freedom to produce forms to suit their own circumstances within the framework of legal requirements. They are also expected to follow good practice guidelines issued by the department. This freedom has some advantages.
We accept that the forms used could be improved. We have already done something about it. It was clear that my right honourable friend, the Secretary of State for Social Security, was aware of the noble Lord's amendment even though I was not until this morning. The Secretary of State was very concerned about it and it has dominated his thoughts over the recent Recess. The Secretary of State is issuing a new model claim form today. It has been developed by the Benefits Fraud Inspectorate as part of its work to help local authorities improve administration. It gives local authorities a standard from which to work and a bench-mark of good practice both in terms of design and content. We believe that this model will help local authorities to produce better claim forms that will be more efficient for them and easier for tenants to complete.
So we share the spirit of the remarks of the noble Lord, Lord Higgins. But we do not go as far as his amendment, which seeks to impose this form on local authorities. Let me explain why.
First, the cost of doing so would he considerable. In order to comply, every local authority would need to reprogram their computer systems—they all have different computer systems—so that the information could be input in the order and in the format set out on the model. In many cases that would be an unnecessary diversion of resources and wasteful.
Secondly, there is of course the interrelationship with council tax benefit. In some authorities housing and council tax benefits are administered separately and in others they are administered together. That
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determines whether or not the claim form is designed to capture information for both benefits at the same time. We can therefore respect the need for some local flexibility to cater for that.
Thirdly, many local authorities add additional sections to the housing benefit claim forms to gather extra information for other benefits for poorer residents—for example, for school uniforms or council nursery places. A national claim form would mean that local authorities would have to issue supplementary forms either with the housing benefit form or after receiving the housing benefit form back. That again could lead to delays or waste of costs.
For those reasons we do not believe that a statutory standard claim form is the way forward at the moment. As I said, the Benefit Fraud Inspectorate developed a model claim form which is in the process of being issued to local authorities along with general guidance on good design of claim forms. That has been developed in full consultation with those authorities and we fully expect it to be used as the minimum standard. Of course the Benefit Fraud Inspectorate will continue to monitor the standard of claim forms in its visits.
Finally, we are making further and much needed changes to the claims process. As part of our modernisation programme we are developing a single claims process for income support, JSA allowance and incapacity benefit, which will also capture and transfer to local authorities information for assessing housing benefit claims. For people of working age it is intended that initial information for claims be gathered over the phone; any evidence subsequently provided will be verified for the purposes of all related claims, and that should prevent some of the duplication which is at the moment taking place and which is wasteful.
I hope as a result that those people who need to claim a variety of benefits will receive an integrated service because they will be using integrated claims forms in the procedures. For those people claiming just housing benefit, our model claim form will enable local authorities to improve and enhance the service they give. It may be, as local authorities re-tool their computer systems, so they will gradually take over the model claim form and it will become a common basis of usage across the wide range of local authorities.
I hope in the light of that response we indicate that we are addressing some of the concerns raised by the noble Lord—issuing a model claim form and encouraging local authorities, where appropriate, to take it up. However, we do not believe it is appropriate at this stage to deny them the flexibility that they have to use the forms for other purposes as well, such as council tax benefit and take-up campaigns of various sorts to identify various forms of need such as council nursery places.
We are therefore treading a line with the consent and support of local authorities, which I hope the noble Lord, Lord Higgins, will feel he is able to respect and which will enable him to withdraw his amendment.
Lord Higgins: My Lords, I am grateful for that illuminating reply. I do not propose to go into the business of managing local authorities' housing benefit—I suspect I am not well qualified to do that.
Nonetheless, it is important that we go as far as possible towards standardisation. As the noble Baroness said, it may be that a specific local authority wants to acquire other information and retain a degree of flexibility. I felt that that could have been met by having a standardised first part of the form and a less standardised part for a degree of flexibility. At any rate, the fact that a model form is being produced is a step forward. I find it extraordinary that the situation was allowed to develop in the first place.
Computerisation raises some issues with regard to the extent to which it will be possible to cross-reference to detect whether some of the other data we have been discussing on the earlier clauses can be checked against the local authority organisation if, as I understand the Minister correctly, there are a vast variety of different computer systems. However, I understand the Minister's reply reflects a realistic appraisal of the problems involved in this area and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.45 p.m.
Clause 6 [Loss of benefit for commission of benefit offences]:
Earl Russell Earl Russell moved Amendment No. 29:
Page 10, line 42, at end insert ("provided always that no such reduction shall exceed 10 per cent.").
The noble Earl said: My Lords, I hope the Minister will confirm that I have today, on the whole, tried to be helpful where I can. One cannot do it everywhere. Unfortunately what is for us the major issue of the Bill has arisen rather too late in the day to be given the treatment to which at other times it might have been appropriate. That is the question of Clause 6 and the benefit sanctions.
It is clear to everybody, no matter from which point of view they approach the issue, that where there is a prohibition there must be a penalty; where there must be a penalty, that penalty must be made as effective as can appropriately be possible. But the word "appropriately" cannot altogether be left out. One wants the penalty to be sufficient to deter. But there are penalties—one reads of such things in other places—which are not merely of a level to deter, but of a far greater level.
It is an assumption that legislators tend to make rather too easily that there is a level of penalty which is sufficient to deter which nevertheless stops short of real savagery. It is not in all cases axiomatic that that is necessarily so. One tries to make it the case where possible. But one should not take it for granted, a priori, that it will be.
The level of sanctions here, we are told, is not to be above 40 per cent and is to exclude housing benefit. But careful questioning by the Delegated Powers and Deregulation Committee brought out that in a limited
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number of cases, where there are overlapping sanctions, the level of sanction could reach as high as 80 per cent. That is a quite draconian level of significance.
The noble Lord, Lord Grabiner, commented on this matter in his report and in Committee—I have read everything that was said there; I apologise for being unable to be present. I found I was answered fairly thoroughly long before I was able to make an appearance and was therefore able to do a degree of preparation I might not otherwise have been able to do. The noble Lord, Lord Grabiner, said that these sanctions are well established in social security law. As I remember, he quoted the Jobseekers Act. He is correct. He may not know that all those he mentioned I opposed when they were introduced, and most of them the Minister equally opposed when they were introduced. The Minister remembers the Jobseekers Act well enough.
The fact that it has been done before, does not mean in my case at least that there is any continuing consent; in fact there is a continuing dissent. A large number of issues are involved which have never been argued out; have never been resolved; and no evidence has been brought to bear on them. The Minister, speaking in Committee, clearly found my view of the effect of sanctions altogether incredible. Indeed, to borrow her phrase, she said that, on the effect of sanctions on those who suffer them, we are living in different worlds.
The virtue I will claim here is that I am prepared to have a commission to research and ascertain which of us is living in the real world; or indeed if neither of us is—which is always a possibility—and in what proportions our worlds are mixed when we come to reality. That seems to me to be a perfectly proper academic curiosity. I have not yet seen in anything done, either by this Government or the last, an equal curiosity to arrive at the truth.
The Minister's difficulty here—indeed, the difficulty of the whole of the Department of Social Security—is that when we consider the existing levels of benefit, particularly of income support, they are suffering from delusions of adequacy. I have already quoted the assumption of most public bodies that any public money voted for a specific purpose is tautologically adequate to the purpose for which it is voted. That is not necessarily so. The levels of social security benefit were calculated by Beveridge in 1948 off research dating from pre-war sources. The chance that that level, uprated automatically in line with inflation between now and 1948, will meet what it genuinely costs to subsist in safe poverty is astronomically small. Prices go up but they do not go up in a uniform scale, so the effect on different points in the social security scale can be very different.
Many people in rural England now spend 10 per cent of their benefit simply travelling to the necessary place to collect it. That is largely a result of bus deregulation. That is only one example; I do not believe that it is unique. As a matter of urgency we need to arrive at a new picture of how much benefit is

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necessary to support good health. The view of the Acheson report that the level of income support is too low to be compatible with good health is not by itself conclusive but I believe that it is one to which we should pay a good deal of attention. We should put some effort into finding how true that is. If the whole level is insufficient to maintain good health and we start shaving off parts from something which already risks being below a minimum, we may create considerable difficulties.
That is my basic reasoning for thinking that the effects of benefit disentitlement on the scale we are considering here are likely to be a good deal more severe than the Minister thinks. The Minister shakes her head; I am sure I shall hear why. I shall listen with a great deal of interest. We need to take seriously the arguments for finding a level of minimum income. My party policy, on which we shall go into the next election, is that we believe we should commission research to find out what is now a minimum income necessary to maintain good health.
I recall when that proposition was put in an amendment to the Welfare Reform and Pensions Bill by the noble Lord, Lord Morris of Manchester. He made an extremely powerful and persuasive case. It ruffled a good many administrative feathers in government circles. To me, that suggests the word "bull's-eye". I think that the noble Lord was right, and the irritation he caused was evidence of his rightness.
When we have a benefit level which is clearly sufficient to maintain good health, we would be in a position to have sanctions which take it down to the level that will maintain good health and no lower. It is when we start to take benefits below that level that we get into trouble. That would either provoke ill health, which is not conducive to returning to work, or would create a temptation to illegal action, which may be serious.
Part of my complaint about the whole regime of benefit sanctions is that we have absolutely no idea on what scale either of those processes operates, if, indeed, at all. If the problem is as trivial as the Minister believes, the research would surely show that I am wrong. I am prepared to take that risk. Is the Minister prepared to take it equally?
The Minister argues that the sample arrived at under the Bill would be too small for serious research. That is a point which can be taken perfectly seriously. On the other hand, I am sure that she does not think I would object if she were to enlarge the research sample to take in people deprived of benefit under other benefit sanctions. At present I do not see any prima facie reason for supposing that benefit sanctions for one reason are likely to create more hardship than equally severe benefit sanctions for another reason.
If I were to see any reason to suspect that, I would be perfectly ready to investigate it. If a larger sample were to show one sanction causing more hardship than another, I would be prepared to look at it further, as I am sure the department would also. But enlarging the sample—I have not demanded that in Amendment
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No. 39, to which I think we might with convenience speak in this group—would not create severe problems. If that is the Minister's problem, I do not see why she should not do it.
If we are to have a sanctions regime—there has to be some way of punishing people on benefit and we have not yet found a satisfactory one—minimum income entitlement would necessarily be part and parcel of the same package. But if we do not have one, I do not see how we shall justify the other. I beg to move.
Lord Davies of Coity: My Lords, I have no difficulty in supporting about 90 per cent of the comments made by the noble Earl, Lord Russell. He has been addressing the question of the level of social security benefits and a minimum income level, which I could probably argue about a great deal. However, the Bill is about social security fraud. Whatever level the social security benefits are at, fraud would still be a problem which we would have to tackle.
It seems to me that we are all opposed to social security fraud and each and every one of us would want to see it reduced, if not totally eliminated. Perhaps the best way to do that is to prevent fraud taking place, but we know that that is not possible; nothing whatever is perfect. What happens here is that anyone who deliberately commits a social security fraud will be subjected to sanction. However, the Government recognise that there are vulnerable people in that respect. Therefore, measures are being taken. There is an opportunity to receive reduced benefit in such circumstances. The sanction will last for only 13 weeks.
This attack is on the people who commit the abuse deliberately. Although we might talk of measures being draconian, the people who commit the abuse and bring about fraud need sanctions which they have to observe. They must be ones which they can feel; ones which will be a deterrent and may prevent them from attempting the fraud in the first place. It does not seem to me that the amendments do anything like that. I think that the Government have it just about right, if we are to punish people who commit fraud deliberately. We know that fraud involving billions of pounds takes place every year.
Baroness Hollis of Heigham: My Lords, I very much agree with my noble friend Lord Davies of Coity. Last year around 10,000 people were prosecuted for benefit fraud. The vast majority of those who were caught did not go on to re-offend, but there is a small minority who do, despite being punished by the courts. It is those persistent benefit offenders who are being targeted by this sanction.
I think that the noble Earl was running two arguments. One is that if benefits were sufficiently generous, or certainly far more generous than they are currently, he would have less difficulty with sanctions because sanctions would then only reduce those benefits to a more acceptable level. That is an argument about the relativity of benefits to wages and the like. We can discuss that on other occasions. The other implication of his remarks was that these are

