Lords Sitting of 5 December 2002

Preamble
The House met at eleven of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Peterborough.

Message from the Queen
Lord Luce: My Lords, I have the honour to present to your Lordships a message from Her Majesty the Queen signed by her own hand. The message is as follows:
"I have received with great satisfaction the dutiful and loyal expression of your thanks for the speech with which I opened the present Session of Parliament".

Police (Northern Ireland) Bill [H.L.]
11.6 a.m.
Baroness Farrington of Ribbleton: My Lords, on behalf of my noble and learned friend Lord Williams of Mostyn, I beg to introduce a Bill to make provision about policing in Northern Ireland and the exercise of police powers in Northern Ireland by persons who are not police officers, and to amend the Police and Criminal Evidence (Northern Ireland) Order 1989. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Baroness Farrington of Ribbleton.)
On Question, Bill read a first time, and to be printed.

Licensing Bill [H.L.]
The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an instruction to the Committee of the Whole House to which the Licensing Bill [HL] has been committed that they consider the Bill in the following order:

Clause 1,

Schedules 1 and 2,

Clauses 2 to 4,

Clause 177,

Clauses 5 to 8,

Schedule 3,

Clauses 9 to 111,

Schedule 4,

Clauses 112 to 176,

Schedule 5,

Clauses 178 to 196,

Schedules 6 to 8.—(Baroness Blackstone.)

On Question, Motion agreed to.

Control of Asbestos at Work Regulations 2002
11.8 a.m.
The Earl of Onslow rose to move, That an humble Address be presented to Her Majesty praying that the regulations, laid before the House on 31st October, be annulled (S.I.2002/2675).
The noble Earl said: My Lords, first I must declare an interest. I am a name at Lloyds and have been clobbered, and I have some asbestos barns at home. I would not have dreamt of raising the subject on either of those counts in your Lordships' House. I raise it because I am genuinely worried about the costs, about the science, and about one or two other related Issues on which I shall address your Lordships.
I also owe a debt of gratitude to the Minister who, yesterday, took much time out of a busy day to receive me in her office. She and her officials were helpful and kind. I did not necessarily agree with what she said, but with justification she said that I did a small "bounce" on her. I shall not tell your Lordships the nature of the "bounce", but I believe that she will agree that it was only a rather small, cuddly, bouncy, woolly, toy playball.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): My Lords, we would all agree that the noble Earl, Lord Onslow, is a teddy bear in disguise.
The Earl of Onslow: President Roosevelt produced the teddy bear.
It is said that the regulations are introduced to stop 4,700 deaths over the next century. That is one death every 10 days or less than two-thirds of 1 per cent of the total death toll. I do not believe that a statistic like that can be regarded as a statistic, especially as, at the moment, the government death book attributes to mesothelioma only 250 deaths a year, mostly among those horn before 1940 and the number is falling.
It is perfectly reasonable to say that the figure is probably an underestimate. Even if 600 deaths a year were to be treated as an underestimate, that does not coincide with the figure for asbestos-related deaths given by the Government of 3,000 to 4,000 a year. Those figures came from Dr Julian Peto, whose study was reasonably well rubbished by Dr Gibbs and Professor Pooley in what I believe would be regarded as peer review in the scientific world. There is some evidence that the Government have ignored that. However, the figures are central to the Government's case.
Yesterday in the Minister's office we went through the matter at considerable length. She and her officials tried to persuade me. I hope that your Lordships know me well enough to understand that if I had been persuaded that what the Government are doing now is correct, I would have withdrawn my Motion, regardless of any embarrassment that may have been caused or whatever mud had stuck on my face. I would have been prepared to say that I was wrong. However,

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I agree with the Government that if only £1.5 billion over 50 years is required to keep everyone quiet, that is peanuts and does not matter. I shall turn to the cost issue later.
I hope your Lordships will bear a little science lecture from someone who studied no science even at GCSE, which in my day—in the year of the coronation—I believe was called school certificate. I have had to sap up on the matter, but I believe that I am reasonably well informed.
Blue and brown asbestos are iron silicate, very nasty and non-water soluble. White asbestos is magnesium silicate. Magnesium is water-soluble and the fibres themselves dissolve. Everyday we breathe in 20,000 of them because it is all around us. The place is wall-to-wall white asbestos fibres, even though we cannot see them.
Yesterday's claims on ratio danger for asbestos were that blue was a factor of 500; brown was a factor of three; and white was a factor of one. If that is correct, why do the regulations in the fibre rules state that white asbestos fibre tolerability is only two-thirds that of the blue and the brown? That kind of figure does not make sense to me.
The next point is that if these deaths are all caused by asbestos, why have there been no deaths caused in the white asbestos mines? There have been no recorded incidents of death caused by white asbestos. The HSE in some evidence to the World Health Organisation quoted the Meldrum report. That report said that there is,
"no reliable evidence to associate mesothelioma with white asbestos".
The Government's own agency said that. If that is the case, and the HSE are saying something different now, either the Government must show that Meldrum was wrong or they must say that he is right. If he is right, do we really need these regulations and their associated costs?
When the Americans introduced similar regulations the matter was taken to court. There is a quote from the judge that has been thrown about quite frequently; I suppose it is because it is quite a good quote and well worth repeating. When throwing out the regulations, the judge said:
"More Americans will die of inhaling a toothpick than they will of inhaling white asbestos".
It is not as though the Americans are not frightened of diseases; they reach for their lawyers at the drop of a hat. Even now we are a race of anarchists compared to how the Americans reach for their lawyers. Furthermore, when the Twin Towers were hit, 40 tonnes of white asbestos were released into the atmosphere. Everyone screamed, "Panic". The Environmental Protection Agency, when told that the measurements were well above existing safety levels said: "We know, but there is not any real risk to the public".
I shall now give a little lecture on trans-substantiation. The reason that I use trans-substantiation means that I can quote the Council of
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Nicea, which gets above the noble Earl, Lord Russell, who is bound to quote the Long Parliament or the Rump Parliament. But what happens with white asbestos is that the magnesium silicate that goes into the cement then becomes calcium silicate. One could say that white cement is not covered by the regulations as they stand. Calcium silicate is called Wollastonite. Wollastonite is absolutely safe. I have a piece of paper from someone with authority who tells me that. I have not read it yet, but that is what I am told it says. No one has in any way argued against that point. So we have this trans-substantiation. It is not homoiousian; it is homoousian. It becomes completely different. So there is no real danger.
I turn to the next hole in the regulations. The regulations do not cover the third of water mains that are made of blue asbestos piping. One cannot have it both ways: to cover harmless white asbestos roof sheeting on the one hand and, on the other, not to cover what could be—but some would say is not—the blue stuff, which everyone says is dangerous, underground. The argument will be, "Oh, well, it is not going to be disturbed". It is not going to be disturbed; no one is talking about disturbing anything, but we are talking about making a survey of it. Therefore, if one surveys what is on someone's roof or in someone's wall, which is not going to be disturbed, one should survey the blue piping underground. There can be no difference in that argument.
Finally, I turn to the subject of costs. The TUC is reputed to have said that the provisions would cost £80 billion. I do not have any authority for stating that figure, but it has been bandied about. There is, however, a figure from the Health and Safety Executive. It first said £8 billion. In a letter to John Bercow on 22nd October, Mr Nicholas Brown said that the cost would be £3 billion. Yesterday, the cost was stated as being £1.5 billion. Will it tomorrow be one and tuppence? As far back as Edward III's Windsor Castle, government costs have overrun. The building of these Houses of Parliament cost twice or three times the budget. The cost of groundnuts in Tanganyika went all over the place. Nimrod aeroplanes cost miles in excess of their budget. It would be unkind and tactless of me to mention the Dome, but I am tempted to be mildly unkind and tactless.
The United Kingdom representative to Members of the European Parliament—I think that he goes by the unfortunate name of UKREP, which is quite disgusting—briefed MEPs on 2nd May, stating:
"There is strong evidence that both the EC directives and the HSE regulations on this issue are all based on flawed science".
There have been times when established science has been proved wrong and been overthrown. Questions should be asked. Let us think about the Lying-in Hospital in Vienna. Semmelweis says, "Everyone must wash their hands, because that will stop puerperal fever". All the established scientists said no, but he was proved right. Thirty or 40 years ago, we treated mental illness with lobotomies and electric shock treatment. We do not now, because the established science of the time was criticised.

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I hope that the noble Baroness will accept that there is a case for scientific query. More than anyone else, because she is an academic, she knows that on occasion, we must think outside the box—as the dreadful modern cliché has it. I beg her to think outside the box and say, peradventure, "My advice may not be accurate—although I completely concede that honest and good men have given it". She is an academic, and I have seen her chew up the late Lord Mackay—admittedly, with the help of the redoubtable Lady Young. Those of us on Lord Mackay's side of the House listened and accepted what she said because she won her intellectual argument. That is the ground on which I beg the Government to look outside the box and think again, scientifically. I beg to move.
Moved, That an humble Address be presented to Her Majesty praying that the regulations, laid before the House on 31st October, be annulled (S.I. 2002/2675).—(The Earl of Onslow.)
11.22 a.m.
Baroness Noakes: My Lords, I am grateful to my noble friend Lord Onslow for bringing the regulations to the House's attention. I shall speak in support of my noble friend's Prayer and, with leave, also to the separate Motion standing in my name on the Order Paper. I apologise to noble Lords for the lateness with which the Motion appeared. Noble Lords may well be aware that the statutory instrument itself was not available in the Printed Paper Office until last Thursday afternoon. Any noble Lords who tried to find the regulatory impact assessment will have found that the copies deposited in the Libraries of both Houses were copied only on the odd sides of the page. I received a full copy only at the weekend.
For the record, I declare an interest as the director of a company that has received a number of asbestos-related claims. I also state for the record that I have neither sought nor received any advice or opinion from that company for the purposes of today's debate.
It is the duty of those of us on these Benches to remind Ministers of the regulatory burdens that the Government impose on British industry. The Confederation of British Industry estimates that the Government have added £47 billion to British industry's costs since 1997; the British Chambers of Commerce calculates the regulatory burden alone at £16 billion. That represents a serious drain on the productive capacity of this country, and accounts in no small measure for the faltering economy to which the Chancellor had to own up in his recent Pre-Budget Report.
The Control of Asbestos at Work Regulations seem to be competing for some kind of prize for imposing burdens on business. Of course, they do not rival the £5 billion annual pensions raid, with which the Minister will be familiar. Indeed, the Minister's department seems to be the home for business burdens and might better he named the burdens on work and pensions department.
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The cost involved in the regulations is unclear. Less than a year ago, the Health and Safety Executive said that the cost was £8 billion or £5 billion. Now, magically, it is £3 billion or £1.5 billion. Whatever the costs are, they are spread over several years, but they have significant front-end loading, with the first few years bearing the main burden. Many have been concerned that the cost estimates produced will prove to be significant underestimates for both industry and the wider economy, which may well be affected by the regulations.
Against those costs, the Government set the value of the benefits in terms of the value of preventing fatalities. The assumptions underlying those calculations are contentious and significantly weight the answer in favour of the benefits outweighing the costs. For example, the calculations use a Department for Transport figure for the value of preventing a fatality, itself a controversial topic, and then arbitrarily double it.
Those detailed calculations are important, but the heart of the issue is whether the scientific evidence supports the regulations. No one on these Benches objects to regulations aimed at harmful substances—provided, of course, that they are supported by the scientific evidence and are proportionate.
The regulations treat white asbestos in much the same way as blue or brown asbestos. That is where the scientific evidence is worrying. I am no scientist, but my noble friend Lord Onslow has already made a powerful case that the scientific evidence on which the Government rely is at best arguable and at worst downright wrong. In that light, the calculation of costs and benefits may well be incorrect and the regulations disproportionate.
My noble friend explained that white asbestos is chemically entirely different from brown and blue asbestos. However, the Health and Safety Commission and the Health and Safety Executive—I shall probably refer to them interchangeably and incorrectly—have demonised white asbestos in much the same way as the very different brown and blue asbestos. There is compelling evidence for the latter's involvement in mesothelioma and lung cancer. As my noble friend said, white asbestos is a naturally occurring fibre that we inhale in quite large quantities every day. It can be harmful in excess, as can many substances, but there is no credible evidence of harm from ordinary exposure that would justify the full force of the regulations. I understand that there is no evidence that white asbestos is dangerous once encapsulated in cement—which accounts for most of its use in this country.
It is difficult to understand how an organisation such as the Health and Safety Commission, which is usually regarded as sensible, could have found itself waging a jihad against white asbestos. It appears to date back to a study by Dr Julian Peto in 1985, to which my noble friend referred. As my noble friend described, that study has been undermined by later work by Dr Gibbs and Professor Pooley—work commissioned by the Health and Safety Commission but then ignored by it.

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The Health and Safety Commission has already achieved a ban on white asbestos in new products. That ban, achieved in 1999, was well ahead of the European requirements, and the UK supported the European directive—despite the fact, as my noble friend pointed out, that UK REP warned that there was strong evidence that both the EC directives and the HSC regulations on the matter were based on flawed research. It probably also warned that Europe was out of step with both the United States and Japan, which have reached completely different conclusions about white asbestos, based on detailed scientific examinations. The Government are now going beyond a ban on new white asbestos products with these new onerous and extensive regulations that attack existing white asbestos.
It is my understanding that there is no evidence to link white asbestos to any deaths. The Health and Safety Executive's regulatory impact assessment, which uses a figure of around 4,700 avoided deaths to justify the regulations, appears to calculate the impact of blue, brown and white asbestos without distinction. However, if some of those deaths have been incorrectly attributed to white asbestos, the cost-benefit case for the regulations could fall down.
I said that I was neither a scientist nor a statistician, but I read the regulatory impact assessment. Noble Lords who have read it will know that it is complex and requires expertise—certainly beyond mine—to be understood fully. For all those reasons, my Motion proposes that the Government set up an independent scientific inquiry to examine the scientific evidence relating to white asbestos that underlies the regulations. I am aware that the Government generally prefer not to set up independent inquiries and rely instead on their own scientific advice. We saw that in the case of foot and mouth disease, and I hope that that experience will have taught the Government the value of the objectivity that independent examinations can bring. My Motion does not ask the Government to withdraw the regulations; it is not a fatal Motion. It does, however, ask the Government to set up an independent inquiry, to consider the regulations in the light of its findings within one year and to report to Parliament at that stage.
I expect that the noble Baroness, Lady Hollis of Heigham, will say that the Confederation of British Industry, the National Farmers Union and other trade bodies have accepted the regulations. I am puzzled as to why British industry has not challenged them. According to my research, most of the representative bodies seem to have taken the scientific opinions of the Health and Safety Commission at face value and have concentrated only on implementation issues. In particular, the NFU, which should have been concerned about the science because of the prevalence of white asbestos in farm buildings, has meekly accepted the HSC's assertions about the medical risks from asbestos. The HSC may well be proved right, but
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I believe that there is sufficient doubt about the science to warrant an independent scientific inquiry. I hope that the Minister will agree to my Motion.
Lord Berkeley: My Lords, can the noble Baroness clarify the question of the value for money on a human life that she quoted from the Department for Transport? The noble Baroness said that it had been doubled. The Department for Transport uses a range of values, as she knows. Some of us may complain about them, but they range from £100,000 for road accidents to £5 million for a rail accident and something like £50 million for signalling. There is an enormous range, and it would help the House if she could say to which figure she referred.
Baroness Noakes: My Lords, I referred to the figure used in the regulatory impact assessment prepared by the Health and Safety Executive and laid by the Department for Work and Pensions. The figure used in one of the detailed annexes is, as I recall, a little over £1 million, which is the Department for Transport's value. That figure is then doubled.
11.30 a.m.
Lord Walker of Doncaster: My Lords, in his speech, the noble Earl, Lord Onslow, declared an interest and said that he had asbestos in his barns. I have asbestos—on my chest. I do not whether that is a declarable interest.
For most of my adult life, prior to entering Parliament in the 1960s, I worked in industry with asbestos, mostly white asbestos. In the 1960s, when I was a junior Minister, I was much involved in the discussion of the regulations relating to asbestos. The debate so far today has carried echoes of the discussions that we had then, when I was persuaded that we should not legislate as rigorously as we might have done, because the dangers had not been fully assessed. Are we going down that road again? Do some noble Lords seek to take us down it again?
In the discussions on the regulations in the other place, the Minister said:
"Asbestos is the most serious occupational health problem in terms of fatal disease that the country faces."—[Official Report, Commons, 24/10/02: col. 481.]
That is what we are discussing. I am aware of the argument that chrysotile white asbestos is not as dangerous as other forms of asbestos. What cannot be ignored is that, in many applications of white asbestos, it has been mixed with the more dangerous forms—blue or brown—and is, therefore, inseparable. The risks from the more serious kinds are likely to be contained in the mix with the white asbestos.
The Earl of Onslow: My Lords, for the past 30 years, blue asbestos has been screened at the mine from white asbestos, so it is not mixed.
Lord Walker of Doncaster: My Lords, it would be wise for me to leave the rebuttal of the noble Earl's detailed point to my noble friend the Minister.

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The World Health Organisation said that all asbestos types could cause cancer. In the debate in the other place, a Member quoted from the WHO's recent review of chrysotile asbestos, which states:
"Exposure to chrysotile asbestos"—
white asbestos—
"poses increased risks for asbestosis, lung cancer and mesothelioma in a dose dependent manner. No threshold has been identified for carcinogenic risks".
The Government's proposals appear to have widespread backing from industry and commerce. They claim a positive response to the regulations from the CBI, the TUC, the British Property Federation and the Federation of Small Businesses, among many others, including specialists in asbestos application.
Between 1968 and 1998, 50,000 people in the United Kingdom died from asbestos-related diseases. I wonder how many of those people might have been saved if I had rejected the siren voices in the 1960s when we were regulating and not been persuaded to take a different approach. The insidious nature of the afflictions tells us that there will be many more for whom we in this place can do little or nothing. However, we can try to help future generations. We must do something, and the regulations are a belated but welcome contribution to that end.
11.37 a.m.
Lord Selsdon: My Lords, I had not intended to speak in the debate. I do so only because I suppose that I should declare an interest. My first job in industry was with Universal Asbestos. My secretary, who has worked with me for 40 years, was also in Universal Asbestos. We made most of the asbestos products, and, in the United Kingdom, our main competitor was Turner & Newall. We then became Cape Asbestos. Gradually, we sought to replace asbestos products with others, but your Lordships are in danger of drawing the wrong conclusions: it is not asbestos alone, but the relationship to many lung diseases that causes problems. The best form of legislation on pollution control was the Clean Air Act.
I ask your Lordships to think for a moment about the generation that follows us, which suffers more and more from lung-related problems. Flats must have wooden floors—no carpets—and there are problems with dust and house-mites. I do not wish to promote asbestos, but it was called a "wonder product". When we made asbestos, as it was called—my noble friend Lord Onslow referred mostly to asbestos cement—we would bring in Cape Blue, a fibrous product, the whites and a range of others in an almost open lorry. We would tip it all down a tip, and I would take people round, pick it up and explain how it worked.
Asbestos cement products were highly necessary in the post-war years because of the damage. It was the most economic way of building factory roofs or farm buildings. We poured the asbestos fibre, sorted into its groups, into a slurry into which cement and other products were placed. There was a paper-making process, in which the mixture would go round a drum.
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It would dry and end up as a sheet, which could be moulded on top of forms to make corrugated roofing known as Standard 6, Standard 3 or Canada tile. There was a range of such products, which were well designed and were used, depending on the pitch of the roof, to keep the rain out. It was economic and profitable. It was profitable because it was easy to assemble quickly. Your Lordships will remember that during the war many temporary buildings, known as handcraft huts, were erected. They had single frames without support and they are still in existence today.
There were other important applications because asbestos cement was used everywhere; for example, for drainage and guttering. However, there were more dangerous elements. Asbestos—apart from its ability to be a flexible reinforcing material for the manufacture of sheets or pipes—was used for its fire resistant qualities. Almost every ship built before a certain year will have its steel still covered with sprayed asbestos. We made a product called Seel and I sprayed reinforced steel joists with Seel for fire protection, wearing a simple cotton mask. That was a dangerous activity.
I should declare an interest too. In future, I shall probably, as a pensioner of Universal Asbestos, receive a pension that will allow me to meet the cost of travelling to your Lordships' House about three times per year.
In time, the industry changed its name and the word "asbestos" was dropped because people were worried about the claims. In the past, the farming industry had the problem of farmers' lung. After all, we have two nostrils—we have two of most things—but only one mouth—and many things go into our lungs. I give as a comparison passive smoking.
If I had had the money I would have tried to become a member of Lloyd's and might have had claims against me. In comparison to Europe, the United States and Japan did not have the same requirement to use economic, cheap products for rapid rebuilding after wars. Asbestos is located throughout the United Kingdom and the current regulations for its removal are simple. If one wants to redecorate a house or a flat and asbestos is found, a notification must be given to the local council. A specialist firm will then use filters to remove the asbestos at a cost of approximately £500 per dwelling. However, sprayed asbestos, which is found around many pipes, has often been coated with plaster and painted. Frankly, that is safe until disturbed.
There are reasons to believe that most asbestos cement products, because of the way in which they were assembled, would not, in themselves, be inherently dangerous—the amount of absorption in the lungs is very small indeed. The difficulty of airborne activity is associated with the blue fibres. One of the advantages that the blue fibre had, which is now a disadvantage, is that it could be teased open into more individual components and finer parts. Therefore it provided better insulation and support for manufacturing.

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It would probably be impossible to conduct an audit of the whole of the United Kingdom. But if one could, it might be found that there was hardly a building which was not, in some way or other, linked to asbestos—whether the asbestos be in the ground and linked with other methane, or whatever. My concern is that there is a certain lack of knowledge and wisdom in introducing the regulations. We all support the need to protect people for the future. However, in digging up all the problems of the past, we would eventually raze the United Kingdom to the ground and be trying to establish ourselves in some form of freer territory.
It is worrying when governments, with all the best intentions in the world, seek to provide protection for past events. The economic benefits to this country which were provided by asbestos were considerable. I sit down saying that I believe the Government would be wise to take the recommendations of my noble friend Lady Noakes and produce some form of more reliable information, rather than creating the scares that now go with pathogens and so forth.
I spoke on this matter 40 years ago in your Lordships' House. I was nervous because Lady Summerskill was attacking me as a hereditary Conservative Peer. I say only that when I was a temporary shop steward in the Transport and General Workers' Union, witnessing suffering from asbestosis or pneumoconiosis, I remembered the words of my uncle, Stafford Cripps. There is no political division on this.
I hope that your Lordships realise that it is not the industry against politics. It is not management against worker. I merely ask the Minister to give more information that does not scare the living daylights out of me.
11.45 a.m.
Lord Marsh: My Lords, I want to speak briefly. I should like to ask the Minister a question. I became involved in asbestos—as everyone has been at some stage—when in the 1970s British Rail discovered that all its sleeping compartments were padded with asbestos. They always had been and no one realised the danger. I remember the efforts and lengths that we went to keep the issue quiet. We looked for special ways to deal with it; for example, stripping the asbestos out under water.
Today's knowledge of the danger of asbestos has been around for a long time. As the noble Lord, Lord Walker, said—and if I may say so, in a very impressive speech—the danger is well known. However, I believe that the reason employers are prepared to accept these onerous controls possibly arises from an appeal hearing in your Lordships' House recently when a number of people engaged in a "class action" against their former employers. The Law Lords found in favour of those appellants and, as I understand the position, there is now a potential legal liability on employers who find themselves liable to an action on those grounds. If that is so, it makes clear why employers would not be opposed to these regulations, which, if enforced, will give them some
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protection. What is clear is that a large number of people have died as a result of asbestos and many more will die for the same reason. I was involved on the fringe of this issue with one of the appellants. I read the medical case notes and I am bound to say that it is an extremely unpleasant way of leaving this world.
Baroness Gibson of Market Rasen: My Lords—
Baroness Finlay of Llandaff: My Lords—
Noble Lords: Cross Benches!
Lord McIntosh of Haringey: My Lords, I believe that we should hear from the Labour Benches before another Cross-Bencher. We have had one Cross-Bencher.
11.47 a.m.
Baroness Gibson of Market Rasen: My Lords, my speech is not a teach-in on asbestos. I am speaking from knowledge gleaned from previous work in my trade union, Amicus, and through the Health and Safety Commission on which I served for six years. Therefore, I declare an interest.
The TUC has been mentioned. It acknowledges that white asbestos is not as harmful as blue or brown asbestos. However, it is a category one carcinogen and that means that it kills. The World Trade Organisation believes that it kills. The European Union has banned white asbestos as a killer. The International Agency for Research into Cancer believes that it kills. Surely, such important bodies cannot be ignored.
I shall not trade numbers today because that is a futile exercise. We all search for, and quote, statistics that prove our case. However, there are statistics on both sides. For me one death at work is one death too many. I know that others on this side of the House agree. There have been thousands, not a few, directly relating to asbestos over the years, and there will be more.
I am disappointed to see these Motions on the agenda. I do not believe that there is any need for an independent scientific inquiry. The regulations are about life and death. Asbestos produces deadly dust and fibres, as has already been said. It produces terminal cancer and takes lives. It affects the lives of all those who know asbestos victims; and that is what they are—victims.
As we sit in these glorious surroundings, our working environment, it is difficult to visualise the kind of working environments which create such illnesses. However, they exist for thousands of working people in this country today. The regulations that we are discussing today are not opposed by the most relevant employers' organizations, including the CBI—and the CBI is very vigilant on these issues. The chief executive of the Asbestos Removal Contractors Association (ARCA), Mr Terry Jago, not only does not oppose them, but he positively welcomes them. The Asbestos Removal Contractors Association represents licensed contractors and accredited

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laboratories. It works closely with the HSE on the subject of asbestos and the issues of health surrounding it. The association has concentrated on improving standards for dealing with asbestos, its main aim being to ensure that asbestos is dealt with safely and that it is effectively managed. That is exactly what these regulations do. The ARCA believes firmly that the regulations spread best practice and that, as such, they will target the minority of businesses which currently fail to manage asbestos properly and show them ways to improve.
The regulations will help construction workers and their management to identify in advance where there is asbestos in a building. This will protect workers from being inadvertently exposed to any form of asbestos and w ill allow suitable precautions to be taken where any activities relating to the construction of a workplace are being carried out.
There have been complaints in some quarters in relation to the consultation process carried out in relation to these regulations. I can tell your Lordships" House that the ARCA is full of praise for the full and comprehensive consultation process which has been undertaken. So is the CBI and so is the TUC. "Full and comprehensive"—their words, not mine.
I am sure that some will accuse me today of overreaction on this issue. Throughout the history of controls on asbestos, unions and trade unionists have been accused of scaremongering and exaggerating the dangers. Such accusations have always been proved wrong. If anything, the controls have been too cautious, too limited and too late.
During my time on the Health and Safety Commission I was only too well aware of what asbestos can do and does do to workers. As my noble friend said, asbestos is the greatest work-related health problem ever experienced in the UK. Three thousand people die each year as a result of asbestos-related diseases. As we sit here prevaricating, workers out there are inhaling the materials which will eventually kill them.
The workers that I am talking about are not as pampered in their working conditions as we are in this House. Not for them leather seats; not for them a heated Chamber or kind ushers to assist them. Workers who come into contact with asbestos put their lives on the line every day—their lives, not ours—and we have a responsibility and a major duty to those workers to pass these regulations as quickly as we can.
11.53 a.m.
Lord Peyton of Yeovil: My Lords, I hope that the noble Baroness, who spoke with reference to her own experience with the Health and Safety Commission, will not leave your Lordships' House today with the impression that those of us who disagree with her do so on the question of whether or not asbestos is dangerous and whether those who work in its neighbourhood should be protected from it. There is no challenge on that at all. All that some of us are trying to say today, as I understand it, is that we wish to be sure of the science and that the science is correct.
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The noble Baroness and those who feel like her have simply got to accept that every now and again government scientists, and scientists serving executive commissions such as the Health and Safety Commission, can be wrong.
They also can be extremely unconcerned with the effects of what they do. The temptation for those who possess power to use it is very real. They do not always think in terms of the unnecessary and avoidable costs in which their rulings may result. That is all that we are saying.
I would remind the Government that in Bill after Bill nowadays there are clauses giving Secretaries of State and Ministers more and more powers to do this, that and the other, and that sometimes those powers are used unwisely, oppressively and without proper care. My fear, which was awakened during the recent foot and mouth outbreak, is that government scientists find it all too easy, instead of making sure of what is the science, to give advice to Ministers, and that gives those Ministers' policies the garments of scientific respectability. That is what worries me.
As my noble friend on the Front Bench said, I wish only to be clear as to what is the science. I am not arguing at all about the menace of asbestos.
11.54 a.m.
Baroness Finlay of Llandaff: My Lords, these are very important issues. The whole asbestos story in relation to mesothelioma has been confusing over the years. with justified worry about the increasing number of cases of mesothelioma, awareness of the large amounts of asbestos in place in buildings and the profitable industry of asbestos removal. However, there have been some important studies in the past few years—particularly from Canadian millers and miners—which have shed light on the wide misinterpretation that may have occurred of previous data on risk.
I declare an interest: in that one of the research centres in the UK on the topic of asbestos and mesothelioma is my own university, the University of Wales College of Medicine, and its partner, Cardiff University.
Mesothelioma is a horrid type of cancer which does not respond to chemotherapy or radiotherapy, and often causes severe pain. I have looked after patients with this disease, who are often young. Their tumours have been histologically diagnosed by Dr Gibbs, whose name has been mentioned already in the debate.
There are two families of asbestos. The first is serpentine asbestos, which is chrysotile or "white" asbestos. As the noble Earl, Lord Onslow, said, these fibres are ubiquitous. They are everywhere in the atmosphere and have been so probably for millions of years. They are even found in samples of Antarctic ice. These short-coiled fibres are cleared from the lung relatively rapidly within a few weeks of being inhaled. From extensive studies in Canada and South Africa, the evidence is not there that they per se cause mesothelioma. These are the fibres found in artex ceilings and concrete. The fibres are locked in to these

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surfaces and are not released when in situ. As white asbestos may not itself cause mesothelioma, disturbing it and releasing the dust of the fibres into the air when it is removed may cause more problems than leaving it in place.
Fibres in the second group are very nasty. These are the amphibole mineral group of fibres, which are the commercial forms of "blue" or crocidolite and "brown" or amosite asbestos. The other fibre, tremolite, has not been used commercially but has been of significance in the studies to which I have referred because it is a contaminant of the white asbestos mined in Quebec in Canada. These amphibole mineral fibres are long, straight fibres which stick in the lung when they are inhaled and persist there for many years. They are the fibres that cause asbestosis and can sit in the lung until mesothelioma develops.
These fibres are found in lagging around pipes and have been used in specialised insulation as they are chemically resistant to acids. Brown asbestos has also been used in some building products, as has blue asbestos to a lesser extent. Most is hidden away and is not accessible except to maintenance men and firemen. Where it is present, it should be encased because when its removal is attempted the atmospheric fibre count in a building goes up dramatically. Whatever precautions are taken, these levels do not appear to settle back for many years. The Health and Safety Executive has data showing this.
The problem with Section 2 of the statutory instrument is that it does not adequately differentiate between the levels of chrysotile fibres, which are of less concern, and the permissible levels of other forms of asbestos—those in the amphibole group—which are either present on their own or in mixtures.
Perhaps I may briefly explain some of the research findings as I understand them. The Quebec asbestos miners and millers were mining white asbestos. They were found to have an elevated incidence of mesothelioma, but this was less than 30 cases among a workforce of over 10,000 people with very high levels of exposure. By contrast, in the South African amphibole miners, mining brown and blue asbestos, the relative incidence was ten-fold higher.
Analysis of the fibres found in the lungs of miners in Quebec showed that those who had a high level of tremolite fibres—the contaminants—were the ones who went on to develop mesothelioma. The tremolite was the contaminant; it does not appear that it was the white asbestos (chrysotile) fibres themselves that were linked with the tumours.
Not all white (chrysotile) asbestos is contaminated with tremolite; it is not found in the lungs of those exposed except in the workers exposed in the Quebec fields, where there are high levels of contamination. These workers were exposed at levels of at least 1,000 fibre cc years, whereas the standard in Europe for fibre exposure works out at about a lifetime exposure of 4 fibre cc years.
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To put this in context, the background level of asbestos fibres, of which nearly all the fibres are chrysotile or white asbestos, in buildings in the UK is generally 0.001 fibres/cc or less, which is similar to levels measured in the street.
In the United States, the Environmental Protection Agency advised the government to introduce a ban on chrysotile, but this was overturned in the courts on the grounds that there was insufficient scientific evidence to support the disease potential of chrysotile asbestos. The scientific evidence is such that there is now a "chrysotile defence" mounted in the US in cases of litigation.
A recent study from the Health and Safety Executive has shown that the potencies of the other fibres to cause mesothelioma is much greater. Chrysotile fibres in the Quebec workers, contaminated with tremolite, have a potency of 1, compared with amosite—brown asbestos—which has a potency of 100, and blue asbestos, which has a potency of 500. The potency of tremolite-free white asbestos is probably far below a relative risk of 1.
The situation may be further complicated by recent suggestions from research that the risk of developing mesothelioma is also linked to the presence in the patient of Simian Virus 40, which seems to predispose to tumour development.
This is a very complex picture. The scientific literature on the relationship between chrysotile (white asbestos) per se and asbestos-related disease is not conclusive. It is clearly there for the other forms of asbestos. The important problem of Simian Virus 40 in causing malignancy must also be considered and further researched.
This issue must remain under scientific scrutiny as the data are complex. I seek reassurance from the Minister that such revision of regulations can occur as and when other information comes to light. I understand that the Government must take a precautionary view, but they must not replace one risk with another, which may be greater, from alternative materials to pure white asbestos or from disturbing fibres which are in place.
12.4 p.m.
Baroness Whitaker: My Lords, I am puzzled by the trepidation of noble Lords opposite over these regulations. I had something to do with asbestos signs and controls when I was in charge of epidemiological planning in the Health and Safety Executive.
I should just like to add one extra point to the expert speech of the noble Baroness, Lady Finlay. We knew in the HSE that excess exposure to white asbestos (chrysotile) caused a large incidence of the crippling lung disease, asbestosis—which is not a cancer. If noble Lords could visit a sufferer from asbestosis trying to breathe or even walk across a room, I do not believe that they would think it was harmless. Surely, it is welcome that the European Union has adopted directives which these regulations implement and welcome that UK protection will be increased.
12.5 p.m.
Lord Marlesford: My Lords, I declare an interest as a farmer who may be affected by the regulations. I had not heard of' them until last Thursday, when my noble friend Lord Onslow told me about them. I tried to obtain a copy from the Printed Paper Office. None was available; however, the PPO very efficiently obtained a copy for me quite quickly.
My main point relates to the process of scrutiny of these important elements of legislation. Statutory instruments are just as much legislation as anything else. Effectively, this a major Bill—in the sense that it will result in considerable cost. The estimates of the cost are uncertain but they appear to be anything above £1 billion. To impose on industry a cost of £1 billion without extremely good reasons would seem to be contrary to the Government's overall policy of reducing the burdens on industry in such a way as to enable British industry to be more effective, more efficient, more competitive and more profitable so that it can contribute to more employment and contribute, in the form of taxation on profits, to the national economy. Therefore, it is important to realise that the principle of proportionality is exceedingly relevant to this piece of legislation.
We know that the scrutiny of secondary legislation is inadequate. The Joint Committee on Statutory Instruments, of which I was once a member, is purely concerned with vires; it is not concerned with merits or sustainability of proposals put forward in statutory instruments. I know that the House is now considering better ways of applying that kind of scrutiny. This is a very good example of where a better way is needed.
In primary legislation, the House of Commons, sadly, has abandoned to a large extent the proper process of scrutiny and this House is acting as an extremely effective long-stop in those matters. But when it comes to secondary legislation such as this, it is no less important.
I was fascinated by the speech of the noble Baroness, Lady Finlay. Frankly, it illustrates—this is no criticism of another place—that there is no way in which the expert opinion that we have just heard would be obtainable in another place. Those sorts of people do not get that sort of experience if they spend a lifetime in politics. It is a very good example, and one that I hope will be remembered, of the merits of the sort of people who are in your Lordships' House.
My point is that questions have been raised on accuracy and on the justification for this particular statutory instrument. It is 15 pages long. I have waded through it and I am not very much the wiser. I shall not dream of getting involved in the scientific discussion on the comparison between white and other types of asbestos. I merely note that experts have very different opinions.
I remind the House of the dictum of my noble friend Lady Thatcher that it is for officials to advise and for Ministers to decide. I question whether there was a proper, carefully considered ministerial decision. I should be interested to know, when the noble Baroness, Lady Hollis, replies, when she first read
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through this statutory instrument. This is no criticism of her, but I suspect that it appeared in her box at a fairly late stage and I am sure that she devoted such time as she had to understanding it.
I remember the late Ernest Marples saying to me that the only way he felt he could do his job as a Minister properly was to say to his officials: "Look I shall do my boxes between 6.30 and 8.30 in the morning, and it is up to you to ensure that what I need to make a judgment on is in those boxes. It is no use filling my boxes in the 'Yes, Minister' way to prevent me making the right decisions". My question is whether there has been a proper ministerial decision on a matter of considerable magnitude in terms of potential costs. I am sure that legislation on asbestos is needed and we should all support any necessary legislation. But all my noble friend Lady Noakes is asking, as I understand it, is that there should be further consideration of the merits of this particular statutory instrument. I should find it hard to 'believe that the Government should resist that.
Lord Elton: My Lords, before the noble Lord sits down, can he add to his remark that there is nothing in the Motion to delay the implementation of the regulations, and that the protection will be there?
12.10 p.m.
Lord Hoyle: My Lords, I declare an interest as a member of the MSF section of Amicus. There seems to be a difference of opinion between the two sides of the House. On this side, we are concerned about lives; on the other side, it appears—the noble Earl can shake his head from now until Doomsday—
The Earl of Onslow: My Lords, it is offensive to accuse me of not caring about lives. Of course I care about lives and the welfare of my fellow subjects; otherwise, I would not have used the energy and undergone the boredom of trying to get my pea-sized brain around this subject.
Lord Hoyle: My Lords, I accept the noble Earl's indignation. I shall tell him about my practical experience, not of looking at roofs, but of being engaged at British Rail. The noble Lord, Lord Marsh, mentioned his experience. I shall tell him about working in workshops where people lagged boilers, with dust everywhere. He may shake his head; I shall discuss white asbestos later. I do not think he has had to work anywhere with his hands; I am sorry about that. Twenty years later, people are dying from that experience because they did not know the dangers that arose from contact with asbestos.
One of my friends who died was a brilliant sportsman—he played cricket and football. Anyone who saw him die as a result of inhaling asbestos would not be discussing whether the asbestos is white, brown or blue, or whether there are dangers. He would be asking what we can do about it if dangers arise from it. We know. I admit that there is a difference between asbestos in lagging and white asbestos. Nevertheless, dangers arise from it and they were pointed out. My

