Lords Sitting of 27 June 2002

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop Of St Albans): The LORD CHANCELLOR on the Woolsack.

Transport Policy: Division of Responsibilities
Lord Tebbitasked Her Majesty's Government:
Whether the Secretary of State for Transport is responsible for transport policy in his own constituency.
Lord McIntosh of Haringey: My Lords, Schedule 5 to the Scotland Act 1998 sets out the division of transport responsibilities. The reserved functions for which the Secretary of State for Transport is responsible include transport safety and regulation, such as for the railways and aviation, some aspects of road traffic regulation, such as vehicle standards, and transport security.
Lord Tebbit: My Lords, I am grateful to the noble Lord for that Answer, which might have been broadly and more shortly expressed as, "No, not in most cases". Is not this the West Lothian question incarnate? The English and Welsh electorate have policies imposed on them by Scots members of the Cabinet—to whom they have given no authorization—which do not apply to Scotland.
Lord McIntosh of Haringey: My Lords, I try to be more helpful than just saying, "Not in most cases". I thought it would be useful to set out the responsibilities that the right honourable Member for Edinburgh Central holds. There have been Scottish Secretaries of State for Transport before. Sir Malcolm Rifkind was Secretary of State for Transport from 1990 to 1992, at a time when a considerable number of transport responsibilities were held by the then Scottish Office.
The Earl of Mar and Kellie: My Lords, does the Minister agree that the West Lothian question is an acceptable constitutional anomaly, that the noble Lord, Lord Tebbit, has found a somewhat halfhearted example, that the West Lothian question is a balancing measure for historical offences against Scotland and that it will be partially resolved by devolution in England? Finally, will the Minister confirm that today's United Kingdom is Scotland's finest achievement?
Lord McIntosh of Haringey: My Lords, I am not sure which two of those questions I am supposed to answer. I understand that if there are more than two, I have a choice. It is interesting that since the passage
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of the Scotland Act 1998, there has been very little reference to the West Lothian question. The arrangements seem to have bedded down particularly well. We have maintained the position that there are not two classes of Member of Parliament. Everybody is to be congratulated on that.
Lord Elton: My Lords, I have a supplementary West Lothian question. What is the proportion of Scots to other nationalities in the Cabinet of the United Kingdom and what is the proportion of Scots to other members of the population of the United Kingdom?
Lord McIntosh of Haringey: My Lords, I am not aware that Scots is a nationality. It does not say so on anybody's passport.
Lord Faulkner of Worcester: My Lords, does my noble friend agree that those of us who take an interest in transport issues will regard ourselves as fortunate to have such a talented and imaginative Secretary of State as Alastair Darling, as the Statement on Railtrack later this afternoon will show?
Lord McIntosh of Haringey: My Lords, I am sure that the whole House will agree wholeheartedly with my noble friend.
Lord Strathclyde: My Lords, when the noble Lord uses the comparison between Alastair Darling and Malcolm Rifkind, he is clearly losing the argument. Devolution has entirely changed the process between the Scotland Office and the Scottish Parliament. Is not the real reason why Mr Darling has been given the job that his parliamentary seat is about to be done away with under the redrawing of the boundaries? This is all about seeking to ingratiate himself in England so that he can get a seat in England.
Lord McIntosh of Haringey: My Lords, Alastair Darling has been a first class member of the Government since 1997. He does not need to ingratiate himself with anybody.
Lord Borrie: My Lords, is there any case for restricting the Prime Minister's choice of Secretary of State for Transport in the way in which the Question implies?
Lord McIntosh of Haringey: My Lords, none whatsoever.
Lord Roberts of Conwy: My Lords, is it not abundantly clear in this mêlée of talk that the Cabinet could certainly do with an infusion of sensible Welsh blood?
Lord McIntosh of Haringey: My Lords, my noble and learned friend the Lord Privy Seal has answered that sotto voce. He agrees with the noble Lord, Lord Roberts.
Lord Swinfen: My Lords, are there any proposals to compensate Members of the other place who may lose their seats as a result of doing away with a number of the seats in Scotland?
Lord McIntosh of Haringey: My Lords, we are not just getting away from the original Question; we are two steps away from it. I do not know the answer.

Parliamentary Estate: Medical Emergency Cover
3.6 p.m.
Lord Astor of Heverasked the Chairman of Committees:
Whether the medical emergency cover within the Parliamentary Estate is adequate.