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people who have fallen into hardship, for whom it is not unreasonable to commit benefit fraud and therefore any sanction that follows alongside it should be as light as possible but noticeable.
7 p.m.
Earl Russell: My Lords, did the Minister hear me at any moment say anything that suggested it was not unreasonable that they should commit benefit fraud?
Baroness Hollis of Heigham: No, my Lords, but given their straitened circumstances it was suggested that the sanctions should be as light as humanly possible, because otherwise they might get into further hardship. All requirements to see the effect of the sanctions are posited on the belief that the sanctions will produce such states of hardship, and so on, as would be unacceptable in the eyes of the noble Earl. That is as I understand it.
Under the current system—though people may disbelieve this outside—this hard core of repeat offenders can continue to receive benefit as if nothing had happened and, if they were stealing from the till and were discovered, as if nevertheless they could continue to work as a cashier. Everyone would think this was inappropriate and wrong.
We estimate that about 5 per cent of those who are successfully prosecuted end up back in court for benefit fraud. These are not inadequate people; they are not people who have a disability, a learning difficulty or other problems. They are people who are deliberately, knowingly and fraudulently cheating the system, as established by the courts, not once but more than that. We are talking, for example, of people like the disc jockey who fraudulently claimed incapacity benefit for two separate periods at a cost of £9,000. There was also the man who was prosecuted once for working while claiming and then again for stealing and cashing a relative's child benefit book. Undeterred, he was prosecuted yet again for attempting to claim JSA to which he was not entitled.
These people are claiming benefit to which they are not entitled, primarily because they have other sources of income already, such as being in work. One claimant was successfully prosecuted in February 1994 for two offences related to girocheque fraud and sentenced to three months in prison. He was prosecuted a second time in September 1996, again for cashing girocheques belonging to other people, and again received a custodial sentence. He was prosecuted a third time in December 1998, this time for working while in receipt of incapacity benefit. The overpayment was about £130, and so he had to serve a period of community service.
This is what we are dealing with. We are not dealing with inadequate people in straitened circumstances; we are dealing with people who have more than once been found guilty by the courts of deliberately and knowingly—not innocently or erroneously—cheating the system. The noble Earl, Lord Russell, will accept that for as long as there has been a benefit system provision has been made to stop or reduce benefit
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where a claimant does not comply with the rules. As far back as the early 'sixties the standard amount by which supplementary benefit—the forerunner of income support—was sanctioned was 40 per cent of the personal allowance. There was the same provision for 40 per cent of the single person's allowance. and for 20 per cent where pregnancy or serious illness was involved.
I understand the concern of the noble Earl, Lord Russell, about basic minimum standards, below which there may be difficulties for the person concerned. Therefore, this sanction has a safety net for the vulnerable, which provides a minimal level of support for the offender and any dependant, where they have no other resources to fall back on. There could be a reduction of benefit, as I have described, which works out at £10 or nearly £21, according to whether a family is involved and to their degree of vulnerability. If the claimant or any one within an assessment unit is seriously ill or pregnant the reduction of £10, the lower rate, would apply.
In the case of JSA, hardship payments would be made from day one to any family falling into a vulnerable group, which includes those responsible for a child or a young person, where someone is disabled or where the claimant or partner is pregnant, is a carer, or suffers from a chronic medical condition. In other cases anyone on JSA would be able to claim hardship payments not from day one but from the 15th day. For those on income support the same rules relating to the seriously ill or pregnant would apply to the amount of deduction.
Obviously the sanction does not remove an underlying entitlement to JSA or income support, and housing benefit and council tax benefit remain in full payment. This mirrors the hardship payment and benefit reduction schemes that are already in place in other sanction regimes.
By restricting, as the amendment would do, the level of any benefit sanction to just 10 per cent of the single person's allowance—£5.25 rather than £10.50—I believe we would be saying that we view this offence of twice knowingly and deliberately committing fraud as certified by the courts to be less serious than those who are currently sanctioned with 20–40 per cent for failing to attend a job interview, or for giving up work voluntarily and who do not appear to be seeking work. In other words, at the moment we sanction 20 per cent or 40 per cent failures or offences done for the first time in some cases which, in most people's eyes, are far less serious than the persistent, knowing and continued fraud that are sanctioned here. That cannot be right.
For any sanction to be effective, we have to combine our concern for those who may be vulnerable with the need to protect the system from those who fail to meet their responsibilities. I do not believe that the amendment would do that. The sanction would last for 13 weeks, after which the benefit would be restored to the rates that would otherwise apply, and throughout this period no reduction would normally apply to housing benefit or council tax benefit.

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This would mean that for a family of four with two adults and two children they would have £128.50 a week to live on, and the housing costs would be met. For a fit single person aged 25 or more the amount would be £31.30 and the housing costs would be met. I do not think this implies destitution, homelessness and debt. At Committee stage the noble Lord, Lord Goodhart, spoke eloquently on behalf of the noble Earl, Lord Russell, and I said that we would monitor the effects of the sanction, including its use as a deterrent, together with the effect on an individual's life, including the adequacy and accessibility of hardship payments and together with the effect on specific claimant groups. I also said that we could not pursue the sort of detailed research that the noble Earl has again proposed tonight.
To do so, it would be necessary to see the effect of taking away £10 a week from the benefit level of £200 a week over 13 weeks. One would need to appraise the health of each member of the family before the sanction was imposed; and one would need to check diaries of their food, expenditure and leisure consumption. It would certainly be necessary to survey their housing and the effects of the weather and also intrude on their privacy to find out the resources of family and friends as regards possible subsidy and other sources of support. One would have to work out whether serious illness in one parent or in a child or perhaps in a third member of the family could be attributed to that deduction of £10 from a benefit of £200 over a period of 13 weeks. Other factors would have to be taken into account, such as the length of time the family had already spent on benefit, and also the amount of savings they had. I do not believe that this research, as outlined by the noble Earl, Lord Russell, is possible.
I come back to my basic argument. These are sanctions imposed only when somebody has knowingly, fraudulently and persistently defrauded the benefits system, and that has been established by the courts. They are in line with the sanctions imposed on offences against the benefits system since the early 1960s and with the rest of other benefit sanctions. We have in play hardship regimes that we think are in line with all the other hardship and benefit regimes that are in place, which have been shown by research on JSA and incapacity benefit to support people while making them realise that we expect the conditions of those benefits to be respected as part of the entitlement to them.
I know that the noble Earl will not accept my argument but I would say that at the end of the day, under these conditions, IS or JSA would normally be sanctioned either by 20 per cent or 40 per cent of the personal allowance and the benefit for the rest of the family would remain undisturbed. Child benefit will never be withdrawn. Housing benefit and council tax benefit will remain in payment, even when JSA or IS is sanctioned. Premiums payable for the family will not be reduced: only the personal allowance. Free prescriptions and free school meals will remain available, even when a benefit may be sanctioned.
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Where a claimant might deny payments to the rest of their family, arrangements can be made to pay the residual benefit to other members of the family. Access to the social fund will still remain and, in the event of a successful appeal, any payments that should have been made will be paid in full.
If people defraud knowingly the benefit system over a period of time, as established by the courts, they must know that there will be a sanction. We believe that the sanctions are proportionate and have proper legal safeguards. We believe that we have decent hardship arrangements in place, and that they have a proper read-across to the benefit sanctions that have existed since the 1960s and to sanctions applied to other forms of benefit.
Although I may not have persuaded the noble Earl, Lord Russell, I hope that I have persuaded the House that our proposal is proportionate, reasonable and appropriate given the offence of persistent, consistent and knowing benefit fraud.
Earl Russell: My Lords, I suppose that the amendment was bound to tempt the Minister into trying to argue that she is against sin and I am not. She has not resisted the temptation. To cut a long argument short, perhaps I may say that where the Bill proposes a six months' sentence of imprisonment, provided I were assured that it was not mandatory I would not oppose it. I believe that we are proposing a somewhat more severe penalty. I know that the Minister does not agree. The noble Baroness heard my arguments about delusion of adequacy as regards the level of income support. I shall repeat them if necessary, but I suspect that the House would rather I did not do so.
Baroness Hollis of Heigham: My Lords, did I hear the noble Earl correctly? Does he think that 13 weeks' loss of £10 on a benefit of £220, reducing the amount to £210, is harsher than a six months' prison sentence?
Earl Russell: My Lords, yes, and I am prepared to consider research to see whether I am wrong, is the Minister prepared to do the same?
Baroness Hollis of Heigham: My Lords, I wonder how many noble Lords in this House believe that a £10 sanction on a benefit of over £200 over 13 weeks is harsher than six months in prison. I do not believe that the proposition deserves substantial research.
Earl Russell: My Lords, the Minister shows a remarkable lack of curiosity. One of us is wrong. I would rather like to know which of us it is. I am prepared to take the risk of finding out.
The next trap that the Minister fell into was that she listed, very properly, cases of social security fraud which are clearly grossly credible. They were almost all people who were already working—for example, a disc jockey. Those people in law, properly, have no benefit entitlement anyway. So a social security benefit sanction takes away from them what they should never have had in the first place. As Gibbon would put it, it