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noble friend, who suffers as a result of contact with white asbestos, said that his lungs are full of it. He is not alone. If there are dangers, we should take precautions.
The French national biomedical research agency, which has been in conflict with the Canadians, says that all forms of asbestos are cancerous. The noble Earl referred to Professor Julian Peto. Professor Peto also wrote in the Lancet:
"White asbestos is rapidly cleared from the lungs and could because of this be less dangerous than other forms of asbestos".
That is what we are discussing. He said that that was especially the case when exposure was short term. He added that prolonged exposure certainly causes lung cancer and that in his view it was not a risk worth taking. I repeat: it is not a risk worth taking.
Some speakers referred to regulations. There are regulations, but many are necessary for health and safety, which is paramount. I would have expected a meeting of minds between noble Lords on that issue. Let us not imperil that by letting the issue seem like one of costs rather than preserving lives. Do not forget about this. Businesses and the CBI have accepted the risk, so why are we having this debate?
Let us move on. Let us implement sensible regulations. In some cases, white asbestos was mixed with blue or brown asbestos. Although, as the noble Earl rightly said, it may be 30 years since that happened, those deaths do not result until 20 to 30 years later. In more extreme cases, it will be up to 50 years before one sees the effects of exposure. The effects are so terrible when they emerge that I appeal to everyone in the House to support anything that will prevent deaths from any asbestos.
Lord Swinfen: My Lords, before the noble Lord sits down, how long does he think the regulations will be delayed if the Motion of the noble Baroness, Lady Noakes, is agreed to?
Lord Hoyle: My Lords, I do not know. The noble Baroness mentioned a year.
Baroness Noakes: My Lords, I thank the noble Lord for giving way. My Motion merely asked for a scientific inquiry to be set up and for the Government to consider that within a year. It does not delay the regulations by a single day.
12.15 p.m.
Lord Forsyth of Drumlean: My Lords, I know that the House is anxious to progress but I wish briefly to speak. As a Minister in the Department of Employment, I was responsible for health and safety for two years. I was tasked with deregulating health and safety regulations. I asked officials to send us all the health and safety regulations that affected business. There was a pause. After a day, they said they would need to hire a special van. We decided to look at the key elements in a major review. The boxes were
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not done from six in the morning until eight at night. I am sure the noble Baroness spends a great deal of time on these matters.
That experience taught me two things about the Health and Safety Executive and the Health and Safety Commission. It is a myth that the two organisations are full of risk averse people dreaming up regulations that will add enormous costs to business. We reduced the number of regulations by about 40 per cent, mainly by eliminating duplication. My second lesson was that the Health and Safety Executive's advice, particularly scientific advice, is second to none and impartial. The suggestion that it will provide what Ministers want to hear was not my experience. Asbestos has been the biggest single problem that health and safety officials have had to deal with.
I do not have a problem with the Motion put forward by my noble friend Lady Noakes in so far as it does not prevent the regulations being implemented. To my mind, the regulations have been subject to detailed, careful scrutiny and a cost-benefit analysis. They are looked at by officials who bend over backwards to balance the benefits against the costs for industry. My only anxiety is the message we are sending to the Health and Safety Executive's scientists. Surely we should back their judgment. We have no reason to believe that they operate in a partial manner. It may be an unpopular message to some of my colleagues. I say to my noble friend Lord Onslow that, when I entered the Department of Employment, I suspected that these scientists were uncommercial and did not understand the costs they imposed on businesses. I was pleasantly surprised to find the reverse.
Lord Skelmersdale: My Lords—
Earl Russell: My Lords—
Lord McIntosh of Haringey: My Lords, I think it would be the feeling of the House that we should hear from the noble Earl, Lord Russell, and then from the Minister.
12.19 p.m.
Earl Russell: My Lords, we have just heard an important speech from the noble Lord, Lord Forsyth, to which I listened with great interest. There are two areas of uncertainty. One is scientific: the danger of white asbestos. The other is political, also apparent in many other debates: the extent of businesses' social responsibilities to the community. It is easy to confuse the two areas of lack of consensus with each other. I shall endeavour not to do so. It will be the judgment of the House whether I succeed. I suspect that very possibly I may not.
I listened with fascination to the noble Baroness, Lady Finlay, who spoke with authority. The final words that linger in my mind from her speech are that the evidence is not conclusive. So far as I can discover, there is an area of lack of academic consensus on the

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danger of white asbestos. However, that lack of consensus happens within parameters. It is, I think, agreed on all sides that there is a danger. The argument is about the extent of that danger. Incidentally, I should say that Professor Julian Peto, whose work has been much attacked in this debate, was working in collaboration with Professor Sir Richard Doll, whose reputation is of the very highest. I should also perhaps say that he used to be a close friend of my sister-in-law. I knew him very well and would have welcomed him as a member of the family. However, I am not declaring that as an interest, because I do not believe myself to be capable of reaching an independent scientific judgment on the evidence. I am interested in the reactions of the jury.
Business is usually very well capable of arguing its corner. I remember when we were dealing with the Statutory Sick Pay Act 1991, the heaviest and, in my view, the most unjustifiable burden on business that I have known during my time in this House—placed on it by a Conservative government—I received innumerable representations from the CBI, the TUC, whose interest in the success of business is genuine but often forgotten, the Federation of Small Businesses and the National Farmers Union. All those bodies have been consulted about these regulations and have approved them. That fact weighs heavily. The thought of an improper and unjustifiable burden placed on business with the approval of all these bodies is about as improbable as a cruel and useless treatment of asylum seekers approved by the Refugee Council. It could happen, but the burden of proof resting on those who allege it is very heavy.
I am also influenced by the actions of my college, King's College London, which is now my former employer. In the old days of the Committee of Vice-Chancellors and Principals, it used to be a standard joke that in the next world the Almighty would approach one or two among them and say, "Since you have been particularly wicked, in purgatory I shall give you charge of a university with two medical schools". My college principal is responsible for three medical schools—King's, Guy's and St Thomas'. They are all medical schools of some distinction. He will have had no difficulty getting expert academic advice from a wide range of people.
Just over two years ago, my college discovered asbestos in its roofing and immediately decided, in the absence of these regulations, to accept the responsibility that is now to be placed on it. That responsibility has already been discharged. The noble Baroness, Lady Rawlings, who is chairman of my college council, will confirm that King's College London is in no position to take on unnecessary burdens. It is feeling the financial draught, as all universities are. The fact that that decision was taken with informed scientific evidence behind it should be taken seriously.
I also have an article from the Annals of Occupational Hygiene, volume 44, No. 8, from the year 2000. It gives a statistical study that covers the same ground covered by Professor Peto. Although I have
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had only 10 minutes to read it, on the whole it appears to uphold his judgments. What emerges clearly from that study is that the rate of cancer and asbestosis among those exposed to white asbestos varies heavily from sample to sample. There is need for some independent variable, probably several, to be established. That is a matter for future research. The Minister is always drawing my attention to the virtue of regulations in conferring flexibility. I am sure she will do so again today. It enables her to keep up—as I am sure, knowing her, she will—with the further development of academic thought in this area.
The other problem is the social responsibility of business. Occasionally, one listens to Conservative spokesmen who sound as if they think that business should have no social responsibility. I am sure that the impression is misleading, but not enough trouble is take to show that that is so, just as on the other side not enough care is taken to show that we remember that business is the goose that lays the golden egg and that we depend on its profits for practically everything we want to do. We should get away from that pro and anti-business ideological division on all sides.
Some burdens are inherent in business, as they are in parenthood. One simply cannot get away from them. Some others are inherent in the interests of business in attempting to make a profit. I once said that there was no more extreme example of short-termism than killing one's customers. I think I was mistaken. An even more extreme example is to kill those on whose services one is daily dependent. It struck me strongly from the debate in another place on 24th October that more than 25 per cent of those who die because of asbestos are plumbers, electricians and carpenters. One has a responsibility to people whom one asks to do that sort of work. No firm wants a reputation for bringing about the deaths of those who attend to its plumbing. Incidentally, I hope the Minister has taken on hoard the point made by the noble Earl, Lord Onslow, about water pipes. That might be a matter for a suitable regulation on another subject. No doubt she will take other advice. A firm that persuades those people that it is not safe to do business there will not stay long in business. Here again, the social responsibility is in the interests of business. Beyond that, businesses have responsibility for contributing to common burdens, as ordinary citizens do. There is no specific claim to an exception.
When the name of Mr Jago was mentioned, there was a general cry of, "Well he would, wouldn't he?". However, in the same letter he has also said that he does not think that these regulations represent any new departure in the treatment of asbestos. He did net have to make that statement and it is not necessarily particularly in his interests. It ought to carry some weight.
That brings me to the proposal of the noble Baroness, Lady Noakes, for an inquiry. I have my doubts about the utility of that. When there is no academic consensus, the findings of an inquiry will depend almost entirely on who is appointed to it. The findings will be impeccable and will be compatible with all the known evidence, but one will know perfectly

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well that if six different people had been appointed to carry out the inquiry they would have come up with different findings. The inquiry cannot create academic consensus where it does not at present exist. That can be done in one of two ways: either by a major conceptual breakthrough that changes the questions that we all ask, or by the slow accumulation of the small change of particular individual case studies so that, if I may so put it, the weight of coin in one pocket becomes grossly lopsided with the weight of coin in the other. That process takes time. I cannot see how an inquiry could take it any further.
The other matter that concerns me as regards the proposal of the noble Baroness, Lady Noakes, is that she proposes two different tasks for such an inquiry. As far as I can see, those tasks would not fit very easily together. The first is a purely scientific inquiry about the risks of white asbestos, which is a matter for scientists. The second is about whether the risk justifies the cost, which is a political decision and one that I do not believe academics are any more competent to make than anyone else—in fact, if they are particularly obsessive in the pursuit of academic truth, occasionally less so. It is essentially a political responsibility, and a buck that we cannot pass.
Finally, I turn to the example of the United States, about which a great deal has been said. I am not a believer either in the supremacy of business or in the supremacy of politics. In my view, we need a see-saw relationship between the two where the balance varies from time to time. Recently in the United States, both because of economic theory and power, the balance has tilted exceptionally far in favour of business. The state of' US campaign funding has contributed to that outcome.
The noble Earl, Lord Onslow, said that Americans reach, first, for their lawyers. But which Americans have access to the largest team of the most high-powered lawyers? The answer must undoubtedly be the big corporations. The globalisation of business has tilted the balance between political and economic power to a very large extent. In fact, one may say, certainly as regards the United States, and increasingly so in some other places, that bringing a big business to justice is about as difficult as bringing a medieval earl to justice—a long struggle, but worth undertaking.
The fact that the process is different in the United States is not necessarily an argument for saying that we should follow that example. I believe that these regulations are justified in the present state of affairs, and I shall so advise my noble friends. The matter needs to be kept under review, but we do not need to ask the Minister to do that because I am certain that she will do so in any event. Therefore, should there be a vote on the matter, I shall advise my noble friends on these Benches to vote with the Government.
12.33 p.m.
Baroness Hollis of Heigham: My Lords, asbestos is the most serious occupational health problem, in terms of fatal disease, that the country faces. In the
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30 years between 1968 and 1998, 50,000 people died in the United Kingdom from asbestos-related diseases. As my noble friend Lord Walker expressed so eloquently, the human suffering and misery behind those terrible figures continue today. There is nothing that we can do about those already exposed. But we can certainly, and must, do much more to prevent exposure today and so prevent the painful and prolonged illness and death in the future to which the noble Baroness, Lady Finlay, referred.
The Control of Asbestos at Work Regulations are a critical element in the Government's asbestos regulatory regime. They provide protection for those who do, or may, work with asbestos. Since coming to office in 1997, the Government have done much progressively to strengthen the laws on asbestos in the workplace, including tightening the Control of Asbestos at Work Regulations 1987, as amended, to provide protection for those at work from inadvertent exposure to asbestos fibres. However, the Government believe that the risks from asbestos will not be fully controlled until one vital piece of the legislative jigsaw is put in place; namely, the duty to manage asbestos in buildings.
Research shows that over 25 per cent of those people currently dying from asbestos-related diseases, some 750 per year, have worked in building and maintenance operations. While virtually all exposure routes have now been effectively controlled—by, for example, banning the use of asbestos products—it is estimated that 500,000 commercial and public buildings across the country still have materials in them that contain asbestos. In many cases, no one is managing the risks from the thousands of tonnes of asbestos still present in those premises. People working on those buildings, such as plumbers, electricians and other maintenance workers, often do not know they are at risk from disturbing the material, which is the real problem. Therefore, they do not know if their work is putting other users in the building at risk. A worker may be charged simply with replacing a light fitting; but, in the process of so doing, he may disturb asbestos that was safe up until that point. He will be unaware of the existence of asbestos, but in the course of his work he may multiply the hazard. That is the sort of situation that we have in mind.
The Health and Safety Executive is aware of numerous incidents where such workers have been exposed to asbestos, with this often resulting in construction projects being stopped and the premises evacuated, as well as potentially serious consequences for the workers involved. It is to deal with this unsatisfactory position that the Government are proposing new legislation.
In my view, the requirements of the new duty to manage asbestos are simple and straightforward: they will require those who have responsibilities for maintenance activities in non-domestic premises to assess whether there is any asbestos in their premises, and, depending on its condition, either remove it or manage it. That will ensure that maintenance activities carried out subsequently do not expose workers to any avoidable risk. The task of managing it may simply be

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a matter of leaving it alone, or barricading it off. Those responsible must ensure that information on the location and condition of these materials is given to anyone likely to disturb it.
Considerable effort has been taken to ensure, as the noble Lord, Lord Marlesford, suggested, that the duty to manage regulation is flexible, thereby allowing a proportionate approach to be taken towards compliance. If the noble Lord studies the regulatory impact assessment, he will see that that is the position. Significant expenditure is required only when the risk justifies it. The requirements are based on the sound business practice of establishing and managing risks efficiently, and closely follow current good practice in the workplace.
In common with the usual procedures on health and safety legislation, the Health and Safety Commission carried out widespread and comprehensive consultation before bringing its proposals to the Government, as pointed out by the noble Earl, Lord Russell. This clearly set out the costs and benefits of the proposals that were included in the regulatory impact assessment, which was published in the consultation document. The response has been overwhelmingly positive. A wide range of organisations expressed support for the proposals—the CBI, the TUC, the British Property Federation, the Federation of Small Businesses, government departments with major property portfolios, such as the MoD and the Department of Health, various local authorities, including Birmingham City Council and many London boroughs which will have significant responsibilities under the new duty, NHS trusts, charities, trade unions, retailers, banks, universities, building and allied trade associations, utilities providers, as well as asbestos specialists. They all support the Government's policies.
The Government are aware of the views of a small minority who believe that chrysotile (white asbestos) is safe, and that, therefore, it should not be included in the proposals. However, that view is contrary to the majority of expert opinion, which supports the Government's view that all asbestos types can cause cancer. Indeed, all asbestos types are unequivocally classified as carcinogens by the WHO's International Agency for Research on Cancer, and by regulatory bodies across the developed world.
It is true that most expert opinion, with which I do not disagree—indeed, neither have your Lordships challenged it today—states that blue and brown varieties of asbestos are more dangerous than white. The most recent review of the relevant evidence suggests that this difference is substantial. However, there is a problem: although chrysotile (white asbestos) is less dangerous, it is still dangerous for two primary reasons. First, it contains tremolite, which is a contaminant and which, as far as we can tell—and as pointed out by the noble Baroness, Lady Finlay—causes the mesothelioma risk.
Secondly, as was mentioned by other speakers, you cannot tell the colour of asbestos from its colour. White asbestos, especially in the 1960s and 1970s, was
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mixed with brown and blue to improve its drying qualities. However, you cannot detect that from the colour. Moreover, if you test it, you will create the very disturbance that these regulations are designed to prevent happening. Therefore, in an effort to find out what you want to know, you will increase dramatically the risks that follow from such activity. 'That is why we should not take that risk.
As a result, the Government's estimate is that it will give rise to an uncertain and unacceptable risk of cancer. Noble Lords have referred to the background fibres in the atmosphere. Maintenance workers have on average 100 times the exposure of the rest of us and have a one in 5,000 risk. I repeat that you cannot extract white asbestos from the asbestos that is currently in our public buildings. The deaths of workers from asbestos and its related illnesses are equal to the deaths from all other accidents in the construction industry. We know that the construction industry is among the most dangerous in this country.
The noble Baroness, Lady Noakes, called for an independent scientific inquiry. That always sounds seductive. I have to say—and I hope she will agree—that her proposals are ill-timed and inappropriate. When the European Union brought in Council Directive 1999/77/EC, which applies restrictions on the marketing and use of products containing chrysotile asbestos, it was mindful that scientific knowledge about asbestos and its substitutes was continually developing No one says that the scientific research has closed. I assure your Lordships that I will do my best, in so far as I am not a scientist, to keep that evidence under review.
None the less, the directive included a commitment to ask the Scientific Committee on Toxicology and the Environment to undertake a further review of any relevant data on the health risks of chrysotile and its substitutes by 1st January 2003. This work is currently being undertaken by Professor Benedetto Terracini whose report will be available in December 2002. I will ensure that a copy of the report is made available in the Library as soon as it is published. If, as a result, any of your Lordships wish to table an Unstarred Question, that debate would encourage the further advance of our information.
To undertake a separate UK review at this time, as the noble Baroness, Lady Noakes, has called for, on an issue that affects all member states in the EU, and when a major report is on its way to your Lordships' House, would add little to the wider scientific debate on chrysotile. The House may also be aware that the Select Committee on the European Union has recently written to Professor King, the Government's Chief Scientific Adviser, seeking his advice, and he will also be reporting in due course.
We accept that we cannot put precise numbers to the degree of risk, because chrysotile is mixed with more dangerous contaminants, from tremolite to brown and blue asbestos. The new duty to manage will impact on a large and diverse group of duty holders many of whom did not have health and safety responsibilities in the area. The HSE is aware of the considerable challenges that will result.

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Therefore, we are happy to give the assurance that we will hold a review into the operation of the regulations, and these two issues in particular. This could be done by the end of next year, still some time before the regulations fully come into force. We will be able to take on board new scientific information. We will invite major stakeholders such as the CBI, the Federation of Small Businesses and the British Property Federation to contribute to this review. I hope that I am meeting the merited concerns of your Lordships' House while not endangering further the lives of maintenance workers whom your Lordships have a moral responsibility to protect.
Annulling these regulations would have far reaching consequences and I am confident that your Lordships will back away—
The Earl of Onslow: My Lords, I am not going to press my Motion, so the Minister can leave out that bit.
Baroness Hollis of Heigham: My Lords, I will. I was going to threaten the noble Earl, Lord Onslow, with the European Court of Justice and a few other remarkable things, but in his greater wisdom he has backed away from the nuclear deterrent.
In support of the comments made by the noble Lord, Lord Forsyth, I am as confident as I could—be and I do not say this lightly—that if the previous government were on these Benches they would be bringing forward these regulations. I ask your Lordships to think about that, given the independence of the HSE and its impeccable academic research and the wide-ranging responsibilities of the Health and Safety Commission and the degree of consultation. I would challenge any noble Lord opposite who has held Front Bench responsibility to say that if they were sitting here, they would not be bringing forward these regulations today. I know that they would do so.
It is not often that we debate issues that directly impact on the lives of individuals. If we do nothing, then the clock ticks for every week that the regulations are delayed. One worker dies. We can make a difference today by supporting the regulations, rejecting the siren calls to annul or to have a scientific committee of inquiry, given that we have a major Europe-wide review due as well as the input of the Chief Scientific Adviser, and my assurances that I am happy to come back to the House with our review in a year's time.
I hope that your Lordships will agree that I have done my best to meet the legitimate concerns about the developing state of scientific knowledge, but in turn I hope that none of your Lordships is willing to play Russian roulette with the lives of maintenance workers, the consequences of which will possibly not be manifest until 30 to 35 years' time, or even longer. Many of us will not be there to see it, but those workers and their children will pay the bill of our neglect today.
The Earl of Onslow: My Lords, I do not in any way apologise for the prayer to annul. We have had an
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extremely interesting debate. The contributions of my noble friend Lord Forsyth, the noble Baroness, Lady Finlay, and the Minister have been well worth listening to. I particularly liked the Minister conceding quite a lot of what my noble friend Lady Noakes was asking for, but pretending that she was not. That is the skill of a superb politician. Talleyrand would be proud—although she does not limp like Talleyrand.
The Minister said that she would keep the regulations under review and come back. That is a sensible view to take. I take slight exception to what the noble Lord, Lord Walker, and the noble Baroness, Lady Gibson, said. The idea that one would pass by on the other side when someone is suffering and be accused of not caring is not true. It is impossible to emphasise that more strongly.
Having said that, there have been arguments flying around that white asbestos is a grade one carcinogen. So is the euro coin, as a matter of technical interest.
Baroness Hollis of Heigham: My Lords, one cannot inhale a euro coin.
The Earl of Onslow: My Lords, one would have to have an enormous nose to do so. I thank all noble Lords for taking part in the debate and beg leave to withdraw the Motion.
Motion, by leave, withdrawn.

Control of Asbestos at Work Regulations 2002
12.48 p.m.
Baroness Noakes had given notice of her intention to move, That this House calls upon Her Majesty's Government to refer to an independent scientific inquiry, with full access to government papers and with powers to take evidence from Ministers and officials, the scientific evidence pertaining to white asbestos underlying the regulations laid before the House on 31st October (S.I. 2002/2675) and to invite the inquiry to report on the degree of risk to public health from white asbestos and the costs of implementing the regulations and to advise whether the risk justifies the likely costs of implementation; and asks Her Majesty's Government to give an undertaking that they will review the regulations in the light of the findings of the inquiry and report to Parliament not later than one year after the coming into force of the regulations.
The noble Baroness said: My Lords, I echo the words of my noble friend Lord Onslow: this has been an excellent debate. There has not always been agreement in all parts of the House, but the debate has demonstrated the strength of the accumulated wisdom that resides here. I pay tribute to the noble Baroness, Lady Finlay, whose interesting and expert speech illuminated the subject for many of us.
The Minister knows that I intended to divide the House on this subject. I felt strongly that it merited further study. However, in the light of her speech, and

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particularly of the new evidence from Europe that she has undertaken to place in your Lordships' House, and with the assurance she has given to review the regulations in a year's time, we on these Benches are more than satisfied. I shall not be moving my Motion.

Contracting Out (Functions in Relation to Applications for Patents) Order 2002
12.49 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville) rose to move, That the draft order laid before the House on 5th November be approved [40th Report, Session 2001–02, from the Joint Committee].
The noble Lord said: My Lords, this proposal will make it possible for the UK Patent Office to contract out some of its search and examination work. Contracting out serves two purposes: first, it will take forward the process of international co-operation in which the Patent Office is playing a leading role:, and, secondly, it will help the Patent Office improve turnaround times. I shall come in a moment to the draft order, but I should like first to set out the context, particularly the international context, which has led us to bring this measure forward.
International co-operation already plays a large part in the international patent scene. Applicants seeking protection across the world can make a single application to the World Intellectual Property Organisation in Geneva, which will eventually evolve into national patents in as many as 179 countries. Alternatively, the European Patent Convention allows a single application to be made to the European Patent Office, resulting in European patents effective in up to 30 European countries. This co-operation is taken forward by a continuous process of harmonisation of the pa tent laws in different countries. Increased harmonisation makes it easier, cheaper and quicker to obtain patent protection across the world. In a recent development, many patent offices are now beginning to consider work sharing. Currently, work is repeated over and over again in different patent offices as applicants prosecute their applications in different countries. Work sharing would help reduce this duplication.
The UK Patent Office is widely recognised as a strong performer. It has been improving efficiency on a number of measures since it became an agency 15 years ago, and it delivers a high level of service to its customers. It has recently been awarded the Charter Mark for the fourth consecutive time. It introduced a fast-track search and examination procedure some years ago which is used by 20 per cent of applicants. It issues search reports quicker than most others in Europe and the world. However, its input has been steadily increasing, which puts a strain on resources, and it recognises that it must do better to meet the needs of its customers, in particular by reducing turnaround times.
In recent months, the Patents Directorate of the Patent Office has introduced a series of measures to make further improvements in its efficiency, its turnaround times and its customer service These measures include improved recruitment, retention and training of patent examiners. The office is also working with patent agents to streamline the way applications are drafted and examined. A further measure is the introduction of a "Private Applicants Unit" to deal with applicants who do not employ a patent agent to represent them. The office has been using electronic searching for many years and is now developing electronic filing and processing systems. It is also currently seeking ISO 9001:2000 quality accreditation for the patent granting process.
A medium-term objective for the Patents Directorate is, by these measures, to reduce the number of applications awaiting processing. The intention is to provide a more rapid response than it currently achieves, and in the longer term to provide a response with substantially no delay at all. In that way, the office will not only be better geared to the needs of its customers but will also be better prepared to contribute to wider innovation issues in the future.
That is the background. The message is that the Patent Office operates in an increasingly international arena. It is working hard to improve efficiency and responsiveness to its customers, and is looking forward to increased co-operation with other patent offices in the future in order to provide further customer benefits.
It is within this framework that the present draft order has been introduced under the Deregulation and Contracting Out Act 1994. It is very brief, but it has the effect that the Comptroller-General of Patents, Designs and Trade Marks will be able to authorise persons outside the UK Patent Office to carry out the search and examination functions normally carried out by UK patent examiners. The Patent Office is currently discussing contracting out a small number of searches with the Danish Patent and Trade Mark Office, and a small number of searches and examinations with the Netherlands Intellectual Property Office. Such contracts will constitute a further measure, in addition to those I have already mentioned, to help deal with pending work. At the same time, the contracts will initiate some practical cooperative working arrangements between the UK, the Danish and the Netherlands offices which will be a step towards work sharing.
The contracts under consideration would run for two years initially. They would be renewable in one-year tranches if both parties agreed. Any contract must last no longer than 10 years, as is provided in the deregulation Act. The total number of search and examination actions under consideration is less than 5 per cent of the UK input. The contracts give flexibility to increase this number, and this option is open if it is convenient to do so, but it is not intended that the amount of work contracted out should increase to any great extent. The cost to the Pa tent Office will be the same as the in-house cost and the applicant would pay the same fee. On timing, most of

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the preparations have been made and the contracts could begin soon after the passing of this order, subject of course to the will of your Lordships' House.
The work will be done to the same standard as in the UK Office: Danish and Netherlands examiners have worked alongside UK examiners during the past year to train in UK practice and procedures. Work they have done has been assessed in comparison exercises. In any contract, their cases will be included in the Patent Office's existing quality assurance system and the outcome will be fed back in regular management meetings. The Danish and Netherlands offices will be subject to the same confidentiality obligations as the UK Office, and any patent application which has a bearing on national security will not be included in the scheme.
The Patent Office consulted on these proposals earlier this year. The consultation paper was placed on its website and sent to 46 organisations and 77 individuals. In the event, very few responses were received, just five to be exact, to which I shall come. The views expressed were carefully considered in the Patent Office in bringing these proposals forward, and the office made some refinements to its preparations as a result. Now, these responses have also been posted on the Patent Office website along with a discussion of the responses and the decision to continue with the proposals.
Among the responses, there was broad support for contracting out the search function. Respondents recognised the advantages of improved responsiveness and preparing for the future, but stressed the need to safeguard aspects such as quality, cost, security and timeliness. Those matters are of course of great concern to the office, and I have already referred to the measures that will be put in place to safeguard them.
Respondents raised other issues in relation to patent examination. Under the arrangements being discussed, examination would be carried out in the Netherlands office. The issues raised included the Netherlands examiners' competence to operate in accordance with UK law and procedures, and the need for close interaction between the applicant and the examiner during examination. I understand the concern, but these factors should not affect the outcome for the applicant. Contracting examiners have a very good command of general and technical English, they already work under patent law which is aligned across Europe, and have trained in UK procedures. The office will also run a "buddy" system whereby applicants can discuss their case with the buddy UK examiner. The work which the office has done with the Netherlands to satisfy itself about their English language and examination capabilities is positive so far but is nevertheless continuing. It will need a satisfactory outcome for the contract to proceed.
This is a practical move for the Patent Office. It will introduce a useful element of flexibility into its resource planning over the next few years and will involve close working with colleagues in other offices. It will help the office to improve customer service both
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in the short term by providing a faster turnaround and potentially in the longer term by developing international co-operation. I am pleased to commend the draft order to the House.
Moved, That the draft order laid before the House on 5th November be approved [40th Report, Session 2001–02, from the Joint Committee].—(Lord Sainsbury of Turville.)
Lord Hodgson of Astley Abbotts: My Lords, the Minister has explained the purpose of the order in his usual equable and persuasive style, for which we are grateful. However, although he has presented the matter as de minimis in many ways, I cannot help but feel that there may be more to it than at first meets the eye.
My concerns are in no way diminished by reading the proceedings in another place, where Miss Melanie Johnson, the Minister's colleague, spoke to the order at length in Committee. Her speech, which has now been echoed by the Minister, can be paraphrased as follows. The UK Patent Office is an efficient and strong performer—witness the Charter Mark grant for four consecutive years—but it is overwhelmed by work. She did not say whether that was because the office has been starved of resources and not recruited sufficiently, or whether it was because of the natural inventiveness of the British people—but we can let that pass. So, she said, we have to find a new way of providing help at no additional cost, which we can do by employing the Dutch and Danish patent offices. She concluded that that is excellent, first, because it is value for money; secondly, because it will maintain a rapid response rate to applicants; and, thirdly, because it will show us to be good Europeans and internationalists. So far, so reasonably logical.
But when answering questions from the committee she threw it all away. She remarked that the UK Patent Office carries out 15,000 searches and 12,000 examinations per annum. She said that the two offices in the Netherlands and Copenhagen—as the Minister has now told us—would carry out 400 searches in the first year and 750 searches in the second year and no examinations at all. So behind this brave proposal, which is trumpeted as a huge step forward, we have something that will cover only 2.7 per cent of the searches in the first year and 5 per cent in the second year and will give no help at all as regards examinations.
Further, as the Minister correctly pointed out, even to achieve that minimal help the UK Patent Office has had to set up substantial elaborate administrative schemes with regard to quality control, standard operating procedures, Ianguage tests and, above, all, as the Minister said, with regard to a buddy system whereby each applicant dealt with in Holland or Denmark has a UK patent officer as a buddy. That must represent a huge duplication and waste of effort.
It is hard to see how this proposal makes sense on an operational, administrative or financial basis. So what could be the basis behind the proposal? It could be the forerunner of a much larger, more far-reaching and
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ambitious idea. We can discover whether that is the case if the Minister is prepared to give the House clear and unequivocal responses to three questions.
First, does a UK citizen applying to the UK Patent Office to have his or her invention patented have the right to insist that it is done within the UK or can he be forced to accept processing in Holland or Denmark? Secondly, do the powers being granted in this regulation permit the Comptroller-General of Patents, Designs and Trade Marks to contract out to any country in the European Union provided he is satisfied with the quality standards being offered, or is it permissible to contract out only to Holland and Denmark? Noble Lords should note that I refer to powers in that regard, not proposals. Thirdly, by what date does the Minister expect the UK Patent Office to have recruited sufficient additional staff to be able to take back the 5 per cent share of applications from Holland and Belgium for processing within the UK?
If the answers to those questions are, respectively, "no", "yes" and "I do not know"—that is, no, a citizen cannot insist on processing within the UK; yes, he may go anywhere within the EU; and I do not know when the UK Patent Office will have recruited sufficient staff to bring back all processing within the country—a bigger issue may be at stake; that is, that this is a first step in the Government subsuming the UK Patent Office operations within the European Patent Office. After all, that has already happened in Holland, which is why that country has surplus capacity to offer us for the reasons the Minister laid out.
There is another straw in the wind with regard to this matter. While preparing my remarks for this debate I looked at an article on the front page of yesterday's Financial Times. I am sure that the Minister has seen the article; he probably wrote it. The article is headed,
"Inventive employees could he awarded royalties".
But that is not the critical paragraph, which comes later. It states:
"The proposal comes in a consultation launched by the DTI and the Patent Office as part of moves to bring the UK into line with changes to the European Patents Convention. Patent laws in Britain have not been significantly updated since 1977".
This idea is not necessarily a bad one. After all, as I believe the Minister pointed out, it would result in a single patent giving an inventor protection in 30 European countries simultaneously. However, it would be wrong for the Government to slide in such a proposal under the cover of a minor, not to say minimalistic, change involving Holland and Denmark only. If a strategic change of that kind is in prospect, the Minister ought to withdraw the statutory instrument we are discussing and resubmit it with revised explanatory notes. The House can then debate it properly in the full knowledge of what is in prospect.
Last night I had the privilege of listening to a lecture in Oxford on the five tests for entry to the euro given by Mr Ed Balls, one of the Minister's colleagues. He
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said that transparency was a key policy for the Government. I look forward to hearing from the Minister how transparent he is prepared to be.
Lord Razzall: My Lords, it is obviously for the Minister and not for me to respond to the speech we have just heard from the Conservative Front Bench. I am somewhat puzzled by the conspiracy which the noble Lord, Lord Hodgson, seems to spot within the terms of the order. I am particularly puzzled by it as the Explanatory Memorandum that Her Majesty's Government circulated with the order makes quite clear what their policy objective is:
"On a global scale, this points to an obligation on patent offices to work towards increased co-operation with a view to reducing duplication of effort and moving in due course towards mutual exploitation of each other's work".
Her Majesty's Government make no secret of the direction in which patent procedures and, indeed, hopefully, patent law, are moving. That is their policy objective. As someone who has over the years been involved in that field on a professional basis, I welcome that policy objective. I agree with the noble Lord, Lord Hodgson, that if we reach the stage where there is a significant further development in that area, we ought to have the opportunity to debate it within this House. However, on behalf of the Liberal Democrat Benches, I welcome the policy objective. Indeed, all practitioners in the field would undoubtedly welcome it as anything that can be done to eliminate the duplication of effort and cost that results from having to make individual patent applications in different countries is obviously to be welcomed.
However, as regards the terms of the order, I should like to probe the Minister on two points. First, I believe that the Explanatory Memorandum makes clear why the Patent Office is going down this route; namely, that there is now a significant mismatch between demand and examiner capacity. The reason for that is that it appears that the Patent Office has recruited and trained many examiners who then get a much better paid job in the private sector or in patent organisations. The Minister ought to confirm that the Government will keep an eye on that matter vis-à-vis the Netherlands and Denmark which, after all, are nice countries in which to live. It would be unfortunate if we continued the practice of training many examiners who then obtain better paid jobs in the Netherlands or Danish patent offices. If that situation continues, it rather defeats the objective of the proposed scheme. I hope that the Minister will confirm that his department will keep an eye on relative pay scales in that area as they could constitute a potential problem.
Secondly, on the general issue, perhaps the Government could confirm when they intend to conduct a review of how the scheme operates and when they will produce a report on how it operates in practice.
Lord Sainsbury of Turville: My Lords, I am grateful for the comments that have been made. The issue we

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are discussing constitutes a significant development for the Patent Office. It is important that people should understand the thinking behind the measure.
There is a backlog in this area, for the reasons that have been clearly set out. In terms of providing a service to industry it is important that that backlog is dealt with as quickly as possible. This is one—but only one—of the ways in which that should be done.
In answer to the noble Lord, Lord Razzall, I say that we must put even more energy into ensuring that we increase the numbers of people whom we recruit and hold on to them. That is fundamental to tackling the main issue. We have made some steps in relation to pay to bring that about, but it is difficult to increase numbers rapidly because of the large training element.
Some examinations are in fact being contracted out. Contracts have not yet been signed with either the Danish or the Netherlands office, but it is proposed to contract out 250 searches to the Danish office in the first year, rising to 500 searches in the second year. For the Netherlands, it is proposed to contract out 150 searches or examinations in the first year, rising to 250 in the second year. As the noble Lord rightly said, however, that is minor in comparison with the scale of the problem. Above all, we need to drive up the number of people so that we do the work in this country. The order should not be seen as doing anything more than giving added flexibility to deal with the problem in the light of the most important consideration, which is to improve the service that we give our customers.
The noble Lord, Lord Hodgson, asked three questions. He asked whether people had the right to insist that the patent was done in this country. The answer is "No", but we will make certain that the quality is the same throughout and allocations will he made in line with that. He asked whether the contract could go to any country, to which the answer is "Yes". Finally, he asked by what date we would be able to withdraw. We believe that there will be a possibility of that in two years, but that depends on being able to achieve the necessary recruitment.
None of this has anything to do with moving operations to the European Patent Office. Our Patent Office is one of the strongest in Europe. One problem with getting a further new European patent, which is actually highly desirable, is that many countries are deeply concerned that, in those circumstances, all the patent work would come to the United Kingdom, because the advantage of the English language is enormous for many businesses. The measure should be seen as standing on its own and creating useful flexibility to deal with the problem of the backlog.
The order is only a starting point. The Patent Office has still to finalise preparations with the Danish and Netherlands offices. If all parties are content with those preparations, work could begin in a matter of weeks and Patent Office customers would then start to benefit from an increased flow of work. The international co-operation issue is for the medium and longer term, but there is every prospect of significant
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developments in that direction. Such developments will be of great benefit to innovators seeking to protect their ideas across the world.
The draft order is a significant measure that will provide increased flexibility for the Patent Office, improve the service it can offer customers and prepare for future international co-operation.
On Question, Motion agreed to.