The Chairman of Committees (Lord Tordoff): My Lords, the House authorities keep the provision of medical cover constantly under review. Recent initiatives include the installation of automatic external defibrillators adjacent to this Chamber. Regrettably, in one case in December last year there was an unacceptable delay before an ambulance was called. However, I assure noble Lords that steps have been taken to ensure that such delays do not occur in future.
Lord Astor of Hever: My Lords, I thank the Chairman of Committees for that Answer. Is he really satisfied that emergency procedures inside and outside the House have been improved since the unacceptable delay that my noble friend Lady Blatch had to endure, in great pain, waiting for an ambulance? Is he concerned that parliamentarians and staff—there are up to 5,000 people working in the parliamentary estate at any one time—appear to have only basic emergency cover after 5 p.m. when the nurse knocks off?
The Chairman of Committees: My Lords, the emergency cover is precisely the same after 5 p.m. as it is before 5 p.m. The provision of the nurse is not for emergency cover. The point of emergency cover is to recover the patient, to resuscitate the patient and to get him or her to hospital as quickly as possible. In the case of the noble Baroness, Lady Blatch, that did not happen. However, I emphasise that the delay was not with the ambulance service; it was internal. The telephone operator took a long time to pass the message through to St Thomas' Hospital, because they were checking on various things at great length. That is partly because there have been a number of spurious phone calls to the 3333 emergency number, so those concerned were making sure that this was a serious case. Instructions have now been given that when emergencies on 3333 originate from here, the first thing to do is make sure that an ambulance is on its way.
I can give the noble Lord a few more details about that case. The call to the central ambulance control was not logged until 7.56 p.m., although the original call here was made at 7.30 p.m. After that, the ambulance arrived at 8.11 p.m. and was with the noble Baroness, Lady Blatch, at 8.14 p.m. The ambulance service is in no way to blame for the delay that occurred on that occasion and we have taken steps to ensure that such a delay does not occur again.
Lord Walton of Detchant: My Lords, on a good many occasions over the past two years, I have been
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called upon to offer medical advice within this House—the last occasion being this morning. Sometimes I have been asked to do so in curious locations, including, once, in the ladies' toilet. Is it not reasonable to have nursing cover in the evenings after 5 p.m.? After all, so far as I am concerned—I am sure that ultimately this may apply to many other medical Peers—if the General Medical Council's regulations on revalidation are soon to be introduced, it is possible that I shall be precluded from giving such advice on the ground of age.
The Chairman of Committees: My Lords, if I may say so, they must be precluding people at a very early age. We anticipate that in the near future nursing care will be able to continue until 10 p.m. However, I emphasise that nursing care is not strictly part of the emergency service; it is for normal day-to-day, simple medical assistance.
Lord Roper: My Lords, all parts of the House will be relieved that a review of the procedures in the telephone exchange has taken place so that unacceptable delays of the kind that occurred previously will not be repeated. However, I should be grateful for an assurance that continuous training is being given in the use of the defibrillators which have been provided and that access to oxygen is now readily available, as I understand that problems have occurred in that respect in the past.
The Chairman of Committees: My Lords, it is true that early last year there was difficulty in accessing the oxygen supply. That has now been dealt with. But one must be clear that the administration of oxygen is not a simple, straightforward matter. Regular training is now given in the use of the medical equipment here. As I said, the defibrillators are outside the Chamber. Regrettably, there was an occasion when Lord Shore of Stepney collapsed in the Chamber, and the Doorkeepers administered the defibrillators to very good effect. Sadly, of course, Lord Shore died later in hospital. But we are convinced that that equipment is working well.
Lord Marsh: My Lords, we are all conscious of the fact that the Parliamentary Estate is not covered by the Offices, Shops and Railway Premises Act. Given the large number of people who are in this building at almost any given time, why cannot the estate have cover by analogy with such outside legislation?
The Chairman of Committees: My Lords, I am not sure that I know the answer to that. However, as I said, it is our belief that we are extremely well covered in relation to emergencies. Perhaps I may take the opportunity of welcoming the noble Lord, Lord Marsh, back to his place after his serious operation.
Lord Taylor of Blackburn: My Lords, does the Chairman of Committees agree that, instead of the nurse being employed until 10 o'clock, it would be far better if the House rose at 7 o'clock, thus dealing with the problem the other way round?
The Chairman of Committees: My Lords, I am sure that the nurse would be pleased to have an early evening. However, I do not believe that that is a matter for this debate; it is a matter for the report of the Leader of the House on the workings of the House.