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robs them of a superfluous treasure. It is a most inappropriate sanction because it bites on something that those individuals should not have anyway.
If we are dealing with real criminals, people to whom benefit should never have been awarded—even if we are thinking in the pure, narrow terms of deterrence—benefit sanctions are not the appropriate penalty. Some more ordinary criminal penalty would in those cases be a good deal more appropriate.
The Minister trotted through a great deal of material about hardship payments to vulnerable people. If one is on a means-tested benefit and that benefit is rightly awarded—we must assume that that benefit is not allowed by the Treasury to be significantly above what is needed to live on—how can one then be deprived of any substantial part of it without being in hardship? I have asked this House before why single people can never be presumed under benefit rules to be in hardship. I have never had an answer. I shall continue to ask the question because one day I should like to hear an answer. It sounds like a somewhat perverse form of family values.
Any punishment must create hardship. I would like that hardship to be such that it does not leave the person beyond the point of recovery—it does not drive him into either illegal courses which may leave him with a long-term drug dependency or in the grip of a drug dealer, or in a state of ill health such that he cannot return to work. That is a degree of moderation which one may legitimately expect of the criminal law in any circumstances. Beyond that point, it becomes self defeating.
I turn to the Minister's difficulties about research. We all know that when the Whitehall machine sets out to prove that some matter is difficult it can do so very well indeed. If we have a sufficient control group with which to compare these people, I do not envisage that every single detail about the area and the weather for which the Minister asks will be necessary. The Minister seeks to make matters more difficult than they need be. It is an art in which any good Minister—as the noble Baroness is—is skilled. I do not take the argument that seriously. But meanwhile the clock is ticking away. We have had the argument previously; we shall have it again. We shall hear the argument during the election. So, ready for the next round, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 30 to 32 not moved.]
The Deputy Speaker (Viscount Allenby of Megiddo): My Lords, before calling Amendment No. 33 I should tell the House that if the amendment were agreed to I should be unable to call Amendment No. 34.
[Amendment No. 33 not moved.]
7.15 P.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 34:
Page 12, line 24, after ("discharge") insert ("or a court in Scotland makes a probation order").
The noble Baroness said: My Lords, Amendment No. 33 had originally been grouped with Amendment No. 34.
In Committee I undertook to consider further the point raised by the noble Lord, Lord Astor, regarding the treatment under these provisions of an absolute discharge or probation order in Scotland. As the noble Lord will recall, the legal system in Scotland and in England and Wales differs somewhat on the labelling of offences. But I am sure the House will agree that social security legislation has to be consistent across both countries.
As I said in Committee, the key point at issue here is whether or not a court has found a person guilty of fraud against the benefit system. The purpose of this amendment is to put that principle beyond doubt. The effect of the amendment is to specify that any case where a court in Scotland makes a probation order is treated as a conviction as regards these provisions.
The noble Lord, Lord Astor, was correct in saying that where a court in Scotland grants an absolute discharge or makes a probation order it is not treated as a conviction because this is what the Criminal Procedure (Scotland) Act 1995 provides. However, the position in England and Wales differs in that while the granting of an absolute discharge is similarly deemed not to be a conviction, any case where a court makes a probation order is a conviction.
The social security system applies to Great Britain as a whole. I am sure that your Lordships would agree that claimants should be able to expect the same treatment whether they live in Scotland or in the rest of Great Britain. It would be unfair to sanction a person in England or Wales on the basis that he had committed two benefit frauds, one of which had attracted a probation order, but not to sanction a person who had committed identical frauds in Scotland and received identical sentences.
I hope that the amendment, which ensures that the sanctions are applied even handedly across the whole of Great Britain, will be accepted by the House. I beg to move.
Lord Astor of Hever: My Lords, I am grateful to the Minister for explaining in detail the amendment. Of course, we welcome it.
On Question, amendment agreed to.
[Amendments Nos. 34A to 35 not moved.]
Clause 7 [Effect of offence on joint-claim jobseeker's allowance]:
[Amendment No. 36 not moved.]
Clause 8 [Effect of offence on benefits for members of offender's family]:
[Amendment No. 37 not moved.]
[Amendments Nos. 38 and 39 not moved.]
Clause 12 [Interpretation of sections 6 to 11]:
[Amendment No. 40 not moved.]
Clause 13 [Delegation of functions]:
[Amendment No. 41 not moved.]
Clause 14 [Colluding employers]:
Lord Higgins Lord Higgins moved Amendment No. 42:
Page 18, line 29, at end insert ("and, in addition, an amount which is 32 times the weekly cost of the benefit which was defrauded by each employee").
The noble Lord said: My Lords, in Committee we debated the question of what penalties should be imposed on colluding employers whose actions resulted in social security fraud. Generally speaking, the feeling on this side of the House is that the proposals with regard to measures to combat organised fraud are significantly less and less effective than proposals to combat individual fraud.
In Committee we suggested that the penalty on employers who were colluding in fraud with their employees should reflect the fact that substantial amounts of money might have been lost to the Exchequer, in particular in relation to employees drawing benefits to which they were not entitled. Somewhat to my astonishment, the Minister expressed horror that any colluding employer should suddenly become liable for the consequences of his action. She suggested that that might put the employer out of business and was unduly severe. Therefore, taking, as always, the views of the Minister into account, I have tabled a more moderate amendment.
Amendment No. 42 suggests that the penalty that a colluding employer should incur, in addition to that set out in the Bill, should be 32 times the weekly cost of the benefit defrauded by each employee. Your Lordships may be puzzled why the figure is 32 times the weekly cost of the benefit defrauded. It is based on the proposal which applies to local government when it adopts an incentive scheme to stop fraud. That seems a not unreasonable proposal. It may be the case that a particular employer employs perhaps 20 or 30 individuals, all of whom are drawing benefits fraudulently. If that is so, the penalty of 32 times the amount of money lost to the Exchequer as a result of the fraud is not an unreasonable penalty to impose.
So I have taken into account the views, and, indeed, the reaction, which the Minister put forward, but it seems to us that a significant penalty should be imposed on employers. The overall effect of the collusion between employers and employees may be significant but both groups of people have an option. They do not have to commit the fraud. Furthermore, the employer does not have to go along with a situation where his employees can defraud the taxpayer. I beg to move.
Lord Grabiner: My Lords, perhaps I may make one or two observations about the proposed amendment. The particular attraction about the provision as drafted is its simplicity. It is clearly drafted. It contains nice round figures that would constitute the penalty to be extracted from the offending employer. I suspect that one of the reasons for the simplicity is to encourage employers who are charged or accused of collusion to come to a deal—for want of a better word—pursuant to these provisions. These provisions are designed to achieve a voluntary deal on a civil basis without the need to invoke the criminal process.
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The first criticism I make of the proposal is that it simply introduces mathematical complication, albeit that the mathematical complication can be explained as it was by the noble Lord, Lord Higgins.
The second point is that the noble Lord need not be concerned that the underlying irritation that drives his amendment cannot already be dealt with under the existing common law. In the kind of fraud we are now discussing, if an employer knowingly participates in a benefit fraud which produces the result that money is stolen or has disappeared in an illegal way and it can be demonstrated that he has the appropriate guilty knowledge, he can be made personally liable as a constructive trustee in the civil courts. There the full extent of the loss sustained by the Exchequer can be recovered. Therefore, the imposition of the penalty, which as I understand it is the real driving force that sits behind the amendment, is not necessary because in a suitable case the DSS could bring proceedings against a colluding employer and recover that money in the civil courts. The proposed amendment therefore is not necessary.
The third point is that the amendment unnecessarily introduces into the existing provision the additional concept of the benefit which was defrauded by each employee. At the moment, the provisions in Clause 14 do not require proof of fraud against an employee. It requires a colluding employer who has done one or other of the things identified in the provision. The introduction of the amendment would mean that proof of a fraud by each employee would be necessary in order to recover the 32 times figure. That is not currently required in order to operate Clause 14. The amendment adds an unnecessary complication. That goes back to my first point about simplicity. It would make it unmanageable and complex. I believe that the existing common law position protects the position adequately.
Earl Russell: My Lords, would I be right in thinking that calculating the amount of benefit defrauded when some of the attendant circumstances cease to be the case might be a good deal of work?
Baroness Hollis of Heigham: I believe so, my Lords. The purpose of Clause 14 is to streamline the lengthy and expensive process of prosecuting collusive employers. It introduces a single fixed penalty for the small-time offender, thereby enabling the department to focus limited prosecution resources on the more serious cases.
As my noble friend Lord Grabiner explained, the effect of the amendment would be to increase the amount of the penalty in circumstances where the employer's act of collusion results in an overpayment of benefit. In addition to the fixed penalty of between £1,000 and £5,000 already provided in the clause, the penalty would also include an amount equivalent to 32 times the weekly cost of the benefit which was defrauded by each employee. As the noble Earl, Lord Russell, said, the amendment would not only be extremely complicated but would hike up the amount of the penalty considerably, depending on the type of benefits stolen.