European Communities (Definition of Treaties) (Agreement on Trade, Development and Co-operation Between the European Community and its Member States and the Republic of South Africa) Order 2002
1.14 p.m.
Baroness Crawley rose to move, That the draft order laid before the House on 7th November be approved [First Report from the Joint Committee].
The noble Baroness said: My Lords, I know that we are under some time pressure, so I shall keep my remarks to the minimum.
Africa is a key UK interest and we are committed to working with European Union partners to find ways to bring peace, security and sustainable development to the continent of Africa. With that in mind, in October 1999 the EU concluded this trade, development and co-operation agreement with the Republic of South Africa. The agreement offers a number of benefits to South Africa and will serve to increase its co-operation and integration with the EU.
The first aspect of the TDCA relates to trading arrangements, and its key element is the establishment of a free trade area between the EU and South Africa. The UK believes that trade access and integration into world markets is vital for achieving sustainable development. The EU is already South Africa's main trading and investment partner, and the agreement will strengthen the relationship, giving South Africa better access to European Community markets and giving the EU better access to South Africa. The agreement covers about 90 per cent of current trade between the EU and South Africa.
The free trade area established under the agreement contains measures to protect South Africa, as well as advantages over other similar arrangements. The South African economy is being restructured, so the EU will open up its markets more quickly and extensively than will South Africa. The EU will liberalise around 95 per cent of imports from South Africa in the course of 10 years, while South Africa is expected to liberalise around 86 per cent in the course of 12 years. The TDCA will be fully compatible with WTO rules.
Certain products and sectors have been excluded because of their sensitive nature to either side. On the EU side, those are mainly agricultural products, while South Africa was concerned about the export of European industrial items. Those products account

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for a low percentage of trade between the two, and some sectors have been liberalised to access EU markets to some extent. Nevertheless, the UK realises the importance to the developing world of access to EU markets for agricultural products; that is especially true of Africa. We are committed to working together for further reform of the CAP and towards the opening up of EU markets.
The EU provides most of its development funding to South Africa through a bilateral programme: the European programme for reconstruction and development. The first multi-annual allocation covered the period between 1995 and 1999, and had an annual budget of around 125 million euros. It was targeted at improving the living conditions of the poorest sectors of the South African population, and at combating poverty.
For all those reasons, the UK supports fully the trade, development and co-operation agreement between the EU and the Republic of South Africa. We believe that it will play a vital role in South Africa's continued development and its further integration into the world economy. I commend the order to the House.
Moved, That the draft order laid before the House on 7th November be approved [First Report from the Joint Committee].—(Baroness Crawley.)
Lord Howell of Guildford: My Lords, I am grateful to the noble Baroness, Lady Crawley, for setting out the purposes of this order. We welcome the broad principles behind it and the prospect of the expansion of freer trade to the benefit of South Africa and its neighbours. However, there is a need for caution in examining the possible knock-on effects of the trade, development and co-operation agreement.
There could be major beneficial implications for South Africa, but we must remember that the pattern of southern Africa is one in which South Africa is only one part. It is part of the South African Customs Union, which consists of a number of other counties that I shall mention in a moment, and the larger Southern African Development Community, which has aspirations to be a free trade area in due course. The first important question is about the benefit that better access to European products, which may only be manufactured goods but the provisions could extend to processed foods as well, will have for smaller countries that are part of the South African Customs Union—notably, Botswana, Lesotho, Namibia and Swaziland. What happens if they find that their markets into South Africa are removed or undermined by European goods which may be subsidised in some areas if they are related to agriculture? There could be dangers there, together with damage to poor countries and infant industries, which will need to be safeguarded very carefully. I believe that the order made mention of infant industries, albeit those in South Africa.
Therefore, of course we are in favour of freer trade because we on these Benches believe strongly that free trade, a long with good governance, the rule of law and
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property rights are the keys to development and social prosperity—much more so, frankly, than the large transfers of government-to-government aid, which generally have done so badly for South Africa. Perhaps it is already having an encouraging effect. Indeed, the Minister in another place brought out a statistic which I found so heartening that I can hardly believe it to be true—that is, since this agreement was provisionally applied a couple of years ago, exports to the European Union from South Africa have risen by 50 per cent.
That is the background. In a moment, I want to return to the concern about other countries which may be hurt and not helped by the order. I have a few questions for the Minister. First, why are we debating the matter only now when the agreement was signed on 11th October 1999? I am sure that there is a perfectly good explanation for that.
Secondly, how will the order affect all the new members of the European Union which are about to join or will join next May? How will their various sectors, which could be in direct competition with exports from South Africa, be impacted upon?
Thirdly, as the noble Baroness explained, although a large number of products are included, some agricultural products are still excluded. It appears from the literature that the burden of adjustment is slightly heavier on the South African side. Forty per cent of all traded goods in South Africa appear to be affected, but in the European Union that figure is only 25 per cent. Therefore, it will not be roses all the way for South Africa. Some heavy adjustment in South Africa will have to take place, quite aside from adjustments in the neighbouring part of the South African Customs Union.
Then there is the question of how the dark poison of Zimbabwe and the impact that it is already having on the whole region will be affected by this aspiration for freer trade. Only last week, a senior Commissioner of the European Union travelled to the region and pointed out that the Zimbabwe effect was poisoning the whole development impetus of the region and undermining all the hopes that we have invested in the new economic plan in NePAD. How will that help? Will it help at all, or will it be undermined by the continuing deterioration of the Zimbabwean situation as it plunges towards total catastrophe and starvation?
I return to where I started—that is, to the immediate impact on the other members of the South African Customs Union. Botswana, Lesotho, Namibia and Swaziland are fine countries. They are doing their best to move forward. They export substantially to South Africa and now have a new competitive rival. Competition is good, provided it is handled in a socially understanding and sympathetic way. As a result of trying to do good on this front, we must not find that we damage and weaken many people who are

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already in an extremely disadvantaged state. Those are the questions that I wanted to raise in relation to the order.
Baroness Harris of Richmond: My Lords, this is unfamiliar territory for me, but this is a non-controversial measure, which we on these Benches welcome. We very much welcome the agreement on trade development and co-operation between South Africa and the European Union. As we heard, the European Union is South Africa's main trading and investment partner. Therefore, it is wholly appropriate that the agreement will greatly benefit both South Africa and the EU with better access to markets.
I have only one question for the Minister. Is she able to tell us what infant industries the Government believe should be exempt from incorporation into the treaty? Because we are short of time, I shall be happy if she gives her response in writing.
Baroness Crawley: My Lords, I thank noble Lords for the extremely interesting but short debate on this significant agreement. The noble Lord, Lord Howell of Guildford, asked a number of important questions. First, he talked about the importance of the agreement—or perhaps, he thought, the threat within the agreement—for the South African Customs Union countries. South Africa's neighbours within the customs union should benefit from the cheaper imports which will enter South Africa as a result of the agreement. Furthermore, the rules of origin, which, as he knows, are flexible within the agreement, should allow South Africa to export customs union goods as South African. Therefore, if they are made in Namibia or Swaziland, they can still be exported into the EU as South African goods because the rules of origin have been made flexible specifically for this agreement.
He also asked why we are ratifying the agreement only now. Again, that question is quite proper. The UK hopes shortly to join the six other member states that have ratified the agreement. The agreement between South Africa and the EC was reached in late 1999, as the noble Lord knows, and has been in provisional application since 2000. In order for it to come into full force, all member states, as well as South Africa, will have to ratify. The delay has been caused, in part, because of complications over the position of our Crown dependencies in relation to the agreement. We hope that other member states will ratify fully as soon as possible.
The noble Lord also asked about candidate countries. Those countries will become party to the agreement when the treaty of accession comes into force. If the noble Lord wishes me to respond further, I shall be happy to do so in writing.
Our relationship with South Africa covers far more than Zimbabwe. It would be wrong to allow key bilateral issues in trading relations between the European Union and South Africa to be affected adversely by what has happened with Zimbabwe. As the noble Lord knows, the EU last agreed to extend sanctions in September this year. Seventy-nine people
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are now on the travel-ban list and half a million assets belonging to named people in Zimbabwe have been frozen in 28 accounts in the UK. Therefore, we are doing everything that we can to support Zimbabweans and to isolate the regime. But we do not wish the difficult situation with regard to our relations with Zimbabwe to influence in any negative way our agreement over this TDCA.
I thank the noble Baroness, Lady Harris, for her remarks and I shall indeed write to her on the matter of the infant industries.
On Question, Motion agreed to.

Northern Ireland Act 1998 (Designation of Public Authorities) Order 2002
1.29 p.m.
Baroness Farrington of Ribbleton rose to move, That the draft order laid before the House on 24th October be approved [40th Report, Session 2001–02, from the Joint committee].
The noble Baroness said: My Lords, I beg to move the Motion standing in the name of my noble and learned friend the Lord Privy Seal.
The order is made under Section 75 of the Northern Ireland Act 1998. The purpose of the draft order is to make the bodies listed in the schedules "public authorities" for the purposes of Section 75 of the Northern Ireland Act 1998. Those public authorities will be subject to the statutory duties set out in Section 75(1) and (2) of the Act, requiring them to have due regard to the need to promote equality of opportunity and good relations between specific groups.
Although devolved government has temporarily been suspended, we remain committed to ensuring the full implementation of the agreement. The order is a further step in that important process.
In order to demonstrate its commitment, each public authority is required to produce an equality scheme that sets out how it will fulfil the duties. The schemes will cover the full range of the organisation's functions in Northern Ireland. As required by the guidelines approved by the Secretary of State each will include arrangements for policy appraisal; public consultation; public access to information and services; monitoring; and timetables. Those schemes will be submitted to the Equality Commission for approval.
The Equality Commission will advise on preparation, validate and monitor the Section 75 statutory obligation and will investigate complaints of default. Section 75(3)(b) and (c) of the Act automatically brought the vast majority of public authorities in Northern Ireland—around 120—within the scope of the statutory equality duty.
We intend that the statutory duty should, in time, embrace as many bodies as possible. It is our policy that non-designation should be the exception, not the rule. This order is not the end of the process and further designation orders will be brought forward as and when required. I commend the order to the House.
Moved, That the draft order laid before the House on 24th October be approved [40th Report, Session 2001–02, from the Joint Committee].—(Baroness Farrington of Ribbleton).
Lord Glentoran: My Lords, I have little to say on this order. It moves forward with the agreement. I support the order.
Lord Smith of Clifton: My Lords, on these Benches we regard the order as a welcome addition and look forward, as the Minister assured us, to further designations in the future when appropriate.
Lord Maginnis of Drumglass: My Lords, I shall endeavour to be brief. I am aware of the pressure of time. I hope that your Lordships will not consider me churlish if I express the hope that Northern Ireland business is not forced to be rushed through in an inappropriately short time. I spent 18 years in another place where. for too long, Northern Ireland business was relegated to the midnight hours or rushed through inappropriately.
No one can disagree with the objectives of the order. It is one thing to expect bodies and individuals to meet the criteria for promoting equal opportunity and promoting good relations, but quite another to see that implemented on the ground. I implore the Government to look carefully at some matters that they are forcing upon the people of Northern Ireland which contradict the objectives of the order. There is an inequality of opportunity and I hope to deal with that to a greater extent when we discuss the new police legislation due to come before the House in the future.
Baroness Farrington of Ribbleton: My Lords, I thank the noble Lords, Lord Glentoran and Lord Smith of Clifton, for their support. I say to the noble Lord, Lord Maginnis, that the Government have absolutely no intention of rushing through these orders. I had understood that noble Lords who wished to be present preferred to take the orders now rather than after Starred Questions. On behalf of my noble and learned friend the Lord Privy Seal, I can assure the noble Lord that we guard jealously the right of noble Lords to comment at the right time on matters affecting Northern Ireland.
I am aware of the view of the noble Lord, Lord Maginnis, on the issue of equality in general. I believe that he supports the order and its aims. I look forward to receiving his comments in detail as we embark on the Police (Northern Ireland) Bill.
On Question, Motion agreed to.

Local Government (Miscellaneous Provisions) (Northern Ireland) Order 2002
1.35 p.m.
Baroness Farrington of Ribbleton rose to move, That the draft order laid before the House on 18th November be approved.
The noble Baroness said: My Lords, I beg to move the Motion standing in the name of my noble and learned friend the Lord Privy Seal. The order will amend the existing legislation relating to the operation of local government in Northern Ireland. It will remove ambiguity and complexity from existing provisions for funding district councils and strengthen their powers and responsibilities in the areas of economic development and community safety.
I propose to comment briefly on the order. I draw noble Lords' attention to the principal provision. The main purpose of the order is to put in place a new methodology for the distribution of the resources element of general grant payable to district councils. It would also extend the existing economic development powers and introduce new discretionary community safety provisions for councils.
Articles 3 to 7 deal with the payment of grants to district councils. Article 4 is an enabling power for the making of regulations to set out the formula for determining the amount of the resources element of the general grant payable to district councils. The existing statutory formula is complex and frequently results in wide variations year-on-year, making effective long-term financial planning difficult for councils. The new methodology would be simpler and would incorporate new factors, taking account of the relative socio-economic disadvantage between districts, in accordance with new targeting social need principles. It would also provide for regular payments to facilitate good financial planning.
Article 8 would extend the powers to promote economic development, allowing a broader range of activities, including the provision of sites and the acquisition of land for economic development. Also, the article would repeal the existing time limit on expenditure by district councils for that purpose.
Article 9 provides powers to district councils to engage, if they so wish, in community safety activity through voluntary community safety partnerships. Such partnerships are to be established under a community safety strategy devised by the Secretary of State.
Extensive consultation has taken place on all those matters and district councils in Northern Ireland generally accept the proposed changes. In particular, there has been overwhelming support for the new economic development and community safety powers.
Your Lordships may be aware that the Local Government (Miscellaneous Provisions) (Northern Ireland) Order 2002 is almost identical to the Bill that was being debated by the Northern Ireland Assembly prior to its suspension. It was considered by the Assembly's Environment Committee, which subsequently published a report on its findings. Concerns raised by the Environment Committee and suggested amendments have been addressed in the order. The Environment Committee was content that its recommendations would be taken on board and did not propose to bring forward any further changes. I commend the order to the House.
Moved, That the draft order laid before the House on 18th November be approved.—(Baroness Farrington of Ribbleton.)
Lord Glentoran: My Lords, I shall be considerably briefer on this order than I had intended to be. One point that I wish to make is that I believe this is a very—and I am not talking about today's timing and the rush there is now—unsatisfactory way of ruling Northern Ireland. I have mentioned this matter outside the Chamber to my Chief Whip and to the Government Chief Whip, and I know it is the view of my colleagues in another place. We cannot continue running Northern Ireland, in the absence of the Assembly, by a series of orders taken one after the other without proper and due scrutiny. I must ask the Government to examine a means whereby we can have pre-legislative scrutiny of some of these orders.
This order is a classic example of what is required. It is a significant order, altering the rules and regulations for 26 local authorities. It sets up orders and ways and means of adjusting the financing from one local authority to another and allowing them to raise funds for a great number of different things. I am sure that had this debate taken place in Stormont, it would have been contentious and would have lasted a considerable amount of time. I see the noble Lord, Lord Rogan, nodding in agreement with me.
That is just one example. There are nine orders outstanding at the moment that concern the management of Northern Ireland, six of which will be taken after the Second Reading of the Police (Northern Ireland) Bill. I was asked whether I was prepared for that to happen. I confess that I said, "Yes", but I believe that probably nearly every one of those orders deserves a separate debate of about one hour each in the form of an Unstarred Question. This method of pushing loads of orders through—there will be more coming until the Northern Ireland political situation changes—is quite wrong. I must ask the Government in the strongest possible words to look into this matter and to make sure that some form of democratic process is put in place so that we can properly scrutinise and examine orders which would be debated in full were they in Stormont.
In principle, I have always believed that the right place for the management of Northern Ireland and for parties and political tribes to work, to get together, and to make matters work is at a local level. I believe that there should be a significant reorganisation of local government. The number of local authorities should be significantly reduced and the next stage, if we do not quickly get the Assembly back working properly, should be to devolve more power to fewer local authorities and to make it work in the villages and in the towns. Having said that, I support this order.
Lord Smith of Clifton: My Lords, I associate these Benches with the remarks by the noble Lords, Lord Maginnis and Lord Glentoran. We are the guardians of Stormont during its suspension. We must not let these orders go through on the nod; we must
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contrive some way to debate these orders properly because, as the noble Lord, Lord Glentoran, says, there are many more coming along.
We welcome the rationalisation of the grant provisions and finances to local authorities, in particular, the extension in local government powers with regard to economic development. This is the first time in my living memory that a government have extended the powers of local government instead of taking them away. We support the orders.
Lord Maginnis of Drumglass: My Lords, I first acknowledge and thank the noble Baroness, Lady Farrington, for her response to the earlier order.
Anyone who wears a local government hat, as I first did over 21 years ago and continue so to do. will welcome this order. But I regret that it has to be dealt with here instead of in the Northern Ireland Assembly. I hope that it will not be long before that forum is up and running again.
Local government has, particularly since the mid to late 1980s, been a stabilising influence in Northern Ireland. Extending the responsibilities of local government has increasingly benefited our communities.
The power devolved to councils in relation to economic development, which is dealt with at Article 8, has been a successful innovation during the past decade. I welcome the extension of that provision at Article (8)(2)(b) to allow councils to acquire, hold and develop land for that purpose.
A careful and considered approach will have to be adopted in implementing this function so that small local government bodies are not overstretched financially, or in respect of their ability to cope with a very specialised discipline, and I would hope that the department and Invest Northern Ireland would be sympathetic and co-operative in this area.
The Assembly when it resumes its functions will have to grapple with how 27 local government bodies can be reduced to a smaller number of more economically viable units if this example of devolved responsibility is to work effectively.
I welcome the way in which the general grant element has been dealt with and the process modified to more equitably facilitate less well-off councils. The new three-year provision is certainly welcome in so far as it better allows forward planning to take place.
I hope that, as has happened this year and in previous years, when the general grant element was dealt with on an annual basis and not quantified until the last minute, the new three-year assessment will permit earlier notification to councils of their entitlement.
Finally, Article 9(2) states:
"The Department may by order confer or impose on district councils other functions … "
I say no more than that I sincerely hope that the powers of district councils in relation to community safety councils will be handled sensitively and that

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district councils will be given time to build up trust on this front before the department "imposes" anything on them.
I implore direct rule ministers to recognise that to irritate political sensitivities in this area could create the opposite effect to what is intended. I believe that consultation, rather than imposition should—indeed must—be the methodology employed in this initiative. I support the order.
Baroness Park of Monmouth: My Lords, the noble Baroness was kind enough to reassure me that this order did not concern the DPPs. For that I thank her. I therefore have nothing further to say, except that I strongly support the views of my noble friend Lord Glentoran and the noble Lord, Lord Smith, that while we are in direct rule, we need to devote more time than this to these issues.
Baroness Farrington of Ribbleton: My Lords, I thank all noble Lords who have taken part in this short debate. I. too, share the background of the noble Lord, Lord Maginnis; I was in local government for a period of 24 years until 1997. I note the points raised by the noble Lord, Lord Glentoran. Of course we all hope that the need for Westminster to make decisions will last for a short time only.
I note noble Lords' welcome for the ability for future planning. At the moment there is no intention and there are no plans to impose on Northern Ireland the functions about which the noble Lord expressed concern. I, too, welcome the fact that this is an extension of powers to local government. If there are any points raised which I have failed to answer, I shall of course write to noble Lords.
On Question, Motion agreed to.

Housing Support Services (Northern Ireland) Order 2002
1.48 p.m.
Baroness Farrington of Ribbleton rose to move, That the draft order laid before the House on 18th November be approved.
The noble Baroness said: My Lords, I move this Motion on behalf of my noble and learned friend Lord Williams of Mostyn.
The purpose of the draft Housing Support Services (Northern Ireland) Order 2002 is to confer on the Northern Ireland Housing Executive the function of securing the provision of housing support services to individuals with particular needs, and to empower the Northern Ireland Housing Executive to pay grants to eligible persons towards expenditure incurred by them in providing certain housing support services.
The order amends Section 129 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 to exclude payments in respect of such services when determining entitlement to housing benefit. The provisions mirror the measures contained in the Local
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Government Act 2000—Section 2 and Sections 92 to 96—and the Housing (Scotland) Act 2001—Section 91.
If any noble Lords have detailed questions, I shall of course be delighted to answer them. The proposals broadly mirror arrangements proposed for Great Britain, which were subjected to widespread documentation through the document, Towards Supporting People. They were also debated in the Northern Ireland Assembly and scrutinised by the Social Development Committee. Of course, they include the full provisions relating to the disclosure and unauthorised disclosure of information of information necessary to comply with data protection legislation. There is also provision to amend Section 129 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 to exclude payments in respect of housing support services when determining entitlement to housing benefit. I beg to move.
Moved, That the draft order laid before the House on 18th November be approved.—(Baroness Farrington of Ribbleton.)
Lord Glentoran: My Lords, the order seems to be common sense. I support the Motion. It is worth saying that the Northern Ireland Housing Executive has done a fantastic job from many years. It should be complimented. I hope that the order will help it to continue.
Lord Smith of Clifton: My Lords, we on these Benches welcome the order.
Lord Rogan: My Lords, I shall be brief. I begin by echoing the sentiments of other noble Lords, especially the noble Lord, Lord Glentoran, in asking for more time to be debate Northern Ireland issues. It is a matter of deep regret that we are today discussing these three Northern Ireland orders; they should be dealt with hack home in Belfast. Speaking as an Ulster Unionist, I can only underline once again how keen is my party that we return to normal business in Northern Ireland. However, let me repeat that that can and will happen only when the republican movement has moved to carry out the necessary act of completion so desired by the vast majority of people in the Province.
The Housing Support Services (Northern Ireland) Order 2002 has been introduced to replace the Housing Support Services Bill, which was welcomed by all parties in the Northern Ireland Assembly. As such, I am more than happy to welcome the legislation in its new form. The one area of concern raised during the Bill's passage through the Assembly was funding—especially whether sufficient money had been set aside to provide for the potential growth of needs. Can the Minister give an assurance that the order before us includes sufficient far-sightedness to ensure that the Government, or the Northern Ireland Executive, if it is to be restored, avoids a funding crisis furl her down the line?
Baroness Farrington of Ribbleton: My Lords, I join the noble Lord, Lord Glentoran, and other noble

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Lords in their congratulations. I can only stress to noble Lords that when the Order Paper was printed, every expectation was that the first order on the agenda would take a quarter of an hour and Northern Ireland would have its appropriate time. We have certainly not in any way sought to curtail debate.
I hope that it reassures the noble Lord, Lord Rogan, if I tell him that officials from the Department for Social Development are in contact with their counterparts in the Department of Finance and Personnel and have been involved in discussions with the Treasury to ensure that the supporting people budget is adequately funded. If noble Lords want on reflection to ask further questions, I hope that they will write to me.
On Question, Motion agreed to.

Business
Baroness Crawley: My Lords, I beg to move that the remaining order and regulations be postponed until after Starred Questions. They will be followed by my noble friend Lord Bassam of Brighton repeating a Statement on the local government financial settlement 2003–04.
Moved accordingly, and, on Question, Motion agreed to.
Baroness Farrington of Ribbleton: My Lords, I beg to move that the House do now adjourn during pleasure.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended at 1.54 p.m.]

Environmental Regulatory Inspection Charges
3 p.m.
Lord Mackie of Benshieasked Her Majesty's Government:
How charges for inspection are fixed in the case of environmental bodies such as the Environment Agency.
Baroness Farrington of Ribbleton: My Lords, there are a number of environmental regulatory charging schemes, covering a range of industrial and agricultural sectors. The general principle adopted is that regulators should set charges to cover the full costs of regulation and that those whose activities impinge on the environment, rather than taxpayers, should meet the cost. The Environment Agency's charges are considered and approved by Ministers each year.
Lord Mackie of Benshie: My Lords, would the Minister like to hear of a specific example that affects
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agriculture badly? A friend of mine put in four septic tanks to handle the facilities for the students who come to pick his fruit. The cost for the tanks and for putting them in was £3,296 and £400 for labour, making a total of £3,696. SEPA—the Scottish Environmental Protection Agency—which I would relate closely to the English Environment Agency, as they sprang from the same sire—charged £2,320 for an inspection that took about an hour. The British Geological Survey took, with VAT, £646. The VAT on the tanks was £566. For an expenditure of £3,696, the Government collected £3,532. That cannot be good for agriculture.
The charges levied by SEPA and the British Geological Survey should be scaled according to the size of the job. I dare say that, on a job costing £400,000, such a sum would be reasonable, but it is unreasonable for that job.
Baroness Farrington of Ribbleton: My Lords, the noble Lord is right in so far as SEPA originated from the bodies that came together to form the environmental protection agencies. However, as the noble Lord is aware, because he helped the process along, devolution means that he must address his views on what happens in Scotland to the Scottish Parliament. It is a matter for that body.
I reiterate that, for England and Wales, the policy is that the costs must be recovered. From my background in local government, I know that people often fail to recognise that additional costs are incurred in providing services. What happens in Scotland is a matter for the Scottish Parliament, in whose existence the noble Lord rejoices.
Baroness Byford: My Lords, how many schemes are in being? When were they last reviewed? Are they reviewed regularly?
Baroness Farrington of Ribbleton: My Lords, unusually, I am puzzled by the noble Baroness's question. The range of functional responsibilities of the Environment Agency for England and Wales covers flood defence, water resource management, water quality, integrated pollution control, radioactive waste management and waste management. Therefore, it is impossible to provide a comprehensive list of the individual areas in which there is activity that falls under the remit of the agency.
The question posed by the noble Baroness was not clear.
Baroness Byford: My Lords, in her response to the noble Lord's Question, the Minister said that there were various charging schemes. My questions were: how many schemes are there, when were they last reviewed, and are they reviewed regularly?
Baroness Farrington of Ribbleton: My Lords, I go back to the point that the charging systems for England and Wales are fixed in consultation with the Environment Agency. I cannot give the noble Baroness a list giving the exact number of such

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schemes, although I am happy to write to her. The schemes cover regulation of all the industrial complexes, farming and other areas of pollution.
The recommendations made by the Environment Agency on the level of fees to be charged are, as far as I am aware, adjusted annually. Should I prove to be wrong, I shall write to the noble Baroness.
Lord Sewel: My Lords, has a calculation been made setting the charges that properly fall on farmers and on the agriculture industry against the subsidy that they receive from public funds?
Baroness Farrington of Ribbleton: My Lords, I am not aware of any work to create that precise cross-referencing. The scheme is not intended to produce more than the cost of administering the service and should ensure that no additional cost falls on the taxpayer, under the polluter pays principle.
Lord Greaves: My Lords, Section 46 of the Environment Act 1995 requires that the accounts of the Environment Agency be audited each year by auditors appointed or approved by the Secretary of State. Does that audit include a duty to consider whether the charges levied by the Environment Agency are reasonable?
Baroness Farrington of Ribbleton: My Lords, I would be extremely surprised were that not to be the case. It is part of the terms of reference of the Environment Agency. In addition to the consideration given by the auditors, there is the ministerial responsibility, which, in England and Wales, is held by the appropriate Minister of the Welsh Assembly working in co-operation with my right honourable friend Michael Meacher.

Special Constables
3.7 p.m.
Lord Bradshawasked Her Majesty's Government:
Whether they will bring forward proposals to pay special constables.
Lord Bassam of Brighton: My Lords, I am aware that there has been a debate for a number of years on whether special constables should be paid. Specials themselves are not agreed on this. Some Specials have argued in favour, while others have felt that payment would devalue their volunteer status.
We intend to introduce amendments to the Special Constabulary regulations to allow police authorities to submit schemes that they have agreed with their chief constable for the payment of special constables. Such schemes will require the approval of the Secretary of State. Running a number of trial schemes will help establish to what extent payments to Specials have a
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positive effect on their recruitment and retention and on the number of hours that they are able to offer their force.
Lord Bradshaw: My Lords, I thank the Minister for that Answer and declare my interest as Vice-Chairman of the Thames Valley Police Authority.
The Special Constabulary was around 20,000 when the Government came to power and is now 11,500. By the time that the Minister moves to bring in a scheme, the constabulary will have disappeared altogether. He gave almost the same Answer as I have had before.
Will the scheme that the Minister has in mind happen quickly? Will it specifically target the police authorities near London, for whom retention is a serious problem? Despite large efforts to recruit more officers, we are unable to increase numbers, and we are losing experienced officers to London and further away, where houses are cheaper.
Lord Bassam of Brighton: My Lords, first, I should perhaps congratulate the noble Lord, Lord Bradshaw, on his persistence on this issue. It is a very important issue and he has raised it a number of times. I have probably responded in the past to some of his questions.
Yes, we recognise that that is a problem. Yes, we want to see the new approach adopted as soon as possible. I believe that we telegraphed it in last year's White Paper Policing A New Century: A Blueprint For Reform. We want carefully to evaluate the impact of running such pilots. Perhaps the noble Lord is aware of the proposals from the Cumbria police authority which is intending, obviously with co-operation from the centre, to introduce a pilot scheme to evaluate the impact that relaxing the regulations might have on attracting and, more importantly, retaining special constables working in that difficult area.
Viscount Bridgeman: My Lords, does the Minister agree that the fall in special constables in England and Wales, quoted by the noble Lord, Lord Bradshaw, reflects a serious crisis in morale among special constables? Does he also agree that there is a danger that the introduction of community support officers may further undermine that morale?
Lord Bassam of Brighton: My Lords, I do not accept that there is a lack of morale. There is continued confidence among Specials in the support and encouragement that they receive. There is no doubt that we are successful in recruitment; it is retention that is the problem. That is precisely why means of retention through relaxation of the current regulations are being seriously considered and will be evaluated through pilots.
I do not agree with the second point made by the noble Viscount relating to community support officers. They are increasingly popular among those forces across the country which are now submitting

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schemes. They have been successfully introduced in London and are doing a tremendous job on behalf of the communities that they serve.
Lord Corbett of Castle Vale: My Lords, will the Minister confirm that there was quite an exodus of special constables two or three years ago when basic training requirements were introduced, which meant that long-serving special constables who had been happy to do the job, were expected to go through precisely the same training as somebody who had just walked through the door and said that he or she wanted to be a special constable? Is that still the case?
Lord Bassam of Brighton: My Lords, there has been some research into the causes behind the falling away of Specials within the special constabulary. No one reason is pinpointed. I believe that last year some 400 Specials actually went into the mainstream police service. That is very encouraging; that has always been a good route. Some 40 per cent have cited family reasons as one of their reasons for leaving the Special Constabulary; namely, the pressure on them of the mix of their job and their work/life balance.
Baroness Gardner of Parkes: My Lords, will the Minister tell me whether, although the special constables are not paid, they are given any form of honorarium or support? The Minister mentioned that they are given support. Does he mean financial support or are they actually out of pocket because they are special constables?
Lord Bassam of Brighton: My Lords, no. I do not believe that they will be out of pocket. They receive allowances and costs for being in attendance. As I have made plain earlier—and I am sure that the noble Baroness, Lady Gardner, is aware—payment is in the form of a wage. Other support is management encouragement and working with the local force systems.
Viscount Tenby: My Lords, is it not the case that all other voluntary service organisations, ranging from retired/ retained firemen to the Territorial Army, are paid? Why should the police be different?
Lord Bassam of Brighton: My Lords, the noble Viscount, Lord Tenby, raised a question which has obviously been debated many times in the past. It is for that reason we have come to the stage where we believe that there is some value and merit in relaxing the regulations so that a pilot can be evaluated. I must say—and I believe that I made the point in my initial response—that special constables themselves are somewhat divided as to whether payment is a good idea. In receiving payment, they would have to be taxed not just on the payments they receive, but also on their attendance allowances. For many of them there is not necessarily a big benefit to be found in payments.
Lord Roberts of Conwy: My Lords, while approving of the recruitment of special constables, will the
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Minister ensure that prospective special constables' criminal records are checked before they are appointed, whether or not they are paid?
Lord Bassam of Brighton: My Lords, I believe that the noble Lord, Lord Roberts, can rest assured that their record is well checked.
Lord Bradshaw: My Lords, will the Minister consider a proper pilot—not some little scheme in Workington—in a big police authority?
Lord Bassam of Brighton: My Lords, I hope that the noble Lord, Lord Bradshaw, was not being discouraging towards the efforts of the Cumbrian police service because I am sure that the special constables will be very welcome in Workington; the extra special constables that they receive will be very welcome on the streets.
As to the second point raised by the noble Lord, it is for police authorities to bring forward schemes in consultation with their chief constables. They will be properly looked at and evaluated, and then put into effect.