Baroness Gardner of Parkes: My Lords, will the noble Lord explain his remark about oxygen being difficult to administer? All dentists are obliged to make oxygen available in their surgeries. Even the most untrained person is expected to be able to use it. I am able to quote instances when lives have been saved through oxygen being available to people who have suffered heart attacks. Can the noble Lord explain why he considers oxygen to be difficult to use? In addition, is he willing to have oxygen available in the same location as the defibrillators, if that is not already the case? In that way, both would be available at the same source and people would know exactly where to go for them.
The Chairman of Committees: My Lords, oxygen is available. I am saying only that I believe that it can be a little dangerous when handled by the untrained, or so I am informed. The noble Baroness looks at me sceptically, but what is new? That is my understanding, although I may be wrong. I have no medical training, but people other than the Doorkeepers are usually available. The Doorkeepers are now properly trained and oxygen is available. I simply suggest that ordinary Members of the House should not rush to the oxygen bottle and try to administer it because they might do more harm than good.
Baroness Masham of Ilton: My Lords, is the Chairman of Committees aware that the nurses' hours were cut by changing their finishing time from 6 p.m. to 5 p.m.? What was the reason for that? Is he aware that some people must be monitored for certain conditions and that, if the nursing service were available, that would prevent emergencies arising?
The Chairman of Committees: My Lords, I do not know why that change was made. However, I understand that a system is to be introduced whereby the nurses overlap and that someone will be on duty until 10 o'clock in the evening. I am not sure when that arrangement will begin, but that is my understanding.
Viscount Simon: My Lords, further to the observations and questions of the noble Baroness, Lady Gardner of Parkes, I know for a fact that the Chairman of Committees is aware that from time to time I have to use oxygen and that it is readily available. It is provided by the health workers in the Houses of Parliament. But is he aware that the bottle to which I have access needs to be replaced and that the occupational health workers are being very obstructive in replacing it?
The Chairman of Committees: My Lords, I am not sure whether my noble friend said "obstructive" or "constructive".
Noble Lords: Obstructive.
The Chairman of Committees: My Lords, I was not aware of that. If that is the case, I shall look into the matter and ensure that the obstruction is removed.

Vauxhall Cross
3.16 p.m.
Baroness Trumpingtonasked Her Majesty's Government:
What their reaction is to traffic conditions at Vauxhall Cross and the junction of Vauxhall Bridge and Millbank.
Lord McIntosh of Haringey: My Lords, that is a matter for the Mayor and Transport for London.
Baroness Trumpington: My Lords, I cannot possibly thank the Minister for that reply. Does he realise the spin-off effect on other bridges caused by the chaos at Vauxhall Cross? Can he explain to me why huge pavements have been built at the corners of Vauxhall Bridge north side? Are they there to accommodate vast crowds applauding Ken Livingstone as he queues in his car for the lights to turn green?
Lord McIntosh of Haringey: My Lords, I do not know. To be honest, I believe that time for Starred Questions in this House is scarce and valuable. Perhaps I may suggest most humbly to the noble Baroness, Lady Trumpington, whom I admire and respect, that as far as possible we should restrict our Questions to matters for which Ministers have responsibility. David Jamieson, the Parliamentary Under-Secretary of State in the Department of Transport, wrote to the noble Baroness, Lady Trumpington, in response to an earlier undertaking by my noble and learned friend Lord Falconer. Clearly we try to be as helpful as we can on these matters. There is nothing out of order in asking a Question for which Ministers have no responsibility. However, does the House not agree that it would be better if, as far as possible, we concentrated on matters for which Ministers have responsibility?
Viscount Astor: My Lords, does the Minister agree that the Question was in order because it was accepted and that he has a responsibility to answer Questions from the Front Bench as best he can? Indeed, the problem at Vauxhall Cross is caused by the Mayor changing the timing of the lights. Will he condemn those changes and answer the Question that he

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avoided answering last week? Perhaps I may suggest that the reason he should answer it is that significant road safety considerations are now at issue. The Government have a road safety programme, and, unfortunately, at Vauxhall Cross motorists are jumping the lights because they do not change in time. Serious accidents will occur and the Government should address that.
Lord McIntosh of Haringey: My Lords, I said in response to the noble Baroness, Lady Trumpington, that the Question was in order. However, in so far as there is ministerial responsibility, the noble Viscount, Lord Astor, is right to say that there is a ministerial responsibility for road safety.