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The clause already reflects the maximum penalty that a court might impose were the employer prosecuted and convicted. As I said in Committee, the majority of small time offenders at which the penalty is aimed are currently prosecuted for giving false information. In those circumstances, the maximum fine a court could impose would be at level 3 or level 5, which carry maximum penalties of £1,000 and £5,000 respectively.
An additional amount suggested by these amendments, which relates to the amount of putative benefit lost, would be likely to take the total amount of the penalty above that which a court could apply. This would essentially remove any incentive for an employer to agree to the penalty, undermining the purpose of the clause, which is to punish small time offenders without going through the process of a lengthy and expensive prosecution. It would also mean that the penalty agreed under such a process by administrative arrangement could and would be higher than the maximum amount that the court would be entitled to impose. Again, I do not think that that necessarily would be appropriate.
I understand the concerns expressed by the noble Lord, Lord Higgins, that any penalty should include a means of recovering the amount of funds that have been defrauded. However, we already do this. Where there is an overpayment of benefit that is attributable to the claimant, we recover the loss directly from that individual, which is in line with the Scampion report. We do not seek to change that.
However, linking it to the size of the overpayment would be unreasonable in that the weekly amount of benefit defrauded is not determined by the employer's action—although I accept that he may have contributed to it—but by the personal circumstances of the employees involved. Although the employer may have assisted in the fraud, he cannot be held responsible for an employee's age—certain benefits are age related—or his domestic situation—he may be claiming on behalf of a partner and children—which could result in certain benefits being claimed. For example, based on the benefit rates from April 2001, it could mean that an employer alleged to have colluded in fraud with a 25 year-old employee who is single and claiming JSA would be offered a penalty of £1,000 and an additional amount of £1,697. The total amount of the penalty would be a little under £3,000. However, if the same individual had a partner and two children, the total amount of the penalty would amount to £4,800. The amount of penalty would fluctuate not according to what the employer had done, but according to the circumstances of the employee, over whom the employer has no control.
The employer's offence is to tell a lie at a specific point in time in relation to his employees. We will get at that, so to speak, by offering a penalty in lieu of a court case. It is very difficult to tie the individual employee's overpayment to the employer because the employer is unlikely to know what benefit they receive. The employer may lie to fraud investigators in respect of one employee's hours of work or amount of wages, which would constitute an offence, but that does not
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mean that the employer is responsible for the size of the employee's family, for the length of time that the employee has been making claims, or even the rate at which benefits were paid.
While I agree that the employer is culpable because he colluded in the fraud in the first instance, the amount of benefit defrauded is not a direct responsibility of his action, although it is consequential on it. The benefits stolen and particularly the total amount defrauded are linked to the claimant's age, his domestic circumstances, for how long he claims and what benefits he claims.
I hope that, on reflection, the noble Lord will agree that this is unfair. The same offence committed by an employer would result in very different penalties being imposed, according to the circumstances of the employee. It could also lead the employer to being vulnerable or liable to administrative penalties higher than those which the courts could impose. Again, that would be unfair. Finally, it would be perfectly reasonable for the employer to choose not to opt for the process of negotiating an administrative penalty—out of a preference not to have a criminal conviction on his record—but would instead revert to the old court system, which would introduce the familiar delays and difficulties of establishing guilt. We would not achieve our aim; namely, to take smaller offences out of court proceedings. In the light of this explanation, I hope that the noble Lord will feel able to withdraw his amendment.
7.30 p.m.
Lord Higgins: My Lords, the amendment seems to have provoked a lively set of arguments, which I should like to take fully into account, in particular the points made by the noble Lord, Lord Grabiner. It is true to say that if such cases go through the normal legal process, they are likely to incur far heavier penalties. We are concerned here with the alternative form of penalty. I take also the point that it might be complicated and difficult to show exactly how much money the Exchequer has lost as a result of various employees seeking to exploit the collusion of the employer.
Having said that, I am not sure, from a purely logical point of view, that I agree entirely with what has been said by the noble Baroness. While it is true to say that the loss to the Exchequer will depend on how many employees engage in the fraud and which benefits they seek to claim, it is nevertheless the case that, if the employer had not colluded, the fraud would not have taken place and the amount, however much it may be, would not have been lost to the Exchequer. I have a little difficulty in agreeing with the argument that the amount lost is somehow independent of the fact that collusion had taken place. If there had been no collusion, then no loss would have been incurred.
However, I should like to consider the matter further. I remain unhappy at the balance struck between the main criminal penalty and the alternative penalty. I should like to think on that between now and Third Reading.
Amendment, by leave, withdrawn.
[Amendments Nos. 43 and 44 not moved.]
Clause 15 [Offence of failing to notify a change of circumstances]:
Baroness Hollis of Heigham Baroness Hollis of Heigham: moved Amendment No. 45:
Page 20, line 3, leave out from ("(4)") to end of line 4 and insert ("for "subsection (1)" there shall be substituted "subsections (1) to (1BC)" ").
The noble Baroness said: My Lords, I beg to move Amendment No. 45 and to speak also to the amendments grouped with it. The amendments deal with two separate issues. The first amendment has been introduced after discussions with Scottish lawyers. I hope that I shall receive a beaming smile from the noble Lord, Lord Astor of Hever, on the grounds that we are doing our best to be helpful. The intention is simply to ensure that the offences are comparable both north and south of the Border, allowing for the differences between our respective legislatures.
The second issue is to ensure that the responsibilities in Clause 15 to report changes of circumstances extend to those who receive benefit on behalf of benefit claimants as well as to claimants themselves and to third parties. In doing this, we have taken the opportunity to make clear the particular responsibilities placed on landlords who receive rent direct in the form of housing benefit to which their tenant is entitled. Their responsibilities are related to changes pertaining to the claimant's occupation of the dwelling for which the housing benefit is paid.
Clause 15 provides for two separate offences. One is the summary offence of failing to notify a change of circumstances which the individual knows will affect his benefit. The other is more serious and attracts a greater penalty commensurate with the offence. I could set out the detail of these differences but, given the hour, perhaps noble Lords will accept that originally, Scottish lawyers thought that we might be able to rely on the existing drafting. On further reflection, it was considered better to use the term "knowingly". The terms "dishonestly" and "knowingly" are used in the present versions of these offences in order to respond to the concerns expressed by the Scottish Law Society and to reflect the different approaches of the two criminal law systems.
This amendment seeks to "tidy up" the legislation in response to consultation and correspondence.
Perhaps I may turn now to the subsequent amendments. The purpose of these amendments is to ensure that those who receive benefit on behalf of claimants are held responsible for reporting changes, as are claimants themselves. We are dealing with two main groups here: appointees and landlords. Because of their different positions in relation to the claimant, the Government consider that different conditions should apply and this is reflected in the amendments.
I shall deal first with appointees. These are individuals and organisations who, because of the mental inability of the claimant to act for themselves, are appointed by the Secretary of State to act in the claimant's place. They make the claim, receive the
1152
payments and take responsibility for notifying changes of circumstances. Because they are standing in place of claimants, if they act fraudulently, we think that they should be treated in a similar way. For example, if an elderly, incapable lady is admitted into a nursing home and a relative acts for them and then acts fraudulently, we believe that they should be caught by the legislation in the same way.
The second group is landlords who receive their rent in the form of housing benefit paid direct to them, instead of the claimant, by a local authority. If the claimant leaves the address, the claimant himself has a responsibility to notify the local authority and so, too, does the landlord. However, if there is no incentive to do so, then the dishonest landlord could continue to pocket the housing benefit. The existing legislation is vaguely worded and has caused disquiet, in particular among landlords in social housing—for example some housing associations—who are not sure where their liability for "policing" their tenants begins and ends. The amendment aims to make their responsibilities absolutely clear. The changes that the landlord is responsible for reporting are those connected with the tenancy: the tenant's occupancy of the property for which housing benefit is being paid, and his liability to pay rent. I am sure that this will reassure honest social landlords as to what their responsibilities are. I hope that it will also send a clear message to landlords who receive rent direct that, if they continue to enjoy it when they should not, they too are liable for prosecution.
Finally, let me point out once more for the record that the offence in Clause 15 relating to "causing or allowing" a claimant to fail to notify a change of circumstances does not include third parties who merely learn of a change. To become guilty of an offence, a third party would have to be active in some way in the failure. This comes back to the CAB point that some knowledge of that failure is not in itself an offence.
I hope noble Lords will agree that, despite the apparent complexity of these amendments, they are in essence a simple replication of the offences so that they apply to third parties under an existing obligation to notify relevant changes in the claimant's circumstances. I hope that the law will now be clarified. I commend the amendments to the House.
Lord Astor of Hever: My Lords, I am grateful to the Minister for explaining the amendments. I have no doubt that the Scottish Law Society will be very happy with the first groupings.
I should also like to thank the noble Baroness for her letter following on from our amendment to Clause 15 at Committee stage. We welcome these amendments, which remove our concerns by placing the responsibility that landlords have in relation to their tenants on the face of the Bill. This includes details of the requirement to report changes in circumstances.
We believe that it is right that landlords and agencies should not be required to be the watchdogs of their tenants. They should have only a duty to report any

1153
change of circumstances that relate to the tenancy. The amendments will be welcomed both by landlords and by agencies which work in a confidential way with tenants and those receiving benefit.
On Question, amendment agreed to.
[Amendment No. 46 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 47 and 48:
Page 20, line 28, at end insert—
"(1BA) This subsection applies where—

(a) there has been a change of circumstances affecting any entitlement of a person ('the claimant') to any benefit or other payment or advantage under any provision of the relevant social security legislation;

(b) the benefit, payment or advantage is one in respect of which there is another person ('the recipient') who for the time being has a right to receive payments to which the claimant has, or (but for the arrangements under which they are payable to the recipient) would have, an entitlement; and

(c) the change is not a change that is excluded by regulations from the changes that are required to be notified.

(1BB) In a case where subsection (1BA) above applies, the recipient is guilty of an offence if—

(a) he knows that the change affects an entitlement of the claimant to a benefit or other payment or advantage under a provision of the relevant social security legislation;

(b) the entitlement is one in respect of which he has a right to receive payments to which the claimant has, or (but for the arrangements under which they are payable to the recipient) would have, an entitlement; and

(c) he dishonestly fails to give a prompt notification of that change in the prescribed manner to the prescribed person.

(1BC) In a case where that subsection applies, a person other than the recipient is guilty of an offence if—

(a) he knows that the change affects an entitlement of the claimant to a benefit or other payment or advantage under a provision of the relevant social security legislation;

(b) the entitlement is one in respect of which the recipient has a right to receive payments to which the claimant has, or (but for the arrangements under which they are payable to the recipient) would have, an entitlement; and

(c) he dishonestly causes or allows the recipient to fail to give a prompt notification of that change in the prescribed manner to the prescribed person.

(1BD) In any case where subsection (1BA) above applies but the right of the recipient is confined to a right, by reason of his being a person to whom the claimant is required to make payments in respect of a dwelling, to receive payments of housing benefit—

(a) a person shall not be guilty of an offence under subsection (1BB) or (1BC) above unless the change is one relating to one or both of the following—

(i) the claimant's occupation of that dwelling;

(ii) the claimant's liability to make payments in respect of that dwelling; but

(b) subsections (1BB)(a) and (1BC)(a) above shall each have effect as if after 'knows' there were inserted 'or could reasonably be expected to know'.").

Page 20, line 29, leave out ("and (1B)") and insert ("to (1BC)").
On Question, amendments agreed to.
[Amendment No. 49 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 50 and 51:
Page 21, line 9, at end insert—
("(1BA) In a case where subsection (1BA) of section 111A above applies, the recipient is guilty of an offence if—

(a) he knows that the change affects an entitlement of the claimant to a benefit or other payment or advantage under a provision of the relevant social security legislation;

(b) the entitlement is one in respect of which he has a right to receive payments to which the claimant has, or (but for the arrangements under which they are payable to the recipient) would have, an entitlement; and

(c) he fails to give a prompt notification of that change in the prescribed manner to the prescribed person.