Royal Navy and RFA: Satellite Television
3.15 p.m.
Lord Faulkner of Worcesterasked Her Majesty's Government:
What consideration has been given to the provision of satellite television dishes to all Royal Navy and Royal Fleet Auxiliary ships; and what would be the cost involved.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): My Lords, a package utilising existing military satellite links to provide "near real time TV" to larger ships should be complete next summer. We have commenced a trial of the feasibility of providing satellite dishes to all RN and RFA surface ships. Once trials are complete, we will be assessing likely costs and will need to consider the affordability alongside other projects.
Lord Faulkner of Worcester: My Lords, I thank my noble friend for that moderately encouraging reply. He knows that recently I completely my commitment to the Armed Forces Parliamentary Scheme when I joined HMS "Westminster" while it was sailing in the South Atlantic. Is the Minister aware that when I asked members of the crew what single change would most improve life at sea, the almost universal response was the opportunity to keep up with the news, follow football and watch the soaps? That was what would make the greatest difference.
Given that the technology now exists to provide satellite television almost anywhere in the world, perhaps I may encourage my noble friend to give its provision a higher priority? In addition, would the

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Government be willing to consider a commercial sponsor, if one were forthcoming, to help defray the cost?
Lord Back: My Lords, I begin by congratulating my noble friend on completing his tour of duty on the Armed Forces Parliamentary Scheme. I am reliably assured that he made an excellent sailor. As regards his Question, that matter has a high priority. As I say, by summer next year all three aircraft carriers, HMS "Ocean" and all frigates and destroyers will have, effectively, satellite television. That is a high priority.
As far as concerns sponsorship, the Government are ready to consider any practical and realistic ways of providing rest and recreation opportunities, including sponsorship. As my noble friend will know, however, the devil is often in the detail. Any arrangements which might be considered with private sponsors would have to meet rigorous criteria of propriety and regularity.
Lord Glenarthur: My Lords, will the noble Lord explain what the difference is between "real time" television and "near real time" television and how that affects the noble Lord, Lord Faulkner, who spent some time in the South Atlantic?
Lord Bach: My Lords, that is a jolly good question—and I shall answer it. "Near real time" television will use existing military satellite links to transmit approximately six hours of recreational television over an 18 hour period each day. That can be played back on board at a time appropriate to the time zone in which the ship is operating. That is why it is "near real time".
Lord Burnham: My Lords, bearing in mind the enormous demands on finance in the Ministry of Defence, can the noble Lord give a figure for the cost of installation of the dishes?
Lord Bach: My Lords, I am not in a position to give a figure as to cost. However, as far as the larger ships are concerned that I have outlined, that cost will be met.
Viscount Falkland: My Lords, is it not a fact that—bearing in mind the importance of crew welfare—there is a captive audience here? It may be a wonderful opportunity to show some British films. British films have a great deal of difficulty in being distributed and seen. Do the Government have any policy to show those films to the crews in order that we may receive some feedback which may, in the end, have a salutary effect on British film production and distribution which could benefit us all?
Lord Bach: My Lords, the noble Viscount makes an excellent point. Perhaps I should remind him that films, by way of video and film, have been shown on Her Majesty's ships, both surface and submarine, for many years. The film "In Which We Serve", which I
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am reliably informed was seen by my noble friend Lady Symons on a submarine on one occasion, is one that we shall ensure is shown again soon.
Lord Greenway: My Lords, does the Minister agree that the provision of properly functioning armament and equipment should remain the greatest priority as compared to the provision of television to Her Majesty's ships?
Lord Bach: My Lords, of course I agree with that. The whole House will agree with that. But, as we move forward with technology, it is very important that those who bravely serve on our ships should have as good a time as possible.
Earl Ferrers: My Lords, are we moving forward if the programmes shown are similar to the film "In Which We Serve", which I believe is about 30 years old?
Lord Bach: My Lords, I am surprised that the noble Earl, in particular, should ask that question. I thought that, with me, he shared a liking for past times. Thirty years is not that long ago. I think the film is older than that and was made perhaps 60 years ago. But it remains an excellent film, which I am sure the noble Earl has enjoyed.
Lord Puttnam: My Lords, is the Minister aware that the British film industry is finding it extremely difficult to attract audiences outside this country? The fact that sailors on ships will be viewing these films outside the UK may be a tremendous promotional asset for the DTI when it is pointing out the advantages of UK film making.
Lord Bach: My Lords, I am grateful to my noble friend. No one in this House has greater experience in this field than he. I shall certainly bear what he has said in mind.
Lord McNally: My Lords, if the research of the noble Lord, Lord Faulkner of Worcester, is right and the priorities of the men on HMS "Westminster" is to watch news, football and soaps, is this not a long way from the traditions of the British Navy expressed by Winston Churchill, which were "rum, sodomy and the lash"? Does this trend bode altogether well for the mettle of our fighting men?
Lord Bach: My Lords, Sir Winston Churchill was undoubtedly the greatest Englishman ever—the BBC have told us that—but he was not always right.

Special Educational Needs
3.22 p.m.
Baroness Walmsleyasked Her Majesty's Government:
What action they intend to take in the light of the report from the Audit Commission on children with special needs.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, we welcome the report, which recognises the action we are taking to address many of the priority issues it identifies. We will publish next year a programme of practical measures to improve outcomes for children with special educational needs through earlier intervention, better co-ordination of education, health and social services, support for inclusion and action to raise the attainment and recognise the achievement of children with special educational needs.
Baroness Walmsley: My Lords, I thank the Minister for that Answer. Is she concerned that the Audit Commission report showed that many parents of children with statements were finding great difficulty in getting those children into the school of their choice, with the implication that schools are excluding children with special needs in order to protect their position in the league tables? Given that the report also states that,
"schools have struggled to balance pressures to raise standards of attainment and become more inclusive, and that national targets and performance tables fail to reflect the achievements of many children with SEN so that inclusive schools appear to perform badly",
is it not time to abandon these misleading and damaging league tables and to introduce a system which properly measures the successes of children and schools?
Baroness Ashton of Upholland: My Lords, there is evidence from the Audit Commission—largely anecdotal—of the unwelcoming attitudes of some schools towards children with special educational needs. Noble Lords will recall that from July 2002 there is a requirement for education authorities to publish their arrangements for monitoring the admissions of children with special educational needs. This will be part of the discussions of the statutory admissions forum in order to ensure that we are dealing with the needs of these children. Many schools are inclusive and achieve high standards. The introduction of value added measures will help to support schools which are inclusive and which work well and hard with children of differing needs. We hope that they will give a more rounded picture. We are looking at ways in which we can recognise the wider achievements of schools and pupils as part of this action programme.
Lord Astor of Hever: My Lords, the Audit Commission identified particularly the difficulties that
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children with autism spectrum disorders experience in school admissions. I declare an interest as the father of an autistic daughter. What action are the Government taking to address this problem?
Baroness Ashton of Upholland: My Lords, work has gone on between the Department for Education and Skills and the Department of Health which has produced guidance to help promote good practice and work with local education authorities. However, this is an area in which we have more work to do. In considering an action programme, I am concerned to ensure that we are supporting children on the autistic spectrum effectively. That means working closely and as well as we possibly can with local education authorities and organisations which support these children.
Lord Renton: My Lords, will the Government bear in mind the vital, overriding factor that a high proportion of children with special needs are in need of special education? To send them to mainstream schools not only deprives them of that, but obstructs the general giving of education for normal children in mainstream schools.
Baroness Ashton of Upholland: My Lords, there is much evidence to support the fact that many children who have special educational needs can be taught well in a mainstream school, to the benefit of all the children in that mainstream school. We have 1,098 maintained special schools. A working group is currently examining how best the department and the Government as a whole can support special schools, working closely with heads and others involved in special schools, to see what more we can do to ensure their rightful place. I agree with the noble Lord that they are valuable for our children with complex needs who are best educated in special schools.
Lord Addington: My Lords, Recommendation 8 in the Audit Report in regard to the monitoring of the progress of special needs is probably one of its most damning because it suggests that we do not know when we are getting it right and getting it wrong. Will the Minister give an undertaking that we shall shortly have enough information to be able to make assumptions on all the legislation on this issue that we have passed through Parliament? Without it, we shall not know whether we have wasted at least half our time.
Baroness Ashton of Upholland: My Lords, I can give the noble Lord the assurance that he seeks. The information currently coming through from the data identifies, first, the special educational needs of children within a framework; and, secondly, the attainment of those children. So from next year, for the first time, we shall have the kind of detailed information that will help us to work out the right level of support; to enable us to ensure that schools are more

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successful in supporting these children; and to help us to value their attainment, for reasons which are obvious to the noble Lord.
Baroness Blatch: My Lords, does the Minister recognize—I am almost certain that she will—the very real increase in the number of young people who are now diagnosed as having autism? Some of the difficulties they are having, both with local authorities as well as with schools, has more to do with the lack of support in the classroom for the teacher, who ultimately has to cope. Any disruption which arises from that will impact on the other children in the class. Does the Minister agree that the real issue is more to do with support in the classroom to enable teachers to cope and less to do with league tables?
Baroness Ashton of Upholland: My Lords, I agree wholeheartedly with the noble Baroness. More children are being diagnosed with autism or with being on the autistic spectrum. From the evidence that I have seen, this is in large part to do with the fact that we are more able to recognise the three areas that denote someone who should be on that spectrum. We are looking very carefully at how we can support these children. I agree that it is a matter of what more we can do in the classroom. We are looking at how we can better support our teachers, particularly in their induction year as they begin teaching. We are looking also at how we can provide support through additional resources, including extra support on behavioural issues. We want to identify children with behavioural problems associated with special educational needs, including autism, in order to help them and to make sure that the support is there.

Local Government Settlement
3.30 p.m.
Lord Bassam of Brighton: My Lords, with the leave of the House, I shall now repeat a Statement made in another place on local authority revenue finance for England 2003–04. The Statement is as follows:
"I am pleased to be able to inform the House that next year's local government settlement will see total support from government grant and business rates of £51.2 billion. This is an increase over this year of £3.8 billion or 8 per cent in cash terms. It provides substantial real terms growth in the funding we are providing for local government.
"The £51.2 billion is made up of £24.3 billion in revenue support grant, £15.6 billion in business rates, £4.1 billion in police grant and £7.3 billion in special and specific grants.
"Today I am announcing details of the allocation to individual authorities of the £39.9 billion of revenue support grant and business rates. When taken together with the police grant, this represents an increase of 5.9 per cent cash over this year's allocation.
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"We announced last year that, from 1st April next year, we would introduce a system for distributing grant between authorities which is fairer, more transparent, and more just. Honourable Members will know that we have taken a long, hard look at the grant distribution system. We had no doubts on the need to replace the outdated and discredited SSA system. However, developing a robust, appropriate and fair replacement has been a challenging task, not least because of the many competing claims from different categories of local authorities. We have held very detailed discussions with local government and those with expertise in this area as we looked at all the current formulae and the options for change. We held 15 meetings of the technical group in just over a year. In addition, many more meetings were held with those with an interest, covering education, police, personal social services and other council services.
"We have then carried out a wide-ranging consultation on those options, including, useful seminars and debates in this House, where Members let us know their views. The consultation paper included 47 specific options, and another 52 exemplifications were done at the request of local authorities.
"We received some 55,000 responses to the options on which we consulted over the summer. Over 1,000 of these responses were from councils, members of the public, Members of this House, business organisations and others with an interest. The others were sent in response to various campaigns. Several petitions were also received.
"I announced the publication of an analysis of those responses earlier today by means of a written statement, and copies of the analysis itself have been placed in the Vote Office.
"In reaching a conclusion, we have needed to balance up the pressures, evidence and representations.
"One of the major problems with the old SSA system is that it attempted to take a view on what authorities needed to spend. This was unrealistic, and inconsistent with our approach towards devolving responsibilities, so we will not continue with it. Notional spending allocations do not imply anything about the budget or spending choices that will need to be made. Those are decisions that should properly be taken by councils in consultation with their council tax payers. The one exception is in respect of the Government's key priority of education, where we have said that we want to see authorities pass on increases to schools. In summary, the purpose of the new system will be to distribute grant according to authorities' relative circumstances and relative ability to raise resources from council tax.
"The new grant distribution formula will, in the main, no longer rely on past spending patterns—one of the main criticisms of standard spending assessments. The new formula will ensure that the

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distribution of grant is relevant to the circumstances councils face now, reflecting up-to-date spending patterns where appropriate.
"We have worked hard to make the system less complex and difficult to understand. This was never going to be easy. The sheer size of the sums of money going to local authorities, the wide-ranging responsibilities undertaken by councils, and the differing circumstances faced by those authorities across England mean that there will still inevitably continue to be a degree of complexity in the formulae used. However, we have simplified the structure of the system, which can be summarised as a basic allocation to each authority with top-ups reflecting particular circumstances facing councils such as deprivation, high wage costs and sparsity.
"The formulae also no longer include the sort of perverse incentives and inadequate indicators that were present in the old system—for example, the old fire formula was based on the number of calls each authority received. That meant that it had little financial incentive to improve fire safety and safety education and so reduce the number of calls. It is that kind of anomaly which we have tried to remove from the new system.
"I know many honourable Members will have a particular interest in the decisions we have taken on the area cost adjustment. We have concluded that pay costs should be recognised within the system, but the ACA has been re-designed to minimise the `cliff-edge' effect. It will in future better reflect the different circumstances in London and the South East and those authorities with differing pay costs. It will also reflect the needs of areas outside the South East with high pay costs.
"The other aspect which I should highlight is that we have increased the extent to which the system takes account of councils' relative ability to raise council tax—'resource equalisation', in the jargon. This means that we make a more realistic assumption about average council tax. It does not mean that we simply reward high spending.
"Turning to other formulae, we have made good the promise to ensure that no authority's schools will lose out in real terms from the changes. The new education formula ensures that every education authority's per-pupil allocation goes up by at least 3.2 per cent cash—well above inflation.
"The environmental, protective and cultural services formula has been greatly simplified, and now better recognises the basic costs that all authorities face. We have made some detailed changes to personal social services—we have simplified it so that there is now a single formula for residential and domiciliary care for older people—though as PSS was reformed comparatively recently the changes here are less extensive than elsewhere. And we have listened to the argument put to us by small authorities—particularly shire districts—that they face a fixed 'cost of being in business'. So we have allocated a flat-rate £300,000 element to most classes of authorities, to recognise that cost.
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"As I have already promised, the system will incorporate 'floors and ceilings' to safeguard authorities from excessive short-term variations in grant. For the last two years we have guaranteed that no authority received less grant than it did in the previous year on a like-for-like basis. Those councils with education and social service responsibilities did, of course, significantly better, and last year we were able to ensure that all councils received a grant increase at least in line with inflation. Honourable Members will know that we have already made clear that no local authorities will receive a cut in grant next year in cash terms.
"These floors ensure that every authority within the scheme gets a reasonable level of grant increase, given the overall distribution and the total level of funding available. To pay for the floor, we impose a maximum on grant increases, and scale back the rises received by authorities between those two levels.
"I am pleased to be able to announce that I am setting the floor levels so that in 2003–04 all authorities will receive a grant increase on a like-for-like basis well ahead of inflation. That means a real terms increase in grant for all authorities.
"The floor increases in cash terms for police and fire authorities and shire districts will be 3 per cent and the floor for unitary authorities, county councils, metropolitan districts and London boroughs will be 3.5 per cent.
"To pay for these floor increases, we will be setting a ceiling of 4.9 per cent for single-service police and fire authorities (including the Greater London Authority); 8 per cent for unitary authorities, county councils, metropolitan districts and London boroughs; and 12.5 per cent for shire districts.
"Increases above the floor but below the ceiling will be scaled back by 5.4 per cent for police and fire authorities, 1.3 per cent for shire districts and 4.6 per cent for authorities with education and social service responsibilities.
"In addition, as I said earlier, we will phase in the new education formula in such a way that no authorities' schools will lose out in real terms. The education formula will incorporate a floor of 3.2 per cent in cash terms and a ceiling of 7 per cent per pupil.
"In addition to the increases in funding for local authorities' general grant, we are also providing further increases in grants for specific initiatives. Of key importance will be the Neighbourhood Renewal Fund, which will allocate £400 million of grant via local strategic partnerships to help support and kick-start public services in the most deprived areas—£100 million more than this year. On a like-for-like basis, local authorities will receive £1.3 billion more next year in special and specific grants.
"As we promised in the local government White Paper, we have looked closely at these grants to ensure that ring-fencing is kept to the minimum

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necessary. Members will be aware from the recent announcement on freedoms and flexibilities that the proportion of funding paid to local authorities as ring-fenced grants will, on current plans, reduce over the three years of the spending review, and that excellent councils will also receive additional freedoms from ring-fencing. Ring-fencing revenue funding is set to decrease from 12.4 per cent currently to below 10 per cent by 2005–06.
"Our plans for next year provide local authorities with good increases in grant—increases that mean that since 1997 we have raised government grant to local authorities by some 25 per cent in real terms, compared to a 7 per cent reduction in real terms in the last four years of the previous administration. There could be no clearer illustration of our commitment to supporting and helping local authorities to deliver the strong local leadership and quality public services that local residents rightly expect and that local government wants to provide.
"Given the significance of the review we have undertaken, local authorities have, understandably, been awaiting today's announcement with some anxiety. Some authorities have been predicting a settlement under which councils will have to make cutbacks or impose significant council tax increases. I am glad that today's announcement demonstrates that those fears and the scaremongering about cuts in grants from our political opponents were unfounded and unjustified. The good increases in funding provided by the spending review, the realistic levels of floors and ceilings we have been able to set, and the decisions we have taken on the distribution of grant to local authorities mean that there is no reason why councils cannot continue to improve services while sticking to reasonable council tax increases. Today's proposals are good news for local government. As such, I commend them to the House".
My Lords, that concludes the Statement.
3.42 p.m.
Baroness Hanham: My Lords, I thank the Minister for repeating the Statement. It is nice to form up to him again. I declare my usual interest as a member of a London local authority. The local government finance settlement has for years been about as opaque as a dense fog. We learn today that there is to be a change in the system, which, according to the Statement, will no longer rely on past spending patterns but will reflect up-to-date spending patterns, where appropriate, with a simplified structure. Hooray to that, if that is what it is.
Having read the Statement, and from what I have seen of the vast tomes of documents on the subject, only the terminology seems to have changed. Standard spending assessments (SSAs) have become total formula spending (TES). SSAs for individual authorities have become formula spending allocations (FSSs). Standard tax elements have now become share of assumed national council tax (SANCTs).
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Whether a name change is relevant is of no concern to local residents. What matters to them is the amount of council tax that they will have to pay. To quote the Statement, the rub will lie in,
"the extent to which the system takes account of councils' relative ability to raise council tax"
That is to say, how the ratios can be adjusted between government grant and milking the council tax payer.
The new system looks heavily at councils' ability to raise council tax, which is a form of equalisation. The Minister says optimistically that that does not mean rewarding higher spending but that well-run authorities that have been prudent and kept council tax down will be penalised. It is instructive in this respect to look at the shifts in grant, not the broad averages, nor the nearly incomprehensible floors and ceilings that the Minister had difficulty in explaining. The actuals should be looked at. Inner London councils will receive an increase of about 3.5 per cent. Kent, Essex and Hampshire will receive 3 per cent. By contrast, Durham, Cumbria, Derbyshire and Cheshire will all have rises of some 12.5 per cent. Presumably, less additional council tax will have to be raised there than in other areas.
If anyone can understand the complexities and rationale of that, it will not be the residents of London and the South East; nor will they know about credit given for higher pay claims as in the newly-revamped ACA. People in Leicestershire, which will receive £85.48 less per child than Lancashire, and in Buckinghamshire, which will receive £83.20 less per child than Durham, will not understand it. Why does the formula ignore rural poverty? The front-page headline of The Times in July was right when it predicted that Labour would tax Tory voters to fund its own heartlands.
Burdens will be imposed not only as a result of the shift in grant to the North and East from well-run councils in London and the South East, but the inequity resulting from the shambles that was caused by the inadequate census. Figures for areas where no returns had been attained were guessed, attributing to many council areas, including my own, a ridiculously reduced population. That is extremely relevant, as grant is based on population as well as on spending and specific need. What is being done to assist the many authorities for which figures were made up?
Last year, average council tax in England rose by 8.5 per cent—the biggest increase in the history of council tax, inflation being just 2.5 per cent. The small print of the Pre-Budget Report predicts that in 2002–03 and 2003–04 council tax receipts will rise by 7.2 per cent against an inflation rate of 2.25 per cent. In two years, council tax will have risen by almost 16 per cent—a staggering figure—against the background of what was said by the Deputy Prime Minister; namely, that the munificence of the grant settlement meant that there was no reason why councils could not continue to improve services while sticking to reasonable council tax increases.
Every year, the Government claim that their funding settlements are generous. This year is no exception. Every year, council tax across England

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soars. In London, the situation is compounded by the extravagances of the mayor and his taxing requirements. Band D has soared by 38 per cent since 1997–98 against the background of a promise by Keith Hill, the then Minister for London, that the new mayor and assembly would cost only 3 pence a week—hollow laughter. The expectation is that this year there will be a further large hike in band D council tax in London as a result of the mayor. I suppose one can only be grateful that at least Ken Livingstone lives up to his promises. As he said during Question Time last September:
"I went into an election saying I would increase the council tax".
Indeed so.
This Government do not protect ordinary families, who will be affected even further by the proposed rebanding and the introduction of new bands heralded in the Local Government Bill. This year, an average band D tax will be over £1,000, which will increase the burden on ordinary families with ordinary incomes and ordinary homes.
I should not perhaps end my remarks without welcoming something in the Statement. I welcome the proposal and promise by the Deputy Prime Minister to reduce the proportion of specific grant, which has risen remorselessly since this Government came to power. Directing local authorities on how to spend the money is a bad way to deliver grant. It is, therefore, with relief that I note that it is at least proposed to reduce the figure to 10 per cent by the year 2005.
I have a few questions for the Minister. Does the noble Lord agree with the estimate of the Chancellor of the Exchequer that council tax will increase by 16 per cent over two years—figures taken from the pre-Budget review? By how much does the noble Lord expect council tax to rise as a result of revaluation and rebanding? What control can the Government put on the Mayor of London to prevent London's council tax payers being soaked? What will the Government do to recompense the 32 local councils, which, under the flawed census, have "lost" more than 5 per cent of their populations?
3.51 p.m.
Baroness Hamwee: My Lords, I, too, thank the Minister for repeating the Statement. I begin by declaring an interest as a member of the Greater London Assembly. The Statement relates to what is termed the local government finance settlement. It occurs to me that this is a very particular use of the word "settlement". I do not believe that it can be regarded as an agreement with local authorities, a meeting of minds, or even a compromise. Although we welcome certain aspects of the announcement, perhaps the Minister will acknowledge that that is the case for this year in particular.
The Government published a consultation document in July for response by the end of September. We have heard that 55,000 responses were received. The report on the consultation rather dismissively says that the great majority of those
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responses were sent as part of various campaigns about education funding. I should not lightly dismiss comments on education funding, whether or not they formed part of campaigns. However, it was not a straightforward consultation; indeed, it could not be because the area is most complex. The paper included many options and questions.
As we have heard, the Government promised a fairer, more transparent and simpler system. They said in the paper that, following consultation, they might decide that,
"relatively complex formulae give the most appropriate grant distribution".
Perhaps the Minister can tell the House whether the Government regard the outcome as, to use that term, "relatively complex"? In the other place earlier today, I heard the Minister with responsibility for local government say that the "ceilings support the floors". I thought to myself that perhaps it is complex.
The problem is this: how do we know and, more importantly, how does the world know what the changes will be? Is it right to wrap up the response to the consultation on principles with an announcement of cash? That is, perhaps, the opposite of "transparent". Does it not leave the Government entirely open to the accusations made by their political opponents and those they call "scaremongers"? Why have these two concepts been wrapped up and announced together? Does this meet the guidelines from the Government's Cabinet Office about consultation; and, indeed, about the spirit of good consultation?
Further, would the Government themselves be able to plan on such a basis? For example, local authorities are being told to plan for three years ahead, but then—I appreciate that it is historical, but this Government have not changed the position—they are faced with a timetable that includes digesting what the noble Baroness just described as an enormous amount of material with almost no time to do so, after which they have to apply such detail to their plans, consult their own communities, and come to decisions as early as next February. If the Comprehensive Spending Review was so close to decision time, would the Government be able to make such plans?
More specifically, the Government make much of reducing ring fencing. I am afraid that I cannot be quite as welcoming as the noble Baroness. Lady Hanham, in this respect. Although the Government have abolished seven special grants, can the Minister confirm that 16 new ones have been introduced? The noble Lord referred to excellent councils receiving additional freedoms, but does he not recognise that that is a highly centralised approach? I believe that there is a large number of ring-fenced grants in the police budget. As I understand it, the Home Office is one department that appears not to be reducing its ring fencing.
Can the Minister comment further on "floors"? In order to assist local authorities to plan ahead, can the noble Lord say when the Government will announce the floors for years two and three? I well understand

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the need to await the detailed demographic information. But, as has already been said, there are considerable doubts and queries about the recently-announced census results.
Can the noble Lord tell us anything more about London? In particular, can he say whether there will be a single floor across all the functional bodies, including the police and fire services? The Statement indicates that there is a single ceiling, so I assume that there is a single floor. If so—this is one for the aficionados, I am afraid—how will the Government protect the fire authority in London when, on any basis of the consultation, it was set to lose very substantially? That is a real issue in London. Indeed, I shall be surprised if we do not hear some reassurances in that respect this afternoon.
We are all aware of the resource issues, especially in the social services sector. We are also aware of the extra responsibilities that will be placed upon local authorities. Bed-blocking is just one example. We realise that money will be going into the service, but I have been told that the fines system that the Government are set to impose could lead to a downward spiral in places where there is simply no capacity to provide extra service and where it will be cheaper to pay fines than to provide the service. That does not scent to me to be the right way forward. Your Lordships recently gave the Licensing Bill a Second Reading. This will put a cost on local authorities as regards dealing with the transfer of the licensing system from magistrates.
If turn, again, to London. On education, can the Minister tell the House whether the working families' tax credit data have been used as a measure of deprivation? That is not something that one can readily find in the swathes of material. I should add that the take-up of that benefit is very low in London, because of high housing costs and the interaction of the credit with housing benefit. I use that rather complicated example simply to demonstrate the complexity of all these issues and how much digestion they will need.
Finally, can the noble Lord tell me how I should answer a point that was made to me today by someone working in the field of partnership between local government and business? The Government are promoting the new business improvement district proposals (BIDs), which are being sold on the basis of additionality—that is, additional funds being made available. How can I assure those whom we are asking to support this venture that the Government really will treat such funds as additional?
3.58 p.m.
Lord Bassam of Brighton: My Lords, I was perhaps expecting rather more warmth from the noble Baroness, Lady Hanham, after repeating this Statement. None the less, I was pleased to receive the welcome that she gave at the conclusion of her remarks for the changes to specific grants. That touches on a point made by the noble Baroness, Lady Hamwee. Indeed, I believe that there will be both recognition
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and welcome for that move across local government. Over the three-year period, we shall be reducing the percentage from 12 per cent to 10 per cent. I know that that reduction will not please everyone.
The noble Baroness, Lady Hamwee, made the point that there are still many areas where specific grants apply. That will continue to be the case, and rightly so. In some areas of public service activity we want to ensure that we drive up standards and fully reflect the needs of different communities for certain services to be provided in a particular way. Therefore, while there is a welcome freedom and flexibility involved, we are committed to that change. However, it is a change that will take time to introduce.
I enjoyed the comments of the noble Baroness, Lady Hanham, about the dense fog of local government jargon and terminology. When I was reading through these papers earlier today I was reminded of the first expression I came across in the allocation of funding to local authorities—I believe it was "GREA". That must be some 20 years ago. I had to ask the borough treasurer, a crusty individual who did not like to be questioned, what "GREA" meant. He gave a long and impenetrable answer. Local authorities have been bedevilled by that tendency ever since and tend to make heavy weather of explaining how things work.
This is an excellent settlement for local government. I have not always said that about local government settlements. Like the noble Baronesses who have spoken today I have criticised more than a few of them. I understand the concerns over this year's allocation, not least because it conies at an unsettling time when there has been extensive consultation over the way in which the settlement will go in the future.
We have given a commitment on floors and ceilings. There will be a real terms increase in grant this year. There is a cash increase for all local authorities. I cannot remember many years when one could consistently say that that was the case. I remember making some severe criticisms when in real terms individual local authorities suffered considerable damage as a result of cuts in their real terms allocation.
I will try to deal with some of the points made by the noble Baronesses. The noble Baroness, Lady Hanham, raised an important question about census data. All I can say is that most local authorities want us to use the most up-to-date information. This is the best data we have on a consistent basis. The floors on grant guarantee all London boroughs a 3.5 per cent increase, which is well above the accepted 2.3 per cent inflation level.
The noble Baroness also raised the issue of council tax increases. If local authorities want it that way—and we all agree that they do—council tax levels are to be set locally after consulting with the local electorate. It is not for us as Government to pre-announce their council tax increases for them. They must determine the increases themselves. We accept that there are indicative figures, but that is a matter of resource allocation.

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I refute the point of the noble Baroness, Lady Hanham, about resource equalisation rewarding higher spending authorities. It does not. Resource equalisation is about the relative ability to raise council tax. It does not take account of individual spending decisions.
I do not agree with the noble Baroness's claim that we ignore rural poverty. The figures show that rural shire districts gain some 7.6 per cent in grant. That is not ignoring rural poverty; it is nearly three times the current level of inflation. She also asked whether revaluation would lead to large increases in council tax. It is too early for us to tell what the impact of revaluation will be. We should not trot around scaremongering. Some households will move to a higher band and some to a lower one, but there should not be any change to the overall amount of council tax collected.
The noble Baroness, Lady Hanham, referred to the mayor. The mayor and the GLA are accountable to their electors. They have to meet their electorate regularly. Electors will make up their minds based on a number of factors, of which council tax responsibility will doubtless be one.
I have tried to cover most of the issues raised. The noble Baroness, Lady Hamwee, asked about the increases in ringfencing. I explained that our long-term objective is to reduce that. We shall continue to consult and to take careful account of the points made by local authorities to us over the period.
Consultation this year has been detailed and thorough. We have published a response to it. Local government will rightly always want to make points about the formula. We will try to respond to those as best we can. We have secured more than adequate funding; it is a generous settlement for local government.
All local authorities will have an above inflation increase. Some of those increases will be larger than others as the formula has changed. We have tried to provide a fair system of floors and ceilings in changing the formula so that its introduction does not interrupt local services, as we have seen so many times in the past. I believe that the Statement will be welcomed.
4.3 p.m.
Baroness Blatch: My Lords, the Minister claimed clarity and simplicity for the Statement. I join the two Front-Benchers who have already spoken to say that it scores no marks out of 10 for either clarity or simplicity. It is an extremely complicated Statement. The Minister prayed in aid the situation 20 years ago. The Government have been in office for almost six years. It is time for them to defend their own record and not constantly to go back 20 years.
The Minister was astonishingly sanguine about the census data. In case he has been asleep over the past few weeks, the census has been deemed the most unreliable that has ever taken place in this country. Because many aspects of the settlement are based on
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the census data it will impact acutely on some local authorities. I am surprised that the Minister is not prepared to admit that.
What proportion of the so-called £15 billion per year until 2006 is included in the Statement for education? And, more significantly, how much of the global education budget is being held back by the Department for Education and Skills to fund its centrally controlled projects? In other words, how much of that money will not be going into the classroom to help with our children's education?
Lord Bassam of Brighton: My Lords, looking at the education figures, the education increase is some £2billion. That is a 7.5 per cent cash increase; 5.1 per cent in real terms. Since 1997–98 that is a £10.5 billion increase. As a member of the Government I am extremely proud of that significant increase. The noble Baroness asked about the amount being held back. I cannot answer that question, but I am happy to have it researched and to provide the detail to the noble Baroness.
I am sure that all Members of your Lordships' House will welcome the fact that a typical secondary school with 1,000 pupils will see a direct grant payment rise of some £50,000 in the year 2003–04, and a typical primary school with 250 pupils will see its direct grant payments rise by some £10,000 in that financial year. We want to ensure that money for education reaches the front line directly. I am sure that all three major parties are agreed on that. That is what we are attempting to achieve through this settlement and all other settlements.
I understand the noble Baroness's unhappiness on the issue of the census. If particular authorities feel that the quality of the census in their area is not as it should be, no doubt they will have already have made representations. All I can do is to encourage them to continue to do so. I know from my local government experience in Brighton that where we had disagreements with the count we made representations, and, from time to time, governments have recognised the validity of those claims. It is open to local authorities to make such representations. As I said, however, the census provides the best available data to deal with these matters. Unhappiness with the census will undoubtedly continue, but we have to trust and rely on that material.
Baroness Byford: My Lords, I am glad that the Government have recognised the difficulty of sparsity in some of our very remote areas. I shall concentrate on those areas, where it is extremely costly to deliver services. I have three questions. First, what proportion of the new allocation will be used to cover increased pay awards—both for pay and for pensions—for local authority employees? Pay and pensions are two very considerable aspects of the districts' expenditure.
Secondly, what extra funds have been allocated for home-to-school transport and some of the peripatetic services in very remote rural areas?

