Lords Sitting of 13 June 2002

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Bristol.

Parish Councils: Code of Conduct
Baroness Byfordasked Her Majesty's Government:
What effects the introduction of the model code of conduct is having on parish councils.
The Minister of State, Office of the Deputy Prime Minister (Lord Rooker): My Lords, the whole of our modernisation agenda is focused on improving the vitality and effectiveness of local government at every level. That includes the introduction of a new ethical framework, which will help to strengthen confidence in local government conduct. The parish code, which has been welcomed by the National Association of Local Councils, has now been adopted by thousands of parish councils up and down the country, thereby strengthening local government at the grass-roots level.
Baroness Byford: My Lords, I thank the Minister for that response. However, he will be aware that many councillors have resigned as a result of the code. What will happen to an elected parish council member who has not yet finished his period of office and who refuses to sign the register of interests or to resign? How, and under what law, will he or she be removed?
Lord Rooker: My Lords, because they do not have to report to central government, I do not know how many parish councillors have resigned. Indeed, not even the new standards body would necessarily have the figures. However, by 10th June more than 4,000 parish councils—that is, about half the total—had informed the Standards Board that they had adopted the code.
Having read the code, I do not see any justification whatever for anyone to feel that they must resign because of the code. I do not have a great deal of experience in this matter, but the code does not differ greatly from those relating to other parts of local government. It affects people only in their official capacity. The nonsense that I heard in this House earlier in the year about people having to resign because of gifts from their families was absolute rubbish. The code makes it explicitly clear that people have to register only in their official capacity.
Councillors' families and spouses are affected only if they benefit to a greater extent than other council tax payers. I cannot see what is wrong with that. There is no justification for the concerns raised about the code.
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I understand that if councillors do not register within two months after 5th May, they cease to become parish councillors. That is the effect of the code.
Lord Marlesford: My Lords, whatever his view of the code, will the Minister at least recognise that it has been appallingly received in the country and, at the very least, that it has been a lousy presentation exercise? I declare my interest as the chairman of a very small parish council of seven members. All of them, except for me, wanted to resign. I have lost one of the best of the seven councillors. Even the gift of a dozen of my wife's bantam eggs did not keep him. Will the Minister at least take steps to ascertain how many people have resigned and report that figure to the House?
Lord Rooker: My Lords, I shall certainly make it my business to obtain the figure if it is possible to do so. However, let me make it clear that the 70.000 parish councillors in this country—that is, seven times the number of local government councillors—are the bedrock of our democracy. Nothing in the code in any way undermines their ability to operate in an official capacity. The concerns raised are totally unjustified. Perhaps the councillors in question misunderstood the code or received bad advice. I invite noble Lords to obtain a copy of the code from the Printed Paper Office; it is Statutory Instrument 3576. They will see that it is absolutely clear that there is no justification for the concerns. We would not seek to place an onerous burden on parish councillors or force them to resign in the way that is claimed. I do not believe that what has been said is in any way justified. However, I shall make it my business to try to obtain the figures.
Baroness Hamwee: My Lords, does the Minister agree that parish councillors should understand the code? Does he further agree that we should take seriously the matter of presentation and help to put across the message? I understand that the issue of declarations of interest and so on are aimed at achieving good, open, transparent and accountable government. Can the Minister assure the House that the intention of the code is not to punish or in any way constrain parish councillors but to achieve that end?
Lord Rooker: My Lords, I agree entirely with the noble Baroness. Of course, the code is not new. It is mandatory. This is not a question of inventing the wheel; the code puts parish councillors on all fours with other parts of local government. As I said, numerically they comprise the biggest part of local government. In terms of local authorities, their number is far in excess of that of local government, councillors. There may be a presentational point to put across, but this is a small code. It is explicit that the code affects councillors only in their official capacity. That is quite right.
Lord Swinfen: My Lords, the noble Lord did not answer my noble friend's question. What will happen to a councillor who refuses to sign the code and refuses to resign?
Lord Rooker: My Lords, it is not a question of that. I cannot quote the exact chapter and verse of the legislation, but I shall make it my business to check that point. Authorities had until 5th May this year to adopt their own codes of conduct, consistent with the national models. Within two months of the adoption of a code of conduct by an authority, its members must make a written declaration to observe it. Failure to do so will mean that they cease to be councillors. That must be implied in the main legislation.
Baroness Hanham: My Lords, will the Minister be kind enough to accept from me that this model code is new? It came about very recently, and its mandatory nature is new. I want to ask the Minister to pursue the matter of parish councillors. Does he consider that one reason that parish councillors are so upset is the fact that the new Standards Board to which parish councils will be responsible is the Standards Board of England: it is not a Standards Board of their local authority? Does the Minister consider that that is a sledgehammer trying to crack a nut, even if there are 70,000 nuts?
Lord Rooker: My Lords, the answer is no, but I am new to this, and I shall check. I do not have any evidence, and have not seen any in the past 16 days, which leads me to believe that we are flooded—Eland House was flooded out this morning—with letters and representations from parish councillors about the onerous responsibility of reporting to the Standards Board. I shall check on that, but I have not seen evidence to that effect.
Lord Berkeley: My Lords, does my noble friend agree that the questions from the Benches opposite bear a remarkable similarity to the debates on declarations of interest in your Lordships' House? What do all these parish councillors have to hide?
Lord Rooker: My Lords, I do not think that parish councillors have anything to hide. A spurious argument has been put forward about aspects of the code. I repeat—because of what has been written and said and said in this House as well—that the code affects parish councillors only in relation to their official capacity; not their private capacity, their friendship capacity or their capacity as neighbours. It affects only their official capacity as elected parish councillors. Frankly, if parish councillors cannot tell the difference between the two, they have a problem being parish councillors.
Baroness Hanham: My Lords, I am not a parish councillor but a local councillor. Is not the Minister aware that, although the code does not affect one's private life, the declaration of those interests is in the public arena?
Lord Rooker: My Lords, we are an open, transparent democracy, and that is the way it should be.

Rural Communities: Housing and Services
3.14 p.m.
Baroness Miller of Chilthorne Domerasked Her Majesty's Government:
What action they will be taking following the publication of the Countryside Agency's State of the Countryside Report 2002.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): My Lords, the report of the Countryside Agency is an important compilation of data on the current state of the countryside. The report records an improvement over the past year in the availability of some services, but there are also some less encouraging trends, which our policies now need to address.
The new department, DEFRA, is actively pursuing the rural policy agenda set out in the rural White Paper to develop stronger rural communities, stronger rural economies and a better environment.
Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his Answer. Does he agree with the chairman of the Countryside Agency in his introduction to the report that parts of the report make pretty grim reading? Does he also accept that the part which makes the grimmest reading concerns the provision of social affordable housing? That is very much a government responsibility. The Government should have taken a lead years ago and failed to do so. How does the Minister expect there ever to be a thriving rural economy if, more and more, the countryside is becoming the preserve of the rich and the retired?
Lord Whitty: My Lords, I agree with the noble Baroness in part. The reference to a grim picture is, in part, what has happened in the countryside. Certainly, many parts of the countryside give cause for optimism. Some of the services and employment possibilities have significantly improved. However, with some services there has been a serious problem.
The issue of affordable housing affects urban, inner city and rural areas, and is a big problem. Having taken on this responsibility in recent days, my noble friend Lord Rooker is now very much "on the case" with regard to both rural and urban housing. The Government have supported the efforts of the Housing Corporation and housing associations to try to increase the amount of affordable housing in many rural areas.
Lord Tanlaw: My Lords—
Earl Peel: My Lords—
The Lord Privy Seal (Lord Williams of Mostyn): My Lords, shall we start with the Cross Benches and then go to the noble Earl, Lord Peel?
Lord Tanlaw: My Lords, I am grateful to the noble Lord for giving way. Can the Minister give an

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indication as to when broadband communication on the Internet will be available to the local post office, the rural school and to the farmer who wants to diversify in the countryside? Does he agree that without that service it is impossible to see a great future in the countryside?
Lord Whitty: My Lords, I agree that the provision of broadband is an important part of the strategy of engaging and connecting particularly the more remote rural areas with the rest of the economy. My colleagues in the Department of Trade and Industry are on that case.
Earl Peel: My Lords, the report on access to rural services, which, as the Minister will be aware, is a very real problem in the countryside, states that greater access to cashpoints is the only significant change from last year. Can the Minister tell the House whether he is proud of the progress of his new department in that respect?
Lord Whitty: My Lords, I am proud of some of the developments in services, particularly in relation to transport. Rural bus services have improved significantly over the past five years in terms of availability. The number of people who live within easy distance of a bus route has increased from one-third to nearly one-half. That results from significant resources being allocated by the Government and my previous department to the bus subsidy and to the rural bus challenge. While some services have improved, I accept the implication that in others there has been a deterioration, which we need to address.
Lord Mackie of Benshie: My Lords, does the Minister agree that one of the great problems with rural housing has been the sale of publicly-financed houses which were built to let? Would not it be better to build more houses for letting and to stop such sales?
Lord Whitty: My Lords, the noble Lord gets into very dangerous water by suggesting that the Government should intervene to stop people selling their houses to those who are prepared to pay the going price. However, I recognise—this was alluded to by the noble Baroness, Lady Miller—that one of the difficulties is that if the only people who can afford the going price are incomers and retired people, the availability of housing for the economically active and particularly the younger element in many rural areas is seriously distorted. That is why we need to address the issue of affordable housing.
Baroness Nicol: My Lords, I welcome the comment from my noble friend that rural transport has been improved. Does the use of postal buses figure in the improvement, or is that being considered for the future?
Lord Whitty: My Lords, there has been some development on the postal bus side in a few areas. That is also part of the more flexible approach for which my
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department and the Department for Transport see a need so that there are forms of transport available which are somewhere between taxis and buses. Some fixed bus routes are not necessarily appropriate for rural needs and taxis are too expensive. There are experiments, including the use of other forms of transport such as postal vehicles, which could benefit rural communities.
Lord Stoddart of Swindon: My Lords, is it not a fact that public authorities are building virtually no affordable houses? That is despite the Government making a good profit out of housing. They get —3·1 billion in stamp duty; they no longer give mortgage relief to house buyers; and subsidies have been cut. We need to take a good hard look at public and affordable housing and start building many more thousands of houses than the housing associations are currently providing.
Lord Whitty: My Lords, it is not the case that there is no building of social housing. As I indicated, the Housing Corporation has engaged, along with the housing associations, in some significant builds. Indeed, it has exceeded its targets for the provision of rural housing in recent years. Nevertheless, there is a quantum problem which will no doubt be addressed in the current spending round in order to ensure that there are adequate resources for social and affordable housing.

Product Labelling
3.21 p.m.
Lord Dubsasked Her Majesty's Government:
Whether they will encourage manufacturers of medicinal, pharmaceutical, food and other products whose use has safety implications to print instructions and lists of ingredients in type large enough to be read by most people.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, the Government will continue to encourage manufacturers to provide clear and accessible information about their products and to promote good practice through specific guidelines on information for medicines, foods and consumer products. All these guidelines already do, or will when published, include recommendations on the minimum size of text.
Lord Dubs: My Lords, I am grateful to my noble friend for his Answer. Is he aware that, according to a survey by the RNIB, some 11 million people in this country find it difficult to read medicine labels or information provided by doctors or hospitals; that 3 million people find it impossible to read the labelling on food products and that another 10 million find that difficult; that the problem is exacerbated by small print on coloured backgrounds; and that this has serious safety implications for people who are diabetic, allergy

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sufferers or for the safe use of products? Will he therefore encourage good practice—as is being put forward by the RNIB and, for example, Lilly UK, a pharmaceutical company—in order to ensure that information is easily accessible to people who would otherwise not be able to read it properly?
Lord Hunt of Kings Heath: My Lords, the short answer to that is, "Yes". My noble friend is quite right: currently there are some very bad examples, particularly of medicine labelling, which are very difficult for people to understand. Even if they have no visual impairment, the labelling is very difficult to read.
Since the introduction of new guidelines in 1999 the situation has improved. The Medicines Control Agency now has a positive role in vetting the new labels. Many of these new labels are better. If I was allowed to use visual aids in your Lordships' House, I could hold up examples of good practice. Clearly, we need to do better than that. At the moment the Committee on Safety of Medicines is engaged in recommending additional guidance for manufacturers. We hope that those will be introduced later on this year.
Lord Addington: My Lords, can the Minister give us an assurance that the Government are encouraging those involved in labelling to provide back-up in the form of descriptions to those who are selling. If someone simply cannot access the written word, no matter what the type of printing, it will not help.
Lord Hunt of Kings Heath: My Lords, I think that that brings us to the role of the community pharmacist. I very much agree that that facility ought to be used to give advice to those members of the public who need it. We see the community pharmacist playing an increasingly important role in providing such advice.
Lord Graham of Edmonton: My Lords, while it is encouraging to hope that the manufacturers and the pharmaceutical companies will recognise their responsibilities in producing readable, larger print labels, if the blind or poorly sighted sectors of the community are affected, is the answer that the use of Braille in some form or another ought to be encouraged? In that way, those who have difficulty reading large print, because they are trained Braille readers may keep out of trouble.
Lord Hunt of Kings Heath: My Lords, my noble friend is right. It is my understanding that at least one company includes Braille labelling on all its own label range of medicines. My noble friend will be pleased to know that the company is the Co-operative Society.
Baroness O'Cathain: My Lords, has the Minister seen the pieces of plastic that are given out in Denmark, in some cases in chemists' shops? They are about two and a half inches by one inch and are, in effect, a magnifying glass but magnifying plastic. They enable people to see exactly what the ingredients are on
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small packets, particularly in the case of medicines. If at the moment we hand out plastic spoons for cough mixture, would it not be equally feasible to do that in conjunction with labelling? Some of these blister packs are so small that one cannot read them, even with good sight. One needs a magnifying glass for all the information contained on them.
Lord Hunt of Kings Heath: My Lords, I am not sure that at this moment Denmark is the country to which I particularly would choose to look for good examples! But, that is a very helpful suggestion. I have not seen examples of that, but I should be very happy to look into it.
Lord Swinfen: My Lords, the noble Lord has concentrated in his answers on medicines. Will he use his best offices to ensure that food is also properly labelled? Many people with poor eyesight have allergies and need to know what food contains.
Lord Hunt of Kings Heath: Yes, my Lords, there are food labelling regulations which require food labels to be easily visible, clearly legible and indelible. But I agree that there are many examples of poor food labelling. The Food Standards Agency has produced a taskforce report suggesting how the regulations of 1996 could be made more explicit. That is subject to consultation at the moment. Again, I hope that the agency will publish further advice later in the year which will enable us to get much better labelling on food products.
Lady Saltoun of Abernethy: My Lords, as we have been talking about eyesight, would not a minimum font size be quite a good idea?
Lord Hunt of Kings Heath: My Lords, yes. Within medicines there is a minimum font size in relation to the packaging of labels, which is seven point Didot, which I can reassure noble Lords is very small indeed. That is why we are anxious to produce voluntary guidelines in this country which will encourage manufacturers to go much further and better than the legislative guidelines.
Baroness Trumpington: My Lords, are garden products included in this? A great many garden products are very dangerous. For instance, if chives which have been sprayed against slugs are eaten, they would not do your child a bit of good.
Lord Hunt of Kings Heath: My Lords, I believe that that comes under the category of consumer product safety legislation. That requires manufacturers to give clear information about safe use. My understanding is that the relevant government department publishes guidance. I shall draw the comments of the noble Baroness to the relevant department.
Lord Brookman: My Lords, my noble friend will be aware of Coeliac disease. I was not aware of it until last year. The Coeliac society, as the Minister is aware,

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does a first-class job. But is he convinced that the labelling of products by shops and supermarkets for those who suffer from this illness-people do not like to call it a disease because it is not transferable—is adequate?
Lord Hunt of Kings Heath: No, my Lords; practice is variable and the Government will continue to talk to manufacturers to ensure that as much information as possible is given.

People Trafficking
3.30 p.m.
Lord Dixon-Smithasked Her Majesty's Government:
What action they propose to take following the evidence presented on Channel 4 on Sunday 9th June concerning people trafficking into the United Kingdom.
Lord Bassam of Brighton: My Lords, the United Kingdom Immigration Service will investigate all substantive evidence of abuse of immigration controls given in the documentary. We have a comprehensive strategy to tackle the organised immigration crime of people trafficking and smuggling. The strategy is set out in the White Paper, Secure Borders, Safe Havens, and focuses on strengthening the law; tackling criminals through intelligence and enforcement; achieving international co-operation and prevention in source and transit countries; and dealing appropriately with the victims of trafficking. Together, those strands constitute a co-ordinated response to a global problem.
Lord Dixon-Smith: My Lords, I am most grateful to the Minister for that reply. It is somewhat reassuring to hear that, despite the delicacy of relationships between those responsible for administering and enforcing the law and those involved in journalism, especially investigative journalism, they are not, shall we say, inhibited by the need to protect sources and so on. However, the programme contained strong evidence in the international field. Can the Minister assure the House that work on the international front and the international aspects of that trade will be positively pursued as rapidly as possible?
Lord Bassam of Brighton: Yes, my Lords, I can give that assurance. The United Kingdom is at the forefront of international efforts to combat organised immigration crime through a number of means: negotiations, signing protocols, joint enforcement work and the United Nations Convention on Transnational Organised Crime, which covers trafficking and smuggling. So we are on the case and working with our partners across Europe and across the world to tackle what is frankly an appalling crime.
Lord Dholakia: My Lords, how many prosecutions have been brought under Section 25 of the
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Immigration Act 1971, which provides the power to arrest people who traffic in human beings? Can the Minister confirm that countries through which some of those people pass receive financial benefit from people who perpetrate such vile crime in human trafficking?
Lord Bassam of Brighton: My Lords, the section to which the noble Lord refers provides for prosecution of anyone,
"knowingly concerned in or making or carrying out arrangements for securing or facilitating"
illegal entry. I cannot specifically identify whether that provision has been used in the circumstances that the noble Lord described, but the power is there and available for use.
Our enforcement efforts during the past few years are bearing fruit. The Government set up the multi-agency Reflex organisation through the National Crime Squad working with the Immigration Service and certain other key local police forces—the Met and Kent police in particular. It has had great success. Since May 2000, I understand, there have been about 82 investigations into organised immigration crime, about 400 arrests, and 139 convictions, representing a 90 per cent success rate in the courts. So we are acting vigorously; Reflex is working well; we are working internationally; and the powers are there to deal with the matter.
Lord Alton of Liverpool: My Lords, does the Minister agree that one of the most disturbing aspects of trafficking is the trafficking of children, unaccompanied minors? Does he recall that in a debate in your Lordships' House in March the Government stated that 66 children had disappeared from the care of West Sussex social services alone? How many more children have disappeared since March from West Sussex social services? What does he know about the plight and ultimate fate of those children?
Lord Bassam of Brighton: My Lords, I share the noble Lord's concern about the smuggling of children, as, I am sure, does every Member of your Lordships' House. It is a grave issue and we must at all times act vigorously on it. The noble Lord asks some specific questions to which I am afraid that I cannot provide the detailed answers from the Dispatch Box. I shall ensure that the information that the noble Lord seeks is provided to him and shared with the whole House.
Baroness Gibson of Market Rasen: My Lords, my noble friend mentioned the work of Reflex. Yesterday, together with other noble Lords, I visited the Reflex organisation as part of our sub-committee work. It is doing a tremendous amount of work, but, as it pointed out to us, the more it does, the more there is for it to do and it needs—that awful word—resources. Can my noble friend assure us that the Government will keep their eye on the resources for that unit, which is doing so much good work?
Lord Bassam of Brighton: My Lords, Reflex received £22·6 million from SR 2000 from the organised crime

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reserve, which runs until 2004. Yes, we recognise the importance of providing resources equal to the task. That is constantly under review. Obviously, there is a current spending round in train and no doubt that is one of the priority areas on which the relevant Ministers will be focusing. I can give that guarantee.
Lord Williams of Mostyn: My Lords—
Lord Waddington: My Lords, with the greatest respect, I would ask the noble and learned Lord to be charitable as the earlier question ran on until 24 minutes into the sitting.
Lord Williams of Mostyn: My Lords, I sympathise with the noble Lord, Lord Waddington, but we have a 30-minute limit. I think that we must stick to it.

Consignia
3.36 p.m.
Lord McIntosh of Haringey: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:
"This morning, Allan Leighton, the chairman of Consignia, announced the second phase of the company's restructuring plans. He announced that the Royal Mail would save £350 million a year by moving to a single delivery at a consistent time, six days a week, and that those plans will result in a further 17,000 redundancies over the next three years. He said:
'The underlying loss from operations graphically shows why we need to restructure the company and embark on a three-year renewal programme to restore profitability'.
"Thousands of postmen and women now face an anxious and difficult time. Those decisions are very painful for the workforce, who have shown their commitment to serving the public and who have often been frustrated and angered by poor management and failure to invest in better ways of working. Allan Leighton has made it clear that the company aims to achieve the reduction in jobs on the basis of voluntary redundancy and by offering alternative jobs within the company. Early indications from the Parcelforce restructuring, which I reported to the House on 25th March, suggest that that can be achieved. We will of course do everything that we can through Jobcentre Plus and other agencies to help people who leave the Royal Mail to get new jobs as quickly as possible.
"The need for radical action is underlined by the company's financial results for the last financial year, published today, in which it announced a —1.1 billion pre-tax loss. Much of the loss comprises exceptional costs from restructuring but the company made an underlying loss of —318 million on its day-to-day operations.
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"Central to the programme to restore the mails business to profit and to improving service and efficiency is the re-organisation of mail deliveries that Allan Leighton announced today. The Communication Workers Union has said that it also supports the ending of the second delivery.
"Twenty years ago, 15 per cent of all mail arrived by the second delivery. Today that is just 4 per cent, but that 4 per cent of mail accounts for 20 per cent of delivery costs and 30 per cent of delivery time. Most other European countries, with far higher postal prices, make only a single delivery each day and none of them has a target of delivering before 9.30 a.m.
"In future, customers who regularly receive 20 or more items of mail a day will receive their delivery between 7 a.m. and 9 a.m. That will include people working from home as well as businesses. All other customers will receive their mail by lunchtime. Those changes will mean that 1 million more first class letters every week should arrive on time. The changes will also mean that postmen and women can work a five day week, instead of the current six.
"Let me put Consignia's announcement into context. Allan Leighton said this morning:
'These losses did not happen overnight. Unresolved issues and problems stretching back for up to a decade are reflected in these results'.
"When this Government came into office in 1997, we immediately took steps to fulfil our manifesto commitment to give the Post Office what management and unions had long been arguing for—greater commercial freedom. The Postal Services Act 2000 completed that process, creating a plc and giving the company the freedom to borrow for growth investment. We cut back its 'dividend' to normal commercial levels and we announced the appointment of a new finance director in October 2000. In April 2001, Lord Sawyer was appointed to look at deep-rooted industrial relations problems in Royal Mail. This year, we strengthened management further by appointing a new chairman and securing a new chief executive for the Post Office network.
"Greater commercial freedom is the right policy. But in exercising these new freedoms, decisions were made that, with the benefit of hindsight, we can now see were wrong. In his announcement, Allan Leighton said that,
"management mistakes have been made over a number of years".
"The company decided, for instance, to expand internationally—a strategy supported by many distinguished observers, including the Trade and Industry Select Committee. But other European postal operators were already ahead of the game—and in the meantime Consignia lost control of its costs at home. Costs went on rising at a time revenue growth was slowing. In 2001 the growth of mail volume, at 3 per cent, was half that of 1999. The financial results published today show that overall turnover grew by 3·6 per cent, but that this was

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outstripped by a 4·8 per cent rise in costs. The result is that the company is now running at an underlying loss of £1·2 million a day. These losses cannot continue, and over the next three years, under the renewal plan, the losses will be eliminated and the company returned to profit.
"I can also inform the House that the group chief executive, John Roberts, will be retiring later this year once his successor has been appointed. The search for his successor will begin immediately.
"Let me stress to the House that today's announcement, like the Parcelforce restructuring, is not the result of any decision by the regulator. Both announcements are about stemming the losses and creating an efficient company. Today's announcement would have been made whatever the decision made by Postcomm.
"But I would like to put on record the fact that I welcome the announcement by Postcomm about the adjustments to the timing of its proposals, the change in the definition of bulk mail and the decision to monitor the market closely to ensure that the universal service is not put at risk. In reaching its decision, Postcomm has clearly listened to the many representations made by honourable Members as well as from other stakeholders, including the Communications Workers Union.
"The challenge now is for Consignia to improve the quality and reliability of its services so that it can keep its customers rather than lose market share.
"Let me deal next with the financial issues associated with today's announcement. I have agreed a package of measures to put the company on the right financial footing to enable it to deliver this renewal programme. Consignia plc has reserves on its balance sheet of £1·8 billion, which represents accumulated past dividends and cash generated by the business. These are more commonly referred to as the 'gilts'. The Government now propose that the £1.8 billion of gilts will be held by the group holding company as reserves while the business is being turned around. These reserves will be available to back the investment required in the mails business to implement the renewal programme and to support the nation-wide network of post offices, subject, where necessary, to the relevant state aid clearances.
"As I explained to the House on 25th March, the Government have agreed to forgo the projected dividend for 2001–02, releasing an additional £64 million for the company. I told the House then that,
'a decision on dividends for other years will be taken in the context of the strategic plan'.
I can tell the House today that the company will be allowed to retain the notional dividends for the previous year as well as part of the overall £1.8 billion of reserves. In addition, I can confirm that the Government do not expect to take cash out of the business by way of future dividends during the three years of the renewal plan.
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"As part of our decision on the gilts, we have agreed to fund the Post Office network's historic losses. David Mills, the new chief executive officer of the Post Office, is working up a strategic plan for the network which will look at new ways of increasing revenues from commercial activities. As we informed the House on 26th April we have committed up to £210 million for compensation for sub-postmasters in the urban networks who are planning to leave the business and for investment in urban offices. The House will have a further opportunity to debate this when state aid clearance is granted.
"I welcome today's announcement by the company that it intends to change its corporate name to Royal Mail Group plc by the end of this year. Her Majesty the Queen has agreed in principle to this name change. Few will mourn the passing of the name Consignia, and I will not be one of them.
"Allan Leighton and his colleagues have shown that they are willing to make the very tough decisions needed to turn the company round. But the company is now set on a course for renewal and recovery. It will not be easy, but, as today's announcement shows, it is essential if we are to have a Royal Mail that the workforce can be proud of and that delivers the service that customers deserve".
My Lords, that concludes the Statement.
3.46 p.m.
Baroness Miller of Hendon: My Lords, I thank the Minister for repeating the Statement made by his right honourable friend the Secretary of State for Trade and Industry in the other place earlier today.
I expect the Minister is probably as sad as we all are to hear of the problems in Consignia and of the company's dreadful results last year, although, following earlier statements, they were expected and did not come as any great surprise.
Less than 10 years ago the Post Office was perceived as the best of its kind in the world. Unlike its European competitors it was profitable, its delivery performance was top of the international league table and its then chief executive boasted of the workforce as his 200,000 in-house consultants and ambassadors to the public. The "postie" was trusted and respected. Then we get today's Statement.
The figures are, by anyone's standards, quite shocking. Only three years ago, when the Post Office was making profits of around half-a-billion pounds annually, the then Secretary of State was pleased to announce that the Postal Services Bill, which was to become the Postal Services Act of 2002, would ensure that the company had a golden future and was set to become a global force. Instead, its performance has deteriorated; morale and performance in the workforce is low; and we learn that last year there was a pre-tax loss of £ 1·1 billion, equivalent to £1·2 million every trading day, with all of its businesses losing money.

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The Statement repeats what Allan Leighton had said. There had been management mistakes over a number of years. I am sure that that is right. But no mention is made of the disastrous industrial relations of the company during that time. I know that the Government have to be aware of it because they set up the inquiry under the noble Lord, Lord Sawyer, to look into the business. Does the Minister agree that that factor has also contributed to the situation? Indeed, does he agree that the Government have also played a large part in the débâcle?
There will be no surprise at the terrible loss of 30,000 jobs. That has been trailed for quite some time. We are pleased and welcome the fact that it is intended to achieve those job losses by voluntary means. However, can the Minister give the House more information on the financial details which will allow the Post Office to use the money that has been invested in gilts over many years? Will this also require clearance from the European Commission under the provisions of state aid? This redundancy money has to come from somewhere, somehow, apart from the costs involved in the restructuring of the company.
It is said in the Statement that the announcement, like the restructuring, was not the result of any decision by the regulator. However, can the Minister state the Government's attitude to the application by the Post Office to increase the price of first and second-class posts? I would be interested to know what the Government think. Is the Minister confident that the Post Office is not simply trying to increase its prices in an area where it does have a monopoly in order to subsidise its heavy loss-making operation in areas where it is subject to competition? It is important, if the company is to get itself right, that we have all this information on the table and know from where we are starting.
We appreciate that the second-class delivery accounts for only 4 per cent of the mail but for 20 per cent of the costs. Are the Government confident that the fears of many people running small firms and working from home about the difficulties entailed if they receive their mail much later than others are unfounded? Will this not also mean a bigger burden for the Post Office if it is delivering first-class post between 7 and 9 a.m. but other businesses or homes in a similar area do not receive their mail until lunchtime?
The Minister has not said too much about the regulator's proposal to open up the market to competition, but we assume that that is still the plan. We welcome that. We believe that not only would competition assist the consumer but that it would assist the Post Office itself if it has to decide to work within certain parameters. Does the Minister agree that, in this area, there are still great opportunities for the Post Office, including potential sources of revenue from allowing other operators access to its delivery network? So far, the Post Office has been unwilling to negotiate realistic terms and prices on access charges. Does the Minister share our disappointment at that
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attitude? Does he agree that, if there is to be true competition, the issue of VAT will have to be addressed sooner or later?
When the Postal Services Act was introduced, we were told that the Post Office would remain a fully state-owned corporation. The Minister will recall the numerous questions that I asked his colleague, the noble Lord, Lord Sainsbury, as to whether or not the Post Office had been in negotiation with TPG, a Dutch company, to sell off the English Post Office. The noble Lord, Lord Sainsbury—and we certainly accept what he said—said that he was unaware of any of that. However, we later found out that that would most certainly have happened had the negotiations not broken down at the very last stage. So will the Minister now tell the House whether Her Majesty's Government would be willing to see the Post Office sold off to a foreign operator, or is the Post Office to remain—as defined at the time of the Postal Services Act—a fully state-owned corporation? It is important that a reply is placed on the record, considering all the previous confusion.
How will the Post Office network now be sustained, particularly in rural areas? There are only nine months to go before payment of benefits across the counter—which accounts for 40 per cent of the revenue—ceases.
Finally, we welcome—as I believe the whole House does—the dropping of the name "Consignia" and the return to the use of "Royal Mail". It was an absolute mockery of all good marketing techniques to drop a well-trusted, well-respected name, and to waste money in doing so, in return for a name that was never accepted from the word go. However, I should like the Minister to explain—although I have a certain sympathy with him; it would have been easier had the noble Lord, Lord Sainsbury, still been the responsible Minister—to explain this point to me. When I asked whether the name "Consignia" would be dropped and whether there would be a return to the original name, I was given a terse, curt, short answer. The answer was simply "No", and that was that. If it were not unparliamentary, I should say that it was a rude answer.
3.55 p.m.
Lord Razzall: My Lords, I join in the thanks to the Minister for repeating the Statement, However, I know from the remarks of the noble Baroness and from seeing the faces around this Chamber that we all regard this as an extremely sad day for the Post Office.
The opportunity should not be missed for both of the other political parties to accept their share of responsibility for what has happened. Up until 1997 the Conservative Party had every opportunity to give the Post Office the commercial freedom for which it was asking and it did nothing about it. It was during that period that the steps that the Post Office should have been taking in all kinds of areas were not taken because of the inactivity of the Conservative government. The situation today is the result of that inactivity.