(1BB) In a case where that subsection applies, a person other than the recipient is guilty of an offence if—

(a) he knows that the change affects an entitlement of the claimant to a benefit or other payment or advantage under a provision of the relevant social security legislation;

(b) the entitlement is one in respect of which the recipient has a right to receive payments to which the claimant has, or (but for the arrangements under which they are payable to the recipient) would have, an entitlement; and

(c) causes or allows the recipient to fail to give a prompt notification of that change in the prescribed Intoner to the prescribed person.

(1BC) Subsection (1BD) of section 111A above applies in relation to subsections (1BA) and (1BB) above as it applies in relation to subsections (1BB) and (1BC) of that section.").
Page 21, line 10, leave out ("and (1B)") and insert ("to (1BB)").
On Question, amendments agreed to.
Lord Higgins Lord Higgins moved Amendment No. 52:
After Clause 16, insert the following new clause—
("Quarterly reports
QUARTERLY REPORT BY AUTHORITY
."(1) Each authority administering housing benefit or council tax benefit shall prepare a quarterly report in respect of—

(a) the number of investigations aborted during the period of the report;

(b) the number of investigations under way during the period of the report; and

(c) the number of penalties, prosecutions and their outcomes during the period of the report, as a result of the powers conferred on it by this Act.

(2) Each authority shall make the reports referred to in subsection (1) available to the public at large in a mariner it thinks fit.").
The noble Lord said: My Lords, this amendment, unlike the following one, which is concerned with other benefits, relates particularly to housing benefit and council tax benefit.
I note that detected fraud in local government exceeded £100 million for the first time in 1998–99, and that detected fraud increased by 22 per cent in the same period. Of course, one never knows whether the increase in detected fraud reflects the fact that there is more fraud or the fact that more is detected.
The purpose of the amendment is simple. Concern has been expressed throughout our debates on the Bill regarding the extent to which the proposals will be operated in a reasonable manner. Concerns remain that there is no external check on that. The amendment seeks to make available an indication of the extent to which the operation of the proposals has turned out to be reasonable.
The crucial item out of the three listed in the amendment is the number of investigations aborted. Clearly, if an enormous percentage of investigations undertaken turn out to be abortive, there is some implication that the reasonableness of the inquiries being started in the first place is in doubt. It would be helpful for us to see how, when the Bill becomes an Act, as I hope and believe it will, it operates in practice. I beg to move.
7.45 p.m.
Baroness Hollis of Heigham: My Lords, the amendment seeks to place a statutory duty on each local authority to publish a quarterly report on the numbers of investigations it carries out on the basis of the powers in the Bill, and the proportion of those which are aborted and those which result in some form of punishment.
I take the noble Lord's point that this information would provide a form of public accountability on how well local authorities were making use of the powers, and whether they were using them properly. However, I hope to persuade the noble Lord that the amendment is unnecessary.
I should first point out that he is in error in his assumption that these data would provide a meaningful picture. Local authorities do not "abort" investigations. In line with the Criminal Procedure and Investigations Act 1996, they carry them through to conclusion, even where the indications are that the investigation is leading to a negative outcome. In that process we would expect there to be a proportion of cases where investigation established that there was no fraud. We would also expect a proportion of cases—though hopefully diminishing with the use of powers in the Bill—where there was insufficient evidence to prove fraud. That is the nature of investigation. Obviously, if we limited ourselves to investigating only those cases where fraud was pretty much a foregone conclusion, we should not make much of a dent in the levels of fraud that we know exist.
We share the understanding that it is very hard to know what counts as success. If a local authority identifies a large amount of fraud, is it because it has let in a large amount earlier in the system which it subsequently detects? If an authority detects a low level of fraud, is it because it has "built out" fraud at early stages? There is no way of knowing from the noble Lord's amendment. Therefore, there is no means of identifying whether a local authority is performing to "best value" standards by nature of the amendment, because we do not know what would count as success or failure. I suggest that that is why, at its core, the
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amendment is not appropriate. We simply cannot use the number of prosecutions or penalties compared with the number of investigations to indicate either success or failure in terms of the Bill.
It is also the case that investigators may use any of the full range of powers at their disposal in any one case. While it would obviously be possible to distinguish cases where the new powers were used from those where they were not, it would be hard to draw meaningful conclusions about the effectiveness of the particular powers in which the noble Lord is interested and the powers that already exist—many of them introduced by the previous administration—and which were being used in addition.
A further point of substance is that we already collect a great deal of information about local authorities' anti-fraud performance for management purposes, which might be a more proper use of such statistics. More generally, I believe that adherence to the code of practice and the commitment on the face of the Bill agreed by your Lordships this evening will ensure that we use the powers properly.
We cannot know whether detecting more fraud or detecting less fraud is a priori evidence that the Bill is satisfactory or not as regards local authorities—because that must be balanced against the amount of fraud that we have built out of the system by other parts of our relationship to local authorities in the handling of housing benefit. It therefore seems to me that what we should rightly be focusing on is whether local authorities observe the code of practice. As we discussed earlier, the paragraphs affecting local authorities will come as a result of consultation with them over the next few weeks. We should also focus on a review of that in the light of complaints that we may receive about the effectiveness of local authorities' performance and the appropriateness of the behaviour of their officials.
We have already given your Lordships a commitment that we shall be reviewing the code within three years to ensure that both we and our information providers are happy with the operation of the powers in practice. We plan to do this by means of a report for consultation, which will cover our performance and that of local authorities against the requirements of the code. Plainly this will include information on how we and local authorities have used the powers and how productive they have been compared with expectations. The report will be widely valued and publicly available.
Local authorities are subject to a best value performance indicator on security and accuracy. Reports of performance under best value are already made available to the public. We intend to review that performance indicator to make it more robust. We expect to link it to the new anti-fraud incentive scheme for local authorities that will be phased in from April 2001.
For all those arguments, we cannot meet the noble Lord's request; namely, to determine whether more or fewer prosecutions, more or fewer abortive prosecutions, are an indicator of success or failure.

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However, we can get to the substantive point and reward local authorities for detecting fraud and for building fraud out of their system, as well as reviewing the conduct of their officials in how they handle fraud in the light of complaints or any concern and embody that in the code of practice and its reviews over the next three years. In the light of my explanation, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Higgins: My Lords, I entirely take the point that if there is an increase in the detection of fraud one is not sure whether that means there is more fraud or more detection. Indeed, I made that point in my opening remarks. I was well aware of the problem when I was Minister with responsibility for Customs & Excise as regards the detection of drugs: one never knew whether it was more drugs coming in or more detection of drugs taking place. The only observation to be made in that context is what is happening to the street price. Unfortunately, there is no corresponding indicator in that respect that one could use as far as concerns the matters now under discussion.
I am seeking to establish to what extent certain enquiries were started which, in the event, ought not to have been instigated. It is possible that the noble Baroness is right in her contention that this is not the ideal way to set about the task. However, the very broad-brush approach that the Minister suggests in terms of a code of conduct, and so on, is perhaps not sufficiently precise an indication of the extent to which those operating the system are, or are not, acting reasonably in initiating particular enquiries. I should like further to consider the matter between now and Third Reading. Clearly it would not be appropriate at this stage to move Amendment No. 53, which adopts the same arguments. Indeed, it would merely delay our proceedings. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 53 not moved.]
Clause 19 [Commencement]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 54:
Page 21, line 25, leave out from ("as") to end of line 26 and insert ("the Secretary of State may by order made by statutory instrument appoint.
(2) Subject to subsection (3), different days may be appointed under this section for different purposes.
(3) The power under this section to appoint a day for the coming into force of the provisions of sections 1 and 2 shall not authorise the appointment for those purposes of any day before the issue of the code of practice that must be issued under section (Code of practice about use of information powers).").
On Question, amendment agreed to.

Business
Baroness Amos: My Lords, as consideration of the Report stage of the Social Security Fraud Bill is now complete, this evening's Unstarred Question is no longer restricted to one hour. A time limit of one-and-a-half hours will now apply. As a result, each speaker
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on the list now has 12 minutes within which to make his or her contribution. However, if noble Lords prefer to avoid the inconvenience of extending their speeches at such short notice, I can assure them that they will attract no criticism from these Benches.