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Thirdly, how much consideration was given to the fact that the national Government require local government to provide many additional services? I am thinking in particular of the attempt to keep people in their own homes for as long as possible—which in itself is good—with the consequence that people are being moved out of hospital very early. The cost of such a move is very high for those in urban areas, but it is extremely high in very sparse areas. Social services are al ready much more sparsely allocated in rural areas than in urban areas. I hope that the Minister will address that point.
Lord Bassam of Brighton: My Lords, the noble Baroness asked three good questions, but I am unable to reply in the detail they deserve. Ministers reached a judgment on sparsity based on the best available evidence, and almost all sparse areas have gained from the overall reduction in top-ups and the consequent increases in the basic amounts. We have very carefully taken account of that. It is not particularly relevant to this settlement, but some very careful work relating to Scotland and Wales has been done to identify key settlements. As I made plain earlier, however, this settlement benefits rural areas, with grants to rural areas increasing by 7.5 per cent, I think. We continue to take account of density and sparsity issues.
I cannot answer the noble Baroness's first question on the percentage increase in pay and on pensions. Home-to-school transport, however, will be within the LEAs' central functions and will be part of their internal allocations. I recognise that that is an issue on which representations will undoubtedly continue.
We have tried to adjust the baseline to take account of the extra burdens, and to identify those new burdens within the formula. It is an exercise that governments must take into account every year when trying to establish the rationale behind their formulas.
Lord Greaves: My Lords, I have two points. First, will the Minister answer the question on the extra cost to local authorities arising from their anticipated licensing function, and the question on BIDs which he did not have time to answer earlier?
Secondly, it will take us a long time to come to grips with this mass of figures and information. As noble Lords have said, however, the settlement has been represented as a transfer of new funding from the South to the North. Is that the case?
Lord Bassam of Brighton: My Lords, I think that local authorities have broadly welcomed the new licensing regime. Perhaps the noble Lord himself, when he was more busily engaged in local authority work, campaigned to bring licensing within the local authority ambit. I do not know, but I think that it is the type of issue that exercises the minds of local councillors. My understanding of the licensing regimes is that they will generally be self-funding. I think that that has been understood from the outset of the negotiations to bring the new arrangements within the orbit of local authorities. However, that is all subject to passage of the Bill.
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The noble Lord raised broader issues such as winners and losers and North versus South. We have tried to ensure that we have a formula that works and that operates fairly for all of England. I would contend that this formula is simpler, despite what the noble Baroness, Lady Blatch, and the noble Lord himself have said. We have tried to present a formulation that takes greater account of local circumstances and the ability to increase council tax and that is more easily explained. All formulae are complex, but this one provides for a basic amount per head plus top-ups for deprivation. I do not think that anyone could argue against including top-ups for deprivation in the formula. The formula also takes account of pay costs and other specific needs. As the Statement makes clear, the formula also helps smaller authorities.
Others might disagree, but I would argue that the regional variations fall within a fairly narrow band. In the South East, the increase is 4.5 per cent, whereas in the East Midlands and West Midlands it is at the upper end, at 7.1 per cent. It is 6.3 per cent in the Yorkshire and Humber region; 6 per cent in the North East; and 6.6 per cent in the North West. I think that I made a note earlier that the district authority in Pendle—which the noble Lord., Lord Greaves, represents or represented—did really rather well this year.
Lord Greaves: My Lords, as a Member of your Lordships' House I do not represent anyone but myself.
Lord Dixon-Smith: My Lords, in the light of the figures mentioned by my noble friend Lady Hanham and provided in the background information to last week's Pre-Budget Report, are we to take it that future council tax increases at three times the rate of inflation would be reasonable?
Lord Bassam of Brighton: My Lords, I do not think that it is for me to pronounce from this Dispatch Box what would be a reasonable increase.
Lord Dixon-Smith: My Lords, the penultimate sentence of the Pre-Budget Report states that there,
"is no reason why councils cannot continue to improve services whilst sticking to reasonable council tax increases".
If the two figures provided by two separate departments are to have any validity, the Minister is obliged to accept the proposition.
Lord Bassam of Brighton: My Lords, I listened to what the noble Lord said, but I do not have to accept his proposition. It is not for me to pronounce on what is an acceptable or unacceptable percentage increase in council tax—I am sure that it will vary across the country. I am also sure that it will vary very much in line with the express wishes of local voters, local electors and those who play a full part in their local authority. There will undoubtedly be larger council tax increases in some areas than in others. It will also reflect their ability to raise council tax, which is an important part of the new formulation.

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So I shall not pronounce. However, I think that the baseline of our settlement, which is well above the current inflation level and has very protective floors and ceilings, ensures a very generous Statement. I challenge the noble Lord, Lord Dixon-Smith, to compare this year's settlement with even the most favourable settlement under the previous Conservative administration. I think that he will find that, in some if not most respects, that settlement is found wanting.

Potato Industry Development Council (Amendment) Order 2002
4.19 p.m.
Baroness Farrington of Ribbleton rose to move, That the draft order laid before the House on 23rd October be approved [40th Report, Session 2001–2, from the Joint Committee].
The noble Baroness said: My Lords, I beg to move the first Motion standing on the Order Paper in the name of my noble friend Lord Whitty.
The Potato Industry Development Council, known as the British Potato Council, is an executive non-departmental public body. It was established by the Potato Industry Development Council Order 1997, under the provisions of the Industrial Organisation and Development Act 1947. It exists to commission potato research and development; to transfer technology: to collect and disseminate market information and to promote potatoes in the UK and overseas markets.
The BPC is self-financing through a statutory levy on growers and purchasers of potatoes which raised approximately £5 85 million in the year 2000–01. It carries out important work for the potato industry and I know that DEFRA Ministers appreciate its achievements at a difficult time for the industry.
The major changes proposed in this order are the raising of the minimum levy thresholds for both growers and purchasers and the establishment of a dual levy rate system. The increased thresholds will relieve smaller players of the financial burden of the levy and reduce the BPC's administrative costs. The dual levy system, with a basic rate, and a higher rate for late payment, will act as an incentive for punctual payment and further reduce the BPC's administrative costs. The order also proposes that when growers and purchasers do not provide annual returns by the due date, BPC estimates based on previous information can be increased by up to 10 per cent. This will allow for estimates to reflect upward planting and market trends as appropriate. The net result of these changes will be to direct more of the levy to the front line tasks of the council. The amendment order also proposes some minor cosmetic changes. The order will come into effect on 1st January 2003. I commend it to the House.
Moved, That the draft order laid before the House on 23rd October be approved [40th Report, Session 2001–02, from the Joint Committee].—(Baroness Farrington of Ribbleton.)
Baroness Byford: My Lords, I thank the noble Baroness for presenting the order. The order has the support of the devolved administrations and of the British Potato Council. As the noble Baroness said, it does not result in any increase to the Exchequer, as I read it, but is calculated to yield a net benefit to the British Potato Council of some £40,000 per year. It also reduces administration costs which must he welcome. It is calculated to benefit the potato industry by approximately £99,000 per year. That benefit will accrue to the smaller producers and merchants, which we welcome.
However, I have two questions for the Minister. First, the change in the statutory date for making planting returns from 15th May to 1st June is a good idea as it ties in with the IACS deadlines. That seems common sense. Has consideration been given to a wet spring occurring and planting being delayed? Is there any flexibility in the dates laid down in the order? Could they be altered or a derogation made? Nowadays as a result of climate change, it is not unusual regularly to experience very wet seasons.
Secondly, two levy rates for both growers and purchasers exist at present: a basic rate where payment is made by a due date, and a higher rate for late payments. These new proposals will catch those members who have paid on time and who have in the past received a £1 discount. I understand that that applied to about 70 per cent of members. It would be unfair if they lost out under the new system. The noble Baroness is probably aware that the £1 discount has never featured in the Potato Industry Development Council Order. I hope that when the noble Baroness replies to the debate she will comment on that matter.
As the noble Baroness will be well aware, potato prices for free market potatoes are desperately low. The order should help some of the UK's smaller producers and merchants which we welcome. We support the order.
Lord Greaves: My Lords, on behalf of these Benches I thank the noble Baroness, Lady Farrington, for presenting the order. I agree with many of the comments made by the noble Baroness. Lady Byford. It is clearly beneficial for small producers and purchasers to be removed from the requirements of the scheme. We very much welcome that. We welcome the fact that bureaucracy, and the amount of money that the British Potato Council spends on bureaucracy, will be reduced. We also welcome the changes with regard to the dates for providing information relating to the planting and lifting of potatoes. I await with interest the response to the sensible question asked in that regard, given the fact that our climate appears to be increasingly erratic.
I have a further general question. I understand that the constitution of the British Potato Council allows for only one marketing specialist member out of

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16 members. Given the present state of the market, to which the noble Baroness, Lady Byford, referred, are the Government satisfied that enough proactive marketing is taking place? We on these Benches support the order.
Baroness Farrington of Ribbleton: My Lords, I thank the noble Baroness, Lady Byford, and the noble Lord, Lord Greaves, for their comments. The early payment discount is not covered by the order. Its replacement by a dual levy rate provides legal certainty. However, the loss of the early payment discount will be taken into consideration when the British Potato Council sets its levy rates for future years.
I welcome the recognition on the part of the noble Baroness and the noble Lord of the important issue of help for smaller producers. An important part of the council's work comprises disseminating accurate market information. Prompt submission of returns is essential for that and also helps the council to pursue the promotional activities that the Government, the council and the noble Lord, Lord Greaves, wish to see.
The BPC will look kindly on returns that are submitted late due to difficult planting conditions. The order proposes to extend the deadline from 15th May to 1st June to allow returns to be submitted with greater certainty in seasons when planting conditions are difficult. I hope that I have covered the points that were raised.
On Question, Motion agreed to.

Air Quality (England) (Amendment) Regulations 2002
4.28 p.m.
Baroness Farrington of Ribbleton rose to move, That the draft regulations laid before the House on 14th November be approved [2nd Report from the Joint committee].
The noble Baroness said: My Lords, I beg to move the Second Motion standing in the name of my noble friend Lord Whitty.
This statutory instrument relates to Part 4 of the Environment Act 1995. The Act provides for the publication by the Secretary of State of a national air quality strategy which must, among other things, contain standards relating to air quality, objectives for the restriction of the levels at which particular substances are present in the air, and measures to be taken by local authorities and others for the purpose of achieving the objectives.
The regulations amend the Air Quality (England) Regulations 2000 and prescribe new air quality objectives for benzene and carbon monoxide for the system of local air quality management. They create a second air quality objective for benzene of five micrograms per cubic metre or less expressed as an annual mean to be met by 31st December 2010. That is three times tighter than the current objective. They also replace the current objective for carbon monoxide with one of 10 milligrams per cubic metre or less when
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expressed as a maximum daily eight-hour running mean and to be met by 31st December 2003. That level is about 10 per cent tighter than the current objective. We set that objective to be met two years earlier than the corresponding European limit value.
The remaining provisions of the regulations concern changes to the interpretation note in the schedule to the 2000 regulations. They relate to the statistical methods to be applied in the case of the new air quality objectives. Regulation 2(3)(a) explains the meaning of the expression "maximum daily running 8 hour mean". The air quality objective for carbon monoxide is now set in terms of this expression. Sub-paragraphs (b) and (c) of regulation 2(3) are needed to make clear what is meant by the expression "annual mean" when it is used in the new air quality objective for benzene.
Local authorities must review and assess air quality in their areas against the prescribed objectives. When objectives are unlikely to be met, authorities must declare air quality management areas and prepare remedial action plans. Authorities do not have to meet the objectives but work towards them, because action to regulate sources of emissions often rests with other bodies, such as the Environment Agency or the Government. Modelling indicates that the new objectives should be met largely by present policies. Local authorities' duties are supported through the revenue support grant settlement and the supplementary credit approval programme.
Air quality has improved considerably since the London smogs of the 1950s. The number of poor air quality days has fallen from 59 in 1993 to 21 in 2001. However, the problem is still serious. Experts estimate that up to 24,000 people die prematurely every year in the UK because of its effects, and long-term effects are significantly greater. Government measures have tightened controls on industrial and vehicle emissions. Our 10-year transport plan includes an investment programme of £180 billion to improve public transport, cut congestion and reduce pollution. That may be outweighed by increasing levels of traffic. however. Local air quality management will identify hotspots and enable action to be taken to tackle them. I commend the regulations to the House.
Moved, That the draft regulations laid before the House on 14th November be approved [2nd Report from the Joint Committee].—(Baroness Farrington of Ribbleton.)
Baroness Byford: My Lords, I thank the Minister for bringing the regulations before us.
In August, the Minister announced that air quality is getting better and that levels of most pollutants have fallen considerably over the past few years through measures to cut emissions from industry and traffic. I ask the Minister: is that optimism overshadowed by recent revelations that carbon dioxide levels have risen since 1997? If so, how can she be confident that the Government will reach their new targets?
I also understand that by 2010 the 24-hour objective of 50 micrograms per cubic metre will be exceeded no more than seven days a year in Scotland and most of

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the United Kingdom and no more than 10 days per year in London. When the Conservatives were in government, our target was not seven or 10 days, but four days a year by 2005. Will the Minister explain why lower targets have been set than were originally set by the Conservative government?
The proposed amendments to the Air Quality (England) Regulations 2000 are partly an outcome of the Government's consultations in September 2001 on the proposals for air quality objectives for particles, benzene, carbon monoxide and polycyclic aromatic hydrocarbons. For the purposes of local air quality management, they are to be welcomed. Tighter longterm objectives for pollutants are necessary if the health protective focus of the air quality management regime is to be maintained.
In the current regulations, the running annual mean is the average of hourly levels of benzene recorded by monitoring equipment over 8,760 hours—the number of hours in the year. The new method will be based on readings taken over a 14-day period, which the Minister has explained. The daily means will be averaged over the year to give an average annual mean. I must admit that I found these regulations challenging.
We understand the reasoning behind the changes in methodology. It evens out the highs and lows of daily data that can be collected when certain vehicle types associated with fuels emitting higher levels of benzene, such as unleaded fuels, are present. It spreads the effect of the short-term local congestion, or when the benzene does not readily disperse because other environmental factors clock in, such as climatic conditions.
The air quality strategy for England, Wales, Scotland and Northern Ireland was published in January 2001, and has set standards and objectives to be achieved for eight key air pollutants between 2003–08, including benzene. In addition to reviewing and assessing the ambient air quality in their areas, local authorities are charged with the task of achieving new objectives in a cost-effective way. Has any data research been established following the introduction of traffic-calming measures, especially with regard to the vast increase in the number of sleeping policemen in our cities and villages? I am sure that they have made a difference, because cars are forced to slow down and then regain the impetus to go over them.
It is perplexing that local authorities are not legally required to meet the new objectives, but only have to work towards them as part of their local air quality management duties under Part 4 of the Act.
Is air pollution from air travel included in the equation? Is the Minister not concerned about the rapidly expanding use of air travel? Indeed, research is being carried out into new build in respect of airports, which takes into account the forecast of a rapid rise in air travel in the next 20 years.
There is a national legal requirement to meet European objectives. It seems strange to set targets only of aspiration for local areas when we have
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national responsibilities to Europe in the form of a legal obligation. Whatever the regulations do, however, we hope that they succeed. It is in all our interests that air quality is of a better standard. I understand that, although the Government are urging local authorities to work towards the targets, they are not required or funded to do so. Will the Minister clarify that?
Air quality strategy must be based on sound science, but there comes a point at which the pursuit of ever-finer degrees of accuracy becomes a substitute for real action. We all want there to be better and cleaner air; it is a top priority for the public. We know that poor quality air has a direct effect on the good health of our citizens. For some, it affects the quality of their working life, but for others it affects their ability to enjoy everyday living.
I thank the Minister for bringing this important statutory instrument before us. I am sorry that I have asked her so many questions, but I look forward to her response.
Lord Greaves: My Lords, I, too, thank the Minister for introducing the regulations. Like the noble Baroness, Lady Byford, I believe that it is reasonable that we widen the discussion slightly from the rather modest regulations that are before us.
The regulations are modest. The Explanatory Memorandum states that the objectives are,
"unlikely to result in any additional burden for local authorities".
It also states that the regulations are,
"not expected to have any financial implications, either to the public, to industry, to local authorities or to central Government".
I believe that the Minister quoted the exact wording, which suggested that,
"virtually the whole of England will achieve the new objectives on the basis of existing policies".
Therefore, in a sense, these new regulations, and the targets within them, follow existing trends rather than set new ones. On that basis, I consider them to be modest.
However, we meet today in your Lordships' House on the 50th anniversary of the infamous great smog of London in which it is estimated that between 4,000 and 12,000 people died. I am pleased to say that I did not live in London in those days, but I did live in the Yorkshire coalfield, where smog was as prevalent as it was in London—perhaps for different, or partly the same, reasons. Those of us who remember the smogs of those days find it difficult to explain to people who are too young to remember them just how awful they were. They were dreadful, and it is one of the great triumphs of legislation, through the Clean Air Acts and so on, that we no longer have to suffer them.
However, it has now emerged that when, in 1952, the government of the day—a Conservative government but that does not matter; any government would have done the same—had to deal with the problem, they pretended that the cause of the large number of deaths and of the large number of people suffering serious illness without dying was an influenza epidemic. In today's Evening Standard, Professor Devra Davis, a

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visiting professor at the London School of Hygiene and Tropical Medicine, claims that it was a cover-up. She said:
"By the end of February"—
that is, in 1952—
"around 12,000 people had died unexpectedly, yet there was no evidence that one-third of people in London at that time had influenza".
I suppose that that is the way that governments behave. But, fairly soon after that outbreak, it was realised that the whole country—the government and society—had been in denial about what was happening to people's health as a result of what, at the time, was blamed on the weather but what was, in fact, atmospheric pollution.
In a report called The Clean Air Revolution: 1952–2052, which is being published today and is available in this building, the National Society for Clean Air suggests that this country is in denial yet again. It suggests that deaths from lung cancer, for example, caused by air pollution number approximately 4,000 a year. That is more than the average number of 3,500 deaths which occur through road accidents. Official estimates suggest that 24,000 people a year die due to peak air pollution episodes.
According to that report, there is new evidence that long-term exposure to everyday levels of pollution may increase heart disease. Those of us with family members who suffer from asthma, as does my (laughter, know how difficult that condition is. Again, the increase in the prevalence of asthma is being widely related to increased atmospheric pollution, particularly from road transport.
I mention those matters because, although the provision before us today is modest, increasingly it appears to be the case that the Environment Act 1995 and the air pollution strategy which the Government published two years ago are proving, and will prove, to be inadequate. We shall have to face such issues in a far more fundamental way than has been the case so far. Having said that, we on these Benches are content with the modest measure which the noble Baroness has put before the House.
Baroness Farrington of Ribbleton: My Lords, I thank both the noble Baroness, Lady Byford, and the noble Lord, Lord Greaves. I shall begin with the final points raised by the noble Lord. Estimating the number of deaths caused by air pollution is a very complex and difficult task. However, we understand the problem better today than we did 50 years ago. We agree that further work is needed to quantify the precise number of deaths caused by air pollution and the key factors which contribute to it.
In this response to both the noble Baroness and the noble Lord, we recognise that targets reflect what we know can be achieved. The point that is being made is that they are not sufficiently ambitious. However, we have to strike a balance between environmental, economic and social objectives. Tightening the regulations will help but the targets must also be achievable.
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The noble Baroness also raised the issue of research into the effects of traffic-calming measures. The Department for Transport has a major research programme, known as TRAMAQ, which concerns traffic management and air quality. It is examining the effects on air quality of all traffic-calming measures. I am sure that the noble Baroness will be pleased to hear that. We are adopting the new measuring method because benzene has long-term health effects and it is sensible to measure its levels over a complete year. That is directly in line with the European directive. I shall return to that point in a moment.
The noble Lord, Lord Greaves, raised the question of the impact on local authorities. We support running costs in the calculation for RSG, and additional borrowing powers towards capital costs are available through the supplementary credit approval programme. Since 1997, £21 million has been awarded.
The noble Baroness, Lady Byford, explained that under the Conservatives the targets were tighter. We examined that issue and the targets that had been set. Our modelling shows that it would be impossible to meet the original target set by the Conservative government in relation to particles even if all the cars in London were switched off and not running. Therefore, we have had to balance the knowledge available. That is not a criticism of the noble Baroness's government. The benefit of the new modelling and targeting proposals is that they show that it is difficult to set targets unless one considers whether it is possible to achieve them.
The noble Lord, Lord Greaves, made the allegation that air pollution is worsening. In fact, it is improving. We accept that there has been a substantial fall in the level of bad air quality. We want to continue to tackle that issue. For example, ozone levels are strongly affected by pollutants blown over from mainland Europe, and we are working at a European level to tackle that problem.
The new objectives do not include polycyclic aromatic hydrocarbons. In answer to the noble Baroness, monitoring data are strictly limited. We have added a further 15 monitoring sites to the national network. We now have 25 and hope to develop more. We need to make separate regulations to transpose the EU directive. That will require the Secretary of State to meet the limit values. The Air Quality Limit Values Amendment Regulations are expected to be laid for negative resolution later this month. We cannot use the draft regulations before us today to transpose EU limit values. Local authorities do not possess all the powers that are needed to meet that. We believe that our targets are challenging. Aviation is included. Central government and local authorities both consider emissions from airports and aircraft, and many airports are developing air control strategies.
I hope that I have covered all the points raised by noble Lords. If I have missed any, I shall write to them.

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In conclusion, I am conscious that today is Plain English Campaign Day, but I defy even that organisation to deal with this subject without straying from what most people view as plain English. I thank the noble Baroness and the noble Lord.
On Question, Motion agreed to.

Stem Cell Research: Select Committee Report
4.50 p.m.
The Lord Bishop of Oxford rose to move, That this House takes note of the report of the Select Committee on Stem Cell Research (HL Paper 83, Session 2001–02).
The right reverend Prelate said: My Lords, it has been an immense privilege and responsibility to chair the Select Committee set up by your Lordships. The issues, at once scientific, legal, ethical, philosophical and theological, have been testing.
I want to thank members of the committee for the seriousness with which they approached the task and the variety of experience, gifts, and perspectives that they brought to it. In particular, I thank our clerk, Tony Rawsthorne and his team and our scientific and legal advisers, Professor Chris Higgins and Professor Roger Brownsword.
Above all, we were conscious of two overriding issues: first, the relative potential of stem cells derived from adults compared with those taken from the early embryo; and, secondly, the moral status of the early embryo—that is the multiplying cells of the fertilised egg to the first signs of a nervous system or primitive streak at about 14 days.
In relation to the first question, your Lordships will appreciate that this is a very fast-moving field. A great deal of research was reported from the time that we were set up in March 2001 until the time that we reported in February 2002. Since then, further interesting and important papers have been published. Some of that research has suggested that adult stem cells hold out the best promise for therapy. Others have pointed out the questions and difficulties that still remain with work done on adult stem cells and argue that for certain forms of therapy embryonic stem cells are likely to prove necessary. Those are highly technical, complex matters in, as I say, a fast-moving field.
However, even as non-specialists, albeit ones who tried hard to get on top of the basic scientific principles involved, we were able to make the following judgments. First, at this stage it is not possible to predict whether therapies using adult stem cells or embryonic stem cells will prove more effective. Any form of therapy using stem cells is still many years away—estimates vary as to how many years. It could be that adult stem cells will prove more effective for some conditions, and embryonic cells for others. At this stage it is simply not possible for anyone to know,
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not even those at the forefront of research. Given that, it would certainly be wrong, on scientific grounds, to close off one or other of those promising lines of research.
That is the judgment of highly distinguished scientists whose work is exclusively with adult stem cells; for example, Professor Helen Blau, the director of the Baxter Laboratory for Genetic Pharmacology at Stanford University in the United States, wrote to the committee to say,
"The work in my laboratory is entirely focused on adult stem cells".
She went on to indicate some of the successes that she has had, stating:
"At this point in time it is impossible to say which type of cell, ES or adult stem cell, will prove more useful in treating a given disease. One may be preferable in some cases whereas the other may be preferable in other cases. Time will tell. Thus, research on both should be encouraged and facilitated".
I emphasise that that comes from a director of a laboratory that is focused entirely on adult stem cells.
We certainly believed, and therefore recommended, that both funding bodies and the Government should support work on adult stem cells. Paragraph 3.22(c) says:
"recent research on adult stem cells, including stem cells from the placenta and umbilical cord, also holds promise of therapies; and research on them should be strongly encouraged by funding bodies and the Government".
In the light of that recommendation, it is difficult to see what force there is in the criticism that we may have ignored this promising area.
Secondly, in order that such therapies may be developed a great deal of fundamental research still remains to be done. Here we became convinced that such research needs to be done on embryonic stem cells as well as adult ones. That is because embryonic stem cells—those taken from the blastocyst after four or five days—are pluripotent; that is, they are capable of developing or differentiating into any one of the specialised cells that make up the human body. As such they provide a benchmark with which to measure what adult stem cells are or are not capable of.
For a similar reason we concluded that some research on cell nuclear replacement—misleadingly called therapeutic cloning—is likely to prove necessary, as in this scientific procedure a specialist cell from an adult is, as it were, fused with an egg and in the process becomes de-differentiated; that is, it ceases to be a specialist cell and becomes a stem cell. As therapies in the future, or at least some of them, could be based on the ability of cells not only to regenerate but to de-differentiate and then differentiate into other kinds of specialist cell, research in this area, simply trying to find out what is happening and why, certainly looks necessary.
I say "looks necessary" because as your Lordships know we have the Human Fertilisation and Embryology Authority (HFEA) which will license work on embryos only if it is convinced that such research is strictly necessary and that the desired research results cannot be obtained in other ways. It was clear to the committee that the HFEA has a very

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high reputation internationally and we are certainly fortunate in this country in having such a regulatory body. It ensures that where embryos are concerned, only research that is necessary is carried out.
However, the considered judgment of your Lordships' Select Committee is that if the benefit of therapy is to be realised, whether using embryonic stern cells or adult stem cells, much fundamental research remains to be done and research on embryonic stem cells will play a key role in that, not least in realising the potential of adult stem cells. That is the judgment of those whose work is exclusively with adult stem cells, who have, we might say, a vested interest in such work, but who recognise that research work on both kinds of stem cell is absolutely essential.
Since we produced our report there has been a much publicised paper from Professor Verfaillie's laboratory in Minnesota. That laboratory identified a class of adult stem cell which can differentiate into a variety of adult cell types when transplanted into a host mouse. That is clearly a promising line of research, although there are many unanswered questions as well as different ways of interpreting the evidence, as spelt out by Professor Verfaillie herself. Furthermore, in her televised interview at a science museum debate, Professor Verfaillie said that, following her findings, the first thing she needed to do was to hire an expert in embryonic stem cells if the potential of those particular adult cells was ever going to be understood and realised. The next stage was further research using ES cells.
The second overriding question that we considered is that of the moral status of the early embryo. The committee fully respects the position of those who believe that from the moment of conception the dividing, multiplying cells of the early embryos should be accorded the rights of a human person. We state the arguments against that position and the moral case for research in the following words: first, in Chapter 4.10,
"the fact that a person has the potential to qualify as a member of some class in the future, if certain conditions are met, does not confer the rights that belong to members of that class of being until those conditions are met. A medical student is a potential physician, and if he or she qualifies may practise as such: but the potentiality alone does not confer a right to practise".
Secondly, in Chapter 4.16 and 4.17, we state:
"Burden of proof arguments are notoriously hard to resolve. If there were no morally serious issues for undertaking research on human embryos, then the mere possibility that the early embryo is a person would be sufficient reason not to do such research. However, if there are morally weighty reasons for doing such research a decision must be reached on the basis of arguments that fall short of proof.
There are morally weighty reasons for doing research that may lead to therapies for many serious and common diseases, and the concept of respect for persons can also be invoked on this side of the argument".
Recognising that people give different weight to those ethical arguments in their personal lives, we concluded nevertheless that it would be wrong for us, as legislators, to put a stop to all research on embryos at this stage. Ever since the report of the noble Baroness, Lady Warnock, and the 1990 legislation,
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this issue has been extensively discussed, legislated for, and voted on, so we concluded that section in these words:
"Whilst respecting the deeply held views of those who regard any research involving the destruction of a human embryo as wrong and having weighed the ethical arguments carefully, the Committee is not persuaded, especially in the context of the current law and social attitudes, that all research on early human embryos should be prohibited".
There is an appendix in the report which shows why it is possible for there to be two readings of the long Christian tradition on the status of the embryo. I shall not repeat what is said there, but I believe that what it sets out is fair to both sides of the argument.
There are of course a number of other important considerations and recommendations in our report, such as the international dimension of what is happening in other countries, as well as reflections on our own law. Then there is the commercial element. I hope that others of your Lordships, including members of the Select Committee, will comment on some of these. We also make a number of specific resolutions on which your Lordships may wish to comment. The Government have of course made their own response and I was glad to read that it was so positive, but I think it might be more appropriate if I comment on particular points, fairly briefly, at the end of the debate when I have had an opportunity I o hear what the Minister might have to say.
Finally, I remind your Lordships that you set up this committee to reflect in greater detail and depth on the regulations that were passed by this House on 22nd January 2001. For the reasons we have set out in our report, we believe that your Lordships were right to pass those regulations. This is an important area of research that holds out real promise, in the long run, for people suffering from a whole range of serious diseases. While people are right to raise ethical questions, we believe that the law as we have it, together with the regulatory framework that we have in place, provides the necessary safeguards. I beg to move.
Moved, That this House takes note of the report of the Select Committee on Stem Cell Research (HL Paper 83, Session 2001–02).—(The Lord Bishop of Oxford.)
5.2 p.m.
Lord Turnberg: My Lords, the House owes a great debt of gratitude to the right reverend Prelate the Bishop of Oxford and his colleagues on an extremely impressive and important report. They have painstakingly sifted through the scientific evidence about embryonic stem cell research, of which there is a great deal, and have weighed the ethical and legal arguments with great wisdom. I do not believe that there could be a more authoritative report on such a difficult issue than this one. The Government have wisely recognised that in their response.
I took the opportunity of re-reading our debate of almost two years ago, as I am sure many noble Lords did. It is difficult to imagine what new points there can be to make after the eight or more hours of debate that

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we had on the subject. It is difficult to imagine a better informed body of men and women than your Lordships on this complex subject, in light of that debate and now this report. I shall limit my remarks to one or two points.
On that occasion I spoke in favour of the changes in the regulations that would allow this type of research to be pursued, so I am naturally very pleased with the conclusions of the committee's report. I have to express an interest as scientific adviser to the Association of Medical Research Charities, whose member charities were eagerly awaiting this report and who now feel overjoyed. It is no exaggeration to say that they are extremely pleased that this potentially valuable avenue of research has not been closed off.
Of course, they and the patients and carers who support them know as much as anyone that cures for the diseases that they are concerned about are not just around the corner. They know from bitter experience that miracle cures, promised regularly in the press, are all too often empty promises. However, stem cell research has exciting potential and offers them hope—not for today or even perhaps for tomorrow, but for some time in the future. It is hope not necessarily for them, but for future sufferers. Hope sustains many of them.
It is worth looking at what has happened in the past couple of years, since our debate. It is clear that, while there are many welcome advances in the adult stem cell field, these have not yet obviated the need for embryonic stem cell research, despite efforts to say otherwise. As Professor Verfaillie herself has said, we still need both types of research. They are complementary.
There has been some hopeful research in the background sciences. For example, a recent report in June in Nature from the National Institutes of Health in Bethesda said that animal experiments reported of a cure of an animal model of Parkinson's disease in rats, using rat embryonic stem cells. Of course, much more research is needed in animals and in man, but that is a small step in a very encouraging direction. The field is moving forward on several fronts, as it should be.
The right reverend Prelate has outlined well many aspects of the report and I am sure that other noble Lords will discuss them. I finish by reiterating my welcome for the committee's confirmation that reproductive cloning is to be banned—no one would deny that—but that embryonic stem cell research should be allowed to continue under the strict regulations laid out in the report and under the control of the Human Fertilisation and Embryology Authority, which has served us so well. I am gratified by the Government's ready acceptance of it.
5.6 p.m.
Baroness Platt of Writtle: My Lords, this was one of the most challenging subjects placed before a committee of the House. It is a complex subject in terms of scientific background. Stem cell research has the potential in the long term to relieve the most
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painful and distressing symptoms suffered by many victims of Parkinson's disease, other neural diseases, spinal cord injury and liver and pancreatic diseases.
At the same time, the research necessitates the need for the use of embryonic stem cells as well as adult stem cells—as the first two speakers have mentioned—and those produced also by the placenta and the umbilical cord. That raises difficult ethical questions with which we literally struggled during the year that we were given to produce our report.
After all our hard work, it is encouraging that the Government's reaction is generally favourable to our recommendations. During the year, we had representations from many people with differing views, including those of differing faiths, which was of great assistance. The passing of the Act prohibiting human reproductive cloning and making it a criminal offence in 2001 was a very important safeguard against any slippery slope argument.
There was no doubt in our minds that human cloning is a very dangerous scientific experiment that could result in unacceptable human abnormalities. It should not be allowed to happen. We hope the Government will be successful in supporting a United Nations international ban on human reproductive cloning as soon as possible.
The inquiry did not come in at the start of embryonic research. The legislation permitting abortion has been in place for over 30 years. As we say, it would be difficult to justify an absolute prohibition on the destruction of early embryos while permitting abortion in a wide range of circumstances post-implantation and well after the emergence of the primitive streak.
Later, the 1990 Act was enacted after the Warnock committee inquiries in the 1980s and subsequent lengthy public and parliamentary debate. That allowed research on early embryos up to 14 days after fertilisation to promote not only treatment of infertility and to increase knowledge of congenital disease and the causes of miscarriages, but also to develop more effective techniques for contraception. Its very strict rules are published at the beginning of the book of evidence. I hold up the book of evidence so that noble Lords can see what we had to listen to and read. The Human Fertilisation (Research Purposes) Regulations 2001 added to them, increasing knowledge about the development of embryos and increasing knowledge about serious disease and enabling any such knowledge to be applied in developing treatments for serious disease—the reason for the committee's report.
We considered in depth, taking into account the evidence we had received from many witnesses, the respect to be given to the human embryo from the beginning, including the experience built up from the passing of the above two provisions. We took evidence from the Human Fertilisation and Embryology Authority under the excellent chairmanship of Ruth Deech, and learned of its strictness in the application of the 1990 regulations, of which we wholly approved, and which we believe

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should continue in the future in applying the new regulations. In that light we have adhered to the original 14-day limit for research on an earlier embryo when it is still in fact smaller than a pinhead and before the development of a nervous system.
In carrying out the enforcement of the 1990 Act, the HFEA in applying the regulations strictly has allowed the creation only of 118 embryos for research during the ensuing decade. We believe the strict regulations should continue, particularly as we were advised of the existence of 53,497 spare embryos in March 1999. We made a very strict recommendation, perhaps the most important recommendation in our report:
"That embryos should not be created specifically for research purposes unless there is a demonstrable and exceptional need which cannot be met by the use of surplus embryos".
We are glad that the Government in their response have underlined the need for that strictness.
If these surplus embryos are not implanted, they will eventually be destroyed. However, even so they must not be used without the informed consent of those donating the embryos, having been given relevant information on the possible research and time to consider it. Once again, that process has been strictly regulated by HFEA for over 10 years. It has also made clear that no payment can be made for donation and that the clinical and research roles are separated.
Clearly, the coming years will show successful development in the treatment of disease using both embryo and adult stem cells. However, evidence was given to us that the pluripotence of embryo stem cells will contribute through careful research to the successful treatment of disease by both types of cell. We also hope that more research will continue into the application of stem cells from the placenta and umbilical cord. At present they are discarded, but they contain the relevant cells for the baby, and may perhaps in the future be preserved for use in their future lives.
We recommend that the Government should, towards the end of the decade, undertake a review of scientific developments and particularly of the progress of adult stem cell research to see if research on human embryos is still necessary, with which the Government have agreed. That is another important safeguard. We are pleased too that the Government have agreed to ensure that the HFEA has sufficient resources to carry out its important work.
Clearly, the results of this research need to be available in the future for therapy of serious diseases, such as Parkinson's disease, with their distressing symptoms. However, it will be necessary for the proper and strict control of the purity, provenance and monitoring of their use. We recommended that a condition of granting a licence that the HFEA should require that any ES cell line generated in the UK in the course of the research should be deposited in a national stem cell bank overseen by a steering committee.
It is good that the research councils have indicated their intention to make the banking of cells a requirement in any award for research. The
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Government in their response added that in pursuance of their statutory duty to satisfy themselves of the necessity for research the HFEA should also take into account the suitability of existing ES cell lines already banked before granting a licence.
The UK has established an international reputation for the strictness of the HFEA over the past decade, which also includes ethical approval by local research ethics committees. We all hope and pray that over the years stem cells will enable therapies to be developed for serious and distressing diseases.
However, HFEA strictness is essential. The Government's response underlines the necessity for stringency in the HFEA when carrying out its statutory duties. As we say on page 36 of our report,
"a number of scientific witnesses argued strongly that reputable scientists do not look for a research environment with minimum regulation, but want an effective regulatory regime which sets out clearly what is and what is not permitted, so that they know where they stand both scientifically and ethically: and that is why the regulatory environment in the United Kingdom is attractive to researchers".
It is on that reputation that our report is built, and it must continue; on that basis our time and effort, we hope, will not have been wasted.
5.17 p.m.
Lord Dahrendorf: My Lords, I rise with great diffidence and after agonising whether I should speak at all. I am, in a sense, the first victim of the Statement on the Local Government Financial Settlement, having to make an inevitable trip and having delayed it so that I can take part in the entire debate today. If the House is prepared to listen to me despite the fact that I cannot stay for the Minister's response, I should like to begin by associating myself with the noble Baroness, Lady Platt of Writtle. She, if I may remind the House, was one of seven noble Baronesses on the committee. If it is not improper to say so, the remaining men were put to shame by the style in which the majority of the committee conducted our debates.
I mention the remaining men because while we were sitting Lord Carnarvon met an untimely death. I am sure that many noble Lords remember him with great affection. He would have made further contributions to the work of the committee.
The commitment, the deep understanding of issues, the fairness and the openness of discussion which we experienced were the result of the membership of the committee and of its eminent chairman, the right reverend Prelate.
In the debate preceding the setting up of the committee, I was one of those sitting on the fence. I was genuinely not clear which way I would come down on this question of embryo stem cell research. Indeed, I am often trying to work out moral issues: I do not have the certainties that enable some to be clear about answers even before they undertake further inquiry. However, at the end of our work, I firmly support the report.