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Some criticism should also be accepted by Her Majesty's Government, first, for the delay that occurred in giving the Post Office what the Government say that it wanted. I noted very carefully the words of the Statement:
"When this Government came to office in 1997, we immediately took steps to fulfil our manifesto commitment to give the Post Office what management and unions had long been arguing for—greater commercial freedom".
A word has crept in; namely, "greater". That was not what the management and unions were asking for; we debated this issue in the House. What the Post Office was actually asking for was "commercial freedom" full-stop. What we now have is the worst of all worlds. The Post Office has not had what it wants, and the Government have been sucked inexorably back into being the lender of last resort to the Post Office and into having to take the actions with taxpayers' money that the Minister has announced today. The House should recognise that both political parties during their period of office, for whatever well-meaning reasons, have been at fault.
I follow the noble Baroness in asking one or two key questions. She touched on the plight of urban post offices. When the Government brought forward their proposals for rural post offices, a number of us in this House made the point that the elderly and the frail have just as great a problem if they are living in an urban area if their post office is closed as they do in a rural area. The Statement says that the Government are bringing forward plans to compensate sub-postmasters in urban areas who will be retiring. Have the Government any plans to assist the elderly and the frail in urban areas who will be deprived of a very necessary service in their community in the same way that plans are being brought forward in regard to rural areas?
Secondly, before the name "Consignia" is consigned to history, will the Minister give some indication as to what the cost of the "Consignia" operation has been? What has it cost the Post Office to conceive, develop, reprint, and rebrand itself as "Consignia", and then to abandon it?
Thirdly, is this an opportunity for the issue of the opening up of competition for the Post Office to be reconsidered? Does the Post Office need a longer breathing space to get its act together and to get into a position to be able adequately to compete with the competition before it is introduced?
Finally—this is a fundamental point and was touched on by the noble Baroness—there seems to be some inconsistency in the Government's position as set out in the Statement. There is a bland comment about the noble Lord, Lord Sawyer, being asked to undertake a review of industrial relations in the Post Office. When the noble Lord's report was produced, and when it was debated in this House, a general feeling of optimism emerged that the worst was over and that all would be well if the recommendations were implemented. The Statement is rather silent on that aspect. I suspect that that is so because the remarks being made by Allan Leighton are not consistent with the optimism that was expressed by the noble Lord in
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his report. The House should be told whether the Government agree with the general optimism about employee relations expressed by the noble Lord, Lord Sawyer, or with the more critical attacks on the Post Office workforce made by Allan Leighton.
4 p.m.
Lord McIntosh of Haringey: My Lords, I am grateful to both noble Lords for their response to this Statement. I agree with them immediately that this is a very sad day. It is a sad day for the Post Office and a sad day for all of us as Post Office users. However, like the noble Lord, Lord Razzall. I have to say that the picture painted by the noble Baroness, Lady Miller, of a golden age of the Post Office in the good old days under a Conservative government is a little bit far from the truth.
I think that we should be humble enough to remember how, in the good old days, we used to criticise the Post Office. We used to criticise British Rail—did we not?—for multiple shortcomings. We have to recognise, I think, that Allan Leighton was right to say, as he has done today, that the problems of Consignia/Royal Mail Holdings are deep-seated and that the current performance is the result of failure to address these issues over a number of years. That failure refers not only to the Post Office management but to government. We should remember, and the Conservative Party should remember, that it was under a Conservative government that the external financing limit was set and that very considerable sums were drawn off from the Post Office which it was not able to use for investment. For example, automated sorting equipment which should have been in place many years ago was frustrated by the fact that the government were not allowing the Post Office to use its dividends or the cash it generated.
I think that everyone is right to pay tribute to the workforce. Again, however, the criticism that at the moment we have particularly low morale in the workforce does not square very well with the fact that, five years ago, industrial action in the Post Office accounted for almost 1 million days lost per year. It was the greatest single element of days lost through industrial action. Those figures are very much lower—enormously lower—than they were then. That must be some indication of the changes taking place.
I do not know that I am qualified to comment on the difference between what the noble Lord, Lord Sawyer, thinks and what Mr Leighton thinks, and I do not think that a third view from the Government is particularly called for. Clearly, however, the workforce who have indeed been threatened by these very significant losses have been behaving with a good deal of responsibility, and they have been supportive of some of the changes that are taking place. In particular, the union is supportive of the suppression of the second delivery.
The noble Baroness, Lady Miller, asked about the use of the £1·8 billion gilts and whether state aid clearance was available in particular for redundancy money. State aid clearance is required for some of the

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purposes for which the £1·8 billion will be available. That does not include restructuring costs, which are themselves an investment in a more efficient workforce. Clearly, however, there are state aid elements, particularly in support of the network.
What view do we take on the application for increased prices? We take the view that price rises should not be used to camouflage inefficiency. That is what happened in the past, and it is certainly what happened under Conservative governments. I do not believe that that is the case now, and the Government are convinced that an application for a price rise in the context of the renewal plan is an appropriate one for Postcomm to consider.
I think that there is some confusion about second class mail and second delivery. There is no change in second class mail. What is proposed is the suppression of the second delivery, which could be both second class and first class mail. It is a legitimate point to say that the target of delivery between 7 a.m. and 9 a.m. for small businesses and those with more than 20 items is a significant challenge for the Post Office. That is why pilots are under way as to how it can be achieved. If it can be achieved, that will be a significant improvement for many small businesses.
I agree with the welcome that the noble Baroness, Lady Miller, extended to the openness to competition. I also agree with her that the opportunities arising from competition are for both Post Office customers and the Post Office itself. As for the issue of charges for access to the network, if there is no agreement about it Postcomm is in place to monitor and take decisions in its regulatory role.
The noble Baroness, Lady Miller, asked about TPG and the negotiations between the parties. I know that she and the noble Baroness, Lady Blatch, are in correspondence with my noble friend Lord Sainsbury, and I do not wish to make of that a four-cornered conversation.
Baroness Miller of Hendon: My Lords, the matter has been sorted out. I was referring only to the future.
Lord McIntosh of Haringey: My Lords, I am delighted to hear that; I shall make no further comment.
As for the name, I am told that it cost about £2 million to change to Consignia. It will cost a great deal less to go back to Royal Mail Holdings.
4.7 p.m.
Lord Dearing: My Lords, may I say in particular as a former Post Office worker that this is a very sad day, possibly the saddest day in the history of the Post Office? I welcome the frankness with which Allan Leighton has addressed the issues and acknowledged management faults. However, I should also like to say that John Roberts, who is resigning later this year as managing director, is a man who contributed massively to the profits of those earlier years.
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I have some questions for the Government. Allan Leighton has confessed management mistakes to which the Secretary of State referred in her Statement to the House, saying that with the freedom that had been given, mistakes had been made by the Post Office management. I refer to the Horizon project, which cost £1 billion. Mr Leighton says of it:
"The incremental costs of running the Horizon system has turned the counter services into a fundamentally unprofitable operation—a position that will be exacerbated by the move of Benefits Agency transactions away from the counters network after April 2003".
Does the Minister acknowledge that the Government had their hand very much in the decisions of the Horizon project and transferred the Horizon project to the Post Office with a write-off of £571 million? Was there no government hand in that decision?
I shall limit myself to one other question. If there are all these commercial freedoms for the Post Office, how many officials are there in the department dealing with the Post OfficeȔ10, 20, 30? How many? And what do they do all day if there is all this commercial freedom?
Lord McIntosh of Haringey: My Lords, I do not dissent from anything that the noble Lord, Lord Dearing, says about John Roberts and his responsibility in the early years. However, I think that it is true to say that he is retiring rather than resigning later in the year.
Lord Dearing: My Lords, I understand that he was asked to stay on but decided to take retirement.
Lord McIntosh of Haringey: My Lords, the Statement makes clear that there have been many mistakes by the Post Office, probably before but certainly during the period of greater commercial freedom which has taken place since the Government took office. In so far as that greater commercial freedom is constrained, the Government must bear their share of the responsibility.
I do not know how many officials in the Department of Trade and Industry are dealing with the Post Office. I doubt whether a large number are dealing solely with the Post Office rather than having it as part of their responsibilities. My strong hunch is that the number would be considerably fewer than when the Post Office was itself a government department and there was nothing like the degree of commercial independence for the Post Office. As has been made clear, there is a price to pay for that commercial independence. One of those prices has been the Horizon project to which the noble Lord, Lord Dearing, refers with his great knowledge of the subject.
Lord Carlile of Berriew: My Lords, will the Minister assure the House that one of the consequences of this humiliating Statement about the Post Office's business will not be the further dilution of already skeletal services in many rural areas?
Lord McIntosh of Haringey: My Lords, we have imposed a duty on the Post Office to protect the rural

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post office network. That has had some results already in the sense that there are unavoidable losses when a sub-postmaster or sub-postmistress retires and no one can he found to replace them. If we talk of avoidable losses, those have been substantially reduced this year compared with last year. The Government, the Post Office and Postcomm have this matter very much in mind.
I can now give an answer to the noble Lord, Lord Dearing, about the number of officials. Apparently 30 officials are involved. The costs of the Horizon project will he covered by the use of the gilts.
The Lord Bishop of Guildford: My Lords, the House will welcome the frankness with which the Statement has been made. Will the Minister comment further on the significance of the return to a Royal service? That surely means not only that it is managed and run financially in a first-class way but also that the people of our country have a first-class service. We have heard that we are losing the second delivery—that may be financially justified; that private households may not receive their mail until the middle of the day; and that private enterprises with a mail of fewer than 20 items will not receive it until later in the day. Many people are anxious about the loss of rural and urban post offices. Will the Minister give us more of a steer about how the use of the Royal name will lead to a better service for the people?
Lord McIntosh of Haringey: My Lords, Allan Leighton replied rather effectively this morning to that point on the "Today" programme. I think he said that we have terrific brands, an unrivalled network, still a monopoly position for a large part of the service, and a dedicated workforce; and if we cannot make money in due course from that then we should all go home. The right reverend Prelate is right. The Royal name brand is a very valuable brand in marketing terms, as the noble Baroness, Lady Miller, would agree. It is very good news that we are going back to it with the approval of Her Majesty the Queen.
Lord Skelmersdale: My Lords, perhaps I may—
Lord Clarke of Hampstead: My Lords, my views are well known and clear. It is a Labour Government who have destroyed the British postal service. I shall not repeat what I have been saying over the past couple of years and before the Postal Services Act. Like the noble Lord, Lord Razzall, I view today as a sad day. It is terribly sad for the 17,000 people and those from Parcelforce, and their families, who face redundancy, whether or not it is voluntary. We all know how voluntary redundancies can be achieved. Is the Minister aware that the cream of the postal service workers will probably go? Because they have given longer service, they will take redundancy leaving the service the poorer. I hope that every effort will be made to keep those workers.
I am glad that Allan Leighton has been able to say, as we have heard in the Statement, that £1.8 billion is available to assist at this difficult time. That gives the
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lie to those ill-informed people who believe that the Post Office has received money from the Government from increased tariffs. That has never been allowed because of political interference. I am glad that that idea has been put to bed. The £1·8 billion is rightly to be used by the Post Office. I hope that the Minister welcomes that demonstration of how profitable and good our postal services were.
Does the Minister agree that the structure announced will assist in bringing about the long-awaited introduction of better working conditions? For the first time it includes a five-day week for people who get up at 4.30 in the morning to walk about in the rain. I should declare an interest. I was a postman. My former boss sits on the Cross Benches. He will understand that those people deserve that consideration. Allan Leighton has referred to low pay. I hope that the restructuring will bring about a better remuneration package for those who have suffered for so long.
At this dreadful time, perhaps we can avoid any suggestion that the chief executive who is to depart is in any way culpable for what has happened. I believe—it is not an ill-informed view—that John Roberts has performed his task admirably, dedicatedly and with great integrity given the political interference to which I have referred on a number of occasions. He has never had the freedom to manage his business that he should have had. We should put on record our gratitude for the job that he has done.
Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Clarke, is too modest to say, as he is entitled to do, that during the passage of the Postal Services Bill he indicated that what has been announced today would occur. He was right: there can be no doubt about it. He is right to say that the loss of a further 17,000 jobs is tragic for those concerned, including their families. Whether that means that the cream of the workforce will leave is an issue of human resource management. I think he would agree that there have been severe deficiencies in human resource management as identified by the noble Lord, Lord Sawyer. But it is a challenge now for the management of the Post Office to ensure that that is not the case.
I am grateful for his welcome of the release of the gilts. I confirm what he says about better working conditions: a five-day week is now available although a six-day service is part of the universal service obligation which will be adhered to.
I agree with what the noble Lord, Lord Dearing, said about the early stage of Mr Roberts' career as chief executive and the fact that he ran a profitable Post Office at that time.
Lord Skelmersdale: My Lords, I am glad that I gave way to the noble Lord, Lord Clarke, because in essence he has made a point that I wanted to make. Occasionally, I meet a former chairman of the Post Office, who is not a Member of this House, at the bridge table. The other day he made a passing remark

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to me: "There is no such thing as a bad workforce, only bad management". Like other noble Lords, I welcome the frankness of the Statement in that respect.
However, I am confused by the Minister's partial explanation of the paragraph that refers to customers who regularly receive 20 or more items of mail a day and that they will receive their delivery between 7 a.m. and 9 a.m. I believe that I understood the Minister to say that that had no bearing on first and second-class posts, although he is looking at me rather woodenly. Perhaps I can take that as a nod. On this subject I regularly declare an interest as a director of a rural mail order and mail delivery firm. It occurs to me that our address is the only one for about four miles around to receive on average well over 20 items of mail a day, which means that the sorting office will send a special delivery to us between 7 a.m. and 9 a.m. However, the next door house, which receives perhaps on average three, four or five items of mail a day, will not have its mail delivered at the same time but, by definition, the mail will be delivered as part of a postal round that will take place later in the day. I cannot see the management logic of that. Can the Minister explain it?
Lord McIntosh of Haringey: My Lords, first and second-class mail refers to the targets for next-day or longer delivery with the corresponding price. That is a quite separate issue from whether there is a second delivery in any one year—I should say "day". First-class and second-class mail can be delivered by the first or the second delivery. I appreciate the point made by the noble Lord, Lord Skelmersdale, about small businesses that receive on average more than 20 items a day. I found the word "regularly" a little confusing—"on average" is clearer. I appreciate that to go down a long lane twice, once to a small business and once to the house next door that receives fewer than 20 items a day, would be madness. Such matters can be sorted out in the pilot projects that are being undertaken.
Lady Saltoun of Abernethy: My Lords, I am delighted that Consignia is no longer to be called "Consignia", but "Royal Mail". Can the Minister tell me whether I am justified in hoping that our postage stamps will continue to bear the Queen's head for many a year to come?
Turning to pricing, the Post Office has two very strong competitors in the area of letters: e-mails and faxes. That will need to be borne in mind when raising the cost of sending letters. It also has a huge delivery of what I believe the Minister calls "bulk mail" and most of us call "junk mail" and which most of us do not want. Is there a chance that losses could be recouped on the delivery of letters by charging a little more for junk mail?
Lord McIntosh of Haringey: My Lords, I can give the noble Lady, Lady Saltoun, the categoric assurance that we will not be taking the Queen's head off the stamps at any time in the foreseeable future. I appreciate her point about competition from e-mails and faxes. Some people are surprised that mail
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volumes continue to rise when there are such alternatives. She is right to say that a considerable part of the increase is what she calls "junk mail" and we call "bulk mail". There are severe limitations on the degree to which one can discriminate by price. The universal service obligation is that there should be a delivery every day to every part of the country at a fixed and standardised price. That limits the scope for doing what she would like to do.
Lord Hooson: My Lords, does the Minister agree, as has been hinted at by the noble Lord, Lord Clarke, that this sad news raises a broader issue for the Government? This week Mr Mandelson proclaimed that we are all Thacherites now. On these Benches we do not happen to be so. Does the Minister agree that that news, following recent bad news about our railways, raises a much broader point about whether there should be public ownership in certain spheres in order to deliver a good, universal public service? Does he agree that the Government should reconsider their proclaimed Thatcherite position and consider the need to revive public ownership of the service?
Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Hooson, is not the only one who is not a Thatcherite. I am not a Thatcherite and I do not believe that any noble Lords on these Benches are Thatcherites. Mr Mandelson is not a member of the Government and can speak to himself—for himself. Once you start on malapropisms, you cannot stop! He was talking in a different context. The answer to the noble Lord is that the Royal Mail is publicly owned and it will continue to be publicly owned.
Lord Stoddart of Swindon: My Lords, I have three questions. First, will the £1·8 billion in gilts be available to the Post Office for all time to use as it wishes, without the Treasury having a lien on it? Secondly, how can we sustain a first-class service and a second-class service for the same amount of payment?
A noble Lord: My Lords, time!
Lord Stoddart of Swindon: My Lords, no other noble Lord will be able to ask a question now so I may as well stay on my feet! I could ask my questions much faster if I was not interrupted. The cost of a stamp will be exactly the same for private and for commercial customers, but one set of customers will be treated differently from another. In other words, one set will be treated worse than the other. I just wonder whether, if there is a challenge in the courts, that will be sustainable.
My final question relates to the Post Office network. In his statement, Mr Leighton referred to the fact that Brussels was holding up the application for a package of £210 million to assist the retention and the development of urban post offices. Can the Minister or the Government do anything to speed up such a decision, which I hope will be in the affirmative?
Lord McIntosh of Haringey: My Lords, the convention of the House is that I am supposed to

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answer no more than two questions from each Member. The Government recognise that it will be necessary for about £800 million of the £1·8 billion to he used for restructuring purposes and the Post Office can use the remainder for investment and for the protection of the network. I believe that the noble Lord, Lord Stoddart, is just confused about the issue of first and second-class stamps. That is not at issue in relation to the change from two deliveries to a single delivery.

Nationality, Immigration and Asylum Bill
Brought from the Commons; read a first time, and to be printed.

City of London (Ward Elections) Bill
4.30 p.m.
Lord Jenkin of Roding: My Lords, I beg to move that this Bill be now read a second time.
Those of your Lordships who watched the Queen's procession to St Paul's will have seen that historic moment when she had to stop at Temple Bar for the ancient ceremony as she entered the City of London. As we consider this Bill to reform the City's electoral system, we would do well to keep that historical perspective in mind.
The City's system of governance goes back to the 14th century and beyond and is unique in the United Kingdom. It will remain unique if the Bill becomes law.
While, happily, it is no longer the policy of any party to abolish the City Corporation, it is widely recognised that the City's franchise has become outdated and in need of reform. If the proposals in the Bill are enacted, and if the other reforms outside its scope are implemented —about which I will comment in a moment—they will provide an electoral system that much better reflects the realities of the City's pre-eminent position as one of the world's leading financial centres.
The Bill comes to us after a long debate in another place. No one knows that better than my noble friend Lord Brooke of Sutton Mandeville, who, as the then right honourable Member for the Cities of London and Westminster, with great skill and much good humour—for which he has already made a reputation in this House—debated the 182 amendments and the 16 new clauses tabled in another place. After he joined us here, that task fell to be completed by my right honourable friend Sir George Young.
We have been accustomed in this House to receive Bills from another place that have had scant, or in some parts, no debate at all. That cannot be said about this Bill. It was deposited as long ago as November 1998, and after nearly 27 hours of debate in the Chamber at the other end and six days in Committee, it finally received its Third Reading in April this year. The Bill's passage in another place took about three and a half years!
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The present electoral system in the City gives the vote to around 5,700 residents and some 16,000 professional people such as barristers, sole proprietors and traders, and individual partners in professional and trading firms. As everyone knows, the vast majority of the people who work in the City are directors or employees of the thousands of companies based there. The preponderance of the revenues raised by the Corporation comes from the non-domestic rate levied on those companies. Yet only residents, professionals, sole traders and partners may vote in elections to the Common Council.
The main thrust of the Bill is therefore to enable the broadest range of interests represented in the City to participate in the electoral process. That is not to suggest that the City has been remiss in its duties. On the contrary, the Common Council—the body that discharges the local authority functions in the City—is widely credited for its innovative activities, its support for regeneration, particularly in its neighbouring boroughs in east London, and for many other activities. I believe the House would wish to acknowledge the important role of the two people widely credited with introducing and carrying forward those policies: Michael Cassidy, the previous chairman of policy and resources, and Judith Mayhew, the present chairman.
The City is regularly praised for the way in which it runs Epping Forest, part of which lies in my former constituency, and Hampstead Heath. I take some personal pride in the fact that it was when I was Secretary of State for the Environment that we decided that Hampstead Heath should be managed by the City Corporation.
I shall not weary the House with the details of all the reports and inquiries that have led to the present situation and to the decisions that have been made, except to remind the House of the words of the present Government in their 1997 Green Paper, New Leadership for London:
"We have made it clear that we do not propose to abolish the City Corporation. In recent years the Corporation has sought to play a much more positive role in order to promote inward investment and to fund schemes and studies for the benefit of London as a whole. The Corporation has assured the Government that it will continue to develop this work and has accepted that it must respond to the need to improve its electoral arrangements".
That last point is the purpose of the Bill, and it is to the Bill that I now turn.
Clauses 1 and 2 give the Long Title and define the terms used. The new franchise is conferred on "qualifying bodies", which are defined by Clause 2 as including both incorporated and unincorporated bodies, apart from the partnerships already in the franchise. A broad definition has deliberately been taken to embrace the widest range of interests represented in the City community. Thus it includes not only companies and incorporated partnerships, but also charities, the voluntary sector—and, as I am sure the right reverend Prelate will be delighted to hear—the churches.
Clause 3 is the principal provision. It sets out the entitlement of qualifying bodies to appoint individuals for inclusion in the ward lists of electors. Such

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appointed people will therefore be able to vote in ward elections. The extent of the entitlement to appoint is to be determined by the size of the workforce in the relevant premises, as detailed in subsections (2) and (3).
That is the main change made in another place. When the Bill was originally introduced there, entitlement was linked to rateable values, but after considerable debate, it was agreed that the size of the workforce was a better way of settling voting rights. The basis of entitlement is now to be one person for a workforce of up to five, one further individual for each subsequent five employees up to a workforce of 50, with an additional person for every 50 of any excess.
Clause 4 requires qualifying bodies to reflect, so far as they can, the composition of their workforces in their appointments. Those appointed by qualifying bodies must be able to demonstrate an association with the City. Clause 5 establishes a link with the period of that person's work in the City. There has been a great deal of discussion as to how the process will be achieved. Guidance will be issued in due course to employers as to how they might conduct it. Many employers will of course use their well-established machinery for employee relations.
Clause 6 excludes Crown bodies such as government departments from the extended franchise. That was agreed at an early stage when the draft Bill was discussed with the Government.
Clause 7 requires reports on the new arrangements to be submitted to the Secretary of State, who must lay them before Parliament. The remaining clauses are machinery and mainly technical and transitional.
The question of the Bill's compatibility with human rights legislation was the subject of much debate in another place. We are familiar in dealing with the issue in Public Bills. In this case, the case of a Private Bill, the statement on compatibility was made on behalf of the promoters but I have a copy of a letter signed on behalf of the Government by the noble and learned Lord, Lord Falconer of Thoroton, in which he endorsed that view and that it is not disputed. For completeness, perhaps I may add that the Bill was considered by the Joint Committee on Human Rights.
I want to comment briefly on the accompanying reforms which do not form part of the Bill. Reference was made in the Green Paper, from which I quoted, to the position of aldermen. As most people know, aldermen in the City of London are quite different from those who existed in local government generally and who were abolished some years ago. In local authorities, they were selected by the other members but City aldermen have always been directly elected. Indeed, they were the first elected representatives of the City.
Formerly, election was for life—or at least until the age of 70—but that is no longer the case. The City has enacted in its legislative instrument—in its own area it is a legislative body—an Act of Common Council, by
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which the term of office for an alderman is set at six years. If he wants to continue and can persuade his electors, he can stand for re-election.
Another reform has been long overdue. There used to be a procedure for a post-election veto on the appointment of an aldermen because all the aldermen sit in the City as magistrates. That function has been taken over by the Lord Chancellor's advisory committee and approval of such appointment will be made or withheld before someone puts himself forward as alderman.
A reform which was discussed in another place, and in which the noble Lord, Lord Avebury, may have a particular interest, is the review of ward boundaries. If there are to be more electors, selected in the manner which I have described, is there not a danger that the voice of the 5,700 residents will be substantially reduced? It has been agreed that that should not be the case and that the ratio of residents' representatives on Common Council should remain approximately the same.
They are preponderant in only four of the City's wards and it is therefore possible to deal with the matter by revising ward boundaries. Indeed, that process has already started by revising the boundaries in order to ensure that the predominantly residential wards will be able to elect the number of members of the Common Council so as to preserve that proportion. Those who study the number of electors in each ward will recognise that they remain extremely uneven and the process of reform, which continues, can deal with that.
My Lords, this is an unusual Bill but the City is an unusual place. The proposals have been subject to long and wide discussions both within the City and outside and with the Government and other interested parties. I believe that after long debate in another place the Bill comes to your Lordships' House in a form which represents an honest, workable and fair way of dealing with the widely acknowledged shortcomings of the present electoral arrangements in the City. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Jenkin of Roding.)
4.43 p.m.
Lord Avebury: My Lords, as the noble Lord, Lord Jenkin of Roding, began his speech by reference to the ceremony which attends the presence of Her Majesty the Queen on the boundary of the City, perhaps I may take this opportunity of congratulating the residents of another capital city in our kingdom, Cardiff, on the visit by Her Majesty today and on the honour which Her Majesty has bestowed on the College of Music and Drama in Cardiff: that of Royal status. I am sure that that will give great pleasure to all Welsh expatriates living in the City of London.
I thank the noble Lord, Lord Jenkin, for his careful and detailed explanation of the provisions of the Bill. We are not concerned with whether the City should have its own local government, although if we were starting with a blank sheet of paper, we would not