General Aviation
7.54 p.m.
Lord Rotherwick Lord Rotherwick rose to ask Her Majesty's Government what are their policies on promoting general aviation, including revised planning guidance.
The noble Lord said: My Lords, I am delighted to be able to speak on general aviation tonight. It is very timely in the light of the two government consultation papers, Noise from Civil Aircraft and The Future of Aviation. I should like to thank the noble Lord, Lord Macdonald of Tradeston, and all the other noble Lords who are taking part tonight. I must also declare that I am a fixed-wing pilot, President of the General Aviation Awareness Council and Vice-President of the Popular Flying Association. Finally, I am presently involved with an industry and parliamentary fellowship with BAE Systems.
In broad terms, aviation can be split between commercial and non-commercial flying. General aviation (GA) is generally thought to encompass civil aviation other than the commercial air transport sector. The question is whether general aviation is important. Sir Malcolm Field, Chairman of the Civil Aviation Authority, said in September of last year that,
"of all the areas of aviation, it is General Aviation which is the most active and varied, with by far the majority of civil aircraft in the UK falling into that category … GA is the springboard for many of the world's commercial pilots and a vital industry in its own right. It is imperative that General Aviation is both successful and safe".
The UK commercial airlines operate about 850 aircraft from 23 UK airports. The UK general aviation fleet comprises more than 10,000 aircraft that operate from around 490 airports, aerodromes and private airstrips. Whereas more than 70 per cent of all GA activity has some business or safety purpose, 85 per cent of all seats sold by airlines are for purposes of holiday travel or personal pleasure.
It should be recognised that a lot of effort goes into ensuring that the needs of the airlines and, therefore, the needs of the travelling public are met. As a result, general aviation has paid a heavy price. GA survival depends on access to airports and airspace; unreasonable restrictions on either can be seriously detrimental to the economic and social welfare of the community, both nationally and locally. Yves Lambert, Director General of Eurocontrol, also said in September of last year that,
"we all know that General Aviation plays a large role in flying circles. The rather loose term covers many important activities. In Europe alone, I believe there are 300,000 pilots flying over 50,000 GA aircraft with an economic impact of some 5.5 billin Euros … GA must be taken seriously. Its needs should be met as far as possible; and its hard-won liberties must not be curtailed".
Private aviation plays an important part in the development and the economy of the UK. If we wish to retain and support it, we must be careful not to confuse different principles like the "user pays" with the "beneficiary pays", as different charging regimes will ultimately impact on the overall flexibility of GA. We are deeply concerned that the escalating costs of operating light aircraft in the UK are pushing flying beyond the reach of our younger generation. The country is in danger of losing its strong pool of qualified pilots and its unique place in the world for pilot training and development. Today, 60 per cent of all pilots joining the airlines come from the club and private flying routes.
The air-mindedness of our youth today has been seriously eroded over the past 10 to 15 years compared to previous generations. It is suggested that this decline is likely to continue. Aviation is ingrained into people from an early age. They often start off as model aircraft builders, going on to enjoy educational flying in the air cadet corps and university air squadrons. They eventually work in aviation, or, like myself, become a home plane builder in the recreational sector.
It is worth noting that, although the UK has less than a handful of commercial plane manufacturers—of which BAE Systems is by far the most important—it also has a successful home-build industry, with many plane kit manufacturers. A good example is the much exported Europa aircraft, which could have been seen hanging in the Dome.
Business aviation includes air taxi operations, in which clients charter whole aircraft, and corporate operations in which a company owns and operates its own aircraft using professional pilots. Business aviation provides industry and commerce with speed and flexibility of operation, which the rigid schedules and time-wasting routines of airline travel deny to those who need to travel quickly, cost-effectively and by the most direct routeing. Many of the world's most profitable companies operate their own aircraft for those reasons. There are well over 200 corporately owned aircraft in the UK. The ability to operate out of a nearby airport may be one of the prerequisites to an international company locating its offices and businesses in a certain area.
There are more than 100 air taxi operators in the UK, not only providing regular charter and ad hoc services for business travellers, but a vital part of the overnight mail, business data transportation services and freight services. A number of Ministers use GA to facilitate their busy and demanding schedules, and so they should. Ministers must surely serve their country more efficiently by making best use of their time. Yet if the infrastructure continues to decline, the flexibility of business aviation will diminish and successful businesses will suffer. Countries such as France and the USA are well aware of this.
GA aircraft are also used for police and ambulance services, aerial photography and survey, pipeline and electricity cable patrols, commercial support to
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military operations, shipping and fishing patrols, coastguard duty, dispersal of coastal oil slicks and for agricultural purposes, not forgetting the eye in the sky helping to keep our roads on the move in our busy cities. Each day GA touches every one of us in some way.
However, the problems for GA are getting worse. More and more regional airports are using pricing policies that deter the small operator. For example, the use of mandatory handling adds substantially to the overall cost. Yet this was never meant to apply to GA operations. In some cases there is no alternative, because smaller aerodromes are closing or have operating restrictions making them difficult to operate to or from.
The future of Gloucester Airport, Rochester, Kemble and Bicester, to name but a few, is in doubt as they are becoming prime locations for housing. Some will become involved in expensive inquiries such as the South Cambridge inquiry, which will cost the local authority £½ million. Once an aerodrome facility has been lost, it is extremely unlikely that another great open space for an aerodrome will be utilised to replace it. Yet these landing sites are not looked upon as being of importance to the national economy, let alone local economies. Coupled to this, with airspace problems such as the gradual loss of lower airspace radar service (LARS), what we are witnessing is an over-commercialisation of the nation's infrastructure which is becoming beyond the economic means of GA. This is where the need arises for a national policy with regard to the future of general aviation.
As for planning policy guidance, PPG13 is a step in the right direction but, as it is only guidance, local authorities can and do choose to ignore it. The strengthening of PPG13 would give better guidance to local authorities. One hopes it might require them to make statements in their regional and local plans. If one agrees with the argument that airports and airfields are part of our national integrated transport system, perhaps local authorities should be required to follow directions rather than follow the guidance of a strengthened PPG13.
8.4 p.m.
Viscount Goschen: My Lords, I thank my noble friend Lord Rotherwick for introducing the debate this evening. As my noble friend mentioned, we know that it is timely because the Government have produced an important consultation paper, The Future of Aviation. I recognise that general aviation is only a small but important part of that exercise but none the less it is relevant. I hope that the noble Lord will regard this evening's debate as part of that consultation process and will take into account the opinions which noble Lords will express in it.
I too am an occasional private pilot although not as distinguished as my noble friends who have spoken and who will speak this evening. It is important to start from the premise that the United Kingdom is a world leader in aviation. It is a world leader in terms of airlines, airports and air traffic control. It has an

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extremely important aerospace business. Many of the people who are the backbone of those industries have a background of general aviation. My noble friend mentioned the figure of 65 per cent of airline pilots who have come up through what can only be described as a self-improvement route. They may have started flying as a hobby. They have then taken it further and have spent their own money to improve their qualifications. They have spent much of their resources on training themselves to enter a highly skilled job which is productive to the UK economy.
I hope that the Minister will support my argument that there is great benefit to the United Kingdom in having a major pool of highly qualified people who can enter the airlines, the military and air traffic control. I understand that many air traffic controllers are also private pilots. That argument has previously been deployed in the context of shipping. I know that previously the noble Lord has recognised the value of having a highly qualified maritime base. The same points apply to aviation. The UK has been a pioneer of the privatisation and the commercialisation of these industries. These models have been followed across the world, first with airlines and then with airports. I am sure—the noble Lord will be more aware of this than I—that all eyes will be on him, his department, the Civil Aviation Authority and NATS itself, when that privatisation occurs.
We contend that GA is important. It is important as a freedom for people to exercise their right to fly if they are suitably qualified. It is economically important to have people who can join the important industries I mentioned. Business aviation is, of course, vital to companies who need to move their executives around quickly and who have calculated that the use of executive aircraft is vital to their businesses. Certainly when I was in government I received many representations from firms that wished to locate near to London, within or near to the M25 zone, but were having great difficulty in finding premises that were within sufficient striking range of GA facilities which would allow their senior executives to come and go using business aviation. It is easy to misinterpret that point and to talk about "fat cats". However, if we wish to attract investment into this country, we must consider seriously what these executives demand and what they need. Business aviation is an important part of that.
We are seeing some new developments. Financial wags used to say that when the chairman bought an executive jet it was time to fire the chairman. Now I believe that we have passed that point. We now recognise the economic value to corporations of using such aircraft where appropriate. Certainly there are new initiatives such as corporate sharing of aircraft—this is effectively time share—which have made them very much more affordable for corporations. We have also seen the new initiative of Richard Noble's F1 company to develop a whole new range of aircraft to be used in the air taxi field. That is also an exciting initiative.
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We are lucky in this country that we have an admirable safety record on GA. However, that is only maintained by having good quality training organisations and extremely efficient safety regulation. I take the opportunity to pay tribute to the work of the safety regulation group of the Civil Aviation Authority. That regulator enjoys the confidence of its industry. That is extremely important to any safety regulator. A pragmatic approach has also been taken to the delegation of authority to other bodies such as the Popular Flying Association, the British Microlight Aircraft Association, the British Gliding Association and others. That is a pragmatic approach which I contend has worked.
When pilots exercise the privileges of their licence they must realise that it is their responsibility to strike a balance between their desire to fly and the desire of people living close by to airports to be able to enjoy a quiet existence. Again, the evidence is that pilots take that extremely seriously. They realise that flying is a privilege and that they must do so in a considerate manner. I invite scrutiny, for example, of the aviation press a great deal of which is devoted towards considerate flying. I also draw attention to the technical diagrams or plates which describe the procedures at any particular airfield, most of which will have special noise considerations built into them to make sure that pilots minimise the disturbance that they cause to other people.
As my noble friend Lord Rotherwick mentioned, in a way aviation has been a victim of its own success. We have seen extraordinary growth in the commercial aviation arena and that has in effect displaced GA from some of the larger airfields. It is an ongoing problem that business operators who wish to operate out of Heathrow, for example, find it extremely difficult to get more than very occasional slots.
The planning regime to which my noble friend refers is extremely important. Planning Policy Guidance Note 13—a draft which was put forward in October—recognises that small airports and aerodromes are important; that they serve business, recreational, training and emergency service needs and that as the demand for commercial air transport grows, GA finds access to larger airports increasingly restricted. In formulating their planned policies and proposals the document states,
"Local authorities should take account of the contribution of GA to local and regional economies; the national need for pilot training; and the benefits of having suitable facilities".
I welcome all those sentiments.
I raise the question of whether the sentiments and policies put forward in PPG 13 are being communicated effectively to local planning authorities. I draw the attention of the House to the paper presented by the General Aviation Awareness Council to the Secretary of State for Transport in February 1999. It pointed out that planning applications for aerodromes had a relatively low success rate yet on appeal the success rate was more than twice the national average. I would be interested to know whether the Government recognise and agree with the council's figures and therefore whether they