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There are four reasons why I changed my mind to move to one side of the fence. The first is, in a sense, scientific. It has to do with the status of the "early embryo", as we called it.
In passing, I may say that one problem in this whole area is that even the terminology is in some ways polemical. The right reverend Prelate mentioned the expression "therapeutic cloning", which is really cell nuclear replacement, but which, by including the word "cloning" suggests that something is happening that bears a distinct similarity to the cloning of human beings, which we all want banned.
The term "early embryo" is also in some ways misleading, because the cells that define the early embryo before implantation cannot by themselves develop into a human being. Implantation in the womb is essential for the development of those cells into a human being. To me, as an amateur in the matter, that is an important scientific fact—even apart from the moral and, indeed, anthropological facts that the noble Baroness, Lady O'Neill, adduced in our discussions, and to which she may return today.
The second reason why I changed my mind was practical. I was struck by the fact that the scientists whom we met were not excessively enthusiastic about research on embryos. Indeed, they were all looking for other ways to conduct the fundamental research that needs to be done and extremely interested and intrigued by the possibilities of adult stem cell research. I support that, and so did the committee, but adult stem cell research, which is so strongly praised by those who are highly sceptical about early embryo research, is a peculiar process. It involves the dedifferentiation of adult stem cells to a point at which they have many of the qualities of embryonic stem cells.
As an amateur, and without wanting to take the point too far, at times I wondered whether, at the end of that road, we may not reach a point at which dedifferentiated adult stem cells have precisely the qualities of pluripotent and, ultimately, totipotent embryos. That would raise a peculiar issue about artificially producing human beings. In other words, I felt that the scientists' attitude was welcome, but raised and left open questions that some opponents of such research must answer if they really want to use adult stem cells as a substitute.
However, let me not stray too far from areas in which I can claim some competence and come to my third point. Obviously, we were all impressed by the moral dilemma between research on early embryos and the possibility of finding cures for terrible, disabling diseases. It is regrettable that some scientists these days have adopted the celebrity culture and announce prospects of success long before they are real—a harmful habit that, I hope, will be countered by others who see the difficulties. There is a moral dilemma and, at the end of the day, my decision was in favour of the potential for cure.
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There is fourthly the need to control research projects and what research is allowed. The noble Baroness, Lady Platt, has said everything that I would want to say on the subject. I wholly support her view that that must be done in a competent, impartial, thorough and, above all, stringent manner. I hope that recent doubts cast on some actions of the HFEA can be either dispelled or corrected, so that we end up with an agency that we can trust.
That leads me to a final point, which concerns cloning and the international scene. In many continental countries, British practice in the area is regarded as especially liberal—indeed, more. One German newspaper recently described the United Kingdom as a "clone Eldorado" and lumped it together with Singapore and China. That is simply incorrect. The argument rests on a total misunderstanding of the practice of licensing research that we advocate and is in force in this country. On the contrary, we avoid the German hypocrisy of allowing research on imported stem cell lines but banning those produced at home. We also avoid the American hypocrisy of demanding a total worldwide ban while not legislating at all on what happens in United States laboratories.
Admittedly, the international scene is confusing. At one end are the cloners. Severino Antinori in Italy does not declare where he is undertaking his work, and the Canadian, Brigitte Boisselier, works in Las Vegas in the United States. Both claim that the first human clones will be born within weeks. I am not sure that those claims are well founded, but I fear that, one day, something of that kind will happen. I hope that your Lordships will not regard it as cynical when I say that it is probably only when it happens—it is bound to go wrong in significant ways—that many will wake up to the need to find international ways to ban the cloning of human beings.
However, Britain is far from that end of the spectrum, and from the position of countries that promote controlled but unrestricted research on embryos as a matter of public policy. China is one example of that; another is Singapore, which has gone out of its way to create something called Biopolis, a huge research centre, which, I understand, has now attracted one of the "inventors" of Dolly the sheep, Professor Alan Coleman. It has gone out of its way to try to attract scientists from all over the place.
There are those who offer the opportunity of unrestricted research. There are those who want to ban all research. The report steers a kind of middle course for Britain. Although I do not normally advocate a third way, in this case the middle course is appropriate, and I therefore support the Motion.
5.30 p.m.
Lord Alton of Liverpool: My Lords, my concerns about the Select Committee's report fall broadly into four categories: procedural, ethical, scientific and regulatory. I understand the points that the noble Lord, Lord Dahrendorf, just made, and I know that he has agonised about the issues. However, the dilemma

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that he faced, when we debated the questions in 2001, was the dilemma of the whole House. The noble Lord had to vote in favour—as he did—of therapeutic cloning at the end of that debate because the Select Committee that we established was a retrospective Select Committee. Even if he had wanted to continue agonising, he was required to cast his vote before your Lordships were able even to consider the matters.
Your Lordships may recall that, during our debate, I moved an amendment asking for a Select Committee to consider the questions before we proceeded. I said that our situation was like that of a court being asked to give out,
"the verdict and sentence, before hearing the defence, the prosecution and the witnesses".—[Official Report, 22/1/01; col. 23.]
During the debate, my noble friend Lady Warnock said:
"We have been bullied and pushed to do things more quickly than we should".
She also said that people who feared the developments in embryology should be,
"given some hope that their fears may be listened to".—[Official Report, 22/1/01; col. 45.]
The failure to appoint to the Select Committee anyone who spoke in the debate against reproductive and therapeutic human cloning was unlikely to strengthen the impression that anyone was listening. All 26 witnesses who were called to appear before the committee to give evidence from a scientific or medical perspective were from the pro-embryo research lobby. Notwithstanding what the right reverend Prelate the Bishop of Oxford said today, no scientists were specifically called to submit oral evidence from an exclusively adult stem cell perspective. The importance of evidence on adult stem cells from, for instance, Professor David Prentice, whom I asked to travel here from the United States, where he is a senior scientific adviser to Congress, is not even referred to in the report. The right reverend Prelate asked for force to be given to that criticism.
The cursory way in which adult stem cell technology was investigated was brought home to me by a question put by a member of the Select Committee at the final public: hearing:
"Are you saying that it is possible, certainly as you understand it, to understand the process whereby an adult stem cell, which, as I understand, it is not yet possible to isolate, can be used but not in isolation?"
Not only can adult stem cells he isolated, but they can offer greater potential than embryonic stem cells. During the same hearing, Professor Prentice warned of the dangers to public health of using embryonic stem cells.
I remain profoundly concerned about the effect on society when we treat nascent human life as a natural resource to be mined, exploited and commodified. The Department of Heath recently confirmed to me—I am grateful to the Minister—that, since the passage of the Human Fertilisation and Embryology Act 1990, over 900,000 human embryos had been created through in vitro fertilisation. Almost 300,000 embryos remained unused and were therefore destroyed. A mere 4 per
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cent of nearly a million human embryos have seen the light of day. I repeat: a mere 4 per cent of nearly a million human embryos created since 1990 have seen the light of day. Where is the special status that my noble friend Lady Warnock talked about in her report and which Parliament is supposed to have accorded the human embryo? We trade in human embryos, we manipulate them, we experiment upon them and we destroy them. They have no special status worth talking about.
An article in Nature magazine on 4th July 2002 underlined how much we knew about our earliest moments of life. I support the remarks that have already been made in your Lordships' House about how fast-moving the science is. We now know much more than we knew then. The article, entitled "Your Destiny from Day One"—not from day 14—states:
"Your world was shaped in the first 24 hours after conception. Where your head and feet would sprout, and which side would form your back and which your belly, were being defined in the minutes and hours after sperm and egg united".
The embryologist Alan Handyside also warns that meddling with early human embryos might carry serious adverse consequences:
"It's possible you could be removing a cell with a predictable fate and causing damage".
Even if we do not accept the inviolability and sacredness of human life from conception—I am disappointed that the report fails to mention the unanimous submission of a group of eminent theologians from all Christian traditions—the precautionary principle surely requires us to err on the side of caution wherever there may be any doubt. We are not potential human beings; we are human beings with potential. The right reverend Prelate gave the example of the medical student who could fulfil his or her potential by one day becoming a doctor. If we terminate that life, he or she will never fulfil that potential. We are always on a gradient, from the moment of conception until our natural death.
In our debate in January 2001, the right reverend Prelate said (at col. 37) that embryo
"research should only be done … if it is truly necessary and that research cannot be done any other way".
There is now no doubt that the research can be done in another way, either using adult stem cells or embryonic stem cells from non-human primates. Everyone in Parliament wants therapies that alleviate illness. There is no disagreement between us about that. However, it is dishonest to suggest that the only way to make progress is by the creation and destruction of countless human embryos. Should we not, at least, ask what progress has thus far been achieved at the expense of one million human embryos, before we permit the destruction of more?
An editorial in New Scientist—not a religious voice—had this to say just a few months ago:
"Like stuck records, Ministers and policy makers continue to enthuse about therapeutic cloning even though the majority of bench scientists no longer think it's possible or practicable to treat patients with cells derived from cloned embryos. They have already moved on to investigating the alternatives".
In its editorial, Nature said:

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"The idea of 'therapeutic cloning' seems to be on the wane…most now believe that it will be too expensive and cumbersome for regular clinical use".
The conclusions in the Select Committee's report are based upon outdated research that has been superseded by research conducted since 1999 and demonstrates profound levels of healing using adult stem cells.
I must also refer to the regulatory issues that were touched on by the right reverend Prelate and others in the debate and are raised in the report. The committee and, today, the right reverend Prelate expressed confidence in the work of the Human Fertilisation and Embryology Authority. He said that it is held in high international esteem. However, the regulation of embryonic stem cell research has been entrusted to an organisation in disarray. In July, the House of Commons Science and Technology Committee was highly critical of the HFEA:
"The Lords Stem Cell Research Committee reported that the HFEA is 'highly regarded, both at home and abroad … [and] has the full confidence of the scientific and medical research community'"—
the very things that we have been told in our House today. It said:
"We are unclear on what evidence it based this assertion".
And so am I. The recent mix-up scandals at IVF clinics; the contemptuous issuing of a licence authorising embryonic stem cell research in 1997, four years in advance of parliamentary approval; this week's revelations regarding Professor Ian Craft's egg trading arrangements, in flagrant disregard of Section 12 of the 1990 Act; the suffering that that has caused women; and the shocking disclosures from the embryologist, Dr Sammy Lee, in the Sunday Telegraph on 10th November, demonstrate that the criticisms of the Science and Technology Committee are not unfounded. Indeed, they reflect a general concern that is widespread in the country today. I am surprised that that is not reflected in the report before us.
Dr Lee wrote that he knew of at least six cases where the wrong embryos were put into women. He maintains that it is,
"galling that the HFEA has sought to brush aside any meaningful discussion of why mistakes occur in IVF clinics, and how frequently".
Yet the Government continue to insist that the HFEA has their full confidence and that they have no plans to conduct an inquiry into its work. In a reply to me earlier today, they say that they are simply going to double the money they give to the HFEA to £5.5 million. Surely, that is something that the Public Accounts Committee should examine.
Also consider for a moment our international isolation on these matters. The noble Lord, Lord Dahrendorf, talked about a "cloning Eldorado". The noble Baroness, Lady Platt of Writtle, mentioned her hope that there would be international action to end reproductive cloning. On that issue we would be in total agreement.
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It is all very well asking other countries to support us, but we have obligations too. Article 18 of the European Convention on Human Rights and Biomedicine, which the Government have still not signed, prohibits the creation of embryos for research purposes. At the end of last month, the European Parliament voted for a total ban on reproductive and embryonic cloning. In the US, there is a four-year moratorium on cloning for biomedical research. I agree with the noble Lord, Lord Dahrendorf, that that is insufficient and proper regulations should be passed by Congress as well. In Germany, destructive embryo research is prohibited. In France, President Chirac is opposed.
In other words, it is perfectly possible and reasonable to reach conclusions different from those of the Select Committee, and many of our international partners have done so. Here, at the behest of the pharmaceutical and bio-tec industry, the United Kingdom has compromised its high standing in the international community.
To conclude, I have outlined my disquiet about the genesis of the Select Committee and its attitude towards the ethical, scientific and regulatory issues that are at stake. Adult stem cell research is a viable scientific alternative and has clearly overtaken research using human embryos. It is simply not true to say that we need to do both. While I admire many of the individual noble Lords and Baronesses who have served on the committee, I do not believe that this is a good report. I believe that it is deeply flawed and I fear that it will not stand the test of time.
5.41 p.m.
Lord Tombs: My Lords, the debate which led to the setting up of the Select Committee lasted for almost seven hours and attracted a large number of speakers. Those speakers can be divided into three groups—those supporting the government Motion without reservation, those supporting it with reservations, and those opposing it.
In the first group—those supporting the Motion without reservation—there were 14 speakers, two of whom were later appointed members of the Select Committee. In the second group—those supporting the Motion with reservations—there were 11 speakers, two of whom were later appointed members of the Select Committee, and one of them chairman. In the third group—those opposing the Motion—there were 13 speakers, none of whom was appointed to the Select Committee.
Therefore, of the eventual membership of the Select Committee—11 in all—four were appointed from those supporting the Motion, and none from those opposing it. I believe that the Committee of Selection, perhaps unknowingly, served the House badly in that regard. The respect which Select Committees of this House enjoy widely is based on the belief that they are fully independent of the issues being considered. That is a valuable asset which must be jealously and conscientiously guarded.

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However, when we turn to the declaration of interests by committee members, the situation worsens. Of the 11 members, nine declared interests—past or present—in academic fields, medical charities or the pharmaceutical industry, which could lead them to favour unfettered medical research. Of course, such a background does not preclude examination of the ethical dimension, but it suggests sympathies and peer pressures that make an independent appraisal more difficult.
In those circumstances, I have sympathy with the members of the committee. They were placed in a situation where their natural sympathies lay with unfettered medical research and were not exposed to the challenging discussions which would normally take place in a Select Committee.
So it was no surprise, to me at least, that the conclusions of the Select Committee supported the policy of the Government. It was no surprise, but it was a great disappointment because it meant that an historic opportunity to introduce an ethical dimension into this medical research policy was missed. Instead, on this subject at least, the unenviable position of the United Kingdom as one of the most ethically indifferent of western nations was confirmed.
The Select Committee concluded that the embryo enjoyed special but not absolute rights—a view, incidentally, not shared by many church leaders and theologians. But it also concluded that research on human embryos could be ethically justified only if there was no alternative. Here the alternative route of adult stem research is crucial. We owe a great debt to my noble friend Lord Alton for using his appearance before the Select Committee to introduce scientific evidence on the immense developments in that field. I am sorry to say that the Select Committee failed to recognise the importance of that evidence.
But, perhaps because of that, Recommendation (xix) of the report suggests that,
"At an appropriate time, perhaps towards the end of the decade, the Government should undertake a further review of scientific developments, particularly of the progress of adult stem cell research and therapies, and of the development of stem cell banks, with a view to determining whether research on human embryos is still necessary".
The Government have accepted that recommendation.
Welcome though such a recommendation is, it raises the question of why the benefit of the doubt is not given to the embryo rather than to the research scientist. A carefully argued written submission by the Roman Catholic Bishop of Plymouth, the right reverend Christopher Budd, put the case for a five-year moratorium on embryo stem cell research, and recent developments in the field certainly support that advice.
The view of the Standing Committee that embryo research is necessary for the present rests on the fact that the UK research establishment remains fixated on embryo research and its seemingly great potential. The astonishing advances in adult stem cell research and therapy over the past two years have taken place in other countries, notably the USA, and it is unfortunate that the Select Committee failed to invite evidence on the current situation from those countries. Instead, it
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relied heavily on advice from British scientists, influenced by their attachment to embryo research and unfamiliar in many cases with the rapid advances in adult stem cell work internationally.
I digress to say that it is not in the least surprising to me that scientists in one field do not seek to criticise the need for work in other fields—dog does not eat dog—and that researchers are content to work in their own fields and to observe with interest the work of others. It would be naive and unfair to expect them to decide the issues which the Select Committee was set up to examine.
The same mistake must not be made in any future review of the need for research on embryo stem cells, and the speed of developments in adult stem cell research and therapy make the suggestion of a review towards the end of the decade an unsatisfactory one. Instead, the pace of development requires, in my view, that there should be an annual review by a standing committee, independent of government and including international scientists familiar with developments in the adult stem cell field. I hope that the Government will seriously consider that option.
5.47 p.m.
Baroness Warnock: My Lords, I add my congratulations and expressions of gratitude to the right reverend Prelate the Bishop of Oxford and his committee on their report. I declare an interest having been involved in the 1990 legislation, within the framework of which the debate is now taking place.
The report has been criticised on the ground that its conclusions were wholly predictable, but that does not entail that they are wrong. I find it difficult to understand the suggestion that the report is in favour of unfettered medical research because it is clear that the framework of regulation within which research using human embryos is carried out is rigorous and quite specific. I also find it difficult to understand how it can be said of the report that it has missed an opportunity to revisit the ethical and moral considerations that lie behind the 1990 legislation.
I shall confine my few remarks to Chapter 4 of the report, where the central moral issue of the status to be accorded to the early human embryo is discussed. As the report notes, this moral question has not changed since the 1980s and the lead-up to the legislation of 1990.
In paragraphs 4.6 to 4.17 (pages 21 to 22) of the report, under the heading "Should the early embryo be treated as a person?", I thought that the report. for once, failed in clarity. It failed to make clear the confusion generated by introducing the concept of personhood into the debate. The question of whether the embryo is a person is not a different question from that of the status we should accord to the embryo; it is exactly the same question.
People sometimes speak as though asking whether an embryo is a person is like asking whether an animal is a horse—a member of the genus equus—to be set tied by observation, scientifically. But, of course, that is not the case. The question of whether someone or

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something is a person is a legal—or, at least, quasi-legal—question, a matter of deeming someone to be a person. There is no sense in saying such things as, "The embryo may possibly be a person", or, "The embryo is probably, or probably not, a person". Neither probability nor discovery comes into the question at all. It is a matter of decision—and Parliament did decide in 1990 that the early embryo did not have the right to the protection that presumably belongs to persons.
I regret that in the original report that led up to the 1990 legislation we used words such as "respect for the embryo". That seems to me to lead to certain absurdities. You cannot respectfully pour something down the sink—which is the fate of the embryo after it has been used for research, or if it is not going to be used for research or for anything else.
I think that what we meant by the rather foolish expression "respect" was that the early embryo should never be used frivolously for research purposes. That is perfectly exemplified by the regulations that are brought in and the licensing provisions that are looked after by the HFEA. It is the non-frivolity of the research which is conveyed by such expressions as "respect for" or "protection for" the embryo.
Finally, one question that must be addressed is whether embryos should be created specially for research purposes. Personally, I have never been able to see any moral objection to creating embryos for research purposes once the central moral decision about the status of the early embryo has been taken. Of course, those who believe that the embryo must be given the full protection of the law from the moment, or the process, of fertilisation believe that it would be utterly wrong to create human embryos for research. But if you have taken the decision that the early embryo is to be used, where necessary, for research, my own view is that there is no difference between an embryo that is surplus to IVF requirements and an embryo that is specially created.
The enormous value, as I see it, of the new knowledge, the new science, the new understanding to be gained from embryonic stem cell research suggests that embryos should, if necessary, be specially created—so that this knowledge can be acquired and can ultimately be used for therapeutic purposes. I do not believe in a sharp distinction between fundamental research and practical and useful research. You cannot have therapeutic research unless you understand the science. That is brought out clearly in the report.
I am in favour, therefore, of using embryos created by cell nuclear replacement as research tools. But one point worries me. It was mentioned by my noble friend Lord Alton, and I believe it to be serious. There is the possibility that women may be exploited into giving away whole cycles of eggs. This was the most shocking story—I entirely agree with my noble friend. The HFEA or another body must address it immediately, perhaps by introducing new regulations to prevent the exploitation of women who, because they are
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desperate to have children, agree to give away a whole cycle of eggs in exchange for free IVF treatment. That is a shocking thing to do.
We need new regulations to cover egg donation. The possibility of donors being exploited is another reason to carry out research using adult stem cells rather than embryonic ones. However, both areas of research must be explored, and I accept fully the probable limitation of the use of adult stem cells.
5.55 p.m.
Lord Brennan: My Lords, stern cell research is a matter of profound medical, legal and social significance. I must, therefore, begin with two very important cautions. First, the topic deserves to be debated with intellectual discipline and reliable reasoning; therefore, the message should not go out from this House today that stem cell research will produce cures for serious disease. It might. It is a speculative aspiration. It is unproven whether it will cure and, if it does cure, it is unknown when.
The second caution is that we must not proceed in the expectation that the legislative framework embodied in the regulations of 2001 represents valid law. Next February, the Judicial Committee of this House will hear the final appeal on the question of whether the regulations are valid. Its decision will involve a major question of constitutional importance: whether the courts of our country have any role in plugging legislative gaps created by the legislature or whether those matters should be remedied by the organ of democracy that created them.
Central to the report is the assumption that the regulatory framework of the Human Fertilisation and Embryology Authority—I shall hereafter refer to it as "the authority"—works effectively in the public interest and can be seen to do so. Secondly, it assumes that there is a reliable legislative framework overall. Thirdly, the committee readily accepted the limited nature of its inquiry into the field. It did not, and could not, come to any conclusions about the degree of control society should exercise over the use of the products of stem cell research for the benefit of the community. I will deal with each point in turn.
First, does the authority have an adequate system of regulatory control in practice? Let us test the proposition. One, licence applications are never published before they are considered by the authority. It is, therefore, impossible for the public to know to what the licence application is directed. As a result, it is impossible for them to know whether the Government's undertakings and the authority's declared policy are being met, namely that stem cell research will be permitted only where it is necessary, desirable and there is no alternative. How are the public to know?
Secondly, after licensing decisions are made they are not referred to in public for up to two years after they have been made. The report of the authority for the year November 1999 to November 2000 was only published in the late summer of the year 2002. When I say "published" as regards what happens with these

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licences, I ant being generous. By way of example, in the 1997 report there is one page that embraces 19 licence decisions, the longest of which stretches to just over 40 words in its description. That cannot plausibly be said to represent informing the public about a licensing decision. In any event, it is too late for anyone to do anything about it because the licence has been given and acted on.
Finally, the right reverend Prelate quite rightly emphasised that at the heart of this question is the integrity and value of the research that is accomplished. Outside the world of this authority, science seeks to achieve those standards by peer review. I shall test with noble Lords the proposition of whether the peer review system under the authority is established as being reliable to our satisfaction: we do not know the system of selection; we never know the expertise of the peer reviewer; and we do not know whether there is any conflict of interest. If your Lordships think that I am being overly strict, I have with me a real-life example from a licensed applicant. In evidence given to the Science and Technology Select Committee of the other place, Dr Austin Smith who is a holder of a licence and a declared peer rev iewer—said:
"Unfortunately the [Authority's] … committees seem insufficiently familiar with the science also. In responding to my queries it seems that the [Authority] … looks to the Medical Research Council for specialist input, who in turn ask my view, with the result that I am asked my view of a ruling which I am seeking Research regulation seems to be at the margin of their activities".
He measured his words carefully, but it is almost risible to suggest that that is a proper system of peer review. It may not be representative; indeed, he may be wrong. However, we do not know.
From all of those propositions I invite noble Lords to consider with me the following suggestion. In scientific issues of this importance, should we not endorse the views of the Science and Technology Select Committee of the other place, which observed in 1999 that there was a crisis of confidence by the public in the regulation of science and technology and called for greater openness and dialogue. Do any of us disagree? If that is a proper objective, I invite my Government to consider the following proposals with the authority. First, adequate details of licence applications should he published. This should not be brushed aside with reference to the nonsense of commercial confidentiality. We are talking about the investigation of humankind for the benefit of humankind.
Secondly, adequate details of decisions should be published. Thirdly, the people who are peer reviewing should be identified, as should their expertise and terms of reference, and a declaration should be required of no conflict of interest. Fourthly, let the authority explain why this research was the only alternative. And, fifthly, let the licence holder who sought leave to investigate report its conclusions, successful or otherwise, back to the authority so that it can summarise the conclusions in its annual report.
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None of that presently happens. Therefore I question the conclusions in paragraphs 8.1 and 8.2 that the public can be satisfied that the authority works in a way that we know and can understand.
The second question is whether there is an adequate legislative framework. The authority is reported as declaring in the report at paragraph 8.22 that it does not have regulatory control over stem cells once extracted from the embryo. I understand that it repeated the same declaration in a court case about tissue typing the other day: embryo control, yes; extracted material, no control by us.
Unless I have misunderstood the science, it is the extracted material that founds much of the research intended to be carried out. If the authority declares that it has no regulatory control over it and no competence in that regard, how can it be said that the present legislative framework is there?
I give two illustrative examples. Extracted material can be used for either research or treatment, but in both instances without regulatory control. It can be so used without any criterion applied as to whether it is necessary and desirable and whether there is an alternative. What we legally require in respect of embryos, we do not legislatively require in respect of material extracted from them.
I turn to the question of commercial control I do not want to give my own views, to which I spoke in January 2001, about where all this was going and who was going to own these wonderful benefits to society: the Geron corporation which has just bought up the Dolly company in the North of England and now has most of the patents in the world in this field; or should it be us, the people who want the benefit from it?
In the evidence to the committee at page 448, Professor Wyatt, a sceptic on stem cell research, concluded:
"The extent of funding of all research involving embryos should be transparent and open to public scrutiny … The commercial ownership of cell-lines and research data needs careful regulatory and public scrutiny. There should be legal protection of "Whistle-blowing' by scientists in commercial organisations if ethical concerns are raised".
Who is to disagree? I turn to a stem-cell research enthusiast, the noble Lord, Lord Walton of Detchant, at page 156, who put the matter crisply in a way that cannot be improved on:
"My own personal belief is that the results of such research should be universally available without significant commercial considerations".
Who would disagree?
Whichever line one takes, there is no government policy of which I am aware, nor any external policy of NGOs in the medical world, as to how society will obtain the benefits of this research, if they ever occur, in a way that serves the community and not the profit-maker. I recall for your Lordships the phrase "intellectual discipline and reliable reasoning". Where are we going?
My conclusion is short and, I hope, simple. The authority should grant no licences until steps regarding the system I have recommended are, at the

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very least, considered; until the legislative framework covers the concerns I have expressed; and until society can be satisfied that what is sought to be done will serve society. This debate is not the end; it is merely an episode in a long-running debate on a legal and social concern for us all. The need for legislative oversight cannot be deferred until the end of the decade; it is a constant requirement. I for one intend to pursue that oversight.
I have not troubled your Lordships with my disagreement with the committee's conclusion. I adopt the reasoned arguments of the noble Lords, Lord Alton and Lord Tombs. I thank noble Lords for their patience.
6.11 p.m.
Baroness Cox: My Lords, I speak with trepidation because this subject has such profound ethical, theological, scientific and clinical implications and because of my respect for members of the committee, for the enormous amount of work they have devoted to the preparation of this report, and to their personal commitment to ethical and scientific integrity. I therefore express my concerns with profound humility. However, I have voiced them previously, and subsequent developments have not allayed them. These include the apparent arrogance of the United Kingdom in going it alone while other European countries and the United States have been constrained by scientific and ethical arguments from going down the path recommended in this report. That point has been very fully made by the noble Lord, Lord Alton.
Furthermore, while great emphasis is laid on the therapeutic potential of embryonic stem cells, it is acknowledged that these cannot have any effective clinical application for many years. However, the progress being made with adult stem cell research suggests that they may have more to offer without the immense ethical or safety problems associated with embryonic stem cells. Everyone wishes to hasten therapeutic developments to alleviate the anguish of illnesses such as Parkinson's disease. As a nurse, I cannot feel anything other than passionately committed to measures to relieve suffering in a whole range of diseases which may be treated by stem cell therapies. However, the question must be asked whether it is prudent to proceed now with a more ethically and clinically problematic route of embryonic stem cells when the option of adult stem cells is generating very positive results and is being used successfully in many parts of the world. Indeed, the United Kingdom is being left behind in this field of research.
The right reverend Prelate the Bishop of Oxford referred to the report's encouragement for adult stem cell research. Encouragement is one thing, funding is another. In the United States, 75 per cent of private funding is going to adult stem cell research organisations, whereas embryonic stem cell research organisations are receiving a very small amount and are struggling to survive. I should therefore like to ask either the Minister or the right reverend Prelate how
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much funding is currently underpinning the encouragement for adult stem cell research. I should also like to concur with the noble Lord, Lord Tombs, when he expressed his grave concern about the suggestion that the situation should be reviewed towards the end of the decade. The issue is much more urgent than the end of the decade. However, I shall focus on the risks of embryonic stem cells as they seem to receive such inadequate consideration in the report, perhaps because the relevant experts who could present the alternative arguments were underrepresented in the witnesses giving evidence.
The report claims that there is no reason to suppose that the risk of tumour formation is higher in embryonic stem cells than in adult stem cells and that cultured embryonic stem cells are unaltered and can be grown and manipulated safely in culture. But these claims are contrary to all the available peer reviewed evidence. I therefore offer some counter arguments which are grounded in reputable scientific research. Time will not permit me to cite the sources but I shall make those available in a fuller paper which I shall place in the Library for anyone to check my claims and arguments.
First, the report does not address the very serious risk of teratoma or teratocarcinoma formation with embryonic stem cells. These are tumours composed of a mixture of various inappropriate tissue types such as bone, cartilage, hair or teeth, which can develop anywhere in the body, for example, in the heart or in the brain.
Tumour formation is not a hypothetical risk but is, or can be described as, an intrinsic property of embryonic stem cells. Indeed, the presence of only a minute number of embryonic stem cells (relative to the numbers implanted in stem cell therapies) is sufficient to generate these tumours. The report also clearly implies that adult stem cells are just as likely to form teratomas, stating that there is
"no reason to believe that (there) is a significantly greater risk for embryonic stem cells than for (adult) stem cells".
But, so far, adult stem cells have not been found to produce these tumours.
Secondly, there are a number of ways that embryonic stem cells and their differentiated progeny could generate cancer, when they are cultured as would occur in the process of multiplying embryonic stem cells for therapies and to an even greater extent in the case of the proposed stem cell bank. The risk is greater still if the embryonic stem cells are obtained from "therapeutic" cloning.
Recently, a form of mutation in embryonic stem cells in culture has been identified which could result in cancer. In this case the cells appear to have the correct number of chromosomes, but they are the wrong chromosomes. There are no copies of a chromosome from one parent but two from the other parent. It is a particularly dangerous form of mutation. The study, which investigated mutations in embryonic stem cells, was reported in the proceedings of the National Academy of Sciences in the United States of America earlier this year. The authors state that the increased

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risk of tumour formation after (embryonic) stern cell therapy should be viewed with concern. By contrast, they state that this mutation
"is not commonly observed in other normal somatic cells"—
this includes adult cells.
Thirdly, the report also claims that cultured embryonic stem cells are unaltered and safe because these cells, at least in the case of mice, can form normal offspring. But the report does not reveal the vast numbers of embryos produced from cultured embryonic stem cells that fail before one succeeds, and the very high percentage that have foetal abnormalities or are born with gross abnormalities or that die at or around the time of birth or shortly after.
The reality is that the experiments described so positively in the report demonstrate clearly that cultured embryonic cells are altered and unsafe, not unaltered and safe. It thus appears to give them a clean bill of health whereas there are numerous ways in which they could cause tumours, including cancers. If this issue is not addressed thoroughly, and if in future years people develop such tumours from embryonic stem cell therapies, they and their relatives will not look kindly on the committee which claimed that embryonic stem cells were unaltered and could be safely cultured despite the fact that there is much evidence to the contrary.
With respect to "therapeutic" cloning, the risks would be even higher because of the very high incidence of severe abnormalities in cloned embryos. If these defective embryonic stem cells were used for "therapeutic" cloning, they would produce defective cells. Unfortunately, in the majority of cases, the abnormalities would not be detectable, as at present in many cases there is no way to tell which are the defective cloned embryos. If such defective cells were used for therapies, they would be likely to cause cancer.
Finally, through ignoring the dangers of embryonic stem cells, and attributing the unique advantages of adult stem cells also to embryonic stem cells, the report commends a procedure that would instantly result in tumour formation if embryonic stem cells were used, despite having received clear warning of those dangers.
Numerous studies with animals with serious diseases such as heart attack, liver failure, stroke and traumatic brain injury have shown that adult stem cells can be injected intravenously or transplanted some distance from the site of injury, since they migrate to the site of injury, differentiate into the appropriate cell type and begin to repair the damage. There have been astonishing levels of success with disorders such as heart attack and liver failure, and dramatic reductions in mortality.
Those studies show that adult stem cells have the ability to migrate to the site of injury and repair the damage. In some cases, differentiation of the stem cells at the site of injury was also clearly demonstrated. That is extremely advantageous, since it means that adult stem cells in many cases could be injected or even mobilised from internal stores rather than surgically transplanted. 'That is particularly helpful in cases like
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stroke, heart attack and spinal cord injuries, where surgery could be dangerous. It also means that the adult stem cells do not need to be either dedifferentiated or differentiated before transplant, since local signals in the body direct events appropriately. It therefore provides a very elegant, quick, simple and safe procedure. However, that procedure cannot be carried out using embryonic stem cells, because of the severe risk of tumour formation when injecting or transplanting undifferentiated embryonic stem cells into the body.
I conclude by arguing that there seem to be strong grounds for concern about the conclusions of the report. I hope that they will be taken into account before it leads to potentially irreversible developments that could harm those whom it is intended to help.
6.21 p.m.
Baroness O'Neill of Bengarve: My Lords, I do not believe that any of us can do anything but accept the seriousness of these issues, and the tone in which we are discussing them is entirely appropriate.
I was a member of the Select Committee and learned a great deal while serving on it. I remind noble Lords that the Select Committee was established to consider issues arising from stem cell research. One thing that we learned was that these are early days, and we are not talking about therapies as yet. Enthusiastic mention has been made of developments that may be adult stem cell therapies, or may not. We are in such early days that it is rash to go beyond the evidence with claims about the relative merits of different sorts of therapies.
In general, I do not believe that opponents of the regulations that this House passed in 2001 or the critics of the Select Committee report have disagreed with the report on the thought that these are serious purposes. They disputed two points: in some cases, they have argued that the regulations are unnecessary and in others that they are unacceptable. Those who believe that embryonic stem cell research is unnecessary will believe that the regulations are unnecessary and that there should have been no extension of the purposes of the schedule to the 1990 Act, which sets out the original purposes for which early embryo research was permitted. They claimed that it was unnecessary because adult stem cell research alone would provide what we all hope for.
The Select Committee spent a great deal of its time on that point. Some claimed that scientific and medical witnesses invited to appear before the Select Committee were selected from a supposed pro-embryonic stem cell lobby, but that was not the case. The committee did not choose its witnesses but invited a wide range of bodies to respond. Many chose to do so while some did not choose to do so. It invited many representatives of faith communities. Many distinguished experts appearing on behalf of those bodies had experience of research into adult stem cells. As far as we know, none was working on or had worked on human embryonic stem cells.
Contrary to some publicity, subsequent work on adult stem cells has raised new difficulties as well as new hopes. I believe that that is inevitable at this stage