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make an exception for one particular area simply because of the extensive concentration of business which varies of course within the City. The Isle of Dogs may ultimately have as much office space as the City and I am sure that there would be no demand for it to be run from Tower Hamlets.
The arrangements which have developed in the City over the centuries have made the Corporation not only a successful unitary authority for its own area but also the curator of huge open spaces, the landlord of more than 2,000 houses in the surrounding boroughs and the largest port health authority in the UK. Those arrangements are unique and like many ancient and apparently anomalous English institutions they work amazingly well.
When the Bill was considered in another place, honourable Members agreed on the importance of the Corporation to the well being of the City of London, which is the most important financial centre in the world. They also agreed on the need for reform of the current electoral system, which they felt was flawed to the extent that it could not be addressed within the powers of the Bill as presented.
The promoters suggested that the Bill would form part of a wider set of reforms and the Committee in another place welcomed their assurance that inequalities of distribution would be dealt with by review of the ward boundaries, as explained by the noble Lord, Lord Jenkin. That was said to be within the powers of the Corporation. But there was some uncertainty about the Corporation's powers and this is a good opportunity for setting the record straight, with the benefit of the legal advice which the Committee suggested the Corporation might obtain. Perhaps in winding up the Minister will explain that advice.
According to a letter I have received from the City Remembrancer's Office,
"The basis of the present ward structure appears to have been established by 1127 or thereabouts. On this assumption the power to alter boundaries could be said to be a custom of London exercisable by the Mayor, Commonalty and Citizens of the City".
The noble Lord, Lord Jenkins, was therefore being modest when he spoke of the arrangements being established in the 14th century; they appear to go back considerably further in time.
That was late in the reign of Henry I who had the reputation of being less hands on than most medieval monarchs, so the right moment was chosen to assert those powers. But the City has been a great urban centre for more than 1,000 years, as we were reminded by the opening on Tuesday of the great Roman amphitheatre below Guildhall.
But, the Remembrancer continues, the City also relies on a charter granted by Edward III in 1341—and that may be the charter referred to by the noble Lord, Lord Jenkin—
"which provides a general power for the City to take corrective action".
That charter is cited in Acts of Common Council, though not in the preamble to this Bill. It is said to have been confirmed by Parliament in 1377 and, if that is so, why is the Act of 1377 not cited as the authority, and
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why has it not been incorporated in a consolidation Bill since then? Or is it argued that the charter of 1341 remains in force as part of the law of the land?
The Committee took the view that both the number of wards and the number of ward representatives should be reduced. There are 25 wards, each represented by one alderman and between four and 12 councillors, There is also an unspecified number of co-opted members, though no doubt the number must have appeared in previous legislation. The Corporation has the power to reduce the number of representatives per ward, but only Parliament can reduce the number of wards. The Corporation indicated its intention to undertake a boundary review and the Committee observed that the opinion of the Boundary Commission for England might be sought on the matter.
The Corporation has reviewed the boundaries of two wards, Aldersgate and Cripplegate, and it was done with the benefit of advice from the Boundary Commission. The number of councillors has been reduced to 112 and there has been an undertaking by the promoters—and I would be grateful if the Minister could confirm it—that the number will he brought down to 100 by the time the Bill comes into effect.
The Corporation has also improved the arrangements for consultation with residents and has reserved seats on the main committees for resident members. It is good that so much has been done ex gratia, but it would have been better if these concessions had been embodied in the Bill. As the noble Lord explained, the Bill has taken a long time to get this far, but perhaps that has provided a useful incentive to the Corporation to get on with some of the reforms which were suggested by the committee in another place. Will it go further and is there any intention ultimately to reduce the number of councillors to correspond with the major local authorities, including the London boroughs, which surround the City?
Has the Corportion explicitly rejected the proposal that the number of wards should be reduced, as suggested by the Committee and, if so, can the noble Lord tell us on what grounds? Does it consider that the aldermen should continue indefinitely? They are appointed automatically as JPs and, as explained, they also act as governors and trustees of schools, hospitals and charitable bodies with ancient City connections. I have no doubt that this is valuable work on behalf of the community. But it is not obvious to me that they are functions which require the holding of elected office. At present, the Lord Mayor has to be an alderman, but if aldermen were abolished, then he or she could be elected by the Common Council.
It was suggested by the honourable Member for the Cities of London and Westminster, when asked about aldermen at Second Reading in another place, that there were historic reasons for the retention of the office; that it was a matter of tradition, the Royal Commission of 1960, and the decision by Parliament to exempt the City when aldermen were abolished everywhere else in the 1970s. He did not attempt to

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demonstrate that none of their functions could be performed by councillors, or by nominees in the case of the other offices mentioned. If in a particular case someone doing those tasks would be a useful member of a committee then, as I have already mentioned, there is a power of co-option, which is already used extensively.
The promoters have not sought to defend the power of veto which was formerly exercisable by the aldermen against elected councillors. I gather, and the noble Lord confirmed it, that there has been an undertaking that the power will not be used again in the future. Again, would it not have been preferable if this concession had been embodied in the present Bill?
The Bill itself deals only with the franchise in elections to the Common Council. It was a pity that these wider issues were not covered. An undertaking was given by the Corporation that it would report on further reforms proposed by the committee within five years, of which three have already elapsed. It would be good if the noble Lord could tell us the time scale of that report.
However, by focusing narrowly on the electoral roll, the promoters in some ways made life more difficult for themselves because the discussion centred entirely on the existence of the business vote and its extension by 39,000 votes under these proposals, apparently swamping the 8,000 residential voters. I say "apparently" because, as explained by the promoters, the residential and business votes are concentrated in separate wards so that the number of councillors elected by the vastly increased business vote would still be the same. It was said that their equity had been watered down, so to speak.
If I may say so, that was being a little economical with the truth. The noble Lord, Lord Jenkin, was not entirely accurate when he said that the ratios between the business and residential vote had been maintained. It would only be fair to acknowledge that the promoters responded to the views expressed in another place and by the London Labour Party in making the business vote dependent on the number of employees rather than the rateable value, as in the original draft of the Bill. They also excluded the government and bodies exercising statutory powers from the businesses which were entitled to vote. Those amendments came at the end of consideration of the Bill in another place, which is another reason for being fairly relaxed about the long, drawn-out proceedings which, as the noble Lord explained, have taken three-and-a-half years so far.
The honourable Member for the Cities of London and Westminster said that the residents were entirely happy with the proposals in the Bill. They are apparently content to see the percentage of their vote considerably reduced, as shown by the Corporation's conclusions on the review of ward boundaries. I shall give the figures for the two wards which have already been reviewed. In Aldersgate, the effect of the boundary changes together with the extension of the business vote as now proposed in the Bill, is to reduce the residents from 91.9 per cent of the total to 72.8 per
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cent. In Cripplegate the residents are down from 88.1 per cent to 77 per cent. So the ratios are not maintained, as the noble Lord claimed, even though in these two wards the residents still have quite a substantial majority.
In the wards adjacent—Farringdon Within, Farringdon Without, Coleman Street, Bassishaw and Cheap—residents were already greatly outnumbered by the business voters and after this Bill they will be in an even smaller minority. In no case dealt with under the review is the balance of power between the residents and business voters altered by the new franchise. Only seven out of the 25 wards have been effectively reviewed by being next door to the two which have been completed. That leaves another 18 wards which still have to be reviewed. Can the noble Lord say why all the wards were not reviewed at the same time instead of stringing out the process over several years? Has he any timetable for the rest of the process or do we have to rely on the original undertaking given in May 1999 to complete the review in not more than six years? Will the Corporation undertake to follow any advice given by the Boundary Commission in the remainder of the process and, if not, has it any proposals on how any differences of opinion between itself and the Boundary Commission are to be resolved?
The wards reviewed so far contain 4,614 voters out of a total of 5,700 on the list for 2001–02. If one considers the remaining wards, only two have a resident vote of more than 100 and in the other 16 there is a total of 269 residents who are already heavily outnumbered by the business vote in those wards. In Portsoken and Queenhithe, however, if the boundaries remain unchanged the residents will find themselves in a minority. The Corporation gave an undertaking that,
"The boundaries of the four residential wards will be adjusted to preserve the residential character of those wards prior to the introduction of the new arrangements".
I should be grateful if the noble Lord can confirm that in Portsoken and Queenhithe there will be majorities of residential voters after the boundary changes.
The petitioners have a number of other points which they wish to raise going beyond the Long Title of the Bill. One is greater transparency as regards City cash. It will be for the Select Committee to decide whether to give the latitude to do that. There is one matter on which I believe they are entitled to a better answer than they have been given so far and the noble Lord. Lord Jenkin, touched on it. It is the assertion that the Bill contravenes Article 3 of the First Protocol of the European Convention on Human Rights, which provides that elections must be held,
"under conditions which will ensure the free expression of the opinion of the people".
One of the petitioners wrote to Ms Jean Corston, MP, the chair of the Joint Select Committee on Human Rights, asking her to elucidate the opinion of the Committee expressed in its 14th report of March 2002, that the Bill does not raise significant human rights questions. There is no indication in that report that the Committee heard arguments on the point

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raised by the petitioner. Your Lordships' Standing Order 38·3 requires the promoter to include a statement of compatibility with convention rights and Standing Order 98A requires a Minister to report on the statement by depositing a statement of his own in the Private Bill Office immediately after First Reading. That has been done, as the noble Lord, Lord Jenkin, explained. But the Minister's statement did not endorse the view of the promoters. He said,
"I believe the promoters have undertaken a full assessment of the compatibility of their proposals with the European Convention on Human Rights and I see no need to dispute their conclusions.
The statement does not say that he, the Minister himself, has made any assessment of compatibility. But surely the corollary of these new procedures, which your Lordships agreed last year, and which came into effect in November 2001, is that if challenged with an assertion of incompatibility with particular articles of the Convention or Protocol, the promoter should then have a duty to respond so that the challenge and the response can be considered together by the Select Committee.
I hope that your Lordships will agree that there is enough substance in this Bill to have made it worth a Second Reading debate, which would not have occurred if I had not put my name down to speak on it. Another place, in its wisdom, has approved the doubling of the business vote in the City, albeit on the basis of a more rational franchise based on the number of workers in qualifying bodies, and with undertakings on the balance of voting strength between residential and business voters. It is not for us to embark on a fundamental review of the powers and composition of the City Corporation, although your Lordships may think that in the longer term, if Parliament is being drastically reformed, the City cannot remain immune from scrutiny. What we can do is to provide a further opportunity for considering matters that have admittedly been canvassed at some length in another place, but where they generated rather more heat than light. I hope that we have been able to do that this afternoon.
5.1 p.m.
Lord Jenkin of Roding: My Lords, I am sure that the whole House will be grateful to the noble Lord, Lord Avebury, for the careful consideration that he has given to the Bill in which he has raised points, some of which he frankly admitted had been raised in another place. I tried to deal with some of them in my opening speech but some, clearly, I must do my best to answer.
The legislative powers of the City have a longstanding history. They go back to the charter to which the noble Lord referred. As far as I am aware, no one has ever sought to challenge the common council's right to, as it were, make its own laws within the ambit of that charter. Of course, some things require an Act of Parliament. We have an Act of Parliament before us as the voting system could not be changed under the charter powers. However, the ward boundaries can be changed. That has happened on a number of occasions in the past, notably after the bombing of World War
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II when it became necessary to change the ward boundaries so as to have some reasonable basis for voting.
I find it difficult to agree with the noble Lord's complaint that matters which can be dealt with outside the Bill ought to have been dealt with in the Bill. It seems to me that if any subordinate authority has powers to deal with certain matters, one does not need to put them in a Bill. I sought to explain—I did not leave it out—that the whole question of boundary reviews and other matters are being dealt with in accordance with the procedures. As regards the boundary reviews, there is a committee of review which consists of senior members of the judiciary and the town clerk. They report to the common council. That is what happened as regards the first two reviews to which the noble Lord made reference, although common council made minor changes. Those boundary changes are now settled.
As regards the timetable for the remaining matters, I cannot give an undertaking on that, but no doubt it can be explored if the Bill proceeds to Committee stage. I believe that there was some confusion between the number of voters and the number of common councillors that they represent. I deal, first, with the number of common councillors. Clear undertakings have been given that the number will be reduced. There were 130—more even than the City of Birmingham! It is widely recognised that that is too many. As I say, a clear undertaking has been given that the number will be progressively reduced. However, as your Lordships will know, reducing the size of an elected assembly is not an easy matter, or, if I may say so, reducing the size of an unelected one. The matter will take time but it is clearly on track. The noble Lord mentioned a figure of 100 by the time the Bill becomes law. That is certainly a target that the City Corporation wishes to reach.
As regards the number of electors, there will be a dilution of the number of residential electors. However, as I made clear in my opening remarks, one of the purposes of the realignment of the ward boundaries is to make sure that, despite the dilution of the residential voters by the addition of the large number of what I might call broadly business voters—the people appointed under the procedure that I described—the number of common councillors who will be elected as the result of the residential voters will be approximately the same proportion as they are now. That is the intention. It will have to be approximate because one cannot determine these matters mathematically and precisely and, of course, they change.
As regards aldermen, the noble Lord said that the matter of the abolition of the veto should have been in the Bill. However, that has already been clone. As it has been done under the City Corporation's own powers, there would be no purpose whatever in putting it in the Bill. I hope that, on reflection, the noble Lord might be prepared to accept that.
On the question of reporting, I draw the noble Lord's attention to Clause 7 which requires the Corporation to submit a report to the Secretary of

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State on the working of the provisions of the Bill and enables the Secretary of State to call for further such reports to be presented to Parliament.
Lord Avebury: My Lords, I am grateful to the noble Lord for giving way. I refer to a report on the set of reforms that were undertaken voluntarily by the Corporation that are outside the scope of the Bill and which are listed in the appendix to the full report on the ward boundaries. That report was supposed to be received within six years of the original undertaking. Can the noble Lord give us some good news about accelerating the report which is to be made under that heading?
Lord Jenkin of Roding: My Lords, at this stage I must disappoint the noble Lord. I do not think that I can give him that information. However, if your Lordships agree to a Second Reading, the Bill will proceed to Committee stage and it would seem to me an admirable point for the Committee to want to probe.
I drew the noble Lord's attention to what is in the Bill as regards reporting to Parliament. As regards human rights, if I may say so, I think that the noble Lord was straining at a gnat. I said that the noble and learned Lord, Lord Falconer of Thoroton, had endorsed the view of the promoters that the Bill complies with the European Convention on Human Rights. As the noble Lord, Lord Avebury, said, the noble and learned Lord said that he saw no need to dispute the conclusions of the promoters. I say with the greatest respect that I think that that is as good an endorsement as one would get. There was a great deal of discussion in the other place on the human rights aspect, as my noble friend Lord Brooke will confirm. The statement of the noble and learned Lord, Lord Falconer, was issued after the Bill reached this House, as is required by our Standing Orders.
I hope that I have gone some way to answer the questions posed by the noble Lord, Lord Avebury. I sense that the House may be anxious to proceed with the rest of the business on the Order Paper. Therefore, I shall sit down.
On Question, Bill read a second time, and committed to a Select Committee.

National Health Service Reform and Health Care Professions Bill
5.8 p.m.
Lord Hunt of Kings Heath: My Lords, I beg to move that the Commons reasons and amendments be now considered.
Moved, That the Commons reasons and amendments be now considered.—(Lord Hunt of Kings Heath.)
On Question, Motion agreed to.

COMMONS REASONS FOR DISAGREEING TO CERTAIN LORDS AMENDMENTS, COMMONS AMENDMENTS IN LIEU OF LORDS AMENDMENTS AND AMENDMENT MOVED IN CONSIDERATION OF COMMONS REASONS AND AMENDMENTS
[The page and line refer to HL Bill 44 as first printed for the Lords.]

LORDS AMENDMENT
2 After clause 2, insert the following new clause—
"Duty of Primary Care Trusts, NHS trusts and Strategic Health Authorities regarding education, training and research
Primary Care Trusts, NHS trusts and Strategic Health Authorities shall have a duty to safeguard and promote education, training and research"
The Commons disagreed to this amendment for the following reason
2A Because the law already provides adequately for education, training and research.
Lord Hunt of Kings Heath: My Lords, I beg to move that the House do not insist on their Amendment No. 2 to which the Commons have disagreed for their reason numbered 2A.
During the passage of the Bill through this House we had some important debates on the whole issue of education, training and research in the NHS in England and Wales. I want to assure noble Lords that the points raised in those debates have been taken very seriously indeed by the Government and that we are exercised to ensure that the NHS, universities, the DfES and HEFC all play their part in ensuring that those issues are dealt with satisfactorily and that there is a co-ordinated response across all those sectors.
During earlier debate, I informed the House of a number of pieces of work that we have put in train which I believe indicate the importance we attach to these matters. We have reviewed the range of existing national liaison arrangements between the Department of Health, the Department for Education and Skills and a range of organisations in the independent sector. We have done so with a view to recasting them into more effective and efficient strategic partnerships to bring together the multi-professional wider health system and broader education and research agendas. We are therefore providing the practical support the modernisation programme requires.
Officials in both my department and the Department for Education and Skills are now drawing up proposals which would see a new national framework, with senior representations from both departments, to ensure effective joint working to take forward the education, research and service agendas and to take an overview of the interplay between them.
Progress has already been made and I am very pleased that it was possible for the Department of Health to agree "a strategic alliance" with the Higher Education Funding Council for England. This alliance, which covers learning, teaching and research, builds on the early alliance between the department and HEFCE on research. A notable feature is that it will cover both health and social care. The alliance will provide a framework of partnerships with higher

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education at national level, facilitating the establishment of local health and education sector partnerships. These partnership arrangements will promote delivery of NHS planned commitments on workforce development.
We have already instigated further work to ensure the success of the medical school expansion. The Department of Health and HEFCE have established a joint group to oversee the implementation of that expansion. The group will include the chair of the General Medical Council's education committee within its membership. Part of the group's remit will be to monitor recruitment to posts needed to facilitate the expansion of medical students. It will identify other issues related to the expansion and recommend appropriate action.
While this group will look at medical schools specifically, I want to emphasise to noble Lords that we recognise the shared interest in monitoring the situation for all teaching academics and the adequacy of the supply of all health professionals and we will ensure that this is not overshadowed.
We have also agreed that one of the seven non-executive members for each strategic health authority will be from an institution within the higher education sector responsible for delivery of pre-registration education in medicine, dentistry, pharmacy, nursing or other allied health profession. The NHS Appointments Commission will interview candidates and the candidate who best meets the requirements of the post will be appointed. It is anticipated that these measures will result in a mixture of representation from medical schools and, I stress, other institutions within the relevant university. This will ensure appropriate expertise is available to the strategic health authority sector as a whole.
As far as the legislative framework is concerned, I believe that what we have in place meets the concerns of noble Lords. I do not accept that adding the suggested duty would of itself ensure that education, training and research are taken more seriously than is already the case. Moreover, the duty would be difficult to define and it would be even more difficult to define what a breach of that duty would be. Surely, the creation of a statutory duty must be sufficiently precise for those who must discharge the duty to know exactly what they must do and what action or inaction will amount to a breach of that duty. Without such precision a statutory duty has no teeth. It is for those reasons that I do not believe there is a place for the duty on the face of the legislation.
There is a further important reason why the amendment relating to Welsh NHS organisations is inappropriate. The Bill establishes local health boards in Wales and provides enabling powers for the National Assembly to decide how they should function. It is surely wrong in principle that we should seek to fetter the Assembly's deliberations by being prescriptive in this one area.
Much of our debate, though I accept not exclusively, was about the role of primary care trusts. They will take on all their functions under Shifting the Balance
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of Power by next April. Additionally, 30 primary care trusts will have been designed as teaching primary care trusts, mainly in deprived and under-staffed areas, to provide teaching, research and clinical opportunities for primary and community care professionals to support and improve the delivery of services to local populations.
This is a very exciting development. Teaching primary care trusts will work alongside local universities to provide a learning environment for their own organisation and staff, as well as a local resource for the wider health community. These and other PCTs will have access to shared resources for research governance and management. A network of PCTs will be designated to maintain this capacity from 2003–4.
The national primary and care trust development programme has been established as part of a set of measures to ensure that these primary care trusts are fully equipped to take on their new functions. It has been recognised that, in addition to developing the general competencies of primary care trusts, more detailed work is required over a longer period on certain matters.
Noble Lords may well be aware that my right honourable friend the Minister for Health announced in another place that one of those subjects will be that of research, education and training issues affecting primary care trusts across the range of those functions. The aim will be to pull together a number of front-line primary care trusts and other key individuals and organisations to take their work forward. That will be a very important way of ensuring that PCTs discharge their functions in this area. There is no doubt that the debate in this House during the passage of the Bill was a very important element in informing the programme that we are now to take forward.
We are not talking just about the role of primary care trusts. Strategic health authorities have an important role to play too—that of creating a coherent strategic framework and of ensuring, through building, capacity and supporting performance improvements, that the primary care trusts are enabled to deliver their full range of responsibilities.
We believe that these changes will bring benefits to education, training and research in and for the NHS as well as to services for patients. We want to hear very much from the service about combining the NHS service commitment with academic duties. My right honourable friend the Minister for Health, with Mrs Margaret Hodge, the Minister of State for Lifelong Learning and Higher Education, will he meeting the chair of the BMA's medical academics staff committee on 26th June to discuss the impact of the research assessment exercise on the medical academic workforce.
I fully accept that we need to monitor the changes closely to ensure that there are no unintended consequences and that the arrangements we have put in place are bedding down well. Once primary care trusts are operating fully in their new, wider role and there is experience of how they work, the time will be right to begin a review of education, training and research in the NHS.

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I am therefore pleased to announce today that there will be a joint ministerial review of education, training and research in and for the National Health Service across England and Wales. The review will take into account the concerns expressed by noble Lords on these matters. I want to stress that it will cover the full range of health care professions and not just doctors. The review will look at, for example, how the new arrangements set out in Shifting the Balance of Power and those created by this Bill impact on the role of primary care trusts, NHS trusts and strategic health authorities in education, training and research across the whole of the NHS. The review will examine the partnerships between the new and existing NHS bodies and higher and further education to ensure that they continue to work well.
These issues are clearly also important in Wales. The review will come at a helpful time for informing the process of implementing local health boards in Wales. The Welsh Assembly has already shown its commitment to research through its research and development strategy, which is currently out to consultation. It seeks to put research and development on a firm footing and covers wider collaboration with trusts and local health groups. However, the review broadens the focus, and the Assembly will give full consideration to any proposals that go beyond those in the strategy. The review will also helpfully inform the development of the Assembly's strategy on continuing professional development in the NHS, which is due to be produced in 2004, and will take forward many of the issues around education, training, and research in the NHS in Wales.
I hope that I have demonstrated that the Government have listened most carefully to the arguments put forward by noble Lords throughout the passage of the Bill. I also hope that noble Lords will accept that the review I have announced this afternoon will be an excellent way in which to monitor and take forward further issues of concern over the next year or so. On that basis, I trust that the House will be able to accept the amendment that I have put forward.
Moved, That the House do not insist on their Amendment No. 2 to which the Commons have disagreed for their reason numbered 2A.—(Lord Hunt of Kings Heath.)
5.15 p.m.
Baroness Northoverrose to move, as an amendment to the Motion that the House do not insist on their Amendment No. 2 to which the Commons have disagreed for their reason numbered 2A, leave out "not".
The noble Baroness said: My Lords, as we have heard, this is a key issue for the future of the NHS. I have no hesitation at all in bringing this amendment back for your Lordships to reconsider. At Third Reading your Lordships approved this amendment, but it was then overturned in another place. The amendment would make it a duty for primary care
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trusts, hospital trusts and strategic health authorities to safeguard and promote education, training, and research.
As we have just heard, it was claimed in the other place that our amendment was unnecessary:
"Because the law already provides adequately for education, training and research".
We cannot agree that the amendment is not necessary. During our debates in this House we heard about the problems that such areas already encounter, many of which were mentioned by the Minister. With the reorganisations proposed in the Bill and the devolution to primary care level, such problems could become more acute. That is why we put forward the amendment in the first place; that is why we are moving it again today.
As we heard at early stages of the Bill's proceedings, PCTs can support education, training and research; but they do not have to, except in a few exceptional circumstances. The view was also expressed by the Minister that dedicated funding streams would be safe. He stated that he did not believe that primary care trusts would be under pressure to spend that money for other purposes. However, during earlier debates, we learnt that that has already happened. Therefore, our task is to ensure that research, education and training are protected and encouraged when PCTs come to set their budgets.
At earlier stages, we and others expressed acute worries about these areas. Since the passage of the original amendment in this House, I am glad to see that the Government have made some welcome moves. The Minister was kind enough to write to me on the subject, and he expanded on that this afternoon. His proposal is that there should be a ministerial review of the arrangements for education, training and research in and for the NHS. In his first letter on the subject, the Minister stated that the review should take place once PCTs have had a chance to take on their full range of functions and the new system had bedded down. If the review highlighted areas of concern, he stated:
"We would consider preparing guidance and, should it prove necessary, issue directions to PCTs and/or other NHS bodies".
I explained to the Minister in my reply to that letter that I remain concerned on a number of points. I expressed surprise that departmental officials and lawyers felt, as he indicated—and, indeed, indicated again today—that they would have difficulty defining the duty to support research, training and education and, consequently, a breach of such a duty. I pointed out that in the secondary sector there is now a research and development structure with monitoring mechanisms, targets and accountability. Therefore, there should be no reason why a similar structure should not exist in primary care. This could be of utmost importance for the furthering of public health, given that the majority of health problems are contained in primary care, although some may progress to secondary care. The Secretary of State also has such a duty. So it is definable, even though it may not be working as effectively as we would all like to see.

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I also noted that the Minister's proposed review would take place only at some unspecified time in the future. There was no indication of who might be involved in the review, whether it would be independent, whether it would include experts, or whether it would be made public in any way; neither was it spelt out as to how Parliament was to discover the nature of its conclusions. It also seemed as if it would be a one-off process, rather than providing more constant audit.
I was also most concerned that setting new arrangements for PCTs in place under the Bill, without building in the protection that we have been seeking, would mean that patterns would develop, which, as time went on, would become more difficult to change. It clearly needs to be part of the culture of the NHS that support for research, training and education is built in at every level. This was highlighted on Tuesday of this week in relation to the Question tabled by my noble friend Lord Clement-Jones about medical education—the problem of trying to increase the number of doctors when at the same time we are losing clinical academics hand over fist. Now is simply not the time to trust to things working out without strong mechanisms being in place to ensure that they do.
I gather that the Minister proposes that the terms of reference for the review should be set by the end of this year, and that it should begin work early in 2003. I remain concerned about the time-scale. I am anxious to hear what the Minister has to say in that respect, given the problems that already exist in these areas. I should also like to be assured that such a review will address some of the key issues involved. Will the review examine whether adequate facilities are available for these areas? Will it examine whether those working in these areas will have protected time and not, for example, be expected to work 80 hours a week in order to be both a clinician and a researcher or teacher? Will it look at whether the money for these areas is adequately ring-fenced, given the fact that we already see devices such as service charges, money being siphoned off, and money from foundations being siphoned oil'? Above all, will the review report to Parliament? Will we be able to see what its conclusions are?
We know that there is a tension between the need to deliver a service both rapidly and effectively and the need to look long term. We know that there is a tension between the need to meet the budget this year and the need to plan for the long term. The latter is already apparent in the NHS. We need to build into the new arrangements protection for the long term, not simply delivery in the short term. That we why we have such concerns.
As Professor Peter Lachmann of the Academy of Medical Sciences puts it:
"At a time when there is an urgent need to secure more service provision there is obviously a temptation to concentrate all resources on that need. While this is entirely understandable, it is an example of 'burning the furniture to heat the house'. If British medicine is, in the longer term, to provide a high-quality service to its patients, then a high level of teaching and research must be preserved".
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That is surely exactly right and it is what the amendment is about. I beg to move.
Moved, as an amendment to the Motion that the House do not insist on their Amendment No. 2 to which the Commons have disagreed for their reason numbered 2A, leave out "not".—(Baroness Northover.)
5.30 p.m.
Baroness Carnegy of Lour: My Lords., I listened with great interest to what the noble Baroness said. However, I say to her that, when we ask the Government to think again about something, I believe that we have a responsibility to listen carefully to the answer and, if, as individual Members of the House, we consider it to be satisfactory, to decide accordingly.
I believe that this issue requires to be raised and discussed. It was required of us to ask the Commons to think again. They have thought again The Government have said a number of things that they did not say previously. I was very interested to hear that they propose a review. I believe that the House has scored a bull's eye. Personally, I shall not be of a mind to vote against the Government on this occasion.
Baroness Noakes: My Lords, the other place rejected amendments which sought to insert new clauses after Clauses 4 and 6 because the law already provides adequately for education, training and research. I believe that that is disingenuous. The law does place a duty on the Secretary of State in relation to facilities for clinical teaching and research in connection with clinical medicine and clinical dentistry. That sounds rather good, but it suffers from serious weaknesses. It is phrased only in terms of clinical medicine and dentistry. But, of course, as we discussed earlier in this House, education, training and research goes far wider than that. Indeed, as the Minister agreed, it needs to cover the education, training and research for all other healthcare professional groups and, indeed, one might say, for every other significant group of staff in the NHS.
In another place it was said that that duty will be delegated to PCTs. But, of course, that is only part of the story. Unless the duty to safeguard and promote education, training and research is held at all levels, it will be ineffective. While, as has already been said, PCTs are enormously important for education, training and research in primary and community care and are also important if they commission services in the acute sector where teaching and research needs to be protected, that duty needs to go beyond PCTs.
The duty does not have an impact on strategic health authorities. Some of us are still bewildered as to what strategic health authorities will, in practice, do. Coherent strategic frameworks do not help some of us to understand that. But, in any event, we believe that they should have the same responsibilities as other parts of the NHS concerning a duty in relation to education, training and research. Of course, trusts also need a duty but at present they have only certain powers.