There are two elements to what has happened at Vauxhall Cross. The first is the rejigging of the road pattern, and I understand that safety elements are involved in that. The other is a cycle and pedestrian scheme, which is very directly connected with road safety because it follows a fatality which occurred a few years ago. That cycle and pedestrian scheme was completed on 16th June. However, the noble Viscount is right to say that there are safety elements to the work at Vauxhall Cross.
Lord Campbell of Alloway: My Lords, does the Minister agree that if the Mayor had discharged his traffic responsibilities with even a modicum of diligence there would be no need for my noble friend the ask the Question? Where else can she ask it?
Lord McIntosh of Haringey: My Lords, the responsibilities of the Mayor are to his electorate and to the Greater London Assembly. Members of the Greater London Assembly have full opportunity to question the Mayor and to disagree with him about any of these matters. The same is true of any local authority in this country. On the whole, we do not answer Questions about matters which are the responsibility of individual local authorities.
Lord Elton: My Lords, is the Minister aware that there is a parliamentary dimension to this issue for anyone who lives on the south side of the river, such as my noble friend Lady Trumpington and me? It was reported on the radio two or three times last month alone that the estimated delay in crossing Vauxhall Bridge was over one hour. That feeds across to other bridges. From time to time south London is isolated from north London and also from the centre of government as a result of those policies. That must be of interest to the Government.
Lord McIntosh of Haringey: My Lords, I am keenly aware of the extent of ministerial responsibility for transport in London. That is why I sought to answer the question raised by the noble Viscount, Lord Astor. However, questions of congestion in Greater London
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are strictly a matter for the Mayor and for Transport for London. I do not believe there is anything useful I can add.
Lord Dubs: My Lords, does my noble friend agree that there might be merit in considering whether the practice in the House of Commons, whereby Questions for which there is no ministerial responsibility are not accepted, could be adopted at this end of the building?
Lord McIntosh of Haringey: My Lords, that is a matter for the House to decide rather than for an individual Minister. However, I am sure that my friends who are responsible for such matters in the House have heard that question.
Lord Howell of Guildford: My Lords, having once had the dubious responsibility of being Secretary of State for Transport, I clearly recall being asked many times about traffic jams and traffic problems in the capital. I recall being advised that perhaps the best answer was that while such matters were the responsibility of local authorities, it is the duty of the Government, and the proper course to take, to state that they would draw to the attention of the local authority—there was not a mayor in those days—most closely and vigorously the strong concerns of Members of the other place. That would apply now just as much to Members of this House. Is it not the duty of the Government to draw those strong concerns to the attention of the Mayor of London so that he can get a better act together?
Lord McIntosh of Haringey: My Lords, that is a helpful and sensible suggestion. I shall certainly draw to the attention of the Mayor and to Transport for London the concerns which have been expressed.
Lord Renton: My Lords, perhaps I may remind the Minister that my noble friend's Question is analogous to one I asked some days ago about the traffic congestion at the eastern end of Westminster Bridge. In this part of London we have some of the worst traffic congestion and heaviest traffic of anywhere in the United Kingdom. Surely, the Minister for Transport has a responsibility to persuade the local authorities to solve the problem.
Lord McIntosh of Haringey: My Lords, I have great difficulty with the concept that the responsibility of the Minister for Transport is to persuade the local authority of his own views on matters which have been devolved to the Mayor and to Transport for London. There is a read back to the Question asked by the noble Lord, Lord Tebbit, of which we should be well aware. The noble Lord, Lord Tebbit, thought that the Minister for Transport was not capable of dealing with matters which are devolved to Scotland; and I believe that is true. I shall draw to the attention of the Mayor and Transport for London the concerns raised by the noble Lord, Lord Renton.

Egg Production and Welfare of Hens
3.24 p.m.
Baroness Miller of Chilthorne Domerasked Her Majesty's Government:
How they intend to ensure that their aim to improve the welfare of laying hens in the United Kingdom does not result in egg production moving overseas to countries with lower welfare standards.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): My Lords, the directive on the welfare of laying hens applies to all member states of the European Union and we directly transposed it into English legislation only last Friday. Any further proposals on the welfare of laying hens will be subject to public consultation. As regards the application to third countries, the EU has been successful in getting animal welfare firmly written into the Doha development agenda. The labelling of eggs has a vital role to play, and improved labelling from 2004 will help consumers to decide.
Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for that Answer. I am pleased that the Government are going out to consultation on this issue. Liberal Democrats fully support improving the welfare of laying hens. However, the Government may decide that regulations in Britain should be imposed in such a way to bring about the end of cages altogether for hens. Surely, the Government have a greater responsibility to promote the excellence of British food so that British people buy a far greater proportion of eggs of free-range hens. At present, I believe, that proportion is only 80 per cent. Can the Government take steps to ensure that public procurement bodies, which buy eggs for school meals, hospital meals, and so forth, take account of animal welfare issues in their specifications?
Lord Whitty: My Lords, the Government—in particular, this part of the Government—spend a considerable time promoting the excellence of British food, including the produce of the British poultry industry. I agree that we should continue to do so and try to persuade British consumers of that excellence. However, at the end of the day we operate a free market and there is consumer choice. The labelling regulations will help in this matter.
Lord Hughes of Woodside: My Lords, I am totally baffled by the Question and the argument put forward. The noble Baroness, Lady Miller, seems to advocate that any time there is an effort to improve animal welfare, it has to be stopped because someone overseas might take away trade. Surely, that cannot be the position of the Liberal Democrats?
Lord Whitty: My Lords, I cannot answer for the Liberal Democrats. The position of the Government is that so far as possible such regulations should be
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conducted on a European basis. However, there may be areas in which we believe the British regulations need to be slightly different. In general, we shall not be gold-plating within Europe. Beyond Europe, this becomes a trade issue, which is why I referred in my Answer to the Doha round.
Lord Elliott of Morpeth: My Lords, does the Minister accept that bringing forward the timing of the abolition of the inhumane method of egg production, which the battery cage represents, will be much appreciated by a number of welfare organisations and many individuals such as myself?
Lord Whitty: My Lords, for those noble Lords who were not present on Friday, I can confirm that the noble Lord, Lord Elliott, gave an effective speech to that end. I indicated then that we were in the process of transposing the regulations and that there would be more consultation on whether to bring forward any further the abolition of cages and how to deal with enriched cages.
Baroness Byford: My Lords, we on these Benches believe strongly in the promotion of animal welfare, as I am sure does the noble Baroness, Lady Miller. Our farmers have led the field on that issue, as perhaps the Minister would acknowledge. Can I press further on the consultation period? At present, DEE RA has commissioned scientific research into the cases for enriched cages or non-enriched cages. I understand that such consultations are going ahead before we have the scientific evidence, which is of concern. Surely, that is the wrong way round. We should wait for the research to be completed before going out to consultation.
Lord Whitty: My Lords, the issue of what is public opinion and what is the view of the industry is one aspect; the research is another. We have indicated that we are seeking the views of the public and the industry. There will be the normal I2-week period of consultation. The research may well eventually inform the final decision.
Earl Peel: My Lords, is the Minister telling the House that the Government are prepared to take action against the importation of eggs produced by hens abroad which are not kept to the same welfare standards as hens in this country?
Lord Whitty: My Lords, I indicated in my original Answer that animal welfare in this area as a whole is an issue that the EU put on the table in the discussions in the Doha round. I also indicated that in order that consumers can better distinguish between the methods of egg production—wherever they are produced—we have introduced labelling regulations which will come into effect from 2004, so that consumers can decide.
Baroness Miller of Chilthorne Domer: My Lords, does the Minister agree that there is no point in introducing these regulations if we simply export cruelty to other countries?
Lord Whitty: My Lords, British consumers and the British public expect certain minimum standards of production within the UK. However, it is also right that if one simply transfers consumer demand to the import of foreign goods where the welfare standards are not so good, one is in part defeating the object. That is why we want to move largely on a European basis and why we believe that animal welfare should feature in the trade negotiations.

Railtrack
3.31 p.m.
The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Lord Macdonald of Tradeston): 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 Transport. The Statement is as follows:
"I would like to make a Statement on the progress being made to put the ownership and operation of the rail network on a sound and sustainable footing; and as part of that the steps being taken to get Railtrack out of administration.
"I will keep the House informed over the next few weeks, but in the light of the conclusion of the sale and purchase agreement this morning between Railtrack Group and Network Rail, I thought it right to come to the House to set out the Government's strategy, the progress made so far and the next steps.
"As the House knows, the High Court put Railtrack into administration last October. As the presiding judge said then, the making of the railway administration order was,
'not only appropriate, but absolutely essential'.
"The Government's objective is to ensure that Britain's rail network is owned and managed by an effective and competent body and so secure a sustainable long-term future for the rail network.