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of the research. In particular, the right reverend Prelate referred to the much-cited work of Professor Verfaillie of the University of Minnesota, who, as she herself said, raised problems that can be resolved only by further work on embryonic stem cells. In short, we found no evidence of a division among scientists into distinct adult and embryonic stem cell research communities. Experts who gave both oral and written evidence did not support the view that adult stem cell work alone would be sufficient. Any of us might have hoped that they would support the view, but they did not. Many of them considered that work on embryonic stem cells was the only way to provide a bench-mark against which adult stem cell research could be calibrated.
Since publication of the report, I believe that there has been an additional reason for thinking very carefully about adult stem cell research—that is, like all adult cells, adult stem cells have been through the process of imprinting during the period of embryonic and foetal life. That means that they have been differentiated or marked in certain ways that we do not yet well understand and their reversal is a difficult matter.
At a later date, when the most basic scientific questions about stem cells of all sorts have been answered, it might prove possible to advance the purposes of the 2001 regulations without further research on embryonic stem cells. In that case, the 1990 Act would not permit the Human Fertilisation and Embryology Authority to license further embryonic stem cell research. Licences for work using early embryos may be issued only where,
"the research cannot be achieved by other means … and is necessary or desirable for a permitted purpose".
The drafting of the 1990 legislation makes the refusal of a licence for research on embryos the default position, and licences to do such work require explicit justification. I have a great deal of sympathy with the point made by the noble Lord, Lord Brennan, about the way in which the process of accountability for the issue of such licences could be improved. I myself am sceptical that publishing them is as effective a remedy as he would hope, but I am sure that there is room for improvement.
Other witnesses who opposed the 2001 regulations and the 1990 Act did not venture into predictions. They did not claim that adult stem cell research alone would prove sufficient. I believe that they were prudent in that respect. They argued against embryonic stem cell research as a matter of principle. That is a position for which I have a great deal of respect. But I have most respect when those who advance it openly state that they wish to abolish all IVF treatment in this country. They are the only consistent opponents of embryonic stem cell research. They acknowledge that IVF treatment, too, involves the destruction of early embryos and that it could not have been introduced without embryo research. However, I cannot see that anyone who considers IVF treatment to be acceptable can consistently object to
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tightly regulated research on embryonic stem cells for purposes that are every bit as important as the treatment of infertility. The two stand or fall together.
While the committee came to the view that there were morally serious reasons for undertaking stem cell research, including embryonic stem cell research, we also made recommendations, which the Government have accepted, that will, we believe, put downward pressure on embryonic stem cell research.
The most significant proposal was to encourage the formation of a stem cell bank, to require that any cell line developed in the UK be deposited in that bank and to require that cells from the lineages in that bank be made available for research. That was not because we did not think that the cell lines that are the products of stem cell research needed regulation, but because we did not think that they needed regulation by the HFEA. The regulation that they would require is rather different and is more comparable to the regulation for the use of all cell-based therapies.
Matters have moved fast. Since the committee reported, the Medical Research Council. with support from the Biotechnology and Biological Sciences Research Council, has established the UK stern cell bank at the National Institute for Biological Standards and Control. That initiative will allow important research to go ahead with minimal use of early embryos. The bank will hold existing and new adult, foetal and embryonic stem cell lines and will give researchers access to ethically approved, well characterised, well documented and guality-controlled stem cell lines. Those lines will continue to multiply and reproduce themselves and they can survive indefinitely. The Human Fertilisation and Embryology Authority would not then be permitted to grant licences for any early embryo research for work that could be carried out by the alternative method of using cell lines held by the bank.
I want to make a small additional point about the international team. To characterise it as a team which the UK lies outside seems to me entirely mistaken. Anyone who followed the debates in European parliaments last year will know that there was a great deal of movement and a great deal of shifting of ground so that by the end of the year the position of the United Kingdom was much less exceptional than it had appeared at the beginning. We should also recognise that many of those jurisdictions may have committed themselves to fine words, but they are not enforcing the standard to which they claim to commit themselves.
If I wanted somewhere to carry out irresponsible research on embryonic stem cells, this is the last country that I would choose for rather obvious reasons. The climate of strong condemnation, coupled with permissiveness, that we see, for example, in the United States and Italy, is something that one may hope international regulation could bring under some control, but as the Select Committee realised, that will be a difficult matter.
All noble Lords can see that the point of embryonic stem cell research is that it holds promise. At this stage we do not know whether it is high promise, middling

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promise or low promise. That is the nature of research. However, it holds promise of enabling something to be done to alleviate terrible diseases. It is early days and we cannot foresee the sequence or the pace of fundamental scientific and medical advance. But I believe that the creation of the MRC stem cell bank will be a good way to support regulated and effective research and to minimise the use of early embryos.
6.32 p.m.
Lord Chart: My Lords, I thank the right reverend prelate the Bishop of Oxford for drawing our attention to the Select Committee report on stem cell research. I have listened carefully to the speeches of noble Lords and my contribution to the debate arises from my professional experience as a neonatal paediatrician caring for new-born babies for nearly 30 years here and in South-East Asia. Therefore, I shall concentrate on the treatment. uses of stem cell research.
I wish to remind your Lordships of the history of stem cell research. It is not a new phenomenon. It has been taking place, using animal cells and human cells, particularly bone marrow, for more than 40 years. The first bone marrow transplant took place in 1969 in a patient with leukaemia. Adult, foetal and umbilical cord blood cells have been available to researchers for the same period. I have used bone marrow transplants and, therefore, it is not true to say that stem cell therapy has not been available. We are using it and it is available. The harvesting of a large number of cells to repair deficient or damaged tissues and their lack of immunological rejection by the host have been features looked for by researchers to satisfy the treatment needs of patients.
Stem cell research from embryos is new and was launched in 1996, only six years ago, by James Thomson of the University of Wisconsin working on non-human primates. His group successfully cultured human embryonic stem cells from five-day embryos in 1998. Embryonic stem cell research has become fashionable since then. There is a close relationship between research and treatment using stem cells because many, if not all, serious diseases in human beings have the potential to be treated by regenerating new tissue from stem cells. However, tragic results have occurred from experimental treatment, for example using foetal tissue implants to treat Parkinson's disease, which is a degenerative disease of the brain. Patients' symptoms and signs of disease disappeared initially after foetal tissue transplants, but the disease returned with a vengeance later and the latter condition of patients was worse than before treatment with foetal implants.
This failure of treatment was thought to be due to immunological rejection of the foetal implants, hence the quest for stem cells without the capacity of being rejected by the diseased host—in other words, looking for cells that had not already had imprints. In this regard, the best tissue to use for treatment would have to come from the patient's bone marrow.
Reports of the use of adult stem cells have been more positive now than when the Select Committee wrote its report and are certainly further along than when it sat
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to hear evidence. For example, the American Heart Association's journal, Circulation, published two papers on 3rd September this year on the repair of heart muscles damaged by heart attack. The first paper, by Strauer et al, from Germany, reported the successful use of the patient's own bone marrow stem cells in 10 people with heart attacks. Three months after they received their own bone marrow stem cells infused into their heart, significant decreases in the areas of heart damage were found. These areas were significantly smaller than in patients who did not receive stem cells. This is permissible and legitimate experimentation and is quite difficult.
Another paper in the same journal reported research in mice. Heart cells derived from embryonic stem cells had a tendency to develop irregular beating rhythms. The US scientists found that heart cell; derived from mouse embryonic stem cells had abnormal beating rhythms. The transplant of such cells into an already damaged heart could promote abnormal heartbeat. The scientists concluded that adult stem cells—in this case in the mouse—had more restricted developmental potential and are more suitable for treating damaged hearts. Embryonic stem cells have great potential for development, as noble Lords have described. That potential makes them more dangerous to use than adult stem cells with restricted developmental potential.
Furthermore, umbilical cord stem cells and hone marrow stem cells can be injected into the body by catheters—I have done that myself—and directed to specific damaged tissues. In contrast, embryonic stem cells would require to be implanted by surgery, because they can form tumours, as the noble Baroness, Lady Cox, has described, when injected into the blood stream.
Clearly, the evidence being accumulated today favours research in the use of adult stem cells in the bone marrow or from umbilical cord blood, particularly of a close relative. The rapid advance in stem cell research in the United States and continental Europe makes some of the conclusions of the report out of date and inappropriate, particularly the encouragement of embryonic stem cell research to the same degree—that is how I understand it—as adult stem cell research.
Embryonic stem cells cannot possibly be the treatment of first choice in serious diseases, and not even for a limited number of disorders where damage is due to severe trauma to the brain or spinal cord, because of all the advances in adult stem cell research with therapeutic use in these areas. Therefore, much more encouragement and funding should he given to adult stem cell research if we are concerned with treatment. Another problem with embryonic stem cell research is the need to use donated embryos produced by various methods of fertilisation, including in vitro fertilisation. Problems about that have already been discussed by noble Lords.
I believe that the Select Committee's report is overoptimistic in its confidence on the HFEA's ability to regulate IVF clinics. Recent reports of the white

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mother who delivered black babies after IVF treatment because of a laboratory error is, I suggest, only the tip of the iceberg of such errors. How many more mistakes have taken place and been undetected because all the babies were white?
Finally, I was looking for recommendations for the improved monitoring and audit of IVF clinics and of embryonic stem cell research by the HFEA. That is more necessary now than when the Select Committee was sitting.
In conclusion, the future of stem cell research should logically promote the use of adult stem cells, particularly in the bone marrow. The Select Committee's report may have been overtaken by new reports of the use of adult stem cells. More stringent regulations must, therefore, govern embryonic stem cell research in Britain if we do not wish to be lumped with Singapore and China as the El Dorado of embryonic stem cell research. In May when I was in Singapore, the Singapore Government publicly declared that because Britain had encouraged embryonic stem cell research, they would go even further: they wanted to be the first in the world to use, what I would consider as, unfettered embryonic stem cell research.
6.41 p.m.
Baroness Northover: My Lords, this has been an excellent debate. I welcome the fact that we are at last debating the report. It is impossible to predict precisely how medicine will develop far into the future, but we have a responsibility to try to see where promise seems to lie. In fact, we mostly seem to agree that the promise of stem cell research is one of the most exciting prospects for treating disease in the future. But, as so many noble Lords have said, we do not know whether, when, or how this could be applied. What we do know is that such research helps our fundamental understanding of human biology. It has always been on that that advances in medicine have been made; and yet research on stem cells has been surrounded by controversy.
Those of us who were members of the Select Committee came to it with a range of different opinions—from those who had supported the noble Lord, Lord Alton, in the original vote, to those who supported the proposal that research should take place. We came from a wide range of political positions and a wide range of backgrounds, with some having a deep knowledge of the area, and others of us very little or none.
The chairman, the right reverend Prelate the Bishop of Oxford, could not have been more even-handed, patient and thoughtful, as we sought to find our way through the issues. We listened; we disagreed with each other; we debated; and we came to a unanimous agreement; and that is the report in front of your Lordships.
We had sterling support from our expert advisers. We certainly needed the scientific advice from Professor Chris Higgins from the Hammersmith
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Hospital. He was very careful to answer our questions factually. We were also anxious to have advice from a legal and ethical expert. That role was admirably carried out by Professor Roger Brownsword. It was important that we had the balance of the two advisers, even though we were so fortunate to have among our number such an outstanding expert on ethics and philosophy as the noble Baroness, Lady O'Neill.
We were able to call for evidence from experts of the highest calibre. We were especially determined that those who opposed research in this area should make their case. They did; both on paper and to the committee. Although no date seemed possible for the noble Lord, Lord Alton, to make his presentation. he needs to know that we concluded that we should simply continue our work until we found a mutually agreeable date, which I am very glad to say was the case. We contacted a wide range of people and organisations and received a mass of material. The quality of what we received was mostly of a high standard, as your Lordships can tell from the supporting papers. Some of the material that we received had not been accepted by peer-reviewed journals. As your Lordships would expect, we took that fact into account when assessing the feasibility of what they claimed to have been able to achieve.
We considered the issues long and hard and, while respecting those who hold the view that no research should be carried out on embryonic stem cells, we concluded that we should not shut the door on that promising line of research. The majority of people in Britain feel that the 1990 Act has in most instances worked well to control the matter, and we were not persuaded to overturn that status quo. We recognised that there is a deeply held view that any research on human embryos is wrong. That is a straightforward difference of opinion and should be recognised as such.
However, society as a whole accepts that work on embryonic cells up to 14 days is acceptable in research on fertility. We felt that to extend the benefits of such research to cast light on normal development as a key to understanding serious disease was, if anything, even more justifiable. We endorsed the position laid down in the 1990 Act that no such research should take place after 14 days. The stage at which ES cells would be extracted would be well within that time, as that must be done before they start to differentiate. We reiterated that there were strong ethical and other objections to the idea of reproductive cloning—which is of course illegal; and we did not propose to challenge that in any way.
As the noble Baroness, Lady Cox, and the noble Lord, Lord Alton, pointed out, there is a lively debate about which have more potential: adult or embyronic stem cells. While we sat that debate raged, and it rages still. We considered that question long and hard. However, we were persuaded that whereas the long-term potential of adult stem cells to produce tissues compatible with a donor may have particular promise, first, more needs to be known about how cells develop—which, we concluded, may at present best be learnt from embryonic stem cells.

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We were frequently presented with the argument that adult stem cells offered greater possibilities. A distinction must be drawn. One may oppose research on embryonic stem cells for moral reasons. That is fair enough. But the argument that science finds that one field shows more promise than another must be assessed separately and dispassionately. I assure your ]Lordships that we considered that question longer and harder than almost anything else. We concluded that, at present, both sides of that research show promise and that adult stem cell research alone simply does not eclipse the potential of embryonic stem cell research—if anything, the reverse is the case.
We therefore conclude that, at present, research should continue in parallel. Work is being undertaken on both embryonic and adult stem cells around the world, and only time will tell how each informs the other. It is self-evident that if scientists and clinicians find greater illumination from their study of adult stem cells, that is where the scientific community will focus.
As the noble Baroness, Lady Platt of Writtle, and my noble friend Lord Dahrendorf explained, we laid down a series of checks and regulations on the research. We therefore felt that it was appropriate that control of this area should be held by the HFEA. Our main concern, as a result of doing that, was that it should have the resources to handle all its new responsibilities. I seek strong assurances from the Minister on that point.
Stein cell research undoubtedly has the potential to benefit vast numbers of people who suffer from all kinds of diseases and disabilities. Our task was to review the field and thus, implicitly, see whether the decision that your Lordships made to allow research to proceed was the right one. I assure your Lordships that the committee, which came from a spectrum of views on the matter, took evidence widely, considered carefully and concluded unanimously. We recognise that some people feel very strongly on the issue. For them, in all honesty, no protections, promises or possibilities will ever be enough. However, we feel not only that our conclusions are fully justifiable, but also that they are widely shared in Britain today.
6.51 p.m.
Earl Howe: My Lords, it is a pleasure for me to congratulate the right reverend Prelate the Bishop of Oxford on a compelling speech at the start of the debate and on the equally compelling and succinct report of the Select Committee that he chaired. I was among noble Lords who firmly supported the establishment of that committee, even though at the time of our debate—22nd January last year—I was persuaded that the regulations then before us were worthy of approval.
In taking that apparently—or ostensibly—equivocal position, I was mindful of one issue above all others: the need for Parliament to secure public trust. Despite all the consultation, there was at the time a distinct feeling that, in their enthusiasm to promote stein cell research, scientists and politicians had, in an important sense, left the public behind. I think back, in
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particular, to the speech made by the noble Baroness, Lady Warnock, in our earlier debate. She made that very point, and it was a wise one.
It is not just in this area of medical research but in many others also that we must remember an important principle. The fact that something can be done is no reason for us to refrain from asking, on behalf of the public, whether it should be done. In the present context, Parliament was satisfied as to the "should", but there were perhaps three central issues that gave rise to hesitations: the possibility that soon there might be an ethically uncontroversial alternative to research on early embryos involving adult stem cells; the ethical acceptability of creating an embryo for the sole purpose of conducting research into stem cells; and, thirdly, the question that perhaps overarches all the others—the ethical status of the early human embryo.
At the same time our debate gave rise to related and parallel concerns. One such concern, well expressed, as I remember, by the noble and right reverend. Lord, Lord Habgood, was that, if Parliament were to consent to stem cell research involving human embryos—as it went on to do—that consent should not be open-ended, either as to time or to substance. Many of us felt that we needed further and better particulars about the boundaries of the proposed research and that Parliament should retain proper oversight over the consent that it had granted. To do that, it needed to be sure that those charged with day-to-day responsibility for implementing its wishes were capable, in the fullest sense, of doing so and, equally, that the Government were sympathetic to the notion of de-limiting the timespan of the order.
Those were the main considerations underlying the decision of the House to establish a Select Committee, and they must, therefore, be seen as the benchmarks of the committee's success. Having read the committee's report and the Government's response to it, I am in no doubt that the right reverend Prelate and his colleagues have fulfilled their remit in a most creditable fashion. That said, the noble Lord, Lord Alton, has voiced a number of criticisms of the report, which I know are deeply held, and I have listened to him with particular seriousness, as I always do. Other noble Lords have supported him.
Perhaps I may be allowed to focus on a few of the main issues that have been highlighted. The first, where all debate has to start, is the overarching ethical issue of the status of the embryo. The report covers that in Chapter 4 and in an interesting short appendix about the Christian tradition. On the theological position I take my cue, as I always have clone, from the right reverend Prelate. The report acknowledges that there are differing traditions and beliefs among different Christian denominations and groups. However, it is significant that the Jewish belief accords with that which the right reverend Prelate enunciated in our last debate—that is to say, the gradualist view of an embryo acquiring increasing moral status as it develops. In essence, that is the position adopted in the Warnock report and which was accepted by Parliament in the 1990 Act.

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Of course, there are many, including the noble Lord, Lord Alton, to whom that view will never be acceptable. Those who believe that a person is created at the moment of conception will take issue with the notion of an early embryo being used instrumentally as research material.
The report points out—and I agree—that the consequences of trying to ascribe to a very early embryo the full moral status of a person are, in current societal terms, untenable. The corpus of existing law and public attitudes are relevant here. Public attitudes are. of course, not the same as right and wrong, nor do they determine what is right or wrong. But the law on stem cell research cannot operate in a vacuum. In vitro fertilisation is a widely accepted procedure, yet it cannot be conducted without wastage of a large number of spare embryos.
The abortion laws have been in place for many years. While it is possible to have an ethical debate—and many do—about the detail of those laws, there are no serious moves to challenge the laws in principle, whether on a human rights basis or any other. Nearer to home, the HFEA has been in operation for over 10 years now, but its decisions have never been the subject of a legal challenge, nor, so far as I am aware, of concerted criticism. It would be anomalous to ban embryonic stem cell research while allowing those other activities to remain legal.
One of the reasons why it is important to revisit and confirm the decisions of the Warnock report as to the ethical status of the human embryo is that, if in due course stem cell research is successful in pointing the way to therapeutic treatment of disease, there will be inevitable commercial consequences. Parliament has always recoiled from condoning the commodification of human beings in any form. If we accept that the early embryo lacks the status of a person but is, nevertheless, to be accorded respect, we need to decide how far such respect should extend when it comes to commercial patents. The ability to patent an invention is generally seen as a spur for conducting research. The downside of patenting, however, is that it tends to raise the cost of research and thus impede access to healthcare.
The Select Committee's report touches briefly on those issues but comes to no firm conclusions. My own view is that it should not be legal to buy, sell or patent human embryos, however defined. However, there is a case for allowing the purchase and sale of embryonic stem cell lines and for the patenting of the products and technologies arising from them. As the noble Lord, Lord Brennan, indicated, the purposes for which patents may be granted and the scope of such patents should be the subject of ethical scrutiny. For example, I believe that the law should not allow a company to patent a technology relating to embryonic stem cells merely with a view to blocking its competitors. Nor should it be possible to register a patent that is unduly broad in its scope, as that would give the patentee an excessive degree of control. There is a balance to be struck between the interests of inventors and the interests of society. I share the view
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of the Select Committee that this whole issue needs to be kept under review, but that ought to mean some solid work being commissioned sooner rather than later.
Some witnesses who gave evidence expressed the view, as have a number of noble Lords today, that the ethical difficulties inherent in embryonic stem cell research could be avoided altogether if the research were exclusively conducted on adult stem cells. I believe this either/or view to be profoundly mistaken. The weight of evidence presented to the Select Committee arguing for embryonic stem cell research, and for such research to run in parallel with work on adult stem cells, was considerable.
I have seen recent evidence emanating from the University of Edinburgh which seriously questions the possibility of adult stem cells being able to differentiate and proliferate into various cell types. It is thought that such cells might simply fuse with existing cells so as to create genetically mixed cells of questionable medical value. The Bio Industry Association has pointed out that it is difficult to isolate adult cells that are free of contamination from other cell types.
The point, however, is that solid evidence about which cells are likely to be useful for which therapeutic purposes, and to what extent, is at present lacking. As the report points out, both routes appear to have potential, but as for the notion of favouring adult stem cells exclusively, we are simply not in a position to say that they offer the route to salvation or the answer to every question. Nor are we likely to have those answers for some time. We first need to understand how all stem cells behave, and in that context it is accepted that embryonic stem cells, at least for now, have an important role to play.
This is where the technique of cell nuclear replacement, or CNR, is particularly relevant. There are those who argue, as did the noble Lord, Lord Alton, that CNR should be prohibited on the grounds that it is unlikely to provide a general basis for disease therapies for the foreseeable future. But the Select Committee was, I believe, right to downplay this argument. CNR and the related procedure known as oocyte nuclear transfer have considerable potential for identifying the process of de-differentiation in cells and for preventing the transmission of mitochondrial disease.
It is something of a relief that in the Government's view basic research of the kind that is needed initially before any applied research is possible will fall within the scope of the current regulations. There was a fear that it might not. However, there is a point that arises from this. The Select Committee's insistence that no embryo should be created specifically for research purposes without prior proof of demonstrable and exceptional need is surely right, but, where basic research is concerned, demonstrable and exceptional need is not a straightforward matter to prove, especially given the standard requirement that licence applications presented to the HFEA should be as tightly drawn as possible. It would be helpful if the Minister could comment on this.

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Perhaps I may say at this point how much I welcome the establishment of the UK stern cell bank which in time should considerably reduce the need for research using early human embryos. Meanwhile it is absolutely essential that the HFEA should keep itself abreast of scientific developments which, as has already been said, are very fast moving.
The HFEA has two principal roles—as an adjudicator and as a policeman. In its capacity as an adjudicator it has, I believe, a good track record. Perhaps the one area where I have cause to question my previous views has been in relation to the HFEA as a policeman. The recent press stories of serious and basic administrative errors in IVF clinics may or may riot point to a wider problem. Either way the public need to have confidence that they are being well served by such clinics.
The recent article in the Sunday Telegraph by Dr Sammy Lee pointed to a less than satisfactory culture operating in certain IVF clinics, where only a minority of embryologists are registered with the HPC or have any real experience of the tight working disciplines that are needed. There are allegations, too, that some clinics are abusing the trust of patients.
We need to be sure that the HFEA is equipped to regulate all the clinics and research establishments that fall under its jurisdiction. With that in view, I welcome the recent announcement of increased base-line funding for the HFEA. That funding should, I hope, enable it to focus on two additional issues highlighted both by the Select Committee and by the Science and Technology Committee in another place: the need to monitor research data and research outcomes, and the need to communicate more openly with the public, and in so doing to promote public confidence. That point was well made by the noble Lord, Lord Brennan.
It is open and public debate about policy which so often acts as a lubricant for good science. In a field such as this, neither the science nor the debate will remain stationary. Because of that, all policy decisions should be regarded as having a limited life and should be regularly revisited to ensure that they remain valid in the prevailing circumstances.
I believe that the Select Committee's report will serve us very well as a base-line for that continuing debate. For that reason as much as any other it should be warmly welcomed.
7.6 p.m.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, for the third time in the past two years we have had a debate of high quality on the question of stem cell research.
I want to begin by praising the work of the committee, so admirably chaired by the right reverend Prelate the Bishop of Oxford. Despite the daunting scale of the task, as the right reverend Prelate suggested, the Select Committee has produced a report which has been widely praised as comprehensive and authoritative in a remarkably short time.
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Perhaps I may echo the remarks of the noble Lord, Lord Dahrendorf, and pay tribute to Lord Carnarvon for his contribution to the Select Committee.
I know that the noble Lord, Lord Alton, would have preferred the Select Committee to report before the House debated the order that was passed in 2001. All I would say is that this House, when it debated the order, had a very clear choice. Following the most intense and robust debate that I have experienced in this place, the House came to a clear view.
In response to the question raised by the noble Lord, Lord Tombs, about the committee members, this is not a matter for the Government but for the House and the Committee of Selection. Looking through the list of members of the Select Committee, it would he very hard to believe that they were not as robust as they possibly could be in dealing with the very difficult matters before them.
On the conduct of the Select Committee, I have no doubt that the right reverend Prelate the Bishop of Oxford will wish to respond. I know that there will never be unanimity of view on the matters debated by the Select Committee. However, I have been struck by the very positive comments that I have received from the many people who have read the report.
Stem cell research is important because of the potential ability to differentiate into so many different cells and tissues. The research does hold prospects for the development of new treatments. The hope is that tissues derived from stem cells will be used to develop treatments for diseases and injuries which are currently incurable.
We have heard from many noble Lords about that potential. My noble friend Lord Brennan is cautious about the expectations, and my noble friend Lord Turnberg said that such outcomes may not be round the corner. But be that as it may, I believe that stem cell research offers hope for the future.
I also recognise that there is a considerable amount of debate to be had about whether research into the potential of adult stem cells is in the end likely to prove more fruitful than research into embryonic stem cells. The noble Baronesses, Lady O'Neill and Lady Northover, were particularly persuasive of the need for work to continue in parallel. The Select Committee concluded that both human embryonic and adult stem cells hold the promise of new therapies and that funders should encourage research on both.
There is always a risk that we will quote from our most favoured scientists. I do not intend to indulge in that. However, it is significant that many of the most eminent researchers in the field of adult stem cell research believe that, given the current state of science, it is important to understand how cells behave, because solid evidence is lacking—the noble Earl, Lord Howe, made that point. That is why, given the current lack of knowledge, it is surely important for research on adult and embryonic stem cells to continue.
I also accept the need for research into cords. I agree with the noble Baroness, Lady Platt. We are considering proposals to double the size of the

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National Blood Service cord blood bank over the next three years. Its aim, along with the banking of adult stem cells in the MRC national stem cell bank, is to ensure that we have the capability to research using all known avenues.
That also applies to the question by the noble Baroness, Lady Platt, about funding. I confirm that funding is available for all types of research. That must be right at the moment. The Select Committee called for continued funding of stem cell research. We are working with partners in the research councils and have prioritised stem cell research. We have also asked the Medical Research Council to take the lead with other funders and the regulatory agencies in developing a national stem cell initiative.
The Government were able to accept or endorse 24 of the report's 28 recommendations. Of the remaining four recommendations, two dealt with the test that should be applied before embryos are created for research purposes. The recommendation was:
"Embryos should not be created specifically for research purposes unless there is a demonstrable and exceptional need which cannot be met by the use of surplus embryos".
There are certain reasons why scientists would wish for the creation of embryos for research. Noble Lords referred to the statistic that 118 have so far been created for research.
The 1990 Act sets out stringent tests that the HFEA must apply when deciding whether to approve such use of embryos. Schedule 2, paragraph 3(1) of the Act permits the HFEA to authorise research that involves the creation, keeping or use of embryos. Schedule 2, paragraph 3(6) states:
"No licence … shall be granted unless the Authority is satisfied that any proposed use of embryos is necessary for the purposes of the research".
The noble Baroness, Lady Warnock, can see no difference, once that position is reached, between embryos created for research and those created for other circumstances. The existing law in this area is robust. In combination with a case-by-case review of research applications by the HFEA, it ought to achieve the Select Committee's objective.
I turn to the two remaining recommendations in the report. In paragraph 8.8 the department is asked to examine with the HFEA the possibility of drawing up indicative guidance as to what constitutes "serious disease". During the passage of the 2001 regulations, I indicated that we were not convinced that a list of what constitutes "serious" would be helpful. Noble Lords will know that I am not very keen on lists. I believe that they build unnecessary inflexibility into legislation. It is much better for the HFEA to operate on a case-by-case basis. It should also carefully consider the disease or diseases to be studied to ensure that the requirements of the 2001 regulations are met. Noble Lords have referred to the fast pace of science. Having a list in the regulations would not be consistent with the situation.
Paragraph 8.23 calls for a new committee to oversee the use of embryonic stem cells in clinical trials as treatments. The Government are not convinced of the
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value of establishing another committee. At present, the main thrust of embryonic stem cell research is to improve our scientific understanding of cell development. We cannot know when, or whether, ES cells will be used as therapies. The use of cell-based treatments, with which I shall deal later, is already subject to existing controls operated under the medicines legislation and will be reinforced by developing EU legislation currently in draft. Therefore, in these circumstances, we do not believe that additional controls are needed. However, I undertake to look at developments in the use of ES cells and to consult with key stakeholders if we believe that further action is needed.
I listened with great care to the noble Baroness, Lady Warnock, and the noble Lord, Lord Alton, who referred to what they described as the "exploitation of women" in the practice of offering free IVF treatment to women if they agree, first, to donate some of their eggs. I agree that this raises some serious ethical issues. I understand that the HFEA has referred the matter to its ethics committee. I shall undertake to ensure that the conclusions of that committee, together with those of the HFEA, are communicated to noble Lords. I shall also arrange for a copy of those conclusions to be placed in the Library of the House.
I turn to the question of the HFEA and its performance as regulator. I have no quarrel with any noble Lords in their determination to ensure that the authority is robust in the operation of its duties. On the passing of the 2001 order. I said that the robustness of the authority was critical to public confidence; and I say so again this evening. I also respond to the comments made by the noble Earl, Lord Howe, who asked me whether I thought the HFEA was proving to be robust as a policeman.
Clearly, all of us have been concerned about a number of recent cases. I am glad to report to the House that the HFEA is to introduce a range of measures to help meet the challenges that it faces as a regulator. That includes an increase in the number of inspectors and other regulatory staff, more training for inspectors, more unannounced inspections, a new code of practice for clinics with clear standards that clinics will be required to meet, more account to be taken of patients' views in the inspection process, and a faster processing of licensing applications, renewals and variations. I believe that the latter represent very welcome action. I can assure noble Lords that the Government will be keeping a very close eye on the performance of the HFEA.
In a number of recent cases I have been most anxious to ensure that the HFEA was as thorough as it could be. I do not believe that that detracts from the overall performance of the HFEA over what is now a decade. I pay tribute to the work of the authority, especially to its past chair and to the current new chair who is doing sterling work in ironing out some of the issues that have been raised.
I turn to funding. We expect funding for the HFEA to increase in the next year from just over £2 million to £5.5 million. The Government's contribution to the

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new figure will be £1.5 million. That should ensure sufficient funding for processing applications for embryonic research to produce stem cells lines and to ensure the authority can establish the robust policing role I have described. We will keep funding closely under review.
Like the noble Baroness, Lady O'Neill, and the noble Earl, Lord Howe, I thought that my noble friend Lord Brennan raised some important matters about the licensing processes. I have some sympathy with a number of the points he raised although I am not sure that I agree with some of his solutions. The HFEA is reviewing its procedures for processing research licence applications. I will ensure that my noble friend's points will be referred to the HFEA. I regret that the HFEA's last annual report was late, but I am glad to say that the next one is due out on time and will be published shortly.
My noble friend Lord Brennan asked about the regulation of the use of the embryonic stem cell once extracted. A research licence would not be granted by the HFEA in the first place if the stem cell line was not intended to be used for one of the purposes in the regulations. Once extracted, the stem cells are not within the scope of the Act. The reason for that is that, unlike the embryo, embryonic stem cells are unable to become a pregnancy; if planted into a woman they cannot develop. For that reason, those cells are treated as any other human cell lines, but at that stage research governance requires ethical approval to be obtained for any research involving human tissues and cells. The recent consultation document Human Bodies, Human choices proposes new controls to cover all human tissues and cell lines.
The noble Baroness, Lady O'Neill, referred to the establishment of a national stem cell bank, the first of its kind. This is very important. It will curate ethically-sourced quality controlled stem cell lines for research leading to the development of new therapies. It will provide access to standardised reagents, reduce the need for individual groups to generate their own cell lines and will reduce the numbers of embryos used for embryonic stem cell research.
A stem cell bank steering committee has been established under the chairmanship of the noble Lord, Lord Patel. It will meet for the first time shortly. Its work plan will include development of a code of practice for the stem cell bank and reviewing, on a case by case basis, all applications to deposit and access embryonic stem cell lines.
I say to the noble Baroness, Lady Platt, that the Government would welcome world-wide action to ban human reproductive cloning and will undoubtedly support action within the United Nations. On the question of international action I must reject the image of the UK as the El Dorado of stem cell research as a realistic picture. The reason scientists are attracted to this country to work is because they believe that we have achieved the right balance between allowing legitimate scientific research within a strict legislative and regulatory framework. Long will that balance continue in this country.
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This has been a splendid debate. I am not sure that any of us has brought any new insights to it, but none the less the arguments have been well put. The Select Committee has done an excellent job and its report is remarkably well written. I pay tribute to all Members for their work.
I reiterate that these are very difficult and sensitive issues. The Government have a responsibility for ensuring that the regulations, the legislation and the work of the HFEA are as effective as possible. I assure the House that the Government will keep all these matters tinder very close review, which is as it should be. I am sure that, as we come to debate these matters on further occasions, we will be able once again to address some of the issues which undoubtedly will develop in the years ahead.
7.25 p.m.
The Lord Bishop of Oxford: My Lords, I thank everyone who has taken part in the debate. I believe—and I hope that the noble Lord, Lord Brennan, will agree—that it has been not only a very serious and thoughtful debate but a rational debate. It has been greatly encouraging to have such a high level of discussion. I hope that noble Lords will excuse me if I deal only very briefly with the points made and take up perhaps just one point from each speech.
I am very glad that the noble Lord, Lord Turnberg, reminded us that at the heart of this debate is the prospect of hope for people who are suffering. It was good to have that brought before us again right at the beginning. We are talking about people suffering from a range of terrible diseases. Whatever research risk route we may think is or is not right to go down, we believe that there is hope for such people in the long run.
The noble Baroness, Lady Platt. emphasised the strict nature of our regulatory authority, the HFEA. This has been questioned by a number of noble Lords on all sides of the House. I wonder whether it is not right to draw a distinction between problems which might have emerged at the moment and for which the HFEA has been highly criticised and the fact that we have in existence a regulatory body with clearly defined powers. What we do know is that many other countries look to that regulatory body as a model for what they would like to have in their own country. I think that that is what we primarily have in mind in supporting the HFEA in our report. It is not for me to respond to the criticisms, but I think that the Minister has responded very strongly to that issue. We know that those concerns will be taken into account.
It was very good to hear the noble Lord, Lord Dahrendorf, sharing with us how he had become a member of the committee with a very open mind and how he had gradually been persuaded by the arguments which the committee eventually accepted.
In a powerful speech, the noble Lord, Lord Alton. made a number of points which need to be taken very seriously. The first was a point that he has made before and that was made by various other noble Lords—that only 26 scientific or medical witnesses invited to

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appear before the committee were from the pro-embryonic stem cell lobby and that no scientists were called to submit oral evidence from an exclusively adult stem cell perspective. Although the noble Baroness, Lady O'Neill, has already mentioned this, I feel that I ought to emphasise that the committee issued its call for evidence to a very wide range of representative organisations. These naturally included the major scientific and research organisations such as the Royal Society and the Medical Research Council. How could we not ask those representative bodies to come before us? Inviting organisations to give oral evidence, the committee did not specify who should represent them. In the event, however, those who appeared on behalf of those bodies included some distinguished experts with experience of research in adult stem cells and, as far as we know, no one working on human embryonic stem cells.
The committee also asked a number of international experts working on adult stem cells for their views on the way forward, and they were unanimous that research needs to continue on both ES and adult stem cells.
The noble Lord, Lord Alton, also drew attention to the very important report by a number of theologians which was submitted as part of the evidence from the Linacre Centre and to which reference has been made. I assure your Lordships that I read that report very carefully a good number of times and I believe that the position—that is, the two readings of the Christian tradition—is fairly represented in the appendix at the back of the report.
The noble Lord, Lord Alton, pointed out that since our report was published an article had appeared in Nature magazine that cast doubt upon the utility of cell nuclear replacement. However, our report also indicated a certain scepticism on the part of the scientific community at present with regard to that matter. We had already taken that on board. I refer the noble Lord to paragraph 5.9. We did not need the article in Nature to remind us that the original high hopes in regard to that matter are not at the moment shared by the scientific community.
The noble Lord, Lord Alton, suggested—as he has suggested before—that this country is isolated internationally as regards the matter that we are discussing. But, as the noble Lord, Lord Dahrendorf, pointed out—this was reiterated by the Minister—it is
much fairer to say that we are in the middle of a spectrum. If one looks at what is happening in the United States, in Germany and in Europe, we are not nearly as isolated as some people suggest. For example, as regards EU funding for research under framework six, until the end of 2003 the Commission will not fund research projects involving the use of human embryonic stem cells with the exception of stem cells already banked or isolated in culture. That agreement means that research projects that used banked embryonic stem cells, such as those going into the new Medical Research Council bank, will qualify for EU funding until January 2003. Other research, such as that involving the extraction of embryonic
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stem cells from embryos, will be subject to a temporary suspension until the end of 2003. The UK is not isolated in this regard. Other countries, including the European Union, are to some extent following the lead that we in this country have taken.
The noble Lord, Lord Tombs, took up some of the other points that the noble Lord, Lord Alton, made in relation to what is perceived as our lack of proper attention to adult stem cells. I do not want to repeat what I said when I opened the debate. However, we need to draw a distinction between a person's basic ethical position and other matters. I deeply respect the position of those who think that no research on embryonic stem cells should take place. I respect that basic ethical position. However, we should not confuse that with an objective assessment of the pros and cons of research on the different kinds of stem cell. I find it very difficult to believe, and rather disappointing, that people cannot appreciate how strongly our report supports work on adult stem cells, that we believe that it needs financial encouragement and that there is clearly real hope there. I cannot go on repeating that point but if people look at our report they will certainly find that that is the case.
The noble Baroness, Lady Warnock, mentioned the status of the embryo and questioned the use of the words "person" and "respect". I shall certainly read her comments carefully as she made some important points that I should like to ponder further.
I believe that we all agree that the noble Lord, Lord Brennan, made an extremely weighty speech with regard to informing the public about licensing decisions, questions raised in regard to peer review and the commercial aspect of the matter, which the Minister has already indicated he will take seriously. I hope that I may stress a fairly obvious point: that is, that the stem cell bank is owned by the Medical Research Council and therefore stem cells will not be available on a profit basis.
The noble Baroness, Lady Cox, pointed to the real possibility of tumours developing as a result of using therapies based upon embryonic stem cells. We were aware of that. I refer noble Lords to paragraph 3.6 of our report, in which we say that that is a possibility and add that it is essential to guard against those risks. In our scientific chapters, we try to set out the advantages and limitations of both kinds of research as objectively as possible. There are grave questions about some forms of adult stem cell research. The main weight of the scientific community could not agree with the view that adult stem cell research alone is likely to produce all of the results.
The noble Lord, Lord Chan, wanted more encouragement to be given to adult stem cell research. It was good to have an informed medical opinion. As the noble Earl, Lord Howe, said, recent studies suggest that there are major questions about what is really happening with regard to some forms of adult stem cell research. Is it truly transdifferentiation or is it cell fusion? I am not a scientist and I do not know the answer. I merely suggest that there are still many questions to be answered by further research on adult stem cells and embryonic stem cells.