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Therefore, we have a duty which is imperfect in coverage and imperfect in reach and a patchwork of duties and powers which simply do not cover the whole territory. If we believed that this imperfect legal framework nevertheless caused no problems in practice, we should not be here this afternoon debating this clause. The plain fact is that there are problems in practice. During the passage of the Bill in your Lordships' House we heard from many noble Lords of the type of problem being encountered.
The Minister said that the duty is difficult to define. I find that argument very difficult to follow. The terms "education", "training" and "research" can bear their natural meaning. Of course, the Bill must be interpreted in the context of the NHS because that is what it relates to. The Department of Health will doubtless issue guidance on the practical implications of the existence of a duty. With the department's normal consultative processes, I am sure that ultimately that would not result in any problems so far as concerns a satisfactory understanding throughout the NHS of what such a duty meant and, therefore, what the breach of such a duty meant.
The Minister has sought to seduce us with the prospect of a ministerial review of education, training and research. That is a very interesting idea, although it falls short of the duty which the clauses addressed. We are pleased about the scope of the review in terms of covering all parts of the healthcare professions with regard to education, training and research. That is welcome. But before we on these Benches decide finally what to do about the Commons response to our new clauses, we should like to hear more from the Minister about the review. As the noble Baroness, Lady Northover, said, timing is clearly important. A start date of early 2003 does not sound particularly early. But, perhaps more importantly, when will the review be expected to end? Kicking something into the long grass is not an attractive alternative to our clauses.
Another issue concerns who is to be involved. The Minister talked of a ministerial review. It would be interesting to know which Minister will lead the review. Of course, noble Lords have a considerable respect for the Minister, and it would clearly be a bonus if he were to lead it. But, in addition to Ministers, can the noble Lord say who else is likely to be involved in the review and, in particular, which experts would be expected to work alongside Ministers?
Lastly, there is the question of reporting, which the noble Baroness, Lady Northover, also raised. I ask the Minister to give an assurance to the House that the outcome of the review will be published and, indeed, that the Government will be prepared to have the issues debated in your Lordships' House following publication of the review. I shall listen with keen interest to the response of the Minister.
Baroness Finlay of Llandaff: My Lords, under Section 51 of the National Health Service Act 1977, the
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Secretary of State does, indeed, have a duty to provide facilities for teaching and research. In his reply to the debate on the Bill on 16th May, the Minister reassured the House that powers exist to safeguard education, training and research. Today, the Minister has given most welcome reassurances and words of comfort. Those intentions are fully accepted and appreciated.
I am particularly heartened to have confirmation of the representation on the strategic health authority of someone from an undergraduate education institution concerned with healthcare professionals. I am heartened that the rolling-out of the medical student expansion programme will be monitored, and I am sure that the meeting with the BMA will be important. I have had a very warm meeting with Jane Hutt in Wales and was most reassured by that. She is certainly well appraised of the challenges that exist in education and research. With the reassurances following that meeting, I accept that it would be inappropriate to press for an amendment to appear on the face of the Bill in relation to Wales. However, it does not remove the need to ensure that a duty on those who provide and commission services is clearly spelled out.
The situation on the ground shows worrying trends. The chairman of the Council of Heads of Medical Schools, with whom I spoke today, remains concerned that primary care trusts will not appreciate the relevance of the wider education and research issues in relation to their functions, including primary care placements for medical and other healthcare professionals, the impact of their commissioning decisions on teaching and research in NHS trusts and primary care, and the growing importance of research in primary care for the future quality of healthcare overall.
On 16th May, the Minister reported his discussions with the Council of Heads of Medical Schools and explored ways of implementing and ensuring some of the changes that had been called for in this House. Some of those reassurances have been given in his reply today. However, the need still remains to ensure what safeguards are in place and how they will be audited. Questions have been asked by the noble Baronesses, Lady Northover and Lady Noakes, which I shall not reiterate. That must be attached to the concept of a ministerial review, which is welcome.
Many PCT public consultation documents contain nothing about education or research, suggesting that PCTs may not understand the importance of integrating clinical teaching and research activities, although such documents discussed in full clinical governance issues and therefore training issues. The Minister asked previously about definitions of "education" and "research". I suggest that in this context education is the process of acquiring the knowledge, skills, competencies and attitudes to enter the healthcare professions and therefore is different from training issues. Training issues are essential for the Government's agenda.
Professor Carol Black, president elect of the Royal College of Physicians, has a particular concern that the short-term service pressures and financial constraints

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risk decreasing the quality of care across the board as central forces to meet targets take priority over the research inquiry into and management of less common conditions. The pressures on trusts to deliver against targets are enormous.
Professor Thompson, Dean of Southampton Medical School, has become aware that in his area the trust does not even want the development of new clinical chairs using Higher Education Funding Council for England (HEFCE) funding because it might divert from the model of a district general hospital that the PCTs seem to want in bringing in complex, rare cases. It is possible that that attitude could completely stifle clinical academic development.
There is an underfunding of services by primary care trusts. That has been offset by the service increment for teaching (SIFT) and R&D inflation, which has been used to fund the clinical expansion. The Council of Heads of Medical Schools has been concerned that new and untried systems could refocus the primary care trusts towards a strategy of viewing teaching hospitals as district general hospitals rather than as centres of excellence, although I fully accept the reassurances given today by the Minister about teaching primary care trusts and how those will differ from other primary care trusts.
Research has been shown to have a direct and immediate benefit on the NHS. Current examples include the M RC acute back pain study, which showed that exercise is more effective than rest. The cost savings can be measured in man hours at work, decreased direct and indirect or secondary complication costs, and savings for society overall. Some research findings, such as day case surgery, have been widely implemented.
However, to reach undergraduates it is essential that facilities are available. The erosion is subtle. Education facilities in many district general hospital wards have now been taken for clinical usage needs, such as offices. The new Wythenshawe Hospital provides excellent facilities in its PFI building but is, by common consent, already too small and the academic block is certainly smaller than was wanted. There are similar problems in Manchester in securing a research place in psychiatry. Although there is a good intention, that has never been confirmed in writing because of the pressures which the mental health trust is under.
Professor Anne Louise Kinmonth, professor of general practice in Cambridge, stated that the systems are untried. The educational budgets to which the Minister referred are being brought together under the workforce confederation, which will hold the margin between education, staff development, service and the systems to research developments. The previous service increment for teaching money will be incorporated in a consolidated budget. I ask the Minister how the accountability will be monitored to ensure that the duty of the Secretary of State under the 1977 Act is fulfilled.
The research and education outcomes provide perverse incentives for clinical academia. The need to have high ratings of 5 or 5⋆ to maintain income have
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meant that research pressures take priority over teaching, yet if the ratings are down and academics are lost, the very people who are required to do the teaching are lost to the system.
Thus, the duty on the face of the Bill will ensure that the current duty of the Secretary of State is devolved out to the primary care trusts, NHS trusts and strategic health authorities, where the commissioning decisions are taken. Such an amendment is entirely consistent with the tenor of government policy and with the accountability recommendations of Follett and, indeed, is completely compatible with the reassurances given today by the Minister.
5.45 p.m.
Lord Turnberg: My Lords, while I strongly support the amendment proposed by the noble Baroness, Lady Northover—how could I not support it—it is the case that the Secretary of State already has a duty to protect teaching and research in the NHS. It is also the case that teaching and research are not simply the responsibility of PCTs and strategic health authorities. Universities, funding councils, research funding bodies and charities play dominant roles but inevitably so much of teaching and research goes on within the NHS and by NHS staff that they must play a part in protecting those vital roles.
The Government are unwilling to see that responsibility reiterated on the face of the Bill, which I understand. It is good to hear that the Minister is unequivocal in making clear that all parts of the NHS have not only a responsibility to their patients now but also a responsibility to teach and train future staff and to promote research on which so much of the treatment of future patients depends.
I was delighted to hear about the ministerial review. That is a tremendous response. I hope that there is not a hint of procrastination here because there is a degree of urgency. New medical students will appear in October. Medical schools are at present suffering problems concerning redundant staff. That paradox of more students and fewer staff is one which needs urgent attention. Those are not the direct responsibilities of PCTs or strategic health authorities but part of a much wider picture. I hope that the ministerial review will in practice cover rather more than the elements we are discussing in this amendment.
Lord Hunt of Kings Heath:: My Lords, I am grateful to all noble Lords who have contributed to the debate and for the recognition that the Government have indeed listened to the points raised throughout the passage of the Bill. I want to make clear that we all have a common interest here. Teaching and research is important not just in its own right but is essential if the NHS is to receive the increase in staff it requires in the many professions covered by that heading and is important to the NHS as a whole and to the United Kingdom as a whole.
It is essential that we have a strong science base, a strong teaching base and a strong research base. The Department of Health has much wider responsibilities

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than simply the well-being of the National Health Service. It is in the interests of my department, just as it is in the interests of the Department for Education and Skills, to ensure that this works effectively and well. There is no argument between myself and other noble Lords on these matters.
I have already stated—my noble friend Lord Turnberg put it very well—why the Government do not consider that the legislative option is the appropriate or workable option. Certainly, that was the view of the other place when it considered the Lords amendments on the Bill. I believe that the key question is whether we have the mechanism in place to ensure that, first, there is a strong partnership between my department, the DfES and HEFCE to ensure that we have a grip on these issues at national level, and secondly, whether we have a performance management system within the NHS to ensure that the duties are carried out effectively at local level. I believe that my earlier points point to the fact that we have the mechanisms available at national level. Secondly, through the performance management regime, we can ensure that the relevant partnership between the NHS and universities is effective at local level. But I do not underestimate the importance of the review that I have announced today. It will be a very important review.
I shall now attempt to answer the specific questions put to me about the review. It will be administered by officials from the departments concerned—the Department of Health, the Department for Education and Skills, and, most importantly, the Wales Office and the National Assembly for Wales. Ministers from each department will oversee it. I can confirm that all other key stakeholders will be offered the opportunity to contribute. I shall encourage consultation with those whose interests are most closely concerned, including experts in the field of health, education and research, to ensure that the review is properly informed and that it covers the range of healthcare professions and not just doctors.
In response to the point raised by the noble Baroness, Lady Northover, while the review will have a defined end point—it is important that all reviews have a defined end point—it may be a recommendation of the review that further ongoing or periodic reviews should be carried out.
I anticipate that the review will start early next year. I understand the points made about timing. I recognise that there is a need to get on with the matter. Equally, there is an argument for allowing PCTs to bed down for some time. I fully accept that we have said that the issue is not solely confined to PCTs. When we first debated it, we debated long and hard about the role of primary care trusts. I have listened carefully to the points raised this afternoon. I am prepared to say that rather than set the terms of reference by the end of the year, I shall try to ensure that they are agreed in the autumn, and that the review should start as soon as possible after that.
The original intent was for the review's findings to be published by 2004. I am keen not to be pressed to give an exact date and time. But in the light of
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everything that I have heard today, I shall seek to ensure that the review completes its first period of work some time in 2003.
Copies of the report from the review will be made available in the Libraries of both Houses. As noble Lords will know, it is not in the gift of the Government to decide what we debate in your Lordships' House. That is a matter for the usual channels. However, I would very much welcome a debate and shall try and ensure that one takes place.
If the review finds areas of concern, one option would be for guidance to be given to primary care trusts, strategic health authorities and NHS trusts wherever necessary—I am sure that that applies also for the Welsh Assemblyx2014;and, if necessary, the issuing of directions. Later in the year we shall make a further announcement about the review.
So far as concerns the specific issues raised by the noble Baroness, Lady Northover, we can pick up the issue of ring-fencing, money for education and Ramp;D, although money for education, training and research in the NHS is already ring-fenced in central budgets and allocated for those purposes. I understand that she will say that there are some other issues here. Of course the review will be able to look at them.
In relation to the issue of protected time, I am well aware of the pressure and tension between clinical academics, whose responsibility on the one hand is to the NHS and on the other within universities, where both are being pressured to do everything they can. In terms of funding—because that is very important to that element—we are developing a funding formula for NHS Ramp;D. That will provide elements of funding in proportion to the time commitment of research-active staff. That will clearly make matters much more transparent and will help to deal with the issue of protected time. I shall go further and say that the review will have the core objective of considering whether the right balance is being struck between care for NHS patients, research and teaching. That surely goes to the core of many of the concerns expressed today.
I hope that in the light of what I have said the noble Baroness will feel able to withdraw her amendment. The Government have moved a long way and I hope that that will be recognised.
Baroness Northover: My Lords, I thank the Minister for that reply. I thank noble Lords for their participation in today's debate and in previous debates on the Bill. It has been striking how concern over this issue has crossed party lines and has come from all parts of the House. I am very grateful for the expert reports offered from within the House.
I am glad that the Government have responded as they have. They clearly recognise how important this issue is and that all is not well. Therefore, a review is required and these matters must be closely examined. I am pleased that the noble Baroness, Lady Carnegy, who is not in her place at the moment, thinks that we have scored a bull's-eye. Obviously, if we have—I trust

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that we have—that owes much to everyone in this House. Of course I shall follow the noble Baroness's advice.
We welcome the Government's moves, but we are very much going on trust. We trust that the review will be rapid. I am happy to see that there are moves to try to speed that up. It must be thorough, probing and long-sighted in its deliberations. I was glad to hear that some of my concerns have been explicitly addressed. The point about ring-fencing is something that we have addressed. I know that much funding is supposed to go to education and research. We have heard about how it does not always work out that way. I am pleased that the idea of protected time for research and training will be addressed.
I am happy that the review's conclusions will be made public. That is extremely important. Therefore, we can all take forward these issues and make sure that the identified problems will be addressed. We shall continue to watch what is happening. It will be a while before the review starts and there are some pressing problems now. I hope that we can work together to try to take things forward. In that spirit, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Motion agreed to.

LORDS AMENDMENT
4 After clause 6, insert the following new clause—
"Duty of Local Health and NHS trusts regarding education, training and research in Wales
Local Health Boards and NHS trusts, and those commissioning specialist services on behalf of the National Assembly for Wales, shall have a duty to safeguard and promote education, training and research."
The Commons disagreed to this amendment for the following reason
4A Beause the law already provides adequately for education, training research.
Lord Hunt of Kings Heath: My Lords, I beg to move that the House do not insist on their Amendment No. 4 to which the Commons have disagreed for their reason numbered 4A.
Moved. That the House do not insist on their Amendment No. 4 to which the Commons have disagreed for their reason numbered 4A.—(Lord Hunt of Kings Heat.)
On Question, Motion agreed to.

LORDS AMENDMENTS
6 Before Clause 16, insert the following new clause—
"Establishment of Patients' Councils
(1) The Secretary of State shall, subject to subsection (2), establish a body to be known as a Patients' Council ("Council") in England in each area for which an overview and scrutiny committee has been established under section 7 of the Health and Social Care Act 2001 (c. 15) (functions of overview and scrutiny committees).
(2) Each Council shall comprise members of the relevant Primary Care Trust Patients, Forums and NHS trust Patients' Forums operating in that area and representatives from the relevant community interest groups.
(3) Where it appears to the Secretary of State that there is a need to establish a Council for an area other than that represented by a local authority with overview and scrutiny functions, he shall, after local consultation, establish a Council for such other area as appears to him will meet the needs of the local community.
(4) The functions of a Council are to represent the interests in the health service of the public in its district and in particular to—

(a) facilitate the co-ordination of the activities of member Patients' Forums including by the provision of staff and services to Patients, Forums,

(b) provide or make arrangements for the provision of services under section 19A of the National Health Service Act 1977 (c. 49) (independent advocacy services) at the direction of the Commission for Patient and Public Involvement in Health,

(c) represent to persons and bodies which exercise functions in its area (including in particular the overview and scrutiny committees and the joint overview and scrutiny committees referred to in sections 7 (functions of overview and scrutiny committees), 8 (joint overview and scrutiny committees etc) and 10 (application to the City of London) of the Health and Social Care Act 2001 (c. 15)) the views of members of the public in its area about matters affecting their health, and

(d) advise the bodies mentioned in subsection (5) on involvement of the public in its area in consultations or processes leading (or potentially leading) to decisions by those bodies or the formulation of policies by them, which would or might affect (whether directly or not) the health of those members of the public, monitor the effectiveness of this involvement and co-operate with the Commission for Patient and Public Involvement in Health in carrying out this function.

(5) The decisions in question at subsection (4)(d) are those made by—

(a) health service bodies,

(b) other public bodies, and

(c) others providing services to the public or a section of the public.

(6) The Secretary of State shall, following consultation with the Association of Community Health Councils for England and Wales, Community Health Councils, patients' and carers' organisations and the wider community, by regulation make provision in relation to Councils and in particular provide as to—

(a) the Patients' Forums and other community interest groups from which members of the Council are to be appointed,

(b) any qualification or disqualification from membership,

(c) terms of appointment,

(d) the proceedings of a Council,

(e) the discharge of any functions of a Council by a committee of the Council or by a joint committee appointed with another Council,

(f) the circumstances m which Councils will co-operate with each other in the exercise of their functions and exercise functions jointly with one or more other Councils,

(g) funding of Councils and the provision of staff, premises and other facilities,

(h) the preparation and publication by a Council of annual accounts,

(i) the provision of information (including descriptions of information which are or are not to be provided) to a Council by an NHS trust, a Primary Care Trust, a Strategic Health Authority, the Commission for Patient and Public Involvement in Health, the relevant local authorities or a person providing independent advocacy services (within the meaning given by section I 9A of the National Health Service Act 1977),

(j) the provision of information by a Council to another person,

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(k) the preparation and publication of reports by Councils,

(l) the furnishing and publication by NHS trusts, Primary Care Trusts, Strategic Health Authorities and overview and scrutiny committees of comments on reports or recommendations of Councils, and

(m) the referral of matters of a prescribed description to any overview and scrutiny committee, the relevant Strategic Health Authority, the Commission for Patient and Public Involvement in Health or the Secretary of State for Health.

(7) The regulations shall include provision applying or corresponding to any provision of Part 5A of the Local Government Act 1972 (c. 70) (access to meetings and documents).
(8) In section 21(10) of the Local Government Act 2000 (c. 22) (overview and scrutiny committees) after "members of the authority" there shall be inserted "and shall include a person appointed by the relevant Patients' Council".
(9) In paragraph 1 of Schedule 5 to the National Health Service Act 1977 (c. 49), as amended by the Health Authorities Act 1995 (c. 17), after sub-paragraph (c) there is inserted—
(d) persons appointed by the relevant Patients' Councils."."
7 Clause 18, page 23, line 16, after "premises" insert "and"
8 Page 23, line 17, leave out "and staff'
9 Page 23, line 26, after "by" insert "a Patients 'Council"
10 Page 23, line 38, after "by" insert "Patients' Councils,"
11 Page 24, line II, after "Forum" insert ", a Patients' Council"
12 Page 24, line 15, after "15" insert "and a Patients' Council established under section(Establishment of Patients' Councils)"
13 Clause 19, page 24 line 34, after "Forums" insert "and Patients' Councils"
14 Page 24, line 43, leave out paragraph (g) and insert—
"(g) co-ordinating and supporting the activities of Patients, Councils in respect of their activities as provided for in section (Establishment of Patients' Councils),"
15 Page 25, line 6, at end insert "and to co-ordinate and support the activities of Patients' Councils in respect of activities provided for in subsection (4)(d) of subsection (Establishment of Patients' Councils)"
16 Page 25, line 27, at end insert—
"( ) The Commission will provide to Patients' Councils services, including staff and other facilities, to support those bodies in the exercise of their functions,"
The Commons disagreed to the Lords amendments but propose the following amendments in lieu:
16A Page 20, line 38, at end insert—
"( ) The members of each Patients' Forum are to be appointed by the Commission for Patient and Public Involvement in Health."
16B Page 20, line 40, after "the" insert "range and"
16C Page 20, line 42 leave out "services" and insert "matters"
16D Page 20, line 45 after first "to" insert "the range and operation or'
16E Page 21. line 10, after "view" insert "(a)"
16F Page 21. line 11, at end insertx2014;
"(b) should be brought to the attention of the Commission for Patient and Public Involvement in Health it may refer that matter to the Commission."
16G Page 21, line II, at end insert—
"( ) Subsection (4) does not prejudice the power of a Patients' Forum to make such other representations or referrals as it thinks fit, to such persons or bodies as it thinks fit. about matters arising in the course of its exercising its functions."
16H Page 21, leave out lines 12 and 13 and insert—
"(5) Patients' Forums must in prescribed circumstances—
161 Page 21, line 44, at end insert the following new clause—
"Additional functions of PCT Patients, Forums
(1) A Patients' Forum established for a Primary Care Trust (a "PCT Patients' Forum") has the following additional functions—

(a) providing independent advocacy services to persons in the Trust's am or persons to whom services have been provided by, or under arrangements with, the Trust,

(b) making available to patients and their carers advice and information about the making of complaints in relation to services provided by or under arrangements with the Trust, and

(c) representing to persons and bodies which exercise functions in relation to the area of the Trust (including, in particular, any relevant overview and scrutiny committee) the views of members of the public in the Trust's area about matters affecting their health.

(2) In subsection (1), references to services have the meaning given by section 15(6).
(3) It is also the function of a PC7 Patients' Forum—

(a) to promote the involvement of members of the public in the area of the Trust in consultations or processes leading (or potentially leading) to decisions by those mentioned in subsection (4), or the formulation of policies by them which would or might affect (whether directly or not) the health of those members of the public,

(b) to make available advice and information to such members of the public about such involvement,

(c) to advise those mentioned in subsection (4) about how to encourage such involvement (including, in the case of bodies mentioned in subsection (4) to which section 11 of the Health and Social Care Act 2001 (c. 15) applies, advising them how to comply with the requirements of that section in relation to the area of the Primary Care Trust), and

(d) to monitor how successful those mentioned in subsection

(4) are at achieving such involvement.
(4) Those referred to in subsection (3) are—

(a) Strategic Health Authorities whose areas include any part of the area of the Primary Care Trust,

(b) the Primary Care Trust itself,

(c) NHS trusts which provide services to patients in the area of the Primary" Care Trust.

(d) other public bodies, and

(e) others providing services to the public or a section of the public.

(5) In section 12 of the Health and Social Care Act 2001 (c. 15) (which inserts anew section 19A concerning independent advocacy services into the 1977 Act), in that new section 19A, after subsection (6) there is inserted—
"(7) The Secretary of State may direct a Patients' Forum established for a Primary Care Trust to exercise any of his functions under this section so far as they relate to independent advocacy services provided to persons in the area of the Primary Care Trust or persons to whom services have been provided by, or under arrangements with, the Trust; and if he does so—

(a) the functions of that Patients' Forum are to be taken to include those functions, but

(b) the Patients' Forum may not make any arrangements with itself under this section."

(6) In this section—
"carer" and "patient" have the same meaning as in section 15,
"independent advocacy services" means services provided under section 19A of the 1977 Act (independent advocacy services),
"relevant overview and scrutiny committee" has the same meaning as in section 15."
16,1 Page 24, line 5, at end insert—
"( ) The regulations must also secure that the members of a Patients' Forum established for a Primary Care Trust also include—

(a) at least one member of the Patients' Forum established for each NHS trust all or most of whose hospitals, establishments and facilities are situated in the area of the Primary Care Trust and

(b) if it appears to the Commission for Patient and Public Involvement in Health that there is a body which represents members of the public in the Primary Care Trust's area in matters relating to their health, at least one person who is a member or representative of that body (or, if there is more than one such body, of any of those bodies)."

16K Page 24, line 20, at end insert "(in addition to its function of appointing members of Patients' Forums)"
16L Page 24, line 34, after "providing" insert "staff to Patients, Forums established for Primary Care Trusts, and advice and"
16M Page 24, line 42 leave out "and"
16N Page 24, line 42, at end insert ", and making recommendations to them about how to improve their performance against those standards"
160 Page 24, line 43, leave out paragraph (g)
16P Page 25, line 10, at end insert—
"( ) It is also the function of the Commission

(a) to review the annual reports of Patients, Forums made under section 17, and

(b) to make, to the Secretary of State or to such other persons or bodies as the Commission thinks fit such reports or recommendations as the Commission thinks fit concerning any matters arising from those annual reports."

16Q Page 25, line 11, leave out subsection (5)
16R Page 25, line 37, leave out subsection (12)
Lord Hunt of Kings Heath: My Lords, I beg to move that the House do not insist on their Amendments Nos. 6 to 16 to which the Commons have disagreed and do agree with the Commons in their Amendments Nos. 16A to 16R in lieu thereof.
We are coming to the end of what has been a long and interesting journey to strengthen patient and public involvement in the health service. From the NHS Plan, published in July 2000, through to the Health and Social Care Act 2001 and now to the Bill, we have reached a position that I can truly describe as one that is as good as it gets.
My ministerial colleagues and I—and our officials—have been in discussion with many stakeholders during the past year and a half to ensure that we develop the best possible set of arrangements. At the end of the day, that has been an extremely constructive process. Although we have not agreed with all of the views expressed to us, all have played a part in fine-tuning the system that we now put before your Lordships.
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Patients councils were, I think, the turning point. The patients council amendments voted into the Bill last month were not welcomed by the Government because of our concern that they would add another tier to the arrangements that we proposed. But the Government always said that much of the purpose of patients councils fits with our view of a strong and comprehensive public and patient involvement system. We have attempted to ensure that the system builds on the strengths of patients councils without weakening the overall structure.
The effect of Amendments Nos. 16A to 16R is to give to primary care trust patients forums the functions that we had previously envisaged for the local offices of the Commission for Patient and Public Involvement in Health. Essentially, that means that the commission will appoint staff to every primary care trust forum in England. On a day to day basis, the staff of the forum will of course be accountable to the members of the primary care trust forum.
That will ensure that a robust process is in place for the work of the staff to be informed by local people and that there is real accountability to local people. It will then be the job of the primary care trust forum to promote the involvement of the local community— in particular, disadvantaged patients and typically excluded groups—in local decision-making processes, and to promote the views of people in their area to local decision-makers and in particular to their local overview and scrutiny committee.
In addition—and this where the key strengths of patients councils have been picked up—the staff of the PCT forums will be able both to provide and to commission advocacy support. As commissioners, primary care trust forums will also be able to commission additional support as local needs determine—for example, specialist services such as bilingual advocacy. The intention is to enable primary care trust forums to be the core providers of independent advocacy services but to retain the flexibility to ensure a comprehensive service that fits local needs.
It will also be the responsibility of the primary care trust forum to act as a kind of one-stop shop for local people, providing them with advice and information about how they can get involved locally and how to make a complaint. The amendment is drafted in a way that enables the primary care trust forum to provide advice and information about making complaints about the services provided and practices and policies adopted by the NHS. They will also be responsible locally for monitoring the arrangements that local NHS bodies have in place to fulfil their duty to involve and make arrangements to consult the public about changes to services. We intend that duty to come into effect later this year.
We have also amended the composition of primary care trust patients forums. They will now include members of local interest groups that represent the public on issues that affect their health. An example may be a residents group concerned about the erect ion of a local mobile phone mast. They will also include a

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member of the NHS trust forums in their area so that there is an in-built mechanism for forums to share ideas and agree areas of mutual concern.
It is extremely significant that we are placing all of those responsibilities with the primary care trust patients forum. That means that we have shifted the power base of the new system for patient and public involvement to local communities. We will be removing the middle layer of our original proposals—the local office of the commission. However, we recognise that there needs to be a way for forums to come together across an agreed area. We have therefore strengthened the provisions in the Bill about the circumstances in which forums should work together. Those will be made explicit in secondary legislation.
I know that concern has been expressed about forums duplicating effort and resources. We intend to involve stakeholders fully in the development of the working arrangements for forums. We will encourage partnership arrangements to be developed whereby one primary care trust forum takes a lead on a specific issue; for example, the commissioning of specialist services that covers several primary care trusts, or the provision of independent advocacy services. Another example might be a primary care trust forum taking the lead in collecting and analysing the data relating to a specific cross-boundary scrutiny exercise being undertaken by a social service authority overview and scrutiny committee.
The important issue to stress is that those arrangements will need to be developed through effective communication and will result from the continuous development of partnership working right across the system. At national level, the commission will perform the critical role of developing best practice and providing resource material on how to ensure that effective practices and outcomes are achieved. It is important to remember that patients forums are independent bodies. I stress that to your Lordships. It will be up to forum members to decide the exact nature of their collaboration. The regulations to be prescribed will provide the structure for that collaboration and it will be vital that we test out real-life scenarios in the formulation of those regulations.
We are also amending the provisions that apply to both primary care trust and National Health Service trust patients forums. We are making it explicit in the Bill that patients forums will not only have a role in monitoring and reviewing services that a trust provides but will also be able to identify gaps in service provision and make reports and recommendations to trusts about them. Trusts will have to publish forum recommendations in their annual patients' prospectus, together with the action that they are to take as a result, further ensuring that forums have real influence.
We have also made explicit the width of the powers for forums to be able to refer matters not just to overview and scrutiny committees, as previous amendments provided, but also to the commission and indeed to any other person or body that the forums
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themselves deem appropriate. So we have taken away some of the functions envisaged for the commission at national level that would have been carried out in its local offices. We have also strengthened the functions that it will carry out at a national level.
On top of its job of setting and monitoring quality standards for all patients forums and providers of independent complaints advocacy, the commission will now also be able to make recommendations to them about how to improve their performance—a point that my noble friend Lord Harris has consistently raised during the passage not only of the Bill but of the Health and Social Care Act 2001. The important thing is that that will ensure that, wherever they are; the public and the NHS can be assured of consistently high standards for patients forums and providers of independent advocacy.
We have listened to parliamentarians and to stakeholders—in particular to the Association of Community Health Councils for England and Wales and community health councils—in relation to the often-cited need for a "casualty watch" exercise. My view, and that of the Government, is that the key thing about the commission's responsibility is that it should be able to undertake national reviews of patient experience data on issues that appear to it to be of national concern. That may include waiting in accident and emergency departments.
We propose an amendment to the commission's functions to provide for it to carry out a systematic review of the data contained in forums' annual reports and, on the basis of them, to identify what key issues warrant a national review. We wish the commission to facilitate the co-ordination of forum activity on a specific theme and then to make reports to the Secretary of State and any other person or body on the outcomes of such a review.
To summarise, in every NHS trust and primary care trust there will be a patient advice and liaison service ensuring that concerns are dealt with before they become a serious problem. There will also be a patients forum ensuring that locally the public have a vehicle to express their views about matters relating to health and that this will monitor and review local services. In every primary care trust forum there will be staff who will commission or provide independent support to help individuals to make a complaint, work to empower their local population to express their views about health issues that matter to them, and provide a one-stop service by providing advice and information to the public about public involvement and complaints processes.
Nationally, the Commission for Patient and Public Involvement in Health will set quality standards for the work of patients forums and independent advocacy, and performance manage them in relation to those standards. The commission will submit reports to the Secretary of State on how the whole patient and public involvement system is working. Alongside that we have the vital and important role of local authority overview and scrutiny committees.