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would conclude, as I have done, that perhaps local planning authorities have shown a tendency to make more unsound decisions as regards flying sites than other applications. If there are other explanations of that, this evening would be a good opportunity to discuss them. If that is the case, the next question for the Minister is what action he proposes to take to communicate the guidance more effectively to local planning authorities. I certainly agree that the action already taken to revise the guidance is a step in the right direction.
My noble friend referred to the lower airspace radar service issue in the course of his speech. We had a very quick run around that course when we had a Starred Question on the issue. But it is extraordinarily difficult, as the Minister and his questioners found, to explain a complex issue within the space of a 20 or 30 second Question.
Let it simply be said that a great deal of aviation activity, both commercial and GA, takes place outside controlled air space and that the LARS service is an important aid to safety, particularly when talking about flying on instruments in adverse meteorological conditions. So I caution the Government, the Civil Aviation Authority and the new operators of NATS, when they take over, to look very carefully at the LARS service and not to forget about the major safety benefit that it brings.
I conclude by stressing the argument that general aviation is important. I urge the Minister not to lose sight of that fact when the Government are considering policy initiatives. One frequently reads in the press of very vocal groups who point the finger at GA, but who do not balance the argument by discussing the important benefits which this activity brings. We cannot afford to regulate or price general aviation out of existence.
8.15 p.m.
The Earl of Liverpool: My Lords, in rising to support my noble friend Lord Rotherwick, I have an interest to declare which, I believe, the two preceding speakers have already done, in that I am a private pilot. That is my only interest. I serve no body within private aviation. But I am delighted that my noble friend Lord Rotherwick has been successful in having this matter debated tonight. It is indeed timely in view of the papers which have already been referred to by previous speakers. It is a subject about which my noble friend knows a great deal, as evidenced by the statistics and the information which he so ably gave the House.
Above that, the House perhaps may be interested to know that when he referred to himself as a "home plane builder", I hope that I will not embarrass him when I say that he built an absolutely wonderful light aircraft which he has flown to many parts of the world. In 1997 I was privileged to be part of a wing organised by the air squadron which flew 11 light aircraft to the north-eastern reaches of Pakistan, at the invitation of the Pakistan Air Force, to celebrate the 50th anniversary of their independence.
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Flying in the Himalayas with a multitude of different aircraft types made for some very interesting and unforgettable moments. Before I detain the House with too many stories, perhaps I may say that I am very relieved that both he and I are back here to tell the tale.
General aviation plays an important part in the economy of our nation. Businessmen need to be able to use this means of transport effectively and this in turn creates investment and prosperity in the regions. This is all the more true today when we have such dreadful traffic congestion on our roads. Any substantial conurbation, I believe, will benefit enormously from having its own regional airport.
With that in mind, I should like to talk briefly about one such airport proposal, which is not very far from where I live. For that reason I declare an interest. I am referring to the proposal to turn RAF Finingley into a regional airport. As noble Lords may know, if it happens it is to become known as Doncaster Airport. Doncaster used to have its own light aviation airport with a grass runway not far from the racecourse. I used it in the past. But about seven years' ago it was closed and the land was developed, which, unfortunately, is something that is happening to too many light aircraft airfields, as has already been mentioned by my noble friend.
In view of the fact that Doncaster lost its airport, I am naturally in favour of the Finingley proposal. I believe that it will bring many benefits to the area, not least in jobs. However, support is not universal, as I understand it. I wonder whether the Minister can tell the House tonight whether there will be a planning enquiry before proceeding or whether it will be allowed to go ahead under local planning rules. I believe that currently there is some uncertainty, which is a bad thing, so perhaps the noble Lord can take this opportunity to clarify the situation.
One of the very important aspects of this particular proposal is traffic planning, the provision of new roads and the upgrading of the existing ones. The A1 trunk road south of the Doncaster A1 (M) section has a notoriously bad stretch between Ranby and Tuxford, some of which is considered so dangerous that a permanent 50 miles per hour speed limit has been imposed on it. It is also an area which is particularly vulnerable to traffic congestion at certain times of the day. I accept that this is slightly wide of the Unstarred Question, but I hope that the Minister will be able to say what plans there are for upgrading this stretch of the A1, which I should have thought was almost sine qua non in the provision of this airport.
My noble friend Lord Rotherwick made some interesting observations, one of which was that costs are pushing flying beyond the reach of our younger generation. As my noble friend Lord Goschen said, 65 per cent of our commercial pilots came up through the private pilot and hobby aviation route. I do not know what the Minister can say to allay that serious problem, but we ought to try to address it if we can.

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I fear that regional airports are using pricing policies to deter general aviation. I hope that we can redress that in some way, because light aviation is a vital part of the fabric of our commercial infrastructure. I hope that general aviation will prosper.
I look forward to hearing the Minister's speech. I hope that he will confirm that the Government wish to promote general aviation in this country.
8.21 p.m.
Baroness Thomas of Walliswood: My Lords, the noble Lord, Lord Rotherwick, has done us a service by introducing the debate. I have learned a lot from his detailed analysis of general aviation. Some time ago I lived in the United States for several years, where general aviation was a large industry. From what I have learned in the past few days in preparation for today's debate, it seems to be going the same way here as it did there.
Unlike the previous speakers, I am not a pilot—perhaps it is not necessary to make that point. Thinking of what the noble Earl, Lord Liverpool, has just said, I am not sure whether, as a pilot, I would have had a greater or lesser feeling of security when I was skimming the mountainsides in the Andes in a commercial plane. That kind of flying is always frightening, however and whenever you do it.
The noble Lord, Lord Rotherwick, gave us good evidence of the importance of general aviation to the air transport industry. It is not just private flying for rich men, but everything from pilot training through freight transfer to crop spraying and air-sea rescue.
The industry has a problem of reduced availability for general aviation. The Government concede in their consultation paper on the future of aviation that the problem can only get worse due to the pressure on airport space. At the same time, local authorities appear to the industry to be unsympathetic to general aviation. Some would say that they are ignorant of its contribution to the economy and over-sensitive to local people's complaints about aircraft noise and fears about increased activity at their local small aerodrome.
The noise from large commercial aircraft has been dealt with pretty successfully over the past 30 years or so via the system of air noise certification, which was forced on the civil servants, politicians and aircraft builders and operators by the strength of public opinion across many countries. I understand that quite a lot could be achieved by the introduction of mufflers or silencers to deal with the noise from smaller aircraft, which can be intensely annoying at a local level. What action could the CAA or the Government take to encourage the use of silencers now and to introduce a system of progressive noise reduction for smaller aircraft similar to that which operates for larger commercial aircraft? That is a different way of controlling aircraft noise from the designation of approach paths or the alignments of flight paths. Those matters seem to be the subject of the consultation paper on the control of noise around aerodromes, which takes no apparent interest in controlling the noise as it comes out of the aeroplane. Those are two different issues.
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I do not accept the argument that local authorities ignore planning guidance. There may be an argument that the guidance could re-emphasise the economic value of general aviation, although I do not know enough about that guidance to say. In my experience, local authorities follow planning guidance, particularly when forming their local or strategic plan. They have to do so, or the Secretary of State will not approve the plan.
Furthermore, to pick up a point made by the noble Viscount, Lord Goschen, if any officer feels that a local elected authority is about to do something that will result in the proposal or plan being rejected at public inquiry, he will certainly tell the elected members so. Because of the extreme expense of going through an unsuccessful planning application procedure, most members will heed a suggestion that they should not do anything that would be likely to result in losing an inquiry.
Nor do I accept the point made in some of the briefing material that small aerodromes are worse placed to contest a planning proposal or put their case to a local planning inquiry than any other small business or individual. Many individuals appear successfully at local planning inquiries or similar occasions and put their views very well. Local planning inquiry judges are very good at ensuring that small organisations and individuals are heard and their points correctly recorded and given their due weight.
I agree that there is a need for a national aviation policy and an airports policy. The noble Viscount, Lord Goschen, encouraged the Minister to take note of today's debate in the context of the current consultation process on the future of aviation, is the Minister minded to construct an airports policy that could guide all those involved in providing airport capacity at any level? Such a policy is badly needed, if only to enable us to cut the time taken by airport development public inquiries. That huge use of time and other resources—I need only mention Terminal 5—is largely the result of having to argue the whole case for or against proposals for change of use or expansion or the creation of a new airport without the benefit of any common ground determined by the Government from which both parties can proceed.
The last area in which there can be conflict is on safety, particularly near major airports. I agree with the noble Viscount, Lord Goschen, about LARS. It is important that whoever is in charge of air traffic control at the end of March—or whenever the new system comes into being—takes into account the importance of making sure that there is an effective method of air traffic control that governs the safety of general aviation, whether in or out of the controlled areas.
8.29 p.m.
Lord Brabazon of Tara: My Lords, like other noble Lords, I should like to congratulate my noble friend Lord Rotherwick on having introduced this short debate on general aviation. It is not an issue that is debated very often in this House, but in recent months,

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funnily enough, it has featured occasionally, especially during the passage of the Transport Bill, which the Minister will no doubt remember well.
The term "general aviation" covers both fixed wing aircraft and helicopters operating for a wide variety of purposes including leisure pursuits, gliding, flying training and of course the business aviation sector, which includes air taxis and other means of transport. I was impressed to learn from my noble friend how many aircraft and activities were included in this category in this country.
The users and owners of these types of aircraft share concerns about reduced access to airport facilities and air space, LARS in particular, and the privatisation of National Air Traffic Services (NATS). Heathrow and other major airports for general aviation users are increasingly subject to restrictions. As capacity at peak times is put under more pressure, general aviation is likely to find it more difficult to access larger airports.
The industry is also concerned about the loss of smaller airports to redevelopment and the imposition of conditions of use at other airports that limit their ability to cater for the users' needs.
Planning Policy Guidance Note 13, which has been referred to by a number of speakers this evening, states:
"Airport development is promoted by developers through the usual planning process, though major schemes will usually be decided by the Secretary of State for the Environment (sometimes jointly with the Secretary of State for Transport) following a public inquiry."
I presume that that note was written before the merger of the two departments, because the Secretary of State for the Environment and the Secretary of State for Transport are now the same person. We are happy to see the Minister of Transport in the Chamber this evening.
The members of the industry to whom I have spoken are keen that public inquiries should also take place where there is a proposal for the closure of these airports. General aviation, and business transport in particular, rely on access to these airports so that they can provide reliable services.
Much reference has already been made to the subject of planning, and there is no doubt that some local authorities have taken a very anti-general aviation stance during the preparation of local plans, primarily because of the noise that general aviation can cause.
General aviation airports tend to attract pilot training schools, hence there are a large number of small piston-engined aircraft flying repetitive circuit patterns, which can cause disturbance to the public. However, general aviation provides a very important supply of trained pilots for the airlines, as well as the smaller GA (air taxi and charter) operators.
The number of service pilots retiring and available on the civil market has reduced significantly over the last few years, emphasising the importance of civil pilot training. Similarly, new European licensing regulations are tending to increase the cost of training
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and have resulted in a reduction in GA training activity over the last year. It is very important to the wider industry that training should be allowed to continue.
The DETR circulated a consultation paper on the Control of Noise from Civil Aircraft last year, and the Airport Operators' Association highlighted the concern of smaller airports over proposals to provide local authorities with greater powers over airports and the need to consider the wide variety of size and type of airport throughout the UK. The Government's position is to prefer local noise issues at aerodromes to be addressed at the local level, but this must not be applied in a discriminatory manner that puts GA airports out of business.
I should like to refer briefly to the EU Draft Directive on the Assessment and Management of Environmental COM (2000) 468 final, which the Minister will no doubt have at his fingertips. The Government will need to ensure that this legislation does not conflict with DETR policy and that, once again, the resultant burden does not prove too great for the fragile financial state of many small airport businesses.
The point to be made here is that in order to encourage aircraft operators to fit quiet propellers and exhaust silencing systems, the industry needs as much assistance as possible from the regulatory authorities. There have been cases, for example, where the CAA has refused to accept the certification process carried out in another EU state, and has required full certification in the UK. The considerable extra cost of this process is in addition to the equipment cost and the cost of fitting it to the aircraft, and this acts as a significant deterrent to the aircraft owner or operator.
Regulation No. 3922/91 states in one of its articles that where a product has been approved in one or more JAA member states, it should be automatically accepted in another JAA member state, without the need for further additional certification or administration. That is the kind of small point that would make life for general aviation operators rather easier.
Recently, we have seen, as a result of the chaos on the railways, an increasingly large number of movements of air taxis and helicopters. As I understand it, the London Heliport at Battersea now caters for over 11,000 movements a year. Can the Minister therefore tell noble Lords what the Government are doing to improve and preserve the access of air taxis and helicopters to well-placed airports?
Another concern is the public/private partnership of NATS. We have been over this ground on several occasions, including earlier this afternoon. As we are all well aware, the Ministry is due to report back to the House within a short space of time on what has happened during the last three months. I think the Minister stated earlier that the subject of general aviation would be included within the overall context of the PPP. Can the Minister therefore say what meetings he or his colleagues have had with