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I thank the noble Baroness, Lady Northover, for indicating to the House the way in which the committee worked and for saying that we worked harder on the issue of adult stem cells than on any other. We tried to look as objectively as possible at all of the issues.
I thank the noble Earl, Lord Howe, for his thoughtful speech and the important points that he made about patents. The Minister has already suggested that he will address that issue. Finally, I thank the Minister for the positive response to our report and the fact that the Government have accepted 24 of our recommendations. I am not sure whether he mentioned that we made 27 or 28 recommendations; there were three recommendations that he could not accept. I hope that it is fair to the committee to say that those recommendations were fairly finely judged anyway, particularly with regard to the question whether there should be an indicative list of serious diseases. We were uncertain at the last moment about whether to advance that.
I thank all those who have taken part in this debate and I am grateful for the tributes to the committee's work. We have had a serious, thoughtful and rational debate. I commend the report to the House.
On Question, Motion agreed to.

Biofuel Industry
7.37 p.m.
Lord Carter rose to ask Her Majesty's Government what is their view of the environmental, economic and agricultural advantages of a viable biofuel industry in the United Kingdom.
The noble Lord said: My Lords, I begin by saying that I am extremely grateful to my noble friend Lord Whitty., who has made a particular effort to be here this evening to respond to this debate. I tabled this Question for two reasons: first, to seek the Government's view of the prospects for a viable biofuel industry in the UK; and, secondly, to comment on the Chancellor's proposed 20p rebate on fuel duty for biofuels.
I make it clear at the outset that my Question is concerned only with biodiesel and bioethanol, and their potential use as transport fuels. There is a much wider debate about the non-food uses of agricultural crops, but that is not for this evening.
I should declare a former interest in this subject. For 30 years before I joined the Government in 1997, I was involved with United Oilseeds, a major farm cooperative that is responsible for marketing a substantial proportion of UK oilseed crops. Some years ago, United Oilseeds sponsored a car that drove from Land's End to John O'Groats fuelled entirely by rape oil, and it raised a large amount for charity along he way.
I framed the Question with three elements,
"the environmental, the economic and agricultural advantages",
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of a viable UK biofuel industry. I shall deal with each in turn. I turn first to the environmental benefits. The evidence seems to be incontrovertible that there are substantial advantages in terms of lifecycle greenhouse gas emissions in favour of biofuels compared with fossil fuels. However, this is not the time or the place to go into all of the very detailed and technical figures.
Therefore, I ask the Minister two simple questions. Do the Government accept the figures produced by the biofuel interests regarding the beneficial effect on greenhouse and gas emissions resulting from the use of biofuels? Secondly, have the Government made any calculation of the possible effect on our Kyoto and domestic targets for the reduction of emissions if biofuels were to be used on the scale envisaged by the draft EU directive; namely, if 2 per cent of road fuels by 2005, increasing to 5 per cent by 2009, came from biofuels?
The economic advantages of a viable biofuel industry appear to be substantial. The EU Commission has estimated that between 45,000 and 75,000 jobs could be created in the EU—mainly in the farming regions. That is already happening in France, Germany, Spain and Austria. Therefore, the obvious question is: why not here? British Sugar, which has a considerable potential interest in the production of bioethanol from wheat and sugar beet at its existing plants, estimates that 20,000 to 30,000 jobs could be created by a 1.2 million tonne UK biofuel industry.
I shall return later to the question of the proposed 20p rebate on fuel duty. But perhaps I may ask the Minister whether the Treasury is aware of a German study which suggests that between 73 and 83 per cent of the tax forgone by duty rebates is offset by quantifiable benefits to the economy. That of course assumes that the duty rebate is set at a level to support an industry which is producing those benefits. Did the Government conduct a full and proper cost-benefit analysis before arriving at the proposed 20p rebate? Did they attempt to bring into their calculations, as an alternative, the cost and the beneficial effects of the 26 to 30 pence rebate that the industry says is the minimum required if there is to be a UK industry at all?
The agricultural advantages are clear. A new market for existing crops would provide considerable help for an industry which is suffering its worst crisis since the 1930s. Crops for biofuel would produce an economic use for set-aside land. Crops which are now being exported to produce biofuels could be processed here and create jobs and agricultural activity at home. We would be helping, albeit in a small way, to improve fuel supply security by using home-grown feedstocks which need no new agricultural technology. In the case of sugar beet, that would also help to resolve the problem which will face the EU when it comes to review the sugar beet regime in relation to the highly subsidised production of sugar beet for sugar and the disadvantage that that creates for imports from developing countries.
The case for the agricultural advantage was put to me succinctly by Mr Martin Farrow, the managing director of United Oilseeds, who said:

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"There is nothing more frustrating than sitting here with willing growers, willing processors and a market that wants to buy".
I ask my noble friend now whether the Government accept the estimates of potential crop use produced by Mr Peter Clery of BABFO—the British Association for Biofuels & Oils—if we are to meet the targets in the draft EU directive. This is not the time to go into all the figures. I am sure that the Minister is aware of the estimates of the crop use that would be required from oilseed rape, wheat, sugar beet and so on if we were to meet the targets which have been declared in the draft EU directive.
I now return to the question of the rebate on fuel duty. In my view, the Government should be prepared to consider increasing the 20p rebate if a sound case can be made on environmental, economic and agricultural grounds. I am the first to admit that such a case would have to quantify the gross cost to the Treasury of duty forgone and the net cost after quantifying the benefits. I know that that is always a difficult argument for the Treasury, which views the matter in terms of the cash forgone and not the quantifiable benefits which must be based on a certain number of assumptions.
If the Government are to meet their objective that production of bioethanol should begin in the UK in the second half of 2004, they will certainly have to rethink their approach on the lines that I have indicated. I ask my noble friend what was the basis of the 20p rebate. How did the Treasury arrive at the figure? We may all have our own views on that, but I would appreciate an informed view from the Minister on the complex and detailed calculations of the Treasury. I am sure that the Minister knows that a reasoned case was produced by the biofuel interest that showed that a rebate of between 26p and 30p per litre is essential if there is to be a UK biofuel industry. On what grounds was that case rejected?
On 29th November there was a letter in The Times from my honourable friend Mr John Healey, the Economic Secretary to the Treasury, who referred to the incentive for biodiesel introduced by the Government in July. He said:
"It is still early days, but there are already encouraging signs that the industry is being stimulated and we expect biodiesel to be available in over 80 petrol stations by the end of the year. Sales have grown steadily to over 300,000 litres in October—a five-fold increase since the first month of production".
Will my noble friend confirm that that production of biodiesel was from recycled vegetable oils from fish and chip shops? That is not quite what we had in mind in relation to the environmental, economic and agricultural advantages of a biofuel industry.
An important point has arisen since the rebate was announced in the Pre-Budget Report. It has been pointed out that at 20p there is a real incentive to import bioethanols produced from written-off plant using products from the Lomé countries and thereby avoid the EU tariff. I understand that the feedstock could be imported from third countries into Lomé countries, used to produce bioethanol and then sent here. That would completely undercut any UK
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production and we would not receive the Kyoto and greenhouse gas reduction benefit as that would be counted against the target of the originating country.
I am not sure that that is what the Treasury had in mind when it produced the 20p rebate, but a simple question arises: what is the Government's assessment of the effect of the 20p rebate on imports of bioethanol? That is a crucial question. The result is that the Government, in their attempt to encourage the indigenous industry, will be seen to be encouraging overseas competitors.
It seems that we have a real opportunity to create a new environmentally friendly industry with considerable economic and agricultural benefits: but I emphasise that it needs the understanding and the help of the Government. I hope that in reply the Minister will be able to confirm that that understanding and help will be forthcoming.
7.48 p.m.
The Earl of Mar and Kellie: My Lords, I thank the noble Lord, Lord Carter, for introducing the debate and providing this chance to discuss these important matters. I regret to say that I had read the Question rather more widely than the noble Lord. I hope that the next seven minutes will not be too much of a burden for the House.
I must declare an interest in that I own farmland and woodland in Scotland and that I sell firewood. I also declare that I have been in considerable correspondence with Mr John Nicholson of Biopower in North Wales, manufacturers of waste vegetable oil fuel for diesel vehicles, but I have no financial connection whatever with that.
The question posed by the noble Lord appears to me to relate to energy crops for transport and for the production of electricity and district heating. Those are relevant and competent issues. Noble Lords will be well aware that Dr Rudolph Diesel used peanut oil in his prototype compression ignition engines. As an aside, he encountered problems with the gumming up of the valves, but today that would be solved by the addition of a solvent. I remind the House that I am not a chemist, but rather an enthusiast. The Question seems to me to be about the impact on the countryside of greater agricultural production of energy crops. Even in Scotland, with its proportionately greater areas of forestry, it is cheaper to import timber from Scandinavia than to harvest our own. Why is that? While we have lots of aims for the countryside, such as farm and timber production, biodiversity, the tourists' patchwork quilt and public access, the Scandinavians have approached their timber production on an industrial scale. That means huge forests as against our usually small woods.
I am not decrying our multiple aims—production, biodiversity, tourism and access—but we have to understand that energy crops will deliver a uniformity into the countryside that may conflict with our other aims. Energy crops are driven by proximity in two forms. First, they need to be grown close to the processing plant. Secondly, the processing plant needs

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to be adjacent to a population centre, whether the intended use is for transport fuel, electricity—to avoid the voltage drop—or district heating.
In the case of a power station fired by willow coppice or woodchip, that means that the countryside adjacent to the town will need to have a fairly uniform appearance if the economies of transport are to be overcome. Similarly, the use of oilseed rape as part of a road fuel will have a different visual impact on the countryside—bright yellow—and an effect on some people's respiratory systems.
Beyond the landscape issues, there are concerns about biodiesel and bioethanol. They are clearly fuels favoured by the Treasury, which has reduced the duty on them by 20p a litre, as the noble Lord mentioned. That reduction is inadequate to stimulate real investment in rape methyl ester—RME—processing plant.
Biodiesel is not a very green fuel because it is only 5 per cent R VIE and 95 per cent fossil diesel. I believe that its conversion produces a lot of waste glycerol and much contaminated water from the washing process. However, it is a start.
Looking Further ahead, I am impressed by the production of a biofuel, sold as Biopower V100, in north Wales. It is derived from a waste product—used cooking oil collected from chip shops and commercial kitchens—and refined. The resultant fuel for diesel engines gives more power and better upper cylinder lubrication. It has the huge merit of being a sustainable use of a waste product.
However, the firm Biopower has received no help from the Government and has to pay the full duty of 46p per litre. I am most concerned about a statement made by a Customs and Excise officer in the Treasury in a letter to Biopower, which said that the then DTLR,
"does not wish to encourage the use of straight vegetable oil"—
SVO—
"as a fuel for vehicles as their information indicates it will have significant negative environmental effects and damage vehicle engines, and could"—
this is probably the most important part—
"undermine the development of a viable, high quality, processed biodiesel market".
Biopower would hotly dispute the allegation of engine damage. This seems highly prejudicial towards a new industry. Does the Minister still stand by that statement? The attitude runs contrary to the approach in Germany.
In the recent Llanelli incident, it was reported that motorists had been arrested by the police and had cars impounded because they were using new, unused cooking oil—straight vegetable oil—mixed with
methanol in their diesel cars. I believe that that is a Customs and Excise and not a police matter. If the duty had been paid, there should be no issue.
I would note that Biopower tell me that it is difficult to get hold of the appropriate excise form, EX 103—derived from the Hydrocarbon Oil Duties Act 1979—
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as Customs and Excise officers do not usually stock it. Alternative road fuels are important to the future and should not be obstructed by government.
In conclusion, the noble Lord, Lord Carter, is right: there is good potential for biofuels grown in our fields, and as a sustainable crop for our farmers. This could be an immediate solution to set-aside. so long as we appreciate the industrial scale that will be needed.
7.55 p.m.
Lord Greaves: My Lords, this is the time of a debate when one normally starts by thanking everyone who has contributed to the exciting and stimulating discussion from all sides of the House. On this occasion I shall thank my noble friend Lord Mar and Kellie for standing in for everyone else, and in particular I shall thank the noble Lord, Lord Carter, for introducing this very important topic so that we can have this debate this evening.
In passing, I should inform the House that in September the Liberal Democrat conference in Brighton debated and approved a policy paper called Our Rural Future, which was produced under the auspices of my noble friend Lady Miller of Chilthorne Domer. It was very nice to see her here today. Within that policy paper we committed ourselves very firmly to the kind of programme put forward this evening by the noble Lord, Lord Carter. So, I am sure that there is a great deal of support for what the noble Lord was saying across the political spectrum. As a political party, we shall certainly not let the matter drop.
I take the view that the debate is not quite so wide as my noble friend thought it was. We are really talking about biodiesel and bioethanol. In that context, we should remember that in the past—certainly 100 years ago for example—a large amount of land in this country was given over to producing biofuels in the form of oats for horses, which, apart from the railways, at that time provided most of the transport in this country. So there is nothing new about this issue; it is a question of adopting and adapting traditional crops for new uses.
As the noble Lord, Lord Carter, said, the issue falls within three areas. There is the environmental side which deals with carbon saving. Obviously, there are different points of view. People will argue about exactly what the carbon saving is from each particular proposal. But, nevertheless, no one can dispute that there is some there.
Fuel security is an important issue. We import 80 per cent of our road fuels in this country. We arc fortunate that we do not still import the virtual 100 per cent that we used to import. Nevertheless, there is a huge question mark about oil supplies and the location of oil supplies around the world. The more oil substitutes that we can provide in this country the more the country will benefit.
There is an interesting question regarding the use of farmland. There is interesting debate going on about the future of farming in all kinds of places, as the Minister will be aware. Many people talk about food security and how far in the modern world we should

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attempt to be self-sufficient in food or in temperate food. In a fortnight there is an interesting Starred Question tabled by the noble Lord, Lord Carter, to ask Her Majesty's Government whether they consider that the balance of trade in temperate food matters.
Behind that question lies that of how much of our own food we ought to produce. My firm view is that in a European market within a wider global market, we shall probably not produce as much of our own food in future as we have recently—certainly if the policy lines suggested by Ministers come about. Farmers may have to depend on fewer subsidies in future. Perhaps the large-scale arable farmers in the North East, East and South East of England and eastern Scotland may have to get by without any subsidy. That is clearly some time off, but if that is the case, it will be difficult for geographical and climatic reasons for such farmers to compete with many other farmers in the rest of Europe and other parts of the world.
If that is the case, those farmers will need substitute crops. Given the choice of growing crops for oil substitutes—for fuel—and growing crops for food, which is likely to be of most benefit to the future security of this country? There is a good case to be made that fuel has a higher priority than food. It is highly unlikely that we will be unable to gain access to secure sources of food without a cataclysmic change to the way in which the world is organised. It is all too easy to envisage circumstances in which oil supplies may be severely affected.
We then come to the questions of the rural economy and farm businesses—whether farmers will find it more difficult to compete on food crops and whether they will stay in business. If the rural economy and landscape are to survive in an acceptable way, alternative, substitute crops will be required. That is one reason why people are so interested in biofuels. Even if only set-aside land is involved, about 500,000 hectares are set aside in any given year. No one believes that set-aside is a viable long or even medium-term option. It is crazy to pay farmers for keeping land to do nothing. Even if only set-aside land is involved, surely using it for something useful would be a huge step forward.
The noble Lord, Lord Carter, asked the Minister some of the direct questions that I was going to ask, so I shall not duplicate what he said. I remind the Minister that the Curry report, on which I think he places great store, although we are not yet sure exactly how much store the Government place on it, suggested that duty on biofuels should be reduced to the level on liquid petroleum gas, which is 4.5p per litre—hardly any duty, which is a radical step. So the level mentioned by the noble Lord, Lord Carter, is not radical in that context.
However, when the Government reduce duty on biodiesel by 20p per litre and, in the Chancellor's latest Statement, propose to reduce duty on bioethanol to the same level, that appears to many people to be a half-hearted approach. Perhaps the Minister can tell us on what basis that decision was made, as the noble Lord, Lord Carter, asked. Is the Treasury concerned
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about loss of revenue? At the present rate, it will not lose any revenue. If the reduction is insufficient to encourage people to carry out the capital investment required to set up plant and systems, it will not lose any revenue, because no one will produce such fuels. Is that the problem?
Is the influence of the oil lobby behind all that, as many people quietly suggest, putting pressure on the Government and restraining them from adopting a more adventurous or radical policy?
It all comes down to whether the Government believe that it is a serious way forward in making a substantial inroad into fuel consumption in this country. If they claim that they do, the level to which they propose to reduce the fuel duties does not match their rhetoric. If they do not believe in it, why do they bother with it in the first place?
The debate and the proposals made during it have reached a stage at which it would be very helpful if the Government were to publish a clear statement of policy on the matter, showing where they think that it is going and their proposals to achieve it. Then, there would be a government document that we and everybody else could debate, and we could see where we were going. At the moment, the Government take initiatives without a clear policy framework or policy commitment and adopt a rather half-hearted approach.
8.6 p.m.
Baroness Byford: My Lords, I congratulate and thank the noble Lord, Lord Carter, for having secured this important debate. Biofuels and non-food uses of crops offer great potential to us as individuals, to the environment and to our farmers. However, we will need proper government commitment to get such businesses off the ground.
As we know, crops can be used directly for generating heat or electricity. More excitingly, they can be made into biodegradable polystyrene replacements, fibre boards, pharmaceuticals and lubricants, to name but a few. In such circumstances, it is, perhaps, a little surprising that the growth of nonfood crops is small and has had to struggle to get a take-up. In some instances, we know that planning permission has been sought but has not been granted. In other instances, insufficient crop acreage has raised doubts about the viability of some schemes. The Minister will not be surprised if I return to the thorny question of planning.
The Chancellor's announcement in his Pre-Budget Report of a duty cut for bioethanol equal to the 20p given to biodiesel is welcome, but the Minister was not surprised, I am sure, by the fact that the noble Lord, Lord Carter, and others indicated that industry felt that the reduction fell below what was required for commercial viability. I would hate the Minister to think that farmers are always moaning, but I suspect that even he will acknowledge that an appropriate base price must be established, if a new industry is to be a success.

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In his Statement, the Chancellor announced a 20p per litre tax cut for green fuel bioethanol. The green fuel, refined from potatoes, sugar beet or wheat, will now he taxed at the same level as hiodiesel, which is refined from rapeseed. The tax break is not as generous as the one for liquefied petroleum gas, equivalent to 40p per litre. Although the Minister, Michael Meacher, indicated that further lobbying could succeed in securing further cuts, it seems strange to give a little, while accepting that more help might be needed in the future. Chris Carter, the political affairs director of British Sugar, which is considering investing in a bioethanol processing plant said, when the announcement was made, that he found it "frustrating". He said:
"We are pleased that the Government have recognised the significant environmental and economic benefits that the development of a UK based bioethanol industry could bring. However, our feasibility studies clearly show that a greater reduction will be necessary to encourage investment into this exciting new area. We continue to endeavour to present the case for increased support for bioethanol and hope that the Government will recognise this in time for the Spring 2003 Budget".
In his opening comments, the noble Lord, Lord Carter, said that it could bring between 20,000 and 30,000 jobs to the UK. Those jobs would be of great help to many struggling rural economies.
I have been critical but not too critical—obviously, 20p is better than nothing. However, I must record my delight in the announcement made today by, I think, the Argent Group Europe, which has opened the first large biodiesel plant in Scotland. That is an investment of £10 million. Indeed, that is to be welcomed. The plant w ill turn animal residues, fats and used cooking oils into 50 million litres of fuel per year. I understand that the plant will not be of benefit to oilseed growers. Perhaps the Minister will explain why the plant is not to use those crops. Is it perhaps because the new plant will have sufficient amounts of fats to use or is it because the processing procedure is not compatible to take oilseed rape crops?
I move from a newly announced success story to one that failed and is a worry to me; namely, the fate of ARBRE. Will the Minister explain how enterprises like ARBRE can in future be "better protected"? The Curry report tells us that we all need to co-operate and work together, but that was a co-operative and a very good venture which failed. The liquidation of such a venture is regrettable and does little to install confidence in persuading farmers to diversify in an unknown future. The Curry report into the future of food and farming recognised the role that non-food crops could play in helping to produce energy crops, at the same time giving the farming community new opportunities within their existing businesses.
I believe that biofuels have much to offer in terms of energy and in helping to reverse the unwelcome increase in greenhouse gas emissions in the transport sector, which have gone up by 5 per cent since 1990. Good quality biomass electricity and biomass heat and power can save over 80 per cent of CO2 emissions when replacing fossil fuel sources. The British Association for Biofuels and Oils argues that biofuels have a range
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of environmental benefits. They produce fewer greenhouse gases than fossil fuels, produce fewer air pollutants and allow for the recycling of waste oils. We touched on that today with our statutory instruments, to which the noble Baroness, Lady Farrington, responded.
My honourable friend Jonathan Sayeed acknowledged the benefits from biomass in his EDM 21. He recognised that it plays a critical role in reducing our greenhouse gas emissions and noted the significant environmental and economic benefits of using farm waste, such as slurry and poultry litter, to produce energy.
I smiled slightly at "poultry litter". It took me back 40 years when I used to run a poultry unit at home. It always seemed a shame to waste the waste litter. It is good that 40 years on there is another source for it.
The Government's own Performance and Innovation Unit review of Britain's energy policy recommended in February this year that a target of 20 per cent electricity should he generated by renewable sources by 2020. Perhaps I may remind noble Lords that when we took through the Utilities Bill I tabled one or two amendments to promote the better use of non-food crops and the role that they could play.
I understand also that the DTI has created a £66 million bioenergy capital grant scheme for the project developers considering investing in electricity generating projects fuelled by energy crops. That could support six power stations and up to 100 smaller heat and power plants. Perhaps the Minister will tell us what progress has been made.
The development of those new schemes would also offer significant benefits to rural jobs and incomes. Some argue that biofuels are an interim measure only and therefore not important, and that the use of hydrogen is the goal to which we should be working. Yes, indeed, that may be the way ahead. However, I understand that a realistic time for that goal for such production on stream is 15 or 20 years away.
I know that the noble Lord, Lord Palmer, was disappointed not to be able to take part in today's debate. As noble Lords will accept, he has been one of the forerunners in promoting such discussions as we are having tonight, both in Questions for Written Answer and in debate in this House.
I sincerely thank the noble Lord, Lord Carter, for promoting this very important debate. Biofuels will give hope and opportunities to members of our farming community. For each of us individually. they will help to improve the air and the environment in which we live and work. More importantly, they will do two things: they will support and perhaps protect in future—although they only do so in a small way at the moment—our future fuel security; and, secondly, they offer wonderful new opportunities that should not he missed.
8.15 p.m.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): My Lords, I associate myself thoroughly with the noble Baroness's penultimate point in regard to the initiative of my noble friend Lord Carter in introducing the debate. It is an indication of the tremendous advantage the House has in having him here in his new distinguished capacity of sitting on the Privy Council Benches and telling us about his experiences in agriculture. It is both nerve wracking and stimulating for those who have to reply on agricultural matters from these Benches and I thank him for introducing the debate.
The main focus of the debate has been on the possibility of using agricultural and other feedstocks to provide liquid biofuels. We also touched on the issue of biomass for energy.
In the area of transport, the Government face some fairly substantial challenges as part of our commitments under Kyoto and also, in some cases to an equivalent extent, in meeting our air quality emissions targets. On the CO2 front, it is clear that transport is the sector which still needs to be restrained if we are to meet the Kyoto targets; and a number of technological and management issues arise in relation to transport policy and the transport part of the climate change programme the Government have introduced.
We have taken action in a number of areas to encourage the introduction and take-up of cleaner fuels and technologies. We have altered quite substantially the structure of company car tax and VED to incentivise more efficient vehicles, to reduce the use of carbon-based fuels and to encourage new fuels.
We know that biofuels in this context can provide significant life-cycle reductions in CO2 emissions compared with the now standard ultra-low sulphur diesel. Both bioethanol and biodiesel from virgin crops can reduce CO2 by about half when compared with conventional fuels at the point of use. In the case of biodiesel, the benefits from waste vegetable oil are even greater because the life-cycle benefits are higher. We therefore believe that biofuels can play a significant part in our commitment to lower carbon fuels in transport.
The noble Baroness referred to the PIU report on energy policy and the noble Lord, Lord Greaves, asked whether biofuels will play a part in our fuels policy generally. The Government are now taking forward the recommendations in the PIU report, including the target of 2020 for renewables, which could include a significant contribution from agriculturally based renewables. We are in the process of drafting a White Paper on energy policy which should emerge in the new year. That will deal with a wide range of energy issues, including this one.
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The noble Lord, Lord Greaves, referred also to the issue of food and fuel security. We shall take that matter into consideration in the energy policy developments, although we recognise that in this context, as in others, we operate in a world market for both food and non-food crops, including energy crops.
In terms of its benefit to the agriculture side as distinct from, but supportive of, the environmental side, establishing new markets and non-food markets is an important part of how we see agriculture developing. There was a strong reference to that strategy in the Curry report, as the noble Baroness said.
The potential for feed stocks for transport biofuels—mainly oilseed rape for biodiesel and wheat and sugar for bioethanol—are well established and known to farmers, and are potentially an attractive proposition from that end of the telescope as well. But the returns for farmers would need to be sufficient to compete in their terms with the established food and animal feed markets. Currently, the prices for those are higher, even given the present depressed levels of arable prices.
The effects of issues such as set-aside are complicated. The mid-term review of the common agricultural policy could in the medium term help, in the sense that it would de-couple the area aid for arable crops and would, therefore, put everything on a level playing field. In that sense, at the end of that process there would be no set-aside; but, on the other hand, it would in the short term remove the incentive to grow non-food crops on set-aside land when subsidised or regime crops cannot be grown. So the manner in which the mid-term review works its way through the system will be complicated. In any case, at the end of the day, it will be market demand for the new fuels that will determine the sustainable viability of those crops rather than the support system.
At this stage of the debate it is quite difficult to see what the structure of the support system will be in any case. But we do need to address the issue of the market. Significant other factors, such as the state of world markets, increased trade liberalisation under the WTO and so on would also enter into this. The potential for biofuels will, therefore, have to be part of this overall change in the balance of the demand and supply of crops more generally.
Fiscal measures, which have been emphasised substantially this evening, and regulatory measures can have an important effect. A cut in the duty on biodiesel of 20p per litre, which came last July, has provoked some supply of biodiesel into mainstream liquid fuels. The industry has waited for a long time for any move of this kind. It does not believe that the cut is enough, but we have given it the 20p. The letter written to the press by my colleague, John Healey, has been referred to. The figures that he gave indicate a very encouraging picture. The use of biodiesel has risen five-fold since the introduction of the duty cut, to

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over 300,000 litres a month. The indications are that those numbers will keep on rising. The industry indicates that it expects over 80 filling stations to be dispensing biodiesel blends by the end of the year.
It is true that that is based on largely waste-based
production. Recycled oil—not entirely chip-shop oil, but recycled oil in general—is a big contribution to how we deal more productively with waste. I revert to a debate that the noble Baroness, the noble Lord, Lord Greaves, and I had earlier in the week. Therefore, recycling waste oil is in itself an environmental and an economic benefit.
The PBR the other week built on the change with a similar 20p per litre cut for bioethanol; and the Government have announced that they will be consulting on the best time to implement that. Clearly, the market needs to be able to deliver the bioethanol supply at the point where there are maximum benefits.
The noble Lord, Lord Carter, asked a series of questions which are related to the view which has come from the industry and from a number of independent studies that the fiscal cut needs to be larger than the 20p on biodiesel and probably bioethanol. I have no difficulty in accepting the first question that he asked; namely, whether the Government accept the beneficial effects. I have said that they are half—indeed, my notes say that the figure is 55 per cent, which is even better. So the Government have no difficulty with that.
The Government have no difficulty with the second question of whether they made a significant contribution to the Kyoto targets; that is to say, the indicative targets envisaged in the EU directive. They would yield between 0.7 and 1.5 million tonnes of carbon equivalent a year, contributing significantly to the transport sector's ability to deliver its part of the climate change targets. I accept the background to that argument.
My noble friend Lord Carter asked for details of the Treasury's cost-benefit analysis of why the fiscal cut for biodiesel and bioethanol was pitched at 20p. Academic and technical experts suggest a trigger figure between 20r) and 30p. The 20p cut in biodiesel is already significantly increasing the amount of biofuel entering the mainstream supply, which indicates that a market has been provoked. In that sense, the Treasury's analysis is correct, because we have already seen movement as a result of the 20p cut. We expect to see the same results from the 20p bioethanol cut.
The noble Lord, Lord Carter, referred to the German studies. The Treasury and other departments, including the Department for Transport and the Department for Environment, Food and Rural Affairs, are also looking at German and other studies. Parallel work is being carried out in the UK at the Central Science Laboratory, which is studying the benefits for the whole economy of stimulating bioethanol and biodiesel markets in this fiscal way. The Treasury's appraisal, at this stage at least, concludes that the higher level of benefits that would result from a cut by more than 20p would not be
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justified by the return. The Government await the final version of the reports from the study conducted mainly by Sheffield Hallam and the non-food crops panel. It will feed into consideration of the position. In the energy policy context, we will be considering what needs to be done as regards transport and biomass to ensure, through various forms of stimulation, that fuel crops contribute significantly to the achievement of our energy targets.
My noble friend Lord Carter also asked whether there were agricultural benefits and whether we accepted the general estimates put forward by the industry. The European Union's indicative targets would mean that much land could be turned over to oilseed rape if biodiesel targets of around half a million hectares were met. That would be a significant new crop for the agricultural sector.
The noble Earl, Lord Mar and Kellie, and the noble Lord, Lord Carter, asked whether the changes would simply bring in imports. There is no a priori reason to think that mainly imports would be stimulated. The 20p cut has already stimulated growth in home production. We are, however, operating in an increasingly liberalised world, and I suspect that there will be imports and exports in the long run if we are all developing biofuels for transport purposes. There is no reason to suppose that the balance of trade should be to the UK's disadvantage.
Transport fuels from crops could, and should, provide major environmental benefits in terms of their carbon content. As regards their quality, they are probably beneficial, but the argument on that is more balanced. In terms of the possibility of using caste ste materials in a productive way, they can also help meet environmental targets. The discussions on how we support the development of such crops are being addressed in a number of different fora, but in the meantime we need to see the full effect of the 20p cut coming through. At present, the indications are very positive.
Reference was made, especially by the noble Baroness, Lady Byford, and the noble Earl, Lord Mar and Kellie, to the bioenergy side of the matter, and the £66 million programme. I cannot give figures as regards the current take-up because we have not yet reached the end of the phase during which the reports will come in. On the heat side, the results of the heat application—the small operation—should be available by the end of this month. Those for power generation should be available early in the new year.
Clearly there have been some disappointments on that front. Reference was made to the ARB RE project. As the noble Baroness said, there have also been some planning difficulties. All such issues need to be addressed. On the planning side, in the review of planning guidance the Government are looking at ways in which we can ensure that such guidance is more favourable to renewable energy products.
The use of virgin crops in bioenergy production is most important but so, too, is the use of waste,

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including poultry waste, to which the noble Baroness seems to be very attached. Perhaps I should not say that because that is not quite right; I should say that that was something that she was advocating. Within that area we certainly wish to see a recycling as well as a virgin crop use as we develop such projects. Again, the Government are considering different ways to stimulate the market. Such considerations will feature significantly in the biocrops/biofuel renewable sustainable dimension of our energy policy document that will be published next year.
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On all those grounds—environmental, agricultural, economic and energy policy—there is, in our view, a significant role for biocrops. We need to get the act together technically in terms of the fiscal and regulatory framework and as regards the ability of the agriculture sector to meet those markets. But a future there is. I am grateful to my noble friend Lord Carter for giving the House an opportunity to debate the issue.
House adjourned at twenty-seven minutes before nine o'clock.