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I have always said that, ultimately, the test of these proposals is whether they will work more effectively; whether they will give individual patients more clout than they have at the moment. I have no hesitation whatever in saying that the proposals before your Lordships' House today will do that. They have been enhanced and improved by our debates and I commend them to the House.
Moved, that the House do not insist on their Amendments Nos. 6 to 16 to which the Commons have disagreed and do agree with the Commons in their Amendments Nos. 16A to 16R in lieu thereof.—(Lord Hunt of Kings Heath.)
6.15 p.m.
Earl Howe: My Lords, this is the end of a long road. The destination we have reached is perhaps not the one that either the Minister or I expected we would arrive at when we started out on the Bill—or, indeed, the one that we anticipated before the last general election when we debated the earlier proposals set out in the Health and Social Care Bill.
We have before us an organisational structure for patient and public involvement that, happily, bears little relation to the one which the Government put before us only a few months ago. Those first proposals were, in my view, so very deficient, so very much weaker than the system that they purported to improve upon, that I had no hesitation in resisting them. We believed—and still do believe—that the Government were wrong to abandon so readily the model of community health councils. I make no apology at all for the position that we on these Benches took in arguing for their retention and reform.
Nevertheless, we are where we are, and I must now acknowledge that the Government have moved a considerable distance. The deficiencies and weaknesses that we identified in their original proposals were ones that we attempted to address in the amendments that were carried in your Lordships' House, creating patients councils.
It is worth reminding ourselves of what the original Bill gave us. It gave us a fragmented structure of patient representation, without a real voice, without proper independence and with a narrow remit and focus. It made no attempt to replicate the one-stop shop; it made no attempt to allow for a lay overview of the NHS in a geographic area; it created a national commission, but one with hardly any responsibility for real patient issues, only for issues relating to processes and structures. For my part, in the absence of CHCs, I should dearly have liked to have seen patients' councils become a reality because they have the potential for rectifying the vast majority of the failings that I have enumerated. I believe that the Government's objections to them are overdone and, in large measure, illusory.
Nevertheless, this House asked the other place to think again, and the other place has done so—not—simply by deleting our amendments but by inserting others in their place. The new amendments to which the Minister has spoken address a great many of the
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key points of principle that were previously at issue between us. I am delighted by that. I do not believe that having secured those points of principle it would be constructive for the House to cling doggedly to the concept of patients' councils and insist on our previous amendments.
This is not a debate about achieving the best structures; it is a debate about how we can enable patients and the public to have their views listened to and represented within the NHS. Any alternative to patients' councils needs to be judged against four key benchmarks: the level of independence enjoyed by the new bodies; their degree of integration; the extent to which they are community led and accountable; and whether they have a real measure of power.
The Government's new model, which is light years away from their first one, can probably be made to work satisfactorily. It is less elegant than CHCs or patients' councils—it will certainly he more expensive—but, importantly, the key principles for which we have been consistently pressing are there.
Having said that, and having made the boast that I understand these new proposals, there are a number of questions that I should be grateful if the Minister could answer. Some are of considerable importance for the way in which the new structures will work.
The first relates to the Commission for Patient and Public Involvement and its power to appoint members of patients forums. How long does the Minister estimate it will take to appoint the 7,500 or so members of patients forums? It will be a lengthy process. How much will the process of appointment cost? The Secretary of State retains a power of direction over the commission. Can the Minister give an indication of the kind of directions that are likely to be issued by the Secretary of State? I hope that he will not mind ii I say that the ability of the Department of Health to influence the way in which the commission performance manages patient and public involvement at ground level should be controlled—and controlled in a way such as to avoid direct interference or, indeed, gagging.
As to the statutory powers of the commission to initiate legal action where that is appropriate, will the commission definitely have the locus to take legal action, if it needs to, on local issues referred to it by patients forums?
I am delighted that patients forums will now have a power of referral to the commission. Can the Minister comment on the status of the patients forum non-executive director on a trust board where, let us suppose, a legal action is initiated against that trust by the commission? The director would find himself or herself with an immediate conflict of interests. How is that to be dealt with?
Another conflict would arise with confidential business. A patients forum non-executive director would not be able to report back to the patients forum on business that was confidential. CHC members who attend trust boards have the right to disclose confidential information obtained as speaking observers where the public interest favours disclosure.

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Am I correct in thinking that under these new arrangements this safety valve in terms of accountability will cease? The whole notion of patients forum non-executive directors raises, to my mind, quite serious difficulties relating to corporate responsibility and governance.
The government amendments extend the remit of patients forums to cover the whole range of health services, not only those being delivered by the trust. I welcome that. Can the Minister confirm that patients forums will now be a one-stop shop on all points of concern to the public and not only complaints? Does subsection (1)(b) of the proposed new clause in Amendment No. 161 provide a one-stop shop for any general concerns that the public might have—for example, on policy issues or contested reconfigurations, and not simply for complaints about local services?
I welcome the new power of patients forums to make representations and referrals as they think fit to whomsoever they think fit about matters arising in the course of their functions. Will the Minister confirm that patients forums will be able to make referrals on health inequalities as well as on straightforward service issues?
I note in passing that there is no obligation on any body, including the Secretary of State or an overview and scrutiny committee, to respond to a referral made to it. Can the Minister give any reassurance on that lacuna? I am sure that he recognises that accountability is a two-way street and that he wishes to see the process deliver such accountability.
Finally, perhaps I may ask the Minister about foundation trusts within the NHS. We are given to understand that foundation trusts may not be NHS trusts within the terms of the Bill. In view of that, what arrangements will they have for patient and public involvement, and how will this be performance managed to ensure consistency and equity?
The Secretary of State has been quoted as saying that he is looking at the potential for the direct election of patient representatives, implying that the system now under discussion will not necessarily apply to foundation trusts. How will their accountability to patients be guaranteed if they are outside the complex system of patient and public involvement that the Government are now setting up?
None of the changes made to the Bill will mean anything unless it is adequately resourced. Without an indication of the level of staffing and other resources, it is impossible to judge how robust the proposals really are. If the Minister cannot give an indication of that kind today, I hope that he can at least give an assurance that this point will be borne closely in mind during the current funding review.
It is probably right that we do not let this occasion pass without a mention of our old friend Mrs Archibald. In the absence of my noble friend Lady Cumberlege, who was the creator of this useful and ubiquitous lady, I believe we can say that Mrs Archibald will be better served by the revised
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arrangements for patient involvement than she would have been under the original Bill. They are clearer, and certainly less confusing, but most importantly they have the potential, if set up correctly, to be joined up. If that is a victory for this House—as I believe it is—it is also right for me to express my thanks to the Minister for his part in bringing these changes about. He has listened to our concerns, and the Bill is much the better for it.
Lord Clement-Jones: My Lords, I always like to think of this stage of the Bill as the "penalty shoot-out stage"— that is the analogy which seems appropriate in the current circumstances. I believe, like the noble Earl, Lord Howe, that a considerable victory has been achieved by local health campaigners, by ACHCEW and by CHCs in securing from the Government the considerable concessions that the Minister has put forward today.
It is worth reminding ourselves of the status of the proposals at the beginning of this process, some two years ago. The proposals had all the defects outlined by the noble Earl, Lord Howe. There was no national commission or national body at all. There were no proposals for an independent complaints advocacy service. Patients forums were not to be independent, but were to be supported by staff employed by the very trusts that they monitored.
During the passage of the NHS reform Bill, even as it stands, the following improvements have been secured. The independence of patients forums has been protected by channelling their funding through the commission as opposed to the trusts they monitor. Patients forums have been given the power to refer issues of concern to overview and scrutiny committees. They will be able to refer issues of concern to the commission. They will be able to make reports and representations to people and bodies as they see fit rather than being restricted. The range of issues which patients forums will monitor and report upon have been widened. They will also monitor how well NHS bodies involve patients and the public and will make recommendations.
A special role for PCT forums is now being proposed which has the potential to provide the integration for patients forums and the new overview and scrutiny which was previously lacking. Staff will be provided, and will be accountable to PCT forums at the local level rather than there being detached, staff-only groups with no local lines of accountability. I could continue. There have been a significant number of concessions. We have moved some distance since the early days of the first proposals almost two years ago.
There have been almost two years of wrangling, and the fundamentals of what it takes to have an effective patient voice—independent, community-based, with real accountability, integration and real powers—have finally emerged. By taking the approach that the Government tried to take, of imposing a model of patient involvement without involving patient representatives, the Government have, by their own failure to involve, demonstrated how essential proper

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dialogue is. The Secretary of State delivered his initial off-the-cuff diktat in the NHS Plan in July 2000, announcing the abolition of CHCs and their replacement with a string of fragmented talking-shops, each with its own incomprehensible set of initials—PALS, ILAFs, OSCs, etc. We have come some considerable distance.
Yet,ironically, we now know, despite the length of time that it has taken us to get there, as a result of the Wanless report, that the success and probably the survival of the NHS is dependent on,
"a dramatic improvement in public engagement … leading to a more effective partnership between the public and the healthcare system".
The report states that accountability is key to this:
"in devolving greater responsibility to the local level there must be strong arrangements for delivering high accountability",
making the NHS more responsive and ensuring the right balance between centrally set targets and sensitivity to local services. We now have a real chance of achieving that.
I fully support the noble Earl, Lord Howe, in the assurances that he sought. Before giving a final blessing to these proposals, there are further key issues on which the Government need to give assurances. First, as regards independence, given the crucial importance of strong local accountability in terms of the NHS, it is important to evaluate these latest plans for independence, without which there can be no real accountability. If questions are asked by an organisation of the NHS on behalf of patients, the answers will be credible and enhance accountability only if that organisation is, and is seen to be, independent.
There remains a real risk that patients forums will appear to be under the thumb of trust chief executives, who themselves will be under the thumb of the Secretary of State. There is a serious likelihood that patients forums will not be perceived as independent by the public, especially if they have an NHS-type name, an NHS location and a seat on the board of the organisation that they are supposed to be monitoring.
There is a danger in patients forums being based, for instance, in trust premises. Will the Government confirm that they will make use of the existing 184 CHC premises, many of which are in high street locations and have been refurbished in recent years? In London alone, some £2 million has been spent on refurbishing these offices. What will, for instance, the patients forum non-executive director do if his patients forum asks the commission to take legal action against his trust as a last resort when its actions are unlawful? There needs to be some separation.
As regards the name, of course, that is a valuable sign of independence. I know that the Minister is a keen reader of the Health Service Journal. I wonder whether he has seen the suggestion by Dr Richard Taylor in this week's edition. He suggests what I think is a very sensible name for the new forums. After all, let us face it, "PCTPF", if spelt out, would be a very long name. Dr Richard Taylor proposed the term
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"citizens health councils", which seems an admirable suggestion. It should certainly be considered by the Minister.
I turn to continuity. In bringing into existence the new structures, CHC staff and members can provide continuity. I very much hope that the Minister will give an assurance that there will be a fair and open appointments process for both staff and members and that every effort will be made to make use of existing skills and commitment in the new structures.
As for transitional provisions, what will happen to consultations which are ongoing at the date of abolition and to complaints for which assistance is being provided by a CHC at that date?
On configuration, there is the issue of and concern about the lack of coterminosity between overview and scrutiny and the new PCT patients forums. As well as agreeing to "take a lead" on certain issues on behalf of other PCT forums in an area—the model that the Minister outlined—another option would he for patients forums to exercise their overarching functions jointly in relation to, for example, a base for staff to support all the forums and do outreach work; the provision and commissioning of ICAS; and overseeing commissioning and public health issues. This would allow individual PCT forums to get on with the monitoring of individual PCTs' services in the same way that patients forums do for other trusts, a role which might otherwise be diluted by the other functions of PCT forums. It might also help to avoid some of the conflicts of interest that these arrangements will create.
Mr David Lammy, the new Minister, was kind enough to write to my honourable friend Dr Evan Harris setting out some of the assurances which my honourable friend sought on the new amendments. In his letter, the Minister said that there is a duty on NHS bodies to consult OSCs on substantial variations and developments. As I understand it, however, that is dependent on regulations being made to define what those services are. I certainly have not had any draft regulations. I should therefore be grateful if, in his reply, the Minister will clarify the status and ambit of those regulations.
Ministers have been uncharacteristically coy in discussing what resources will be available for the new patient and public involvement structure. We are continuously told that we must await the outcome of the spending review. However, we have been waiting two years for these sets of proposals. Ministers must have an idea of the resources that will be required. How do we know that the resources allocated will be sufficient to fulfil the many and complex functions of the patients forums and the OSCs and so on? Having agreed these proposals in the other place and in this House, it would be extremely galling to find that the resources were not available to implement the model with which we were prepared to live.
There is a similarly vague approach to the funding of PALS. Some trusts are not establishing them at all this year for lack of funds. We certainly do not wish that to be mirrored in the funding for PCT patients forums.

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My final point is on the abolition of the Association of Community Health Councils for England and Wales. The Minister has given assurances that CHCs themselves will not be abolished until the new system is up and running, but it would be helpful if he could give an assurance on the future of ACHCEW itself. Will he confirm that ACHCEW will not be abolished ahead of CHC abolition? He might wish to argue that, once the new Commission for Patient and Public Involvement in Health has been appointed, there is no need for another national body. Clearly, however, ACHCEW needs to exist to represent and provide services to CHCs as long as they are in existence.
In many ways, we would have preferred to retain CHCs and the clarity of the structure of patients councils proposed in the original amendments. However, we believe that we have come as close as we possibly can to the model which we on these Benches proposed originally. Like the noble Earl, Lord Howe, we believe that, with the right assurance, this is a satisfactory and workable model. We will not stand in the way of the amendments proposed by the Government. I very much look forward to hearing the Minister's reply, and I thank him in advance for the flexibility displayed in this part of the Bill.
6.30 p.m.
Lord Harris of Haringey: My Lords, the noble Lord, Lord Clement-Jones, described this as the "penalty shoot-out stage" of legislation, but given that we will probably have no Divisions at all, I suspect that it is more like the golden goal. I think it was Harold Wilson who said that a week in politics is a long time, but it is now 98 weeks, I think, since the Government first said they wished to do away with CHCs. However, the proposals had been made before. The noble Lord, Lord Jenkin of Roding—who spoke earlier but has left the Chamber—made similar proposals 20 years earlier. They were strongly opposed, however, and ultimately dropped.
What is interesting about the process of the past 98 weeks is the extent to which the Government have shifted their position and listened to concerns about the original, cack-handed set of proposals. I am pleased that the Government have listened to the arguments which I advanced in the House on patients forums attached to PCTs. It is essential that the one-stop shop—which is what I think we are creating—should be seen as locality based rather than institution based. I am also pleased that we have had various assurances on the independence of both the membership and the staffing arrangements of patients forums. The Minister's comments today have reinforced that point.
An added bonus in the later arrangements is the way in which the advocacy arrangements have been much more clearly integrated into the new structure. I believe that the current proposals offer clarity at local level. Previously, there was no clarity over how individual members of the public would relate to the structure. The structure is now undeniably coherent.
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Given that neither clarity nor coherence was at all visible in earlier representations, that is clearly substantial progress.
It would be helpful, however, if my noble friend the Minister could give more indication of the resource levels that the Government think appropriate to make the new structure effective. It is possible, for example, that one isolated staff member from the Commission for Patient and Public Involvement in Health could wind up in a room dealing with individual patients forums for PCT areas. Such a structure would clearly not work and would represent less investment in the structure than is made now. What resource levels are envisaged? What resources do the Government think necessary to make the structure work? I appreciate that we are still awaiting the outcome of the spending review, but some guidance on the point would be very helpful.
Another matter that should have been dealt with in our many discussions—perhaps it was but I missed it—is a reassurance that patients forums will elect their own officers, such as their chairs and vice-chairs. It would be useful if my noble friend the Minister could confirm that those officials will be elected and not appointed by the commission. It would also be helpful if he could clarify at what stage the commission will be put in place, patients forums properly established and the appointments process started. We should like some idea of the timetable and how it relates to the winding down of CHCs and the association, which are currently withering on the vine, given that both staff and members are looking to the future and moving elsewhere. I hope that my noble friend can give some indication on those points.
I hope that all Members of your Lordships' House will agree that we now have a system which will act robustly in the interests of the public and patients. The Government have demonstrated a clear desire to listen to the arguments put forward on all sides of the House and outside Parliament.
Lord Rea: My Lords, I hope that my noble friend will clarify a point which might have been obvious if I had read every word spoken during the 90 weeks. I am a little uncertain about how the Commission for Patient and Public Involvement in Health will be chosen. Clause 19(1) states:
"There shall be a body corporate to be known as the Commission for Patient and Public Involvement in Health".
Nothing in the clause states how the commission is to be appointed. Perhaps I should know what a body corporate is and who chooses it but I am ignorant about it. The point applies not only to the main commission but also the subsidiary branches of the commission in local areas. I am concerned that if appointment lies in the hands of the Minister, the independence of the commission will be compromised. For instance, there is a rumour that one of the persons being considered as chairman of the commission is a senior officer in—
Lord Clement-Jones: My Lords, the noble Lord might find it useful to look at Schedule 6.
Lord Rea: My Lords, I thank the noble Lord. I should probably not have opened my mouth without doing so. I hope that the position is clear and that all other noble Lords are satisfied.
Lord Hunt of Kings Heath: My Lords, the intention is that the NHS Appointments Commission will undertake the appointments.
I am grateful for the contribution of all noble Lords. I listened with great interest to the interpretation that the noble Earl, Lord Howe, and the noble Lord, Lord Clement-Jones, put upon what has occurred between the introduction of the last Act and now. I do not share their view. I maintain that the principles before noble Lords today are wholly consistent with the principles enunciated in the Health and Social Care Act. Some of the practical effects of those principles have been tested and. I believe, improved upon by debates in this House and another place. I am grateful to all noble Lords for their constructive participation in those debates.
It was the suggestion of the noble Lord, Lord Harris of Haringey, in debate on Report on the role of primary care trust patient forums which unlocked the door to where we are today. I am grateful to him for that.
A number of questions were asked. I shall attempt to answer them as quickly as possible. The noble Earl, Lord Howe, asked how wide the remit was on making available advice and information on complaints about policies as well as services. In drafting the amendment we took on board comments from ACHCEW to ensure that those wider issues were encompassed. The critical element of the amendment is the making of complaints relating to services. It is drafted on the basis that that means advice and information on complaints in the wide sense that noble Lords indicated.
On the power of the commission to initiate legal proceedings, the commission will be a corporate body. It will have power to initiate legal proceedings in its own name.
On consultation, regulations will be made later in the year and consulted upon.
There is no question about the independence of the Commission for Patient and Public Involvement in Health. I made clear in my opening remarks that it will be able to undertake national reviews.
As I have said on a number of occasions, the direction-making powers are only in respect of functions that the commission carries out ancillary to its core functions. It is not a general direction-making power. It is a power to make the carrying out of ancillary actions subject to directions and is, therefore, of a limiting nature only. Concerns have been expressed about the independence of primary care trust patient forums. I have maintained that they will be wholly independent. They will not be under the thumb of the trust chief executives. Anyone who has discussed these matters with trust chief executives
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knows that they understand that we are putting a robust independent mechanism in the heart of the organisation for which they are responsible.
I did not understand the description of the noble Lord, Lord Clement-Jones, of chief executives being under the thumb of Ministers. The noble Lord will know that that is wholly in conflict with shifting the balance of power on the basis of which this Bill was brought before your Lordships' House. In my right honourable friend's subsequent speech, he spoke of the need for the department to withdraw from micro-management of the health service.
My only caveat is this. We have debated this week a number of issues on health and social care. I can think of four or five instances when, far from asking me to withdraw the thumb of control, the noble Lord, Lord Clement-Jones, has asked me to intervene much more. I am disappointed—
Lord Clement-Jones: My Lords, I take the Minister's jests as a total assurance about the independence of trust chief executives.
6.45 p.m.
Lord Hunt of Kings Heath: My Lords, trust chief executives are employed by their employing authorities, not the Secretary of State.
The noble Lord made a good remark with regard to accommodation for primary care trust forums. Of course we want them to be accessible. Primary care trusts might be placed in community hospitals or health centres. Using vacated CHC premises is also an excellent idea. I make the point that there are 184 CHCs. There will be many more primary care trust patient forums. That is one of the advantages of the changes we make.
The noble Earl, Lord Howe, asked about health inequalities. That is a focal point about the work of primary care trusts in their role of assessing health needs. The patient forums of those primary care trusts will be able to comment and to draw attention to issues of concern about that matter.
The noble Lord, Lord Clement-Jones, said that I was uncharacteristically coy about resources. I am always coy on the issue of resources. Although we have the headline figures for the health department on funding—they are for the next five years for the NHS and three years for social services—we are still deciding how that should be "divvied" up. I cannot go further tonight on how we shall fund patient and public involvement. However, I can repeat our stated intention and commitment that we shall ensure that the new arrangements are resourced so that they work successfully in practice.
I was asked about the timetable. The headquarters of the Commission for Patient and Public Involvement in Health will be established in January 2003. It will then appoint staff to each primary care trust patient forum area. It will then co-ordinate the appointment of patient forum members. I understand what the noble Earl says in relation to numbers. There is a

433
considerable number of people but we shall be assisted by the staff of the primary care trust patient forums at local level to speed that through.
The noble Baroness, Lady Hanham, is not in her place, but we debated a conflict of interest at great length. The point is that the patient forum member will be accountable to the whole board, as are other board members. We shall set out guidance that will help some of the issues that the noble Earl raised. At the end of the day, having been a local authority appointee to a health authority in the 1970s, I do not believe that they will be in a different position from those local authority members then, or university members now. I am sure that there will be tensions but we shall issue guidance to help to accommodate that.
On foundation trusts, it is too early to say how the patient public involvement issues will relate to them because we are still working on foundation trusts. The whole point about foundation trusts is to get greater public health involvement.
On the interesting suggestion that the noble Lord, Lord Clement-Jones, quoted from Dr Taylor—my favourite GP—of a citizens' health council, I have given it the seriousness that it warrants and I have to disappoint him. I believe that we have the correct title already. We have had a good debate and we have come to an acceptable conclusion. I hope that we can agree to the Commons amendments.
On Question, Motion agreed to.

Tax Credits Bill
6.52 p.m.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.
Clause 24 [Payments]:
Baroness Byfordmoved Amendment No. 88:
Page 18, line 6, at end insert ", provided that nothing in any such regulations shall exclude credit documents cashable at post offices unless the Board is reasonably satisfied that necessary facilities are in place for every claimant to receive payment by other prescribed means"
The noble Baroness said: My Lords, before speaking to Amendment No. 88, I declare an interest as patron of VERSA which has carried out a lot of work with post offices and particularly with small retail services. I receive no money. It is an educational charity that tries to help and to support small rural shops in rural areas.
In tabling this amendment I am trying to ensure that every claimant receives his or her money. My determination was further strengthened by today's Statement on Consignia. In Committee on 23rd May the Minister referred to the payment methods that the
434
Government expect to be put in place over the next couple of years. The most important aspect of the Bill from a tax credit client's point of view is access to one of the said methods and immediate access in time of need.
In Committee the Minister stressed that the Prime Minister and the Paymaster General are agreed that the requirement to receive payment electronically will cut in only when those facilities are in place. That confirmation was welcome. Additionally, I seek assurance that not only will the facilities be in place, but also that anyone requiring to use them will be able to do so. Also in Committee the Minister assured the noble Earl, Lord Russell, that,
"The point is that this will not come into place until the payment methods are available and appropriate".—[Official Report, 23/5/ 02; col. CWH 178.]
This Bill is concerned with introducing systems; I am concerned with enabling individuals, often at a time of great need, to gain access to their financial entitlement. So I take issue with the words "available" and "appropriate". The individual will need to access available facilities within a reasonable distance of his or her home. That applies particularly to the less well off in areas where public transport is often lacking or expensive. Will the Minister expand on how available the Government envisage those facilities will be? In considering the word "appropriate", I recall my English teacher banning the word from our essays on the ground that it is a catch-all word and effectively meaningless. Can the Minister explain the definition that she has in mind?
The purpose of Amendment No. 88 is to ensure that the board takes responsibility for ascertaining that the facilities necessary for each claimant to receive benefit are in place. It makes the point that every claimant shall be able to receive payment. The board has a duty of care and a responsibility to ensure that each claimant receives his or her money.
I turn to the availability and accessibility of post offices, the main way in which many receive their payments. My concerns grow. I begin to wonder whether anyone truly knows exactly how many post offices there are and where they are. Again on 23rd May the Minister said that,
"85 per cent of people in rural parishes live within two miles of a rural post office; the average distance is 1.23 miles".—[Official Report, 23/5/02; col. CWH 179.]
I do not doubt that, but I shall return to that point later. First, I ask the Minister to define "rural" in the context of the Bill. I understand that only two years ago the recognised figure was 6,000 inhabitants, but that was altered to 10,000 inhabitants. I believe that that is the current figure.
When assessing how far people live from a post office or a sub-post office, is a circle drawn on a map with a compass to indicate a mile, so that the distance is taken as the crow flies and not as one would walk or cycle, which could be quite different? I decided to pursue the matter further and to find out more.

435
The Countryside Agency in its 2002 report—just published—states that,
"one in every 15 rural households (6.5% of the rural population) are more than two kilometres from their nearest post office".
Some 546 rural post offices closed between 1997 and 2000. That reflected the decline at parish level in the availability of post offices from 57 per cent of parishes with a post office in 1997 to 54 per cent in 2000. A further 5 per cent of rural post offices closed in 2000–01.
I then turned to Consignia's figures from Post Office Limited, which state that the average distance to a post office in rural areas is 0.7 miles, with 84 per cent of the rural population living within one mile of a post office. I turned again. The Performance and Innovation Unit in 2000 gave yet different figures: 85 per cent of rural populations live within one mile of a post office and 99 per cent of rural populations live within three miles. I turned again. Postcomm 2001 statistics say that 93.7 per cent of households live within two kilometres of a post office in England and that 0.23 per cent live more than four kilometres away.
I am sure that noble Lords will be as confused as I am. It did not give me confidence in the current position. Additionally, the Consignia figures for the closures of post offices in rural areas for 2000 and 2001 combined come to some 929. The Postwatch figure is 809 for the same period, of which 80 per cent were in rural areas. At the very least there appears to be major confusion. One organisation states that there were 929 closures and another says 809. In one year, 120 post offices are either unaccounted for or accounted for in differing ways.
That is truly extraordinary, but in addition I was told the following story this afternoon. The village of Trull, pronounced "Trowel", in Somerset, is three and a half miles from Taunton. The national Post Office management, in encouraging urban postmasters to retire, asked Trull's postmaster to retire on the basis that it was one "urban post office too many". Despite protestations that he did not run an urban post office, it was many weeks before the Post Office manager came to visit him. On arrival at Trull's post office, he realised that it was indeed a rural, not urban, sub-post office.
I know that the Minister has not been involved in all the Statements on the Post Office, although she sat in on today's—I was glad she was here for it. However, she must appreciate that there is strong feeling in both this House and another place that it was iniquitous for the Government to put on the Post Office the cost of withdrawing the Horizon project, referred to by the noble Lord, Lord Dearing—who is not in his place—which meant that expenses of some £571 million were passed to it. The Government, in particular the Department of Social Security—as it was then—should have taken that cost on board.
If I have laboured the point, it is only to make the real point that where people are able to collect their credit from is important to them. The Minister has often implied that the matter is not her department's direct responsibility. I have to disagree with her. It is
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no use our bringing in new systems if the client cannot reasonably access that to which he is entitled. The Government must take some responsibility for their actions.
We live in an age where there have been many closures of post offices, banks and shops, which is as true of urban areas as it is of rural areas. The Government should understand and accept that many people are having to spend more of their benefits on the cost of travel to collect them. More often than not, those directly affected are the less well-off or the elderly.
I hope that the Minister will reflect on the feeling that I suspect will follow my introduction of Amendment No. 88. It is linked with Amendment No. 90 in the name of the noble Earl, Lord Russell, on which I hope to comment later when I have heard his contribution. Amendment No. 88 asks that,
"the Board is reasonably satisfied that necessary facilities are in place for every claimant to receive payment by other prescribed means".
I beg to move.
Earl Russell: My Lords, for the convenience of the House I shall say that, should the amendment he accepted, I shall not move Amendment No. 90. Amendment No. 90 goes slightly further than this amendment, but were I able to take one pound of flesh I would not be greedy and ask for two.
The amendment is a matter of belt and braces. Although I cannot use the memorable line of the noble Lord, Lord Briggs, that that is something of which I have some professional knowledge, it is a matter of which I have at least some amateur knowledge. It was painfully clear this afternoon that the decline and collapse of the Post Office is proceeding a great deal faster than some of us expected. In the nature of administrative matters, especially when information technology is involved, it is possible that the growth of the universal bank may correspondingly happen a great deal slower than people expected.
This is not a matter of the Minister's good faith. We totally accept the Minister's good faith, but she is not omnipotent. The world might in some respects be better if she were, and I do not say that often. But she cannot control the working of every information technology contract and the working of the global economy. She can express a firm intention that the universal bank will be in place in time for the Bill, but she cannot be certain that it will happen.
There are some among us who foresaw the comments passed on the Post Office today. The gentleman I used to know as my noble friend Lord Thurso, to whom I must now get used to referring as my honourable friend Mr Thurso, put out a press release on 31st January, which stated that,
"Postcomm's decision to open up the postal market to full competition by 2006 would signal the death knell for the Post Office unless urgent action is taken to safeguard the Universal Service Agreement".