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representatives from the general aviation community during this period, and give an insight into the reassurances he has been able to give general aviation about the concerns that have been so well expressed by my noble friends on this issue this evening?
We are all well aware that in Europe there is a great move towards the creation of a single European sky, and according to reports that I have received, this is going full steam ahead. My final question, therefore, is this: can the Minster reassure noble Lords that during discussions about the single European sky the Government have taken on board the concerns of general aviation in that area?
I look forward to the Minister's reply.
8.39 p.m.
Lord Macdonald of Tradeston: My Lords, I should like to congratulate the noble Lord, Lord Rotherwick, for initiating the debate. I welcome the opportunity to share what the Government are doing to promote general aviation, and to address the hopes and concerns that have been expressed during the debate.
The Government will do all that they can to promote every area of the UK aviation industry, from our major international carriers to our smaller enterprises. The UK aviation industry leads the way, thanks to the innovation and competitiveness of its aviation companies.
Our aim, as Government, must be to create an environment that allows our aviation innovators to continue their excellent work and to foster growth in this area as far as possible. The contribution to this success made by the general aviation industry in all its guises is not to be underestimated. We will seek to continue to support general aviation and we will also ensure that the very specific needs of this industry are not overlooked. We will do that when we come to implement our general policy aims in the aviation and transport sectors.
However, in order to do so, we need to have in mind that the term "general aviation" covers a number of activities, including flying, training, leisure flying by private individuals and the use of air taxis. I thank the noble Lord, Lord Rotherwick, for his detailed description of the various aspects of the general aviation sector and for highlighting so clearly that each aspect has differing needs and priorities.
Although the activities covered under the heading of "general aviation" are extremely diverse, the combined contribution that general aviation makes is significant in economic terms and also in other ways, such as providing, as has been emphasised tonight, a source of pilots for the aviation sector as a whole. General aviation is also a source of pleasure for the pilots who use more than 8,000 general aviation aircraft in the UK and who are entitled to enjoy their right to fly. Of course, they must do so in a balanced way which takes into account the rights of those who live near aerodromes.
Although I said that general aviation covers a wide range of activities, the Government will consider the needs of the general aviation industry as a whole and
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will take those needs into account when shaping aviation policy. We shall not act without first seeking the views of those who are most likely to be affected by our actions.
We have undertaken to introduce an air transport White Paper in order to prepare UK aviation policy 30 years ahead. It is essential that we get that right. We have issued a consultation document so that all the main parties can consider the issues and put forward their views. I look forward to receiving comments from the general aviation industry which should express the detail of the industry's needs and aspirations for the future.
I am aware that a good start has been made and that the general aviation voice was heard loud and clear at the recent seminar which we organised to discuss responses to the consultation document. I hope that the comments received from those working in general aviation will cover many of the issues raised today. Although this debate is perhaps not timely in that we currently await comments on the air transport consultation document, I shall try to specify why current policies are as they are and what they do to promote general aviation.
I note from the title of today's debate, and from some of the interventions made, that planning is at the forefront of the minds of noble Lords and of our general aviation industry. Therefore, it may be helpful if I explain briefly the general rules and procedures which govern the planning system.
We have a "plan-led" planning system. The general principles are contained in Planning Policy Guidance Note 1—General Policy and Principles. That document explains that, where the adopted or approved development plan for the area contains relevant policies, planning applications must be determined in accordance with the local plan unless material considerations indicate otherwise. On the other hand, applications which are not in accordance with relevant policies in the plan should not be allowed unless material considerations justify granting a planning permission.
Material considerations must be genuine planning considerations—that is, they must be related to the purpose of planning legislation, which is to regulate the development and use of land in the public interest. Obviously much will depend on the nature of the application under consideration, the relevant policies in the development plan and the surrounding circumstances.
The courts are the arbiters of what constitutes a material consideration. All the fundamental factors involved in land-use planning are included, such as the number, size, layout, design and external appearance of buildings and the proposed means of access, together with landscaping, the impact on the neighbourhood and the availability of infrastructure, and so on. Government statements of planning policy are material considerations which must be taken into account, where relevant, in decisions on planning applications.

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Although development in general requires planning permission, some forms of development are granted a general permission by the Town and Country Planning (General Permitted Development) Order 1995 without the need to make a planning application to the local planning authority. That includes certain works related to aviation development. In the first instance, it is for the local planning authority to determine whether planning permission is required in any particular case.
Planning policy is of most interest to the general aviation sector in so far as it impacts on planning decisions in relation to aerodromes. In general, we have not intervened in the development of general aviation aerodromes. Essentially they are local planning matters which should be decided locally. However, through their local representatives, the Government scrutinise development plans and are able to keep a close watch on emerging policies which affect general aviation aerodromes.
Generally, the Government will intervene only if planning issues of more than local importance are involved; for example, if a plan or application conflicts with national policies or important matters which may have significant effects beyond the immediate vicinity, or in cases which involve issues of national security. I note the point made by the noble Viscount, Lord Goschen, about the outcome of planning decisions. Although I have no detailed comment to make on that this evening, the figures in the GAAC paper have been noted. We do not collect those figures centrally. Therefore, I am unable to verify the analysis of reasons for appeal and whether that warrants further consideration. However, planning authorities must make decisions on the basis of local facts.
In order to ensure a coherent approach to planning across different sectors and regions—I hope that this will help to provide some reassurance to the noble Viscount—25 planning policy guidance notes have been issued by the Government. All local authorities must take those into account in preparing the regional planning guidance and determining planning applications. They focus on the integration of land-use planning and transport, including the promotion of more sustainable transport choices both for people and for moving freight.
Transport guidance note PPG13 emphasises the important role that small airports and aerodromes can play for local business, recreational, training and emergency needs. For that reason, the guidance note advises that local authorities should take account of the important contribution that general aviation can make to local and regional economies, including the national need for pilot training. That guidance note is in the process of being updated. If the noble Lord, Lord Brabazon, does not have a copy of the current issue, I shall certainly ensure that it is updated to take account of the changes that have been made in departmental structures. However, the document is being updated and it will continue to recognise the important contribution made by the general aviation sector to local economies and beyond.
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A question was raised in relation to airport slots. I have already said that we shall do our utmost to promote and encourage the good work done by the general aviation industry. However, it must be done with a sense of perspective and with an eye for the realities of modern aviation.
With regard to the issue of slots, since 1986 there have been legal constraints on the use of Heathrow and Gatwick Airports by business and general aviation during the hours of peak congestion. That is simply and obviously a consequence of the demands on capacity at those airports. I appreciate that over recent years the constraints have bitten increasingly hard as the airports have become more congested. However, it is important to make the most efficient use possible of the available infrastructure. A slot which is used for business aviation cannot be used for a scheduled service which reduces the passenger throughput. A mix of large and small aircraft also requires longer gaps between aircraft movements than where the fleet is more homogenous. That may have the added effect of reducing hourly capacity at airports where capacity is such a precious commodity.
Business and general aviation is not excluded from Heathrow or Gatwick and there are no plans that it should be. I accept the arguments made about the importance of business aviation, and I take on board the point made by the noble Earl, Lord Liverpool. I am afraid that I am unable to give much detail as to the current position with regard to the proposed Doncaster airport. Noble Lords will understand that I am constrained by the inhibition of the planning process because the possibility always exists that there may be a quasi judicial role for Ministers in the event of a call in that respect.
Thirty years ago in my business life I travelled many times on corporate aircraft between Heathrow, Manchester and Liverpool and I have done so many times since in England, across Scotland and abroad. I understand the importance of encouraging business travel to be flexible and efficient. That drives us towards economic competition and growth. Noble Lords need have no concerns on that score.
Business and general aviation still have a role to play in Heathrow and Gatwick. It is essential for the industry to recognise that there are no easy solutions and that the pressure on capacity will not go away, at least in the short and medium term. One response is to consider making greater use of alternative airports to serve the London area. Longer term, I refer back to our consultation document in pursuit of a White Paper. That process is supported by regional studies examining the best shape for the aviation industry in the next 30 years. That is an important process.
On the point made by the noble Baroness, Lady Thomas, I confirm that while the CAA is currently reviewing the so-called large provision in the South East of England, it will certainly take into account some of the issues that the noble Baroness raised. That review is still in progress, but I am confident that any specific proposals concerning provision around Gatwick and Heathrow will be considered very carefully and acted on where necessary.

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I say to the noble Viscount, Lord Goschen, that I shall certainly take into account the views that noble Lords expressed tonight. Our debate has been an important contribution to the current consultations on air transport policy. The noble Viscount, like other noble Lords, made his point with great eloquence and force.
On the question of noise from civil aircraft, there has recently been a consultation on legislation for the control of noise from civil aircraft and the effect that that might have on general aviation. In launching the consultation process, we have not prejudged whether there should be any limit on the types or size of aerodromes that are liable to be designated. We are looking with interest at the views that we have received. It remains our preference where possible for aviation noise mitigation measures to be resolved between interested parties. The proposal to provide aerodromes with greater means of regulating flying behaviour will be an enabling power and it will be used only if there is a need to do more to ameliorate aircraft noise at a particular aerodrome.
The noble Lord, Lord Brabazon of Tara, asked about improving access for helicopters and air taxis. Looking at the clock, I see that time does not permit
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me to attempt an answer; even if I had made such an attempt, I should not have done so with any precision. I assure the noble Lord that in our consultations on the operational aspects of NATS with interested parties, we shall ensure that general aviation is consulted. The Parliamentary Under-Secretaries of State in the Department of the Environment, Transport and the Regions in another place have been conducting consultative meetings. I shall report back to the noble Lord in the very near future.
I hope that I have explained some of the ways in which the Government have acted to promote the general aviation industry. The best way in which we can do so is by providing a business environment that allows our companies to thrive. Our debate has shown that while that is the case, we need to examine several specific issues in relation to which the voice of the general aviation industry still needs to be heard. I urge the industry to use its voice.
I thank the noble Lord, Lord Rotherwick, for giving us the advantage of his extensive aviation experience and for securing this debate. If I have left any questions unanswered, I shall write to noble Lords with greater detail.
House adjourned at six minutes to nine o'clock.