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On 24th May, he pointed out that 2,000 Scottish households were ceasing to receive regular delivery. What is Scotland's case today may be England's tomorrow. The situation may become urgent at any moment.
However much the Minister says that it will be all right on the night—the motto of the noble Lord, Lord Peston—she cannot be certain that it is true. It is no good her saying that it will not be done until it is appropriate. When Mr Lennox-Boyd was Secretary of State for the Colonies, he once said that Cyprus would not be given independence until the appropriate moment. Aneurin Bevan pressed him hard as to what was the appropriate moment, and received the answer: "The appropriate moment is the appropriate moment".
Try as she would, I do not believe the Minister could say any more than that. This is a matter of people's lifelines. Plenty of people are already spending 10 per cent of their benefit on fares simply to collect it. There may soon be people with no opportunity at all to collect their benefit. I am not entering now into the argument about whether people should be disentitled to benefit, but they should not lose their benefit by accident. Do not die of ignorance; do not lose your benefit by accident. If the amendment is not carried, some people will.
The Earl of Northesk: My Lords, once again I pay tribute to my noble friend Lady Byford for her dogged persistence and sincerity in pursuing this issue. As she and the noble Earl, Lord Russell, have told us, today's Statement on Consignia has added to rather than dissipated nervousness. Of course the Minister will give her customary reassurances on that matter. That is all good and well. But it begs the question posed by the noble Earl, Lord Russell, in Grand Committee, as to why those reassurances cannot be written in the Bill. Their currency and quality are such that surely there is nothing to be lost and potentially much to be gained in doing so. In terms, that is what our amendment seeks to do.
A theme of our debates has been the desire for all sides of the House to persuade the Government to acknowledge that the Inland Revenue, in taking over a benefit function has, as my noble friend Lady Byford said, a duty of care to those entitled to claim tax credits. Part and parcel of that duty of care is to deliver payment of tax credit claims via mechanisms appropriate—I hesitate to use the word for fear of incurring the wrath of my noble friend's erstwhile English teacher—to the needs and circumstances of individual claimants. Contrary to the Minister's suggestion in Grand Committee, this is not about dictating where post offices should be located, but about ensuring that the system offers the right levels of choice to its customers.
Without wishing to labour the point, I repeat that this is wholly consistent with the Performance and Innovation Unit's report, Reforming our public
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services: Principles into practice. That document, wholeheartedly endorsed by the Prime Minister, states on page 8:
"Public services … have to be refocused round the needs of the patients, the pupils, the passengers and the general public rather than the problems of those who provide the services".
And on page 11 it states:
"The starting point must be that the public has a right to good quality education, to healthcare, to law and order, to local authority services,"—
and, the key point—
"to income support, and that it is the duty of the Government to secure these rights on their behalf".
The logical inference is that, as a necessary requirement of their duty of care to their tax credit customers, the Inland Revenue has a duty to secure the rights of individual claimants in ways that ensure that the level of service is focused on their needs. In other words, the amendment is wholly consistent with the policy initiative outlined by the Performance and Innovation Unit and endorsed so fulsomely by the Prime Minister. In such circumstances, I cannot resist suggesting that it would be somewhat strange were the Government to resist the amendment. For our part, we on these Benches support it wholeheartedly.
Baroness Hollis of Heigham: My Lords, I agree with the noble Earl, Lord Northesk, that this is not a debate about the location of post offices. The noble Baroness spent part of her speech on that issue but we are not dealing with it today.
The amendment seeks to ensure that payment facilities at post offices, wherever they may be located, are adequate and appropriate for clients. Ultimately, post offices survive because they are used. A statistic I have given the noble Baroness previously indicates that half the Post Offices which were closed last year were used, on average, by fewer than 70 people per week. One cannot expect any government department artificially to keep alive a post office for which there appears to be no local demand.
I am second to none in my respect for the noble Baroness in continuing to draw the matter to our attention. However, as the noble Earl, Lord Northesk, said, we are not debating that matter. We are debating the facilities at those post offices.
Earl Russell: My Lords, will the Minister tell us why 70 people starving because they cannot obtain benefits is less serious than 70 people dying in a train crash?
Baroness Hollis of Heigham: My Lords, no one has said anything about 70 people starving because they cannot obtain benefits. I said that in half of the post offices which were closed last year on average fewer than 70 people used them each week. Perhaps those people could have gone elsewhere and chose not to.
Given the cost of subsidy of rural post offices, the noble Earl will know that it would cost almost as much to send a car to take each individual user of the post office to the nearest town. Ultimately, post offices survive because they meet a demand and a need. If they

439
are not being used and supported by local communities, it is hard to expect government subsidies to keep them afloat at considerable cost.
I had hoped that today we could stay with the substance of the amendment—that is, the payment methods —and we seek to reassure your Lordships that with ACT we are widening the methods of payment. I hope that I shall be able further to reassure your Lordships that as a result of our policies and the commitments already given by the Prime Minister and the Government, claimants will be able to receive direct payments in cash by some means other than ACT if there is a delay before the proposed Post Office card account becomes available to clients who are unable to obtain a normal or new basic bank account with a high street bank.
Amendment No. 88 suggests that until suitable alternative payment mechanisms are available to all claimants the regulations should not prevent payment by some method of credit document cashable at the post office. I do not disagree with that. My question to the noble Baroness, Lady Byford, is: why do we need to place such a provision on the face of the Bill? It does nothing more than prevent us from ruling out forms of payment cashable at the post office until such time as other payment facilities are available to claimants. I agree with that, so the issue between us is how to give that assurance.
I ask the noble Baroness why she believes that the published draft regulations which she will have and which cover the matter precisely do not meet her concerns. I give way to the noble Baroness. Will she please tell me why the draft regulations do not meet her concerns? As I read them, they do precisely that and the only difference between us is whether the provisions should be contained in regulations or appear on the face of the Bill.
Baroness Byford: My Lords, I am grateful to the Minister for giving way. I have tried not to make today's debate a post offices issue but to highlight the difficult issue of where those people will go. The Minister said that half the people—
Baroness Hollis of Heigham: My Lords, this is not Committee stage. I asked the noble Baroness a specific question; I did not invite her to repeat her speech about the location of post offices. Why does she believe that the published draft regulations do not meet the proposal made in the amendment and that until adequate alternative facilities are in place people will not be able to obtain money by credit documents? Why does she believe that the regulations do not meet her concerns?
Baroness Byford: My Lords, I am grateful to the Minister. I tabled the amendment because I would rather see the provisions on the face of the Bill. I know that they are contained in regulations and I do not see
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why the Government are not willing to accept this sensible amendment and put them on the face of the Bill.
Baroness Hollis of Heigham: My Lords, am I therefore right to assume that the noble Baroness agrees that the issue is fully covered by the regulations and that we are merely arguing about its location?
Baroness Byford: My Lords, no, I do not believe that I am. Perhaps I may return to my original point, and I realise that we are not in Committee. I give way to the noble Earl.
Earl Russell: My Lords, does the noble Baroness agree that regulations, when they prove inconvenient to a government, can be revoked instantly but that repealing an Act takes some time?
Baroness Byford: My Lords, I am grateful to the noble Earl for that intervention. I have taken one or two Bills through the House and I reckon that a provision in regulations does not have the same implication as on the face of a Bill. The noble Earl has made my point.
Baroness Hollis of Heigham: My Lords, I suggest that this is not an issue for the face of the Bill. Regulation 12(iv) relates to methods of payment and when they are to commence. It states:
"This regulation does not have effect in relation to claims for a tax credit made before … 2003".
That is to be filled in when the regulations come before your Lordships' House and the other place in due course, as and when we are confident about the delivery outlets at local post offices. I believe that meets precisely the point which the noble Baroness is pursuing.
I do not want to argue the virtues of ACT over cash books, giros or order books. I suggest that the concerns of the noble Baroness are met in the regulations and the assurances given by the Paymaster General on 7th February 2002 in which he said that if accounts were not in place other methods would have to be found to ensure that the money reached the claimants. We have the power to deal with that.
I believe that the points raised in the amendment are fully addressed by the regulations and the assurance, and that the provisions should appropriately appear in regulations. It is not sensible to put such a level of detail on the face of the Bill. Provisions such as this have never appeared in any of the social security Bills I have handled and I do not believe this is the right time to start to try it.
We have been able to give assurances and there is no difference between us on policy. The only difference is where those assurances should be located—in regulations or on the face of the Bill. I hope that as a result of that the noble Baroness will feel able to withdraw her amendment.
Baroness Byford: My Lords, I have listened carefully to what the Minister has said and I understand where she is coming from. However, as she would not earlier allow me to expand the reason for my concern perhaps this is the moment for me to do so. The payment must be made somewhere. The crux of the matter is whether it is to be made at a post office or whether other arrangements are to be made. The Minister may well scratch her head and be very cross and irritated by me, but I believe that those 70 people need to know that they will be able to obtain their money from somewhere. I do not mind where it is, but nowhere in the Bill is such an assurance given.
Today's Statement on Consignia only goes to show how fragile the position is. We all wish Consignia well and hope that it recovers and strengthens. We hope that more people will use the post offices, but, as the Minister said, half of those which closed had fewer than 70 customers a week. Where are those people expected to go in order to make their claims and obtain their money? I have not received a satisfactory answer. I am happy to give way to the Minister again if she can define the position more clearly. No, I presume that she does not wish to do so.
Baroness Hollis of Heigham: My Lords, the reason I am not responding is that this is not a general debate on the future, location and services of post offices. I am trying to deal with an amendment at Report stage which relates to methods of payment at existing post offices. I have addressed my remarks to that and to the assurances on which the noble Baroness and the noble Earl have pressed me that we shall not go over to ACT across the board until we are confident that it is available to all who need to use it. What is more, the regulations go further. We say that in exceptional circumstances, even with ACT throughout the system, people will still be able to use other forms of access such as credit documents. That is what I am dealing with, the amendment on the Marshalled List—not with a Second Reading debate about post offices and their location. That is why I have not responded to the noble Baroness's point about distance, location, as the crow flies, rural density, size of catchment area and so on. Those are entirely proper issues for another debate.
Baroness Byford: My Lords, I thank the Minister. Sadly, she and I are obviously not going to have a meeting of minds. The issue is important and I care strongly about it. I do not mind if payment is not made at post offices, but I mind that we do not know how people are going to access their entitlement. I am very disappointed with the noble Baroness who is normally so conscientious. I seek to test the opinion of the House.
7.21 p.m.
On Question, Whether the said amendment (No.88) shall be agreed to?
Their Lordships divided: Contents, 70; Not-Contents, 92.

Division No. 1

CONTENTS

Addington, L.

Maginnis of Drumglass, L.

Alderdice, L.

Mancroft, L.

Allenby of Megiddo, V.

Mar and Kellie, E.

Barker, B.

Masham of Ilton, B.

Blackwell, L.

Mayhew of Twysden, L.

Bradshaw, L.

Monson, L.

Bridgeman, V.

Montrose, D.

Brooke of Sutton Mandeville, L.

Mowbray and Stourton, L.

Brookeborough, V.

Moynihan, L.

Brougham and Vaux, L.

Newby, L.

Byford, B.

Newton of Braintree, L.

Clement-Jones, L.

Nicholson of Winterbourne, B

Cope of Berkeley, L. [Teller]

Noakes, B.

Crathorne, L.

Northbrook, L.

Denham, L.

Northesk, E.

Dholakia, L.

Northover, B.

Dixon-Smith, L.

O'Cathain, B.

Elliott of Morpeth, L.

Oakeshott of Seagrove Bay, L.

Elton, L.

Park of Monmouth, B.

Glentoran, L.

Rawlings, B.

Goodhart, L.

Razzall, L.

Greaves, L.

Reay, L.

Hamwee, B.

Redesdale, L.

Harris of Richmond, B.

Rennard, L.

Higgins, L.

Rogan, L.

Hogg,B.

Roper, L.

Jenkin of Roding, L.

Russell, E. [Teller]

Kingsland, L.

Saatchi, L.

Laird, L.

Seccombe, B.

Lester of Herne Hill, L.

Sharp of Guildford, B.

Lyell, L.

Shutt of Greetland, L.

MacGregor of Pulham Market, L

Smith of Clifton, L.

MacLaurin of Knebworth, L.

Soulsby of Swaffham Prior, L.

Maddock, B.

Strathclyde, L.

Thomas of Walliswood, B.

Walmsley, B.

NOT-CONTENTS

Ahmed, L.

Gibson of Market Rasen, B.

Alli, L.

Gilbert, L.

Andrews, B.

Goldsmith, L.

Archer of Sandwell, L.

Gordon of Strathblane, L.

Ashton of Upholland, B.

Goudie, B.

Bach, L.

Gould of Potternewton, B.

Bassam of Brighton, L.

Grabiner, L.

Berkeley, L.

Graham of Edmonton, L.

Bernstein of Craigweil, L.

Grenfell, L.

Bhatia, L.

Grocott, L. [Teller]

Bragg, L.

Harris of Haringey, L.

Brennan, L.

Harrison, L.

Brooke of Alverthorpe, L.

Hayman, B.

Brookman, L.

Hilton of Eggardon, B.

Brooks of Tremorfa, L.

Hollis of Heigham, B.

Campbell-Savours, L.

Howells of St. Davids, B.

Carter, L.

Hughes of Woodside, L.

Christopher, L.

Hunt of Chesterton, L.

Clarke of Hampstead, L.

Hunt of Kings Heath, L.

Clinton-Davis, L.

Irvine of Lairg, L. (Lord)

Cohen of Pimlico, B.

Chancellor)

Crawley, B.

Janner of Braunstone, L.

David, B.

King of West Bromwich, L.

Davies of Oldham, L.

Lea of Crondall, L.

Desai, L.

Macdonald of Tradeston, L.

Donoughue, L.

McIntosh of Haringey, L.

Dormand of Easington, L.

[Teller]

Dubs, L.

McIntosh of Hudnall, B.

Elder, L.

MacKenzie of Culkein, L.

Falconer of Thoroton, L.

Mackenzie of Framwellgate, L.

Farrington of Ribbleton, B.

Massey of Darwen, B.

Fyfe of Fairfield, L.

Milner of Leeds, L.

Gale, B.

Morgan, L.

443

Morris of Aberavon, L.

Scotland of Asthal, B.

Morris of Manchester, L.

Sewel, L.

Nicol, B.

Simon, V.

Pendry, L.

Stone of Blackheath, L.

Peston, L.

Symons of Vemham Dean, B

Pitkeathley, B.

Temple-Morris, L.

Plant of Highfield, L.

Turner of Camden, B.

Prys-Davies. L.

Uddin, R

Puttnam, L.

Walker of Doncaster, L.

Ramsay of Cartvale, B.

Warwick of Undercliffe, B.

Rea, L.

Whitty, L.

Rogers of Riverside, L.

Wilkins, B.

Rooker, L.

Williams of Mostyn, L. (Lord Privy Seal)

Sawyer, L.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
7.31 p.m.
Baroness Hollis of Heigham: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, may I suggest that the Report stage begins again not before 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Regulatory Reform (Vaccine Damage Payments Act 1979) Order 2002
7.32 p.m.
Baroness Hollis of Heighamrose to move, That the draft regulatory reform order laid before the House on 29th April be approved [21st Report from the Regulatory Reform Committee].
The noble Baroness said: My Lords, I shall try to be extremely brief. It gives me great pleasure to move the draft Regulatory Reform (Vaccine Damage Payments Act 1979) Order 2002 which was laid before the House on 29th April and to ask your Lordships to approve it.
Approval of this order will mark the final stages of the improvements to the vaccine damage payments scheme announced at the end of the review of the scheme. We have increased the payment for new cases to £100,000 and we have made around 900 top-up payments of between £58,000 to £68,000 to past recipients at a cost of over £60 million.
If the order is approved, it will amend the Vaccine Damage Payments Act 1979 in two ways. It will extend the time limit for claiming a vaccine damage payment and reduce the degree of disability required to qualify for a payment so that more people will be eligible for it. It also makes arrangements for transitional claims.
I could extend my description of what these proposals do if your Lordships wish, but that may he enough. It is an entirely benign matter. As I say, it extends the time limit and it reduces the degree of disability down from 80 per cent to 60 per cent and makes appropriate transitional arrangements. If your Lordships are content with that information, I am happy to ask the House to approve the regulatory reform order.
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Moved, That the draft regulatory reform order laid before the House on 29th April be approved [21st Report from the Regulatory Reform Committee].—(Baroness Hollis of Heigham.)
Lord Clement-Jones: My Lords, it welcome the order. I wish to make a few points. It is interesting to note that two years have passed since we debated the contents of the order. Indeed, I believe that the Secretary of State made the original announcement on 27th June 2000. That announcement concerned the outcome of the review of the vaccine damage payments scheme which reported three years after the general election which brought in this Government. Therefore, five years after this Government came into power, these changes are finally being made. That does not diminish the importance of these amendments but it shows the time-scale involved which, I believe, is a regrettable one.
However, that said, I very much welcome the content of the order. I should like to ask the Minister about the retrospective nature of the order. Can those who fell outside the previous levels of disability now apply retrospectively? Will she explain the somewhat difficult terms in which the Deregulation and Regulatory Reform Committee of another place talked about applying the measure retrospectively in terms of whether or not people were 21 at the time of the original claim on the basis that that was outside the six-year time limit? I am sure that the Minister will be able to elucidate that point. Obviously, it is of great importance that people are able to claim retrospectively as far as possible. As I say, I welcome the order.
Lord Higgins: My Lords, the order before us has been studied by the Deregulation and Regulatory Reform Committee. I understand that that committee recommended various amendments to the drafting. Those amendments have been made. Therefore, from a technical point of view, I understand that the order is in good shape.
The order effectively does two things. It alters the time limit for claiming a vaccine damage payment and it reduces the degree of disability that is required. For those people who are unfortunate enough to be in a situation where they may need to claim, both those relaxations are clearly to be very much welcomed. We certainly welcome them.
I understand that the order allows for transitional claims to be considered from persons who had previously claimed unsuccessfully or who, in various specified circumstances, did not claim. It will put past claimants, or persons who might have claimed but were told that they would not succeed, in the same position as those who claim after the coming into force of the amendments to the Act made by the order. It seems to me that this is an entirely wise and benevolent measure. We on this side of the House certainly support it.
Baroness Hollis of Heigham: My Lords, I am grateful for the response of both noble Lords. The

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noble Lord, Lord Higgins, has, indeed, answered the first of the points raised by the noble Lord, Lord Clement-Jones; namely, that transitional claims will be entertained from people who have previously claimed unsuccessfully, possibly due to their degree of disability, or who have perhaps received wrongful advice that they should not claim.
As regards dates and ages, the Act will provide that a claim must be made before whichever is the later of, first, the date on which the disabled person attains the age of 21, or, where he or she has died, the date on which he would have attained the age of 21, or, secondly, the end of the period of six years beginning with the date of the vaccination to which the claim relates. That is a more generous provision than the six-year period that currently exists.
I hope that the noble Lord, Lord Clement-Jones, is content that the noble Lord, Lord Higgins, and I have between us answered his questions. I hope that the House is content to approve the order.
On Question, Motion agreed to.

European Union Extradition (Amendment) Regulations 2002
7.38 p.m.
The Minister of State, Home Office (Lord Falconer of Thoroton)rose to move, That the draft regulations laid before the House on 9th May be approved [30th Report from the Joint Committed].
The noble and learned Lord said: My Lords, the regulations before us today are needed in order to make minor amendments to the European Union Extradition Regulations 2002. Those earlier regulations gave effect to the 1995 Convention on Simplified Extradition procedures between member states of the European Union and the 1996 Convention relating to Extradition between Member States of the European Union. Both conventions were designed to speed up and simplify extradition between EU partners and required amendments to the Extradition Act 1989 for full implementation.
The original regulations received parliamentary approval on 19th December 2001 and came into force on 20th March this year. They were made under the provisions of Section 111 of the Anti-terrorism, Crime and Security Act and, therefore, these amendment regulations must be made under that same power.
The amendment regulations that I move today make two small changes to the original regulations. They are needed because there were two errors in the earlier regulations. The first of the two errors occurred in Schedule 9, paragraph 5 of the regulations, which introduced a new Section 14A to the 1989 Act. In new Section 14A(5), reference was made to,
"provision for a magistrate to order the committal for return of a person".
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In fact, the term "district judge" should have been used rather than "magistrate"; hence, we have Regulation 2(2) of these amendment regulations. The second mistake was that paragraph 10(4) from new Schedule 1 A to the Extradition Act 1989 modified the wrong section of the Act. This concerns speciality protection for fiscal offences, which are offences in connection with taxes, duties and Customs and Excise. Article 6 of the 1996 convention required that member states extradite for fiscal offences. Article 6(3) allowed states to say, if they chose, that they would restrict extradition for fiscal offences only to those in connection with excise, value-added tax and Customs. Two member states, Greece and Luxembourg, chose to do so.
Inadvertently the change that was made to a section of the 1989 Act was the one that affected incoming requests. The relevant subsections were both the subject of similar, complex amendments and similar in appearance even to experts, so this slipped by the busy proof-readers. Fortunately, no cases have been affected by this oversight but it is only right that the correction should be made to ensure that the extradition position process is as fast, fair and accurate as we can make it. Regulation 2(3) of this statutory instrument therefore omits the provision which was inserted in error, and Regulation 2(4) adds it to the correct provision, affecting outgoing requests.
I cannot believe that there is any controversy about this matter. I commend the regulations to the House. I beg to move.
Moved, That the draft regulations laid before the House on 9th May be approved [30th Report from the Joint Committee].—(Lord McIntosh of. Haringey.)
Lord Goodhart: My Lords, of course I do not intend to object in any way to the correction of mistakes, but I should draw the attention of the House to a concern of mine about what has happened here. These mistakes are in fact mistakes in primary legislation because the regulations that are being amended were regulations that exercised a Henry VIII power to amend primary legislation.
Obviously, everybody must be well aware that the standard of drafting in secondary legislation is not always as high as it is in the case of primary legislation, but it does seem to me that particular care is needed in the case of the exercise of a Henry VIII power. I wonder whether the noble and learned Lord the Minister can tell me whether it is the normal practice, when a Henry VIII power is being exercised, to ask parliamentary counsel, who are after all the guardians of primary legislation, to look at amendments before they go into formal regulations and, if not, whether it would not be a good idea for that to be done in the future.
Lord Dixon-Smith: My Lords, the noble and learned Lord will be relieved to hear that we do not find anything controversial about these regulations in themselves, but I feel it is necessary to echo the words

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of the noble Lord, Lord Goodhart, because what is controversial about them is that this is secondary legislation. We are correcting an error in secondary or primary legislation, whichever way you want to look at it, and that indicates that we need to be very much more careful how we set about these things in the first place. One would have to be immensely optimistic to believe that this will not happen again and one has to hope that on this occasion the regulations are correct.
We accept what the noble and learned Lord has said and we are happy to support the changes that he is putting forward.
Lord Falconer of Thoroton: My Lords, I thank both noble Lords for their support. They are correct when they say that, although amendments were made by secondary legislation, it was primary legislation that was being amended. It is therefore of very considerable importance that errors are not made. I deeply regret that the errors were made.
My understanding is that where primary legislation is involved parliamentary counsel drafts the provisions. Where it is secondary legislation, even though it may be amending primary legislation, it is drafted by the department but sent to parliamentary counsel to look at. But I shall write to both noble Lords in relation to that point. In answer to the question of the noble Lord, Lord Goodhart, it would have been seen by parliamentary counsel but perhaps on a different footing from the way it would have been dealt with had it been primary legislation. I very much take on board the point made by both noble Lords that one has to take as much care as one possibly can to avoid these sorts of mistakes being made.
On Question, Motion agreed to.

Criminal Defence Service (Representation Order Appeals) (Amendment) Regulations 2002
7.45 p.m.
Lord McIntosh of Haringeyrose to move, That the draft regulations laid before the House on 26th March be approved [25th Report from the Joint Committee].
The noble Lord said: My Lords, these amendments make two changes. The first is to change the time at which a representation order takes effect when the applicant has appealed against a refusal of funding. The second is a small group of technical amendments which are needed to support the bringing into the Criminal Defence Service of appeals from the Financial Services and Markets Tribunal.
First of all, on the timing point, at present when a defendant is refused a criminal representation order by a court he can appeal by making a fresh application to the same court. Regulation 6 of the CDS (General) (No.2 ) Regulations provides that a representation order takes effect from the date the court receives the fully completed application.
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Where the defendant has had to apply a second time, this means that his representation order takes effect only at the time he made the renewed application. This was not the position in the previous legal aid system. Regulation 44(7) of the Legal Aid in Criminal and Care Proceedings (General) Regulations 1989 allowed pre-grant costs to be paid where in the interests of justice work had to be done before representation had been granted.
Regulation 3 of this instrument amends the existing CDS (Representation Order Appeals) Regulations to restore that position. It provides that, where a second application has had to be made, any resulting representation order takes effect from the date the original application was received. This applies to all appeals in any court dealing with criminal matters.
I turn now to the financial services amendments. I would like to give some background on the procedure to which they relate. The Financial Services and Markets Tribunal was established on 30th November 2001 and deals with matters referred following a decision of the Financial Services Authority against an individual for market abuse. Applicants to the tribunal are helped by a legal assistance scheme which provides help for persons unable to afford the cost of legal advice and representation.
Appeals from the tribunal go to the Court of Appeal (Civil Division). However, the nature of the work—and in particular the fact that it can involve heavy fines—means that public funding has to be provided as if this were criminal work. This is to comply with our ECHR obligations.
At the moment, funding from the CDS is available only for cases in the Criminal Division. Parliament has already passed a number of regulations that remove this distinction and allow CDS funding to be used in either division, as appropriate. The amendments in Regulation 4 support this by making similar changes to the way appeals against a refusal of funding are dealt with. Specifically, they allow the necessary renewed application to be made to the head of the Civil Appeals Office, as with the original application.
A person appealing to the Court of Appeal will not be means tested. Funding will be subject to the interests of justice test. Again, as with other criminal representation, the court will be able to order defendants to repay some or all of the cost of their defence. I beg to move.
Moved, That the draft regulations laid before the House on 26th March be approved [25th Report from the Joint Committee].—(Lord McIntosh of Haringey.)
Lord Goodhart: My Lords, we on these Benches are perfectly happy with these regulations and have no objection.
Lord Kingsland: My Lords, for the reasons given by the noble Lord the Minister, we also support these amendments.
On Question, Motion agreed to.

Scotland Act 1998 (Modifications of Schedule 5) Order 2002
7.48 p.m.
Lord McIntosh of Haringeyrose to move, That the draft order laid before the House on 2nd May be approved [29th Report from the Joint Committee].
The noble Lord said: My Lords, in rising to move this order, I should like, with the leave of the House, to speak also to the draft Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2002.
The orders before us are principally constitutional in nature. The first is made under Section 30(2) of the Scotland Act and concerns an amendment to an area reserved by Schedule 5 to the Scotland Act 1998. The result of this is a change in the legislative competence of the Scottish Parliament. The second is made under Section 63 of the Scotland Act and provides for Scottish Executive Ministers to exercise executive powers in areas where primary legislation continues to be a matter for this Parliament. This is commonly known as "executive devolution".
Noble Lords may care to note that Ministers in the lead policy departments have been fully involved in preparing both orders before the House today. In the case of the Section 30 order, the lead policy department is the Department of Transport, and in the case of the Section 63 order it is the Department of Transport and the Department of Trade and Industry.
The first order is made under Section 30(2) of the Scotland Act. Schedule 5 to the Scotland Act forms part of the definition of the legislative competence of the Scottish Parliament and sets out the matters that are reserved for the purposes of the Act.
Section 30 of the Scotland Act provides a mechanism whereby Schedules 4 or 5 to the Scotland Act can be modified by an Order in Council, subject to the approval of both Parliaments. This allows the boundaries of the Scottish Parliament's legislative competence to be adjusted, either by removing existing reservations in whole or in part, or by adding new ones.
Following devolution, railways are a matter reserved to this Parliament. However, commitments were made during the passage of the Scotland Bill in 1998 to devolve a number of measures relating to railways in Scotland. What is known as the McLeish settlement ensures that Scottish Executive Ministers have a significant level of control over Scottish passenger rail services within the overall Great Britain framework. Elements of the package have already been implemented by previous orders under the Scotland Act. Other elements of the McLeish settlement were implemented by the UK Transport Act 2000.
The order amends Section E2 of Schedule 5 to the Scotland Act. It transfers to the Scottish Parliament legislative competence over powers for the promotion and construction of railways in Scotland. Once implemented, project promoters will be able to apply
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to the Scottish Parliament for all the necessary permissions to initiate projects. They will no longer have to go to Westminster to do so.
The order fulfils the commitment made in the McLeish settlement to ensure that promoters of railways, stations and maintenance depots would be able to seek the powers for proceeding with construction from the Scottish Parliament. Until now, all projects involving the construction of railways in Scotland have been scrutinised at Westminster. This has been done either through the order-making procedures of the light railways Acts or through the Private Legislation Procedure (Scotland) Act 1936.
In future, permissions for railway projects that are wholly within Scotland will be granted at Holyrood and only cross-border developments will continue to be dealt with at Westminster. Scottish projects, which I understand will be dealt with by private legislation in the Scottish Parliament, will include both heavy and light railways. Procedures for Private Bills were updated and improved by the Scottish Parliament in November 2000.
Powers for the development of heritage railways have traditionally been granted through light railway orders. These light railway orders will continue to be made, but by Scottish Ministers.
Noble Lords may be aware that a number of new railway projects in Scotland are currently being considered that will require legislation, including the link between Stirling and Alloa. The order is being enacted in advance of any Private Bill associated with these projects being lodged.
The second order, the draft Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2002, is made under Section 63 of the Scotland Act. Section 63 provides a mechanism to allow functions of a Minister of the Crown to be exercisable by Scottish Ministers in or as regards Scotland instead of, or concurrently with, the Minister of the Crown. The order is being brought forward today primarily as a result of joint efforts between the Scotland Office and the Scottish and Northern Ireland Executives to establish ferry services between Ballycastle in Northern Ireland and Campbeltown in Kintyre.
At the end of 1999, Sea Containers, which had run summer-only commercial operations on the route since 1997, was encountering heavy losses and indicated that the service would not return in summer 2000. The service had been established to take advantage of the strong historical and cultural links between Kintyre and Antrim. It was also to build on the potential tourism benefits of linking these two neighbouring regions of outstanding natural beauty. Loss of the service would affect both already fragile local economies. Moreover, both Ballycastle and Campbeltown had newly built and publicly funded port facilities in danger of becoming permanently redundant.
Having identified that a service could operate only with a public subsidy, the first task was to investigate whether a subsidy could legally be paid by declaring a public service obligation. Following discussions with

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Commission officials, and having seen the evidence provided by consultants, Commission officials agreed informally that a ferry service would not infringe state aids legislation.
Section E3 of Schedule 5 to the Scotland Act reserves responsibility for financial support for shipping services that do not begin and end in Scotland. The uniquely peripheral nature of the Highlands and Islands is such, however, that the primary purpose of any new ferry service to Northern Ireland would always be to assist economic development rather than merely as a commercial transport link. It was on that basis that both the Northern Ireland and the Scottish Executives have from the start of this process undertaken that any eventual subsidy would be found from within devolved resources.
Scottish Ministers have requested this order to allow them to make payments directly to an operator of ferry services between the Highlands and Islands and Northern Ireland. In future, the Scottish Executive will be able to take action to promote ferry services to Northern Ireland to support its economic development role in the Highlands and Islands. It will be for the devolved administrations to decide how to make use of these powers and to take forward the tendering processes. I beg to move.
Moved, That the draft order laid before the House on 2nd May be approved [29th Report from the Joint Comntitiee].—(Lord McIntosh of Haringey.)
The Duke of Montrose: My Lords, I thank the Minister for enlarging on what is contained in the order as regards the question of the modification of Schedule 5. As the Minister said, there have been quite a few modifications to the schedule since it started. When we consider that originally,
"the provision and regulation of railways",
was to be totally reserved to the UK Government, we can see that it has been devolved in very many ways.
As far as concerns both my understanding and that of my party, the Scots are, by and large, satisfied with the various modifications that have taken place. During the debate that took place in another place on this modification regarding the promotion and construction of railways beginning and ending in Scotland, it emerged that the Scottish Executive may become the one promoting the new railways, if necessary. That raised immediate concerns about funding and where it would come from. I gather that the Minister in the other place seemed to think that the grant that is given to the Scottish Executive would be quite adequate to cover this project. I presume that the Scottish Executive has discussed the matter and is prepared to play along with this. That is the only comment that one can make.
Under the transfer of functions order, we are dealing with a subject with which the Scottish Executive is no doubt very familiar in general; namely, the subsidising of ferry services. Most of these are devolved. However, it was interesting to note that the Explanatory Notes attached to the legislation spoke of the Scottish
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Executive carrying out a continuing review of the subsidising of ferry services. I believe that there also remains an obligation on the Government in Westminster to monitor such subsidisation. Does the Minister have that in mind? Further, can he say whether that review will be an ongoing process?
The Earl of Mar and Kellie: My Lords, noble Lords on these Benches have no difficulty in approving this transfer of legislative competence. It certainly fulfils part of the McLeish settlement and completes the measures of railways devolution. If we think a little about what this enables the Scottish Parliament to deal with, it is clear that it relates to railways on routes which have never previously been used. We had a fairly recent example of that on the Island of Mull, with a light railway between Craigmuir and Torosay Castle. It also deals with the re-opening of moth-balled railways. The Minister will not be surprised to hear those words, Stirling, Alloa and Kinkardine. But perhaps I may also add Larkhall and the Edinburgh cross-rail, which, I am happy to say, have in fact just opened, thereby extending the railway system down towards Dalkeith; and, more critically, towards the Edinburgh City bypass. There is also the restoration of abandoned routes, which would deal especially with border rail, about which I shall say something later.
On a slightly anecdotal note as regards Stirling, Alloa and Kinkardine, the Scottish Executive had to hold a debate as to whether one could claim to be rebuilding the route because the railway line is still there—or whether it would be better to have new legislation. It was decided that the 1846 Act relating to the Stirling and Dunfermline railway did not hold sufficient powers and was subject to challenge. It was decided that it would be safer to have a new railway order.
The issue of renewing the railway on the abandoned border route poses a small problem. I can see that, to begin with, the railway will he promoted down towards the towns in the borders, but eventually it will extend to Carlisle. The last part will have to he considered by this Parliament, whereas all the extensions down the Waverley route towards the Border can be dealt with by the Scottish Parliament. I look forward to that, although it may not happen, for a long time.
With regard to the implications, having twice been commissioner on the Private Legislation Procedure (Scotland) Act 1936, I am disappointed to see that it has been abandoned, because I believe that the local public inquiry is a good process. The power to use the Light Railways Act would be helpful, but one wonders about the issues of health and safety. Initially the light railways were designed to be lightly laid and used in very rural areas.
Like the noble Duke, I have been trying to define railway devolution and reservation. The question is: where does the line go? By that, I mean the Schedule 5 line. It is tempting to say that it runs between the rails. But it is also difficult to find out exactly where the reserved devolved line runs. Not only has there been railway devolution in modifications of Schedule 5; it

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has also taken place through transfer of functions orders and through other Acts. Definitive answers as to exactly what is reserved and what is devolved in Scottish railways are still eluding me. Therefore, I want to ask whether there is a single record of all the transfers of functions. Clearly the modifications of Schedule 5 are much easier to track. That said, we are very happy with the railway order.
I move on to the ferry order. We certainly approve of this transfer of ministerial function. Of course, this is likely to take place in a constituency familiar to these Benches and to my honourable Scottish friends Alan Reid and George Lyon. The transfer obviously provides the opportunity to subsidise the Campbeltown to Ballycastle ferry and presumably any other ferry between Northern Ireland and the Highlands and Islands that anyone might like to dream up—in theory, at least.
It is a clearly a transport, tourism and economic development measure. It is certainly part of remote areas policy, and I suspect that the new renewable energy equipment factory in Machrihanish could benefit if it chose to export into the Irish market. That will clearly have an impact on the Scottish Parliament's budget. It also depends on co-operation between the Scottish and Northern Ireland Executives. I suppose that it brings to my attention that there is a very small constitutional problem here. Despite all the architecture of dispute resolution within devolution, it is all aimed at dealing with disputes between the United Kingdom Government and a devolved Parliament or Assembly. At present there is no architecture to deal with disputes between devolved Parliaments or Assemblies. I hope that that will not happen, but it could.
Finally, I want to ask three questions. First, has the power to make.such changes yet been transferred to the Northern Ireland Assembly? Secondly, will Caledonian MacBrayne be allowed to tender for the service? I felt that it was somewhat unfairly excluded on the previous occasion, especially as it had to supply the ship. Finally, can we clarify the wording in the schedule to Article 2, which refers to "shipping services carrying passengers"? Presumably the ferries will be allowed to carry cars, lorries and freight as well as passengers. However, I take the point that primarily it must be a passenger-carrying ferry service.
Lord McIntosh of Haringey: My Lords, I am grateful to both noble Lords for their welcome for these orders. I shall deal with the points that they raised which are properly the concern of this Parliament. The noble Duke, the Duke of Montrose, referred to the implication from a Minister in another place that the block grant was adequate for the purpose. It is not really up to us to say whether the block grant is adequate for the purpose. We need only know that it will be financed entirely from within the block grant. Frankly, anything beyond that has nothing to do with us. It is up to them to decide their own priorities.
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The noble Duke asked whether, since these are specific circumstances of potential economic gains from a subsidy for ferry services, there were any other circumstances where these might occur and whether we would monitor such cases from Westminster. We are not aware of any other circumstances but, of course, if there were any, the Department of Transport would continue to monitor them.
I believe that most of the issues raised by the noble Earl, Lord Mar and Kellie, were entirely matters for the Scottish Parliament. However, my understanding is that—
The Earl of Mar and Kellie: My Lords, perhaps the noble Lord will give way. At this moment, they are the responsibility of this Parliament because we have not yet devolved these issues.
Lord McIntosh of Haringey: My Lords, if the orders are approved—I have not heard any opposition to them—they will complete the devolution of responsibility for railways within the confines of the orders. Therefore, all the matters which he raises about differences between light railways and other railways, and the difference between abandoned lines and so on, will be entirely matters for the Scottish Parliament, and I would not wish to trespass on them. My understanding is that the Northern Ireland Assembly has the powers to carry out its side of the bargain. The question relating to Caledonian MacBrayne is entirely a matter for the Scottish Parliament and the Northern Ireland Assembly. As for the definition of "shipping-carrying passengers", of course that does not exclude carrying anything else. Indeed, if it were to work, I believe that it would have to carry coaches and coach parties.
The noble Earl, Lord Mar and Kellie, suggested that there is no architecture for devolved administration disputes, but we can set up joint ministerial committees to resolve such disputes. They would be attended by the United Kingdom Government and by the devolved Parliament and Assemblies. I hope that, on that basis, the order can be approved.
On Question, Motion agreed to.

Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2002
Lord McIntosh of Haringey: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the draft order laid before the House on 2nd May be approved [29th Report from the Joint Committee].—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
Lord McIntosh of Haringey: My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 p.m.

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Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.9 to 8.30 p.m.]

Tax Credits Bill
Consideration of amendments on Report resumed on Clause 24.
[Amendments Nos. 89 and 90 not moved.]
Clause 25 [Payments of working tax credit by employers]:
[Amendments Nos. 91 to 98 not moved.]
Clause 28 [Overpayments]:
[Amendments. Nos. 99 to 107 not moved.]
Clause 30 [Underpayments]:
[Amendment No 108 not moved.]
Clause 31 [Incorrect statements etc.]:
[Amendment No. 109 not moved.]
Lord Higginsmoved Amendment No. 110:
Page 22, line 29. at end insert—
"( ) No person shall be liable for negligence under this section unless the Board is satisfied that it is just and reasonable in all the circumstances of the case to hold such person personally liable.
( ) Amongst the circumstances the Board shall consider in coming to a determination as to whether the Board is so satisfied as set out in the preceding subsection shall be—

(a) the extent and degree of the neglect,

(b) whether the neglect is so gross as to constitute a deliberate act,

(c) the degree of personal gain,

(d) any impairment of the health or other reason whereby the neglect may have been occasioned, and

(e) the resources available to the person concerned to be able to comply properly and duly."

The noble Lord said: My Lords, Amendment No. 110 is concerned with the question of negligence by individuals who are administering the tax credit arrangements and suggests that no person shall be liable for negligence under the clause unless the board is satisfied that it is just and reasonable in all the circumstances of the case that it should hold such a person liable.
The amendment specifies a number of circumstances the board should consider in coming to a determination on whether it is so satisfied; namely, the extent and degree of neglect; whether the neglect is so gross as to constitute a deliberate act; the degree of personal gain, if any; impairment of health and so forth, and the resources available to the person concerned to be able to comply properly and duly.
Although it is true that in administering the tax credits the employer faces a considerable burden, obviously he is also preoccupied with running his business. None the less, it is right that if he is negligent, appropriate steps should be taken, and the Bill makes provision for that. Having said that, it seems to us that there is some argument for ensuring flexibility in particular circumstances. I refer, for example, to the proprietor of a small enterprise who suffers from ill
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health and would not otherwise be able to cope not only with his business which would perhaps fall into disrepair, but also with the administration of the tax credit system as far as his employees are concerned.
The amendment is self-explanatory. It seems to us that there is an argument for giving a degree of flexibility to the board as to whether or not the individual concerned should be subject to the provisions of the Bill, particularly as regards penalties and so forth. I beg to move.
Lord Bassam of Brighton: My Lords, I welcome the fact that the amendment is before us. It enables us to clarify a matter which we thought we had clarified in Committee. Having read the briefing from the Child Poverty Action Group today, it is clear that that organisation would welcome clarification.
Clause 31 provides for a penalty to be imposed where a person has, fraudulently or negligently, provided false or incorrect information or evidence. The amendment seeks to place limits on the imposition of penalties for negligently providing false information. The "negligence" test for penalties is a matter that has been given careful consideration both here and in another place.
Neglect means that there has been a failure to take reasonable care. When people are applying for significant amounts of public money, it is only proper that they should take reasonable care. The alternative would be to say that people can deal with their tax credits affairs in a totally cavalier fashion. I am sure that noble Lords would not want that to be the case.
If we are serious about ensuring that claimants receive what they are entitled to, about tackling fraud and about targeting resources where they are most needed, the Revenue must have the power to require additional information to be provided. For those powers to be meaningful there must also be fair but effective sanctions to prevent fraudulent claims or the negligent provision of information. To allow claimants to supply incorrect information with impunity would be a fraudster's dream.
I understand the concerns about imposing penalties on those who have made an innocent mistake. However, that is not what the test of fraud or negligence is intended to allow. The test of negligence is applied to those who fail to take care in making their claim or in providing information that any reasonable person would take, and which any reasonable person would expect them to take. In making a claim it is only right to expect people to act responsibly.
There will also be cases where it is difficult to show categorically that someone has acted fraudulently. However, in such cases it may be possible to show that someone's behaviour amounted to negligence. In practice, many of the matters set out in the amendment will be matters which the Revenue or any appeal body will take into account when considering whether there has been negligence. I do not believe that it is necessary or appropriate to set out those matters on the face of the Bill.

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The test of fraud or neglect is long established in law. It is not an innovation or something we are introducing on a whim. Tinkering with that test, which would be the effect of the amendment, would generate uncertainty. We do not think that uncertainty is in the best interests of claimants or employers. They would be faced with two different tests of negligence: one for tax and national insurance affairs and another for their tax credit affairs. Again, we do not believe that that would be advisable or helpful.
The test of negligence has been used in the tax system for many years. It also applies to the working families' tax credit and the DPTC system. I have not heard anything from noble Lords opposite to suggest that they think that the Revenue is using that existing power in relation to tax credits in a heavy-handed way; one could argue the reverse. In any case, the test of negligence does not allow the Revenue to penalise people who make innocent mistakes, even if it wanted to. The necessary flexibility for which the noble Lord argues is there in the way in which this test can be operated. I hope that the noble Lord will not press his amendment further.
Earl Russell: My Lords, am I right in recollecting that this clause is aimed at what is known as a phoenix company, because if that is correct, that would materially assist me?
Lord Bassam of Brighton: My Lords, I have always had a great desire to materially assist the noble Lord, but I am afraid that on this occasion, much as it might help my own case, I am unable to do so.
Lord Higgins: My Lords, before the noble Lord sits down, I understand the arguments he is putting forward. However, some of the comparisons he draws are not relevant. It is true that the test as regards negligence might well apply to tax affairs. However, the situation here is rather different. It may be that a small businessman, responsible for running his business and so forth, has problems of a short-term nature. It may well be that he is not able, within a matter of two or three weeks, to keep wholly up to date but he might be thought to be negligent if he does not do so.
We suggest that consideration should be given to the various factors which might be the reason for his appearing to be neglectful and for the board taking the view that he was neglectful. It does not compare with the tax situation which, on the whole, is run over a rather longer time period where matters such as illness and so forth would probably not be relevant.
We have also put forward some other suggestions. I do not find the Minister's reply wholly convincing. Unless he can satisfy me further, particularly on the illness point, I am inclined to return to the matter at Third Reading.
Lord Bassam of Brighton: My Lords, I respect the noble Lord's point. I should clarify that negligence
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already applies to tax credit affairs. It includes employees in the working families' tax credit. So we have some experience of the way the test is applied.
The point that the noble Lord makes about innocent mistakes—that is effectively what he is talking about—is covered. There is a degree of innocence if someone is inadvertently indisposed and cannot put his affairs straight in the limited period of time suggested by the noble Lord. I take his point, but if there is an inadvertent error, as suggested by the noble Lord, those matters can properly be taken account of in the way that the test will always be applied. At some point in the dispute those matters can quite properly be tested in a tribunal forum. That is another opportunity to set matters right and have the record put straight.
The flexibility is there. There is capacity and scope for dealing with innocent mistakes and with inadvertent errors caused by people being unable to keep their affairs perhaps correctly recorded. Therefore, what the noble Lord seeks to achieve with his amendment does not take us any further. We think that the necessary flexibility is already there. Going along the route suggested by the noble Lord would only confuse and make matters more difficult.
Lord Higgins: My Lords, I shall consider carefully what the noble Lord said. We are not concerned with errors or with mistakes. They have nothing to do with negligence. We are concerned with whether inadvertently, and for reasons beyond the individual's control, he might be thought to be negligent when there is a good reason why he is unable to fulfil his responsibilities. I shall read and consider what the noble Lord said. I thought he gave an inadequate answer. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 32 [Failure to comply with requirements]:
[Amendments Nos. 111 and 112 not moved.]
Schedule 2 [Penalties: supplementary]:
[Amendments Nos. 113 to 119 not moved.]
Clause 37 [Interest]:
[Amendments Nos. 120 and 121 not moved.]
Clause 38 [Appeals]:
[Amendments Nos. 122 to 128 not moved.]
Clause 39 [Exercise of right of appeal]:
[Amendment No. 129 not moved.]
Clause 40 [Annual review]:
[Amendments Nos. 130 and 131 not moved.]
Clause 41 [Persons subject to immigration control]:
[Amendment No. 132 not moved.]
Clause 42 [Polygamous marriages]:
Lord Higginsmoved Amendment No. 133:
Page 26,1ine 34, at end insert "which are the same as those made under the State Pension Credit Act 2002"
The noble Lord said: My Lords, the noble Baroness, the noble Earl and I spent many hours debating various aspects of the State Pensions Credit Act. The purpose of Amendment No. 133 is to ensure that the

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provisions mentioned in that Act are the same as those in the Bill. The amendment seeks merely to ensure conformity between the two pieces of legislation. That seems eminently sensible. We hope that the noble Baroness feels able to accept the amendment.
Baroness Hollis of Heigham: My Lords, I am deeply disappointed. I was hoping to be able to discuss again the differences between polygamy and polyandry and the principal forms of polyandry and the people from the Malabar coast of India. Instead, I have been denied the opportunity of exhibiting the research done by a young man from our department.
I shall do as I have asked other people to do, which is to stay with the words of the amendment. It seeks to align the rules of the new tax credits with the rules for pension credits. I do not think that we can do that. It would not work. The regulations regarding polygamy made under each Bill need to reflect the character of the respective credit introduced by those Bills. If the regulations made under Clause 42 of the Bill were the same as those made under Section 12 of the Pension Credit Act, they would obviously be about the pension credit, which would not be much help to people trying to claim the working tax credit or the child tax credit.
Perhaps I may give an example. The working tax credit will contain an additional element for couples. Regulations made under Clause 42 will need to deal specifically with that issue. By comparison, regulations regarding polygamy made under the State Pension Credit Act need to deal with the question of the availability in such cases of the guaranteed credit or savings credit within the pension credit. Therefore, I am afraid that one cannot cross-write in the way that the noble Lord seeks, mainly because the building blocks of the two systems are very different.
The noble Lord looks baffled. Pension credit, as he will recall—
Lord Higgins: I am surprised.
Baroness Hollis of Heigham: Never baffled, merely surprised. My Lords, the pension credit, as the noble Lord will recall, is the fact that between the retirement state pension for a single person of £77 (next year) and £100, which is the current MIG figure for 2003, there is no advantage to people in having a small pension. When pension credit comes into effect next year they will be able to keep 60 per cent of the difference between those two sums according to their pensioner status.
There is no read across from that to what is happening here, which is about a building block or a family need. Pension credit is about ensuring that an occupational pension is not tapered out against an entitlement to MIG. The couple or single person element obviously comes into play. But it is not a means test in the form of tax credit or child tax credit which must build in additional elements for each member of the family. That is basically why one cannot leap from one to the other. They are different structurally. But in both cases we treat the position of a second, third or fourth spouse in supportive ways.
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I should be happy to seek to enlarge on my remarks if the noble Lord wishes. But basically pension credit is saying that one can keep one's occupational pension between those two figures as opposed to working tax credit and child tax credit, which is actually building on the allowances given for the size of the family, which is a very different system.
Lord Higgins: My Lords, it is sometimes said that one should never ask a question unless one knows the answer. Generally speaking on a Bill one can anticipate a number of replies which the Government are likely to make—most of them unfavourable. Having said that, I am surprised by this. It seemed to me that there was an argument for some consistency. I understand the points made by the noble Baroness. I shall read carefully what she has said and read again the previous debates on the Bill. Subject to that, beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 43 [Crown employment]:
Lord Higginsmoved Amendment No. 134:
Leave out Clause 43.
The noble Lord said: My Lords, Amendment No. 134 seeks to leave out Clause 43. It is an extremely short clause about Crown employment. It states:
"This Part applies in relation to persons employed by or under the Crown (as in relation to other employees)".
As the noble Baroness will understand, this is a probing amendment. I am not clear why those in Crown employment should require that provision to be included in the Bill. I should have thought that Crown employees are employed, so far as concerns the Bill, in exactly the same way as anyone else employs someone or is employed by someone. The wording is rather odd in the parentheses, where it says:
"as in relation to other employees".
I do not understand why a person employed by or under the Crown has any relationship to other employees, but no doubt the noble Baroness can elucidate that and explain why Crown employees require a specific mention in the clause. I beg to move.
Baroness Hollis of Heigham: My Lords, we are here dealing with those employed directly by the Crown; in other words, members of Her Majesty's private staff and those who work for the Royal Household, as opposed to the more general application of the term, "Crown servant", which could mean any civil servant or person employed in the public sector. Without such a power, it would not be possible for the employees of Her Majesty to be eligible for tax credit. The Queen has graciously consented that her employees may have their wages topped up by tax credits. Therefore, there is a clause in the Bill to that effect.
Lord Higgins: My Lords, I am most grateful to the noble Baroness for that reply, which again I had not anticipated. I thought that lots of people were employed by the Crown in the sense of the Government. I had not realised that the provision referred to the Royal Household. I am not sure what

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would be the drafting if one wanted to refer to civil servants, rather than members of the Royal Household. But the noble Baronesses has explained that point.
However, I am still not clear why the expression is,
"as in relation to other employees".
Baroness Hollis of Heigham: My Lords, it means in a like manner as to other employees of other employers—in other words, the same income in the same circumstances generates the same tax credit.
Lord Higgins: Yes, my Lords, fine. We shall consider that carefully, but the noble Baroness has at least explained what the clause is intended to cover, for which we are grateful. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higginsmoved Amendment No. 135:
Leave out Clause 45.
The noble Lord said: This amendment concerns notices issued by the board under Clause 45. Again, it is simply a probing amendment. The clause states:
"The board may give any notice which they are required or permitted to give under this Part in the manner and form which the Board considers appropriate in the circumstances".
I do not understand why the clause is necessary. I should have thought that it was apparent that the board could give notices that it is required to give in whatever form it considered appropriate. It is given total discretion to give notices in whatever form it likes. I do not think that anyone has suggested the contrary and I do not understand why we need the terms of Clause 45. I beg to move.
Earl Russell: My Lords, the noble Baroness is familiar with my concern for the rights of the illiterate. Perhaps I need to start to develop an equivalent concern for the rights of the computer illiterate. Notices can be addressed by e-mail to those who are not equipped for such a thing, as frequently happens to several of us now. I hope that, with the case of Pepper v Hart in mind, the Minister can assure us that that would not be regarded as an appropriate method of communication, because it does not reach its destination.
Baroness Hollis of Heigham: My Lords, as does the noble Lord, Lord Higgins, I regard the clause as a belt-and-braces provision. It gives the Inland Revenue the flexibility that it needs to issue notices in the most appropriate form and manner. I am self-conscious about using the word "appropriate" after our earlier debate. None the less, every argument that I shall advance will insist that what we are doing is appropriate.
To take the substance of the question of the noble Earl, Lord Russell, for the most part, notices will be given in writing. That is the most common way of contacting claimants, especially at the end of the year
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when issuing notices under Clause 17. However, when a claimant wants to be contacted electronically—in the same way as some people now fill in their tax returns and submit them electronically—it is only right that the Bill should provide the flexibility to do so. Obviously, there is no intention to force claimants to deal with the Inland Revenue electronically, but it is right to have the flexibility to encourage electronic communication with those who wish to utilise it.
The clause also relates to notices that may be given to employers under Clause 25. Again, it is important to have the flexibility to send notices in a manner that suits the employer—electronically, by facsimile or by post.
I can only assume that we need the provision in the Bill because there has been some previous challenge as to whether a notice that was sent had due legitimacy given its mode of communication. I am certainly aware of cases in which a fax has been used but has not been held to be a valid form of communication. I am assured that the clause is a belt-and-braces provision that makes clear that notices can be sent in whatever form is convenient to the claimant or the employer, but the presumption will for the most part be that that is in writing. I hope that the noble Lord will be content with that explanation.
Lord Higgins: Yes, my Lords, the clause seems to be a belt-and-braces provision and, I should have thought, otiose, but I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higginsmoved Amendment No. 136:
After Clause 45, insert the following new clause—
"Annual report by Board
After section 13 of the Inland Revenue Regulation Act 1890 (c. 21) (commissioners to keep accounts) insert—
"13A COMMISSIONERS TO REPORT ANNUALLY
(1) The duties of the Board are to include a duty to set forth in an annual report a full analysis of tax credits, by reference to racial groups as defined by section 3(1) of the Race Relations Act 1976 (c. 74), distinguishing in each case between awards of the child tax credit and shall include—

(a) the number of claims received;

(b) eligibility for the respective claimants of tax credits;

(c) the number of rejected forms;

(d) the number of appeals;

(e) the number of successful appeals; and

(f) a summary of the main reasons for the failure of appeals.

(2) The report referred to in subsection (1) shall be published no later than 31st July following the end of each tax year.""
The noble Lord said: After a series of probing amendments and points of rather nitty-gritty detail—which it is of course right that the House should consider, as we have now done—we come to what is an important amendment of substance. It proposes after Clause 45 to insert a new clause entitled,
"Annual report by Board".
We have already discussed annual reports by the board—indeed, provisions have now been made for such a report regarding certain matters as a result of

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the Division that took place yesterday. But the annual report with which we are here concerned is of a rather different nature.
We have received representations from several bodies. The originators of the amendment have a good pedigree —we understand that it is proposed not only by the Law Society but by the Disability Alliance, the Low Pay Unit, the Child Poverty Action Group and the National Association of Citizens Advice Bureaux. Many of those will be at the forefront of the Bill's operation. All of them have expressed concern that there should be a mechanism for monitoring the ethnic origin of tax credit applicants to maximise take-up and ensure that every section of the community benefits from it where available.
In discussion of earlier amendments, we have been concerned with the whole issue of take-up. For example, I understand that some offices of the Department for Work and Pensions have to deal with a considerable number of individuals in a wide variety of languages. Given some of the complexities of the Bill, that may make it especially difficult for individuals to succeed in claiming what, with our support, it is the Government's intention that they should receive.
But if the monitoring is to be done effectively, it is appropriate that records of it should be kept and that the House should be made aware of them. That is why we suggest that the board should make an annual report.
I can recall that previously—perhaps 20 or 30 years ago, especially with regard to the form in which a census form should be made out—the sensitivity was that there was something wrong with saying, "What particular ethnic group does this or that individual come from?" That was—and, to some extent, perhaps still is—a sensitive matter.
It is probably true to say—I express a purely personal view—that that sensitivity has tended to be replaced by the view that one ought to make sure that no particular group is being discriminated against. Attitudes change over time. Given the pedigree of the amendment, quite clearly a number of those who are very much concerned with these issues have come to the view that it would be helpful to race relations, and to the administration of the Bill when it becomes an Act, if such a record were kept.
The specific provisions in the amendment are concerned with the number of claims received, the eligibility of the respective claimants, the number of rejected forms, the number of appeals, the number of successful appeals and a summary of the main reasons for the failure of appeals. The report should distinguish between child credit and working tax credit so far as concerns the ethnic origin of the various claimants and the success that they have in order to discover whether any group is not receiving the benefits that this House, another place and the Government have decided are appropriate for them.
That being so, I am hopeful that I may receive a somewhat sympathetic response from the noble Baroness, or at least an indication of what is the
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Government's thinking on this issue. The noble Earl, Lord Russell, did not move his amendment to Clause 41 but it may be that some of these issues arise also on that clause. We may return to it at Third Reading.
I thought it appropriate at Report stage that I should ask what are the Government's feelings about these issues, which clearly are of considerable concern to the various people who have made representations. I understand that the Cabinet Office Performance and Innovation Unit published a report in 2001 entitled Ethnic Minorities in the Labour Market which highlighted the difficulties with existing survey data. It would seem that there is an argument that. rather than carry out surveys which statistically are always open to a variety of views, reference to actual cases rather than sample cases might be a more effective way of dealing with the matter.
There are varying views on this issue. I merely bring it forward because some outside bodies have taken the view that this would be helpful to ethnic minorities rather than otherwise. I shall listen with interest to what the Minister has to say. I beg to move.
9 p.m.
Lord Northbrook: My Lords, I support the amendment of my noble friend Lord Higgins for the following reasons. First, it would be useful statistically; secondly, it would give a good indication of whether any racial group has difficulty tilling in the forms; and, thirdly, it would be helpful for refining the forms to make them easier to understand and to increase the take-up rate. I approve of subsection (2) which states that the report should be published by 31st July following the end of the tax year.
Earl Russell: My Lords, I entirely agree with the analysis of the noble Lord, Lord Higgins, that there has been a historical change on the question of ethnic monitoring. On the whole, I agree with his reasons for why it has changed and I believe that it is a good thing that it has. It is assumed now that the motive for desiring the information is benevolent.
While the noble Lord was speaking, I remembered a conversation that I had back in the 1960s with my noble friend Lady Williams of Crosby, whose then husband was one of my colleagues. She said then that it was often quite useful to be able to say that one did not have the information. She was assuming that the information was being solicited for the purposes of causing trouble. Now we much more often assume that the information is solicited for the purposes of being helpful. That is a change entirely for the better. I hope that it is permanent.
As always with these changes, there are always some people left behind. When ethnic origin information is requested there are always some people who either express a conscientious objection to filling in the required information, or think it is wanted for malevolent purposes, or occasionally object for the perfectly good reason that the only honest answer they can give is the good old answer "mongrel".

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If the amendment is accepted, I hope that there will not be a penalty for refusing to fill in one's ethnic origin. That should also be counted as a right. If we do not count it as a right, we shall create only martyrs where we do not want to create them.
Baroness Hollis of Heigham: My Lords, like all government departments, the Inland Revenue is fully committed to monitoring the take-up of the new tax credits among ethnic communities. It is important to get that on the record. Inland Revenue officials are continuing to discuss with the relevant community and interest groups the best way to achieve this. When those discussions have been completed, it may be of interest and help to your Lordships if I write and give details of the conclusions of those discussions.
As your Lordships are aware, there is a legislative obligation on the Inland Revenue and other departments to assess their policies and functions and to publish assessments, consultations and monitoring with a view on how these impact on race equality. That obligation arises out of the provisions of the Race Relations (Amendment) Act 2000. Under that Act, the Inland Revenue must publish and implement a race equality scheme, the aim of which is to eliminate unlawful discrimination and promote equality of opportunity and good relations between different racial groups. That scheme was published on 31st May of this year and can be found on the Inland Revenue website.
Behind all this is the wider question of outreach and so on as opposed to monitoring. The Inland Revenue is fully committed to ensuring that the take-up of tax credits is increased among ethnic communities. Indeed, the department is already undertaking a number of initiatives to ensure that that happens. The development of the publicity campaign for new tax credits has included work to improve the targeting of messages to ethnic groups. The department has identified and carried out research which supports plans to target those most likely to contain the highest concentration of potential tax credit recipients but with the lowest penetration of messages from mainstream sources. Publicity directed at these groups will be specifically tailored both in terms of language and for a cultural fit.
Alongside this, the mainstream campaign will seek to be as inclusive as possible by representing the diversity of the UK population in its imagery and will include the use of ethnic media where appropriate. The department will also be supporting the role of intermediaries, such as community advice workers and local authorities, through the provision of support materials and background information. Where appropriate, material will be available in foreign languages.
So I hope I can assure noble Lords regarding the efforts being made by the Inland Revenue and by other government departments. In my own department I have been involved in looking at diversity policies and so on. Therefore, I am very aware of the concentrated and consistent efforts now being made by government.
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The noble Lord is right. There has been a shift in attitude as to the propriety of this approach. Certainly, in my own field I often find that the one area that I do not know about is X and its implication for ethnic minority families—whether they are large families, whether it is a question of payment of child support moneys, or whatever. We have simply not collected that information, perhaps through the wrong approach in terms of sensitivities. As a result, we are now handicapped in our ability to develop policies which specifically respond to their needs.
To give an assurance to the noble Lord, the Race Relations (Amendment) Act 2000 requires us to do exactly that for which the noble Lord is calling. This aspect of the annual report would be published in accordance with the Inland Revenue's obligations under the Race Equality Scheme. I believe that it will provide the noble Lord with the detailed information that he seeks. I am happy to write to him on the details of the Inland Revenue's ethnic minority monitoring plans and to provide him with a copy of the Race Equality Scheme. With that additional information, I hope that he will feel able to withdraw his amendment. It is a very useful one. I am glad to have the opportunity to put these points on the record.
Lord Higgins: My Lords, I am grateful to the noble Baroness. So far as concerns the lack of statistics, her reply suggests that the Inland Revenue—and other departments too—will seek to remedy that deficiency.
What I am not quite clear about is whether a report in the form suggested by the amendment—or, indeed, a report at all, other than in the normal Inland Revenue report—will be available. When we discussed reports earlier, the noble Baroness described what was asked for as a "scissors and paste job". I am not clear whether she is saying that a report of the kind that we seek in the amendment already exists, whether it is possible for people to put it together, or whether one could simply accept the amendment. While I fully accept, as I believe the noble Earl will, that the Minister's reply is forthcoming and welcome, I am still not absolutely sure whether she is saying that she is prepared to accept the amendment or whether she thinks that existing information is in a form that makes it readily available.
I am not suggesting that all members of ethnic minorities will read this legislation when it is eventually passed, but there might be some argument for having such a provision on the face of the Bill, simply to make clear the good intentions of those on all sides of the House.
Baroness Hollis of Heigham: My Lords, the point I was making was not that I disagree with the amendment, but that, as is occasionally the case, the amendment is redundant. The Inland Revenue is already required to do what the noble Lord has called for under the Race Relations (Amendment) Act 2000; namely, departments are required to produce their race equality scheme, which includes information about take-up, monitoring and so forth. We published the scheme on the website on 31st May 2002. It may be

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that, between now and Third Reading, the noble Lord—who I am sure is more of a computer expert than I and, I gather, the noble Earl, Lord Russell—will be able to see whether this meets his concerns. Developing that further—that is, ensuring that we get the fullest publicity, outreach and take-up by ethnic minorities—is not just about publishing the information; it is about working with groups and with the media to have that effect.
As I said, I hope that I have allayed the noble Lord's concerns. This matter is of great importance. The amendment as it stands is redundant, because departments are already required under the Race Relations (Amendment) Act 2000 to do that for which he is calling. Over and beyond that, there is the equally important task of ensuring that tax credits are brought to the attention of ethnic communities in our society. I believe that the Inland Revenue has well-founded schemes in place.
My own department too has great experience of this and we are used to seeking to build up this information. The pity is that we did not have this information five years ago.
Lord Higgins: My Lords, again, I am grateful to the noble Baroness. I shall take up her suggestion that I should consult the website. I am not sure that I am any more computer literate than either the noble Baroness or the noble Earl.
I am inclined to ask: will the information appear in the variety of languages for which those concerned with this issue might wish? But I am rather deterred by that. A few nights ago, I was surfing the Web—I believe that is the expression—and the information came up in French. I was rather worried by this, but then it came up with a nice option saying that it was available in other languages. I selected English, and it said: "This is an English translation which has been done automatically from the French. Lord Higgins is a member of the Preserving Party"$ It is absolutely true. So it can be surprising what people say about one on websites. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 3 [Tax credits; consequential amendments]:
Lord Higginsmoved Amendment No. 137:
Page 46, line 5, leave out paragraphs 4 to 7.
The noble Lord said: My Lords, the Minister will be glad to know that this is the last of a series of amendments which effectively seek to delete from the Bill amendments which the Government wished to insert in Grand Committee. We have debated various issues of this sort. In Grand Committee, we agreed that for convenience we should describe the numerous government amendments under various categories. These ones come under category 5—which I for one am glad to say is the last category we were discussing.
These amendments reflect two points. First, as we well know, the government amendments were tabled very late. Secondly, some of them referred to Part 2 of the Bill, which was not discussed at all in another place. That was a matter of considerable concern and
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I delivered a rather long and passionate speech about it in Committee. The House will be glad to know that I do not plan to repeat that speech. However, it would be helpful for the Minister and for the other place when it comes to consider these amendments of which it has hitherto been unaware—if the noble Baroness would very rapidly summarise what these various amendments do. I beg to move.
9.15 p.m.
Baroness Hollis of Heigham: My Lords, these amendments reverse a number of minor and technical amendments agreed to in Grand Committee. The amendments fall broadly into two categories. As the noble Lord said, Amendments Nos. 137, 153, 170 and 172 reverse consequential amendments relating to various Northern Ireland legislation. As he also said, in Committee I described those as the fifth category of government amendments. The remaining amendments reverse changes that are consequential on two matters, the abolition of WFTC and DPTC and the replacement of SERPS with the state second pension. I should like to deal with those amendments first.
On SERPS, Section 45A of the Social Security Contributions and Benefits Act 1992 and its Northern Ireland counterpart provide that WFTC and DPTC may be taken into account when calculating the earnings factor relating to SERPS entitlement. As we are both abolishing WFTC and reforming SERPS, consequential amendments are clearly necessary. I shall be happy to describe those in more detail if the noble Lord so wishes. In summary, however, both WFTC and DPTC are going, as is SERPS. We therefore need to re-label the amendments. Is that sufficient explanation for the noble Lord on that aspect of the amendments?
Lord Higgins: My Lords, that is sufficient.
Baroness Hollis of Heigham: My Lords, I am grateful. The second matter is the need to reverse consequential amendments to Northern Ireland provision, which is category 5. In the main, these consequential amendments sought simply to remove redundant references to WFTC and DPTC in existing Northern Ireland legislation. Amendment No. 137 reverses consequential amendments to the Legal Aid, Advice and Assistance (Northern Ireland) Order which simply removed references to "Family Credit" in that order. In 1999, "Family Credit" was taken out and replaced with "WFTC". We now need to replace that with the new titles.
Amendments Nos. 153 and 170 reverse consequential changes to Article 18C(7)(b) of the Children (Northern Ireland) Order 1995. This article allows those who have certain services paid for by a local authority on their behalf—primarily day care services for children in particular need—to receive the services for free as long as they are in receipt of the specified benefits or elements of tax credits set out in the article. We now have to change the title of the specified benefits or tax credits as set out in the article.

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Amendment No. 172 reverses the repeal of Article 12(3) of the Criminal Injuries Compensation (Northern Ireland) Order 2002. Again, there is a reference to WFTC which requires re-labelling.
So that is what is going on. There is an array of Northern Ireland legislation in which some eligibility depends on references to WFTC and DPTC. Those references now need to be replaced with the labels of the new benefits and tax credits.
Lord Higgins: My Lords, I am most grateful for that clarification which I think will be helpful not only to us on this occasion but to another place when it comes to consider the large number of government amendments. One's fear is that the system of programming in another place not only has curtailed debate on these issues until now, but may well curtail further debate on the amendments which your Lordships have made—a very large number of amendments indeed. However, we have to wait and see how that works out and, if need be, comment on it when the matter returns to this House, if the other place is so misguided as not to accept the amendments we have made. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 138 to 153 not moved.]
Clause 47 [Interpretation]:
[Amendments Nos. 154 to 156 not moved.]
Clause 48 [Functions transferred to Treasury]:
Lord Higginsmoved Amendment No. 157:
Page 28, line 11, leave out from "State" to end of line 32.
The noble Lord said: My Lords, Amendment No. 157 knocks out a large chunk of Clause 48. Amendment No. 158 would leave out "Treasury" and insert "Chancellor of the Exchequer". There has been a clear trend since 1997 for the functions of various departments to be taken over by the Treasury. The Bill is a massive indication of the extent to which the Treasury's tentacles are extending further into other parts of Whitehall. In Clause 48 a large number of functions are transferred to the Treasury. Although not directly related to the Tax Credits Bill, I give as an example the guardian's allowance, child benefit and so on.
It is an interesting but not necessarily desirable development. In another place, the Bill was dealt with by the Treasury. We have been fortunate in this House that the Department for Work and Pensions has clawed back—I think that that is the right expression—responsibility for the Bill. We have had the expertise of the noble Baroness in dealing with this legislation. We thought that it was worth commenting upon.
I have a specific point. Oddly, it seems to us, the clause begins by stating that the functions of the Secretary of State, under the range of provisions stated, are to be transferred to the Treasury. Amendment No. 158 would leave out "Treasury" and insert "Chancellor of the Exchequer". The Secretary of
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State is an individual or at least an office. The Treasury is not an individual and not in the same sense of the word an office. We were not clear why the functions of the Secretary of State were transferred to the Treasury rather than the Minister—in this case, since the Inland Revenue is one of the Chancellor's departments, the Chancellor of the Exchequer. I beg to move.
The Deputy Speaker (Lord Elton): My Lords, I have to tell your Lordships that if this amendment is agreed to, I shall be unable to call Amendment No. 158.
Baroness Hollis of Heigham: My Lords, I had thought that the amendment was a tease. As drafted, the noble Lord's proposals would not only transfer social security functions to the Chancellor of the Exchequer but also those relating to health, education, national defence and even overseas development. As drafted, the amendment covers any function carried out by any Secretary of State in any of the departments for which they are responsible. I thought that it was not just a tease but marginally over the top as teases went.
If the noble Lord wants, I shall be happy to engage in a more serious discussion about the need to transfer, as dealt with in Part 2 of the Bill. Child benefit and guardian's allowance will be dealt with by the Treasury. That, was considered by the Social Security Select Committee, a cross-party committee, as early as July 2000. It has been discussed with various pressure and interest groups. In all the discussions to which I have been party or about which I have read reports, there has been widespread agreement that it makes sense for responsibilities for all financial support for families with children to reside in a single department, as this Bill prescribes. Therefore, it covers both the transfer of responsibilities to the Inland Revenue and Treasury and allows changes to child benefit to bring them into line with proposals for the child tax credit. That will allow the Government to produce a more streamlined system of financial support for families with children. It means that only one department will deal with financial support for children, which I believe will be to the benefit of transparent administration and ease of simplicity for those receiving the benefit.
I can go into a longer philosophical argument about the nature of child benefit in relation to child tax credit, or the Chancellor's and the Treasury's relationship to the Department for Work and Pensions, but this amendment will not do. As far as I can see there are only two departments of government, a big one called the Treasury and a little one called the Cabinet Office. I am not sure that that is what the noble Lord intended.
The substantive point goes to the core of the Bill, which is to integrate the different financial flows of support for children so that they are no longer separated between out-of-work benefits, which are the function of the DWP, and in-work benefits, which are the function of the Treasury—tunnel benefits. Instead to have an integrated benefit for children, the child tax credit that goes from out-of-work to into-work is an

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encouragement into work as well as giving security against poverty for the children who will receive it. That is possible only with an integrated administration and it will make sense to claimants only if they know that they are dealing with one department. That is at the core of the Bill and I cannot believe that at this time the noble Lord seeks seriously to undermine the whole philosophy of the child tax credit.
Lord Higgins: My Lords, I am still not clear why it is not the Chancellor of the Exchequer rather than the Treasury.
Baroness Hollis of Heigham: My Lords, perhaps I can get hack to the noble Lord on that.
Lord Higgins: My Lords, it ceases to be a tease and becomes extremely worrying. The Chancellor of the Exchequer has been taken over by the Treasury rather than the other way around$
Baroness Hollis of Heigham: My Lords, the reference to the Treasury is merely a drafting convention and refers to the Ministers of the Treasury of which the Chancellor is one. Noble Lords will be aware that the constitutional arrangements for the Treasury mean that the First Lord of the Treasury, the equivalent of the Secretary of State, is the Prime Minister. So this wording makes it clear that it is a Treasury Minister, for example, the Chancellor, who is to have such powers.
Lord Higgins: My Lords, I am grateful for that reply. At this time of night the Minister has replied in a jocular manner, but the reality is that this Bill transfers to the Treasury functions that it has never previously exercised. In particular, one suddenly finds the Inland Revenue paying out money rather than collecting it, which is a fairly radical change. Subject to that, I am grateful to the noble Baroness for her comments. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 158 not moved.]
Clause 49 [Functions transferred to Board]:
Lord Higginsmoved Amendment No. 159:
Page 29, line 2, after "State" insert "for Northern Ireland"
The noble Lord said: My Lords, this amendment is even more pedantic and I shall deal with it quickly. As the Minister knows, the convention is that the expression "the Secretary of State" is used indiscriminately. One is supposed to understand to which Secretary of State reference is made. Generally, it is apparent and does not give any cause for problems. But this amendment suggests that on this occasion we should identify the Secretary of State as the Secretary of State for Northern Ireland because various Secretaries of State are involved at this stage of the Bill and there could be confusion. I beg to move.
9.30 p.m.
Baroness I kills of Heigham: My Lords, the effect of the noble Lord's amendment is to prevent the Inland
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Revenue from administering child benefit and guardian's allowance within Great Britain. That may relate to his question about which Secretary of State the Bill refers to. The Secretary for State for Northern Ireland has no responsibility under the provisions set out in subsection (2) in Great Britain or even Northern Ireland, as that sits wholly within the remit of the Northern Ireland department as defined in the Bill, the Department for Social Development.
So the noble Lord's amendment would limit transfer of operational responsibility to the Inland Revenue to Northern Ireland, even if policy responsibility for those benefits sat with the Treasury. Given our earlier arguments, that would be nonsensical. The technical point is that the Secretary of State for Northern Ireland, my right honourable friend Dr John Reid, is not the same as the Northern Ireland department—as defined in the Bill—responsible for these measures, the Department for Social Development. The general point is that we are trying to ensure the same consistency and integration of responsibility in Northern Ireland as in England, Scotland and Wales.
Lord Higgins: My Lords, before the Minister sits down, is the amendment wrong—that is to say, the Secretary of State referred to in Clause 49 is not the Secretary of State for Northern Ireland? Is it some other Secretary of State? The amendment sought to clarify the situation by referring to the Secretary of State for Northern Ireland, but in the light of the Minister's remarks the clause appears to refer not to the Secretary of State for Northern Ireland but to some other Secretary of State, in which case the case for specifying which Secretary of State is overwhelming. I am not clear where we go from here.
Baroness Hollis of Heigham: My Lords, the advice I am given is that "Secretary of State" is not limited, but that the limits are to the Secretary of State's powers under the defined legislation clause. I am not sure that it matters which Secretary of State it is.
Lord Higgins: My Lords, which Secretary of State is meant?
Baroness Hollis of Heigham: My Lords, surely it will be the relevant Secretary of State? I shall write to the noble Lord on the matter.
Lord Higgins: My Lords, I understand that the Minister is unclear as to the answer. I am happy for her to write to me. However, it cannot be any Secretary of State, as the clause refers to "the Secretary of State". I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 52 [General functions of Board]:
[Amendment No. 160 not moved.]
[Amendment No. 161 not moved.]
Clause 54 [Continuing entitlement after death of child]:
Lord Higginsmoved Amendment No. 162:
Page 32, line 20, leave out "before the end of the week in" and insert "within seven days of the day on".
The noble Lord said: My Lords, in moving the amendment I shall speak also to Amendments Nos. 163 and 164.
Clause 54 seems intended to be very restrictive. It is concerned with an individual's entitlement to child benefit on the death of a child. One would have thought that in circumstances where a family has lost a child the provisions would be reasonably sympathetic and relaxed. On the contrary, subsection (3) states:
"If a child dies before the end of the week in which he is born, subsections (1) and (2) apply".
The purpose of the amendment is to seek to ensure that the amount of the benefit which the parents of the dead child receive does not depend on the day of the week on which the child happened to die. That seems to be the effect of the clause as drafted. It seems that the amount of child credit which the family will receive when the child dies is, first, strictly confined to a matter of days; and, secondly, appears to depend on which day of the week the child dies. That seems to be harsh, to say the least. It is strange that the benefit should depend on the day of the week. I beg to move.
Earl Russell: My Lords, is there in law a day on which the week begins?
Baroness Hollis of Heigham: My Lords, for benefit purposes, benefit weeks begin on different days according to different benefits. That is in order to reduce pressure on payments at the post office. I need some help from the noble Lord because I understood his concern to be related to the entitlement to the extension—the roll-on period after a child has died—of eight weeks of continued benefit. However, the noble Lord did not speak to that; he spoke only about whether a week could be less or more than seven days.
Perhaps I may give an answer based on our understanding of his concern because I may be able to allay his fears. Not only does his amendment do the reverse of what he wants it to do but it would stop the department's generosity, which is decent and of which I am proud. The amendment seeks to provide that where a child is born but does not survive a week, the claimant should still be entitled to the extension of child benefit. That is the eight-week roll-over period which comes into effect once a child has died. That is substantial money—it is not the first week of benefit but the continued payment for eight weeks. However, the amendment as drafted does the complete opposite and instead defeats that precise purpose.
Perhaps I may set the matter in context. A person can be entitled to child benefit for any week only when he or she is the person responsible for a child. Section 147(1) of the Social Security Contributions and Benefits Act defines a week as a period of seven days beginning with a Monday. Subsection (2) of the
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section goes on to state that we should treat a person as responsible for a week only if he or she were responsible for the child at the start of that week. It seems rather convoluted, but it makes sense when one looks at child benefit. It is a weekly benefit where the claimant needs to be responsible for a child each week of the claim, so it makes sense to have a relatively simple test to identify when a person becomes responsible or loses responsibility for a child.
That matters because often there is shared care, or part shared care, and some determination is necessary as regards who is the claimant of child benefit, particularly as it cannot be split. In providing an extension of support for families where a child they have been responsible for dies, we would want to provide that support to any family responsible for a child regardless of the length of time the child was with them. That aligns child benefit with the proposals in the child tax credit which has been so warmly welcomed by interest groups. That is what adding the proposed new Clause 145A to the existing legislation would achieve.
However, because of the rule within Section 147 that I have already described, if a person became responsible for a child but that child died before the first Monday after the date he or she had joined the family, that person could not claim child benefit or the extension. He or she would not have cared for the child for the full week. That is not the aim of the extension, which is to recognise the needs of families at the time. The loss of a child is difficult whether the child dies soon after birth or many years into the child's life.
For that reason, Clause 54(3) specifically provides that where a child had been born in one "week"—that is, a seven-day period starting on the Monday—but had not survived to the following Monday, for the purposes of this extension of support we could treat that child as having existed at the start of that week so that the family could become eligible for support for that limited period to help them through the difficult time. So it is essential, unless one redefines what is a "week" for the rest of the child benefit legislation, to use the word "week"; otherwise we cannot achieve the aim that we all seek.
I apologise for such an elaborate explanation, but if we do not legislate in this way, parents who lose a child within the first week of that child's life will not be entitled to or be eligible for the eight-week extension, which I am sure we would regret. I apologise for giving such a complicated and technical answer, but that is the reason for the wording.
Lord Higgins: My Lords, it is best if we read very carefully what the noble Baroness has said. This is far from simple. I fully accept the Government's good intentions. We shall have to study the matter very carefully indeed because the drafting appears to be rather strange. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 163 and 164 not moved.]
Clause 55 [Presence in United Kingdom]:
Lord Higginsmoved Amendment No. 165:
Page 32, line 39, leave out subsection (1).
The noble Lord said: My Lords, this amendment is concerned with presence in the United Kingdom. Clause 55(1) states:
"No child benefit shall be payable in respect of a child for a week unless he is in Great Britain in that week".
On the face of it, that seems to be a rather strange provision since it may well be that, given we are all members of the European Union and so forth, a particular family may have gone abroad for a fortnight's holiday, whereupon it seems to lose child benefit for the period of their absence. That seems to be a rather strange provision. However, it may be that that is helped by subsection (3) which states that:
"Circumstances may be prescribed in which a child or other person is to be treated for the purposes of this section as being, or as not being, in Great Britain".
I presume that that means one can have a situation where the circumstances prescribed say that if they have gone on a holiday for a fortnight the family still receives child benefit. This is a very strange way of proceeding. In any case, as the noble Baroness will know, we on this side of the House have taken the view that matters should be on the face of the Bill rather than in regulations if they are not going to require a series of subsequent adjustments. If there are circumstances in which the child can be absent for more than a week without losing benefit, it would be more sensible to put that on the face of the Bill rather than in regulations. Perhaps the noble Baroness can explain exactly what the Government have in mind. I beg to move.
Earl Russell: My Lords, I believe that here we have something which requires some thought. The Department for Work and Pensions, and the Department of Social Security before it, have really had a very national-based outlook on the question of entitlement. They always tend to think in terms of "Out of sight, out of mind".
But that is not up to date with the nature of the world economy as it is developing. As we keep saying, but never remembering, we are going constantly more global. I believe that soon it will begin to worry employers that they may find it difficult to recruit people for jobs which involve constantly moving from country to country if the people concerned lose benefit when they do it.
This purely national-based thinking about the economy is almost as out of date as confining poor relief to the parish. At some time there has to be rethinking. Whether this amendment is the vehicle for that, I am not certain, but the point is worth putting on the record.
Baroness Hollis of Heigham: My Lords, we are here seeking to streamline the tests for eligibility for child support in its various forms. Under the current systems of support, a family trying to claim support for a child has to satisfy different tests in each benefit or
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tax credit to prove to the relevant department that they are actually a valid resident of the United Kingdom or have been present in the UK long enough to qualify for support.
For child benefit the rules are based on the claimant and the child being required to be physically present in the country for a particular length of time. Obviously, that is when they are coming into the country. For income support and the jobseeker's allowance, as the noble Earl, Lord Russell, will know, they need to be habitually resident. Under the working families' tax credit, the claimant needs to be present and ordinarily resident in the United Kingdom. It is a confusing array of tests and as a result we have found cases in which claimants have been entitled to certain types of support but not to others on the basis of the same facts. This is difficult to explain to a family who have newly arrived into the country, especially those who are, and have always seen themselves as, UK citizens.
If we are to streamline the systems of support for families with children, we need to ensure that the same test applies across those systems. In essence, this does not result in any real change for the vast majority of families who claim child benefit. But for those UK citizens who have recently come back into this country after a long period abroad, or those who are no longer subject to immigration control, having a single test should mean that what is required of them, and the effect of those requirements, should be much clearer and therefore more easily understood.
Clause 55 provides that continuity by allowing us to define in regulations what "in GB and Northern Ireland" means for child benefit purposes. This will enable us to follow the same test as that provided for new tax credits. So where a family with children satisfies a single test, they can become en titled to both systems of support.
Without such a test of presence, some people working in this country were remitting child benefit to children who were never present in this country but lived in, for example, India, Pakistan or South Africa. The measure is designed to ensure that child benefit is paid to those who currently have the care of children in this country.
The noble Lord asked about periods of absence. The existing child benefit has always contained specific provision to permit short periods of absence—an eight-week standard period when the child or adults are abroad for temporary reasons such as holidays and longer periods if the child is absent for education or health reasons. I believe that the House has previously discussed children who go back to the Asian subcontinent for long periods over the summer holidays. That does not in any sense disqualify their families from receiving child benefit.
9.45 p.m.
Earl Russell: My Lords, before the Minister sits down, is it not becoming a characteristic of the global economy that we are all remitting money to children in

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other countries? We are not merely taking in each others' washing; we are taking in each others' parents. We shall have to get used to thinking of that as normal.
Lord Higgins: My Lords, before the noble Baroness sits down, or rather before she stands up again, I should say that the first part of her reply had very little to do with the points I sought to raise which were essentially ones of temporary absence. The Bill is clear. The proposed new Section 146 states:
"No child benefit shall be payable in respect of a child for a week unless he is in Great Britain in that week".
It does not say that that is all right if they are on a fortnight's holiday or a month's holiday or whatever.
Baroness Hollis of Heigham: My Lords, new Section 146 continues:
"Circumstances may be prescribed in which a child or other person is to be treated for the purposes of this section as being, or as not being, in Great Britain".
Lord Higgins: My Lords, I understand that. That brings me to the point that I made earlier; namely, that one would have thought that those circumstances could be put on the face of the Bill. They are not something which needs to vary over time. We ought not to put in regulations something which is likely to be permanent rather than temporary. If a month's absence is to be permitted, there is a strong case for stating that on the face of the Bill.
The other issue which arises in the light of the noble Earl's intervention is whether these provisions are in conformity with European law. I do not know whether the noble Baroness has a view on that.
Baroness Hollis of Heigham: My Lords, I am assured that they are in conformity with European law. As regards whether the provisions the noble Lord mentioned should be on the face of the Bill, I do not believe that they should. Fairly recently we clarified what had been developed through custom and practice; namely, that although eight weeks might be a standard period of absence—that is more or less the summer holidays for children—that could be extended if, for example, children were being returned to India or Pakistan. I keep mentioning those countries but it is in relation to them that cases have arisen. I do not intend my remarks to be discriminatory. As I say, we have only recently clarified that that eight-week period may be extended in those particular circumstances. We can make such changes through regulations. One cannot do that when one has a rigid time period on the face of the Bill.
I can conceive a situation in which, instead of having one long school summer holiday, we have more terms and shorter holidays in between. One would therefore need a linking rule. I can imagine all kinds of
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complexities that may arise as a result of changes in the school year with regard to whether children are, or are not, regarded as being present in this country. It seems to me that regulations are exactly the measures that are required for that degree of description and prescription.
Lord Higgins: My Lords, I hear what the Minister says, and I shall consider it. However, I am still not clear as to why one has to start from the basis that someone is not entitled to the benefit if he is absent for a week; indeed, that is a very specific provision. I shall bear in mind what the noble Baroness has said, and give it due consideration before Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 166 not moved.]
Clause 56 [Abolition of exclusion of tax exempt persons]:
[Amendment No. 167 not moved.]
Clause 58 [Use and disclosure of information]:
[Amendment No. 168 not moved.]
Schedule 5 [Use and disclosure of information]:
[Amendment No. 169 not moved]
Schedule 6 [Repeals and revocations]:
[Amendment No. 170 not moved]
Baroness Hollis of Heighammoved Amendment No. 171:
Page 66, line 23, column 2, at beginning insert—
"In Schedules 3, 4 and 5, the entries relating to Schedule 3 to the Tax Credits Act 1999."
The noble Baroness said: My Lords, this amendment deals with minor, technical repeals to the Employment Bill, which is currently in its final parliamentary stages. I am sorry that it was not possible to bring such an amendment forward earlier. The changes to the Employment Bill, which made these repeals necessary, were made at such a late stage that this amendment could not be tabled in Grand Committee.
The amendment repeals references in the Employment Bill to Schedule 3 of the Tax Credits Act 1999 which will become redundant once the working families' tax credit and the disabled person's tax credit are abolished in April 2003. No equivalent references are needed to this Bill because Schedule 1 directly amends the Employment Rights Act 1996 to provide better protection to employees along the same lines as achieved by the provisions being repealed. In fact, as we discussed in Grand Committee, this Bill provides

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better protection for employees. I hope that noble Lords will accept these minor, consequential amendments.
Lord Higgins: My Lords, we are grateful to the Minister for her explanation of this government amendment. This part of the Bill, together with the whole of Part 2, has not been considered in another place. However, I believe it could reasonably be said that we have given it a degree of scrutiny. No doubt we shall continue to do so at Third Reading.
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Even at this stage—and, indeed, ahead of the Third Reading stage—I should like to congratulate the noble Baroness, as always, on her stamina and lucidity. It is always so much better when she spells it out in her own words rather than reading it. We all look forward to an interesting Third Reading.
On Question, amendment agreed to.
[Amendments Nos. 172 and 173 not moved.]
House adjourned at seven minutes before ten o'clock.