"To achieve that, the next step is to remove Railtrack from administration as soon as possible and have the network under new ownership and strengthened management, who are committed to improving service and safety. That is in everyone's interests: the industry's, that of the workforce and the travelling public alike.
"On 25th March this year, my right honourable friend, the Member for North Tyneside, told the House of the bid made by Network Rail to acquire Railtrack from its parent company, Railtrack Group plc.
"While other bids would have been considered, none was received. Network Rail is a public interest company limited by guarantee and will be run for the benefit of the whole railway, concentrating on its core priorities of operating, maintaining and renewing the rail network. There will be no shareholders and any operating surplus will be used for the benefit of the railway system.
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"The company will operate on a sound commercial basis with a board and management whose performance targets will be aligned to the Strategic Rail Authority's long-term plan as well as the obligations under its network licence to its customers.
"Instead of shareholders, its directors will be accountable to the company's members who will not only be drawn from the rail industry, but will also include members representing the public interest and the Strategic Rail Authority. In this way, the directors of Network Rail will be answerable to people whose primary interest is in the long-term future of the railway.
"Railtrack Group and Network Rail have concluded a sale and purchase agreement to acquire Railtrack plc. I would like to set out in some detail the terms of this agreement.
"In line with its original offer, Network Rail will pay £500 million—pof which £a300 million will be provided by the Government—as well as taking over Railtrack's debt, which now stands at £7·1 billion. This includes loans from the European Investment Bank and the German bank, KfW, totalling just over £1 billion, which Network Rail plans to assume.
"In parallel, London and Continental Railways is acquiring from Railtrack its interest in the first phase of the Channel Tunnel Rail Link for £295 million. At a cost of £80 million, Network Rail will acquire the right to operate, manage and maintain the Channel Tunnel Rail Link and the concession to manage St Pancras station.
"I can tell the House that Network Rail has already secured up to £9 billion of bridge financing from commercial banks to fund its acquisition costs and to refinance Railtrack's existing debt, as well as to fund the immediate operation of the railway.
"Network Rail will also put in place additional commercial financing of up to £7 billion for its medium term requirements. This is necessary to cover operational expenditure as well as to cover substantial cost overruns which were inherited from Railtrack and which will have to be met.
"Network Rail will also need to have—as would any owner and operator—access to back-stop contingency funding. For this reason, the Strategic Rail Authority will provide an additional standby credit facility. This contingency funding of last resort has been set at £4 billion.
"Further details of this funding and of the short to medium term standby credit facilities offered to Network Rail by the Strategic Rail Authority are set out in the two minutes that I am laying before the House in the normal way.
"The House will also wish to know that the rail regulator has today issued a statement setting out his approach to a request for an early regulatory review.

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"These are large sums by any standards. But they are necessary, given the size of the task facing Network Rail, and they would be needed by any successor to Railtrack. There is no escaping the fact that Britain's railways need very large-scale investment—investment we believe is essential.
"It is because of the need for long-term sustained investment that the Government are, through the 10-year plan, increasing the average annual investment in the railways—on top of continued support for running costs—to £4·6 billion. That is more than three times the annual average in the 10 years prior to 1997.
"The public are entitled to expect that this investment will be spent efficiently and effectively. That has clearly not been the case in the past.
"The new company, Network Rail, faces a legacy of poor management and of very substantial cost overruns, which will have to be met. For example, when it began, Railtrack estimated that the cost of the West Coast Main Line project would amount to about £2 billion. It is now clear that the actual costs of the work will he considerably more than that.
"So what is now needed is a competent owner and operator. That is why Network Rail's acquisition of the railway network is so essential to the future of the industry.
"This agreement is a major step towards removing Railtrack from administration and putting the rail network back on a sound footing.
"The next stage in the process will involve Railtrack Group plc putting this offer to its shareholders at a special meeting which is expected to be held next month. It is for the company to decide how much it can offer its shareholders.
"The European Commission is also considering whether any aspect of the support being provided needs to be cleared as state aid.
"However, if the shareholders of Railtrack Group approve the bid at the special meeting and the appropriate clearance is obtained from the European Commission, I would expect to ask the High Court for an order releasing Railtrack plc from administration thereafter.
"It is obvious that Railtrack could not have carried on as it was. Even the company recognised that last summer. And what is more, the division and lack of common purpose that characterised the railway system in the past few years were damaging and destructive to the interests of both the industry and the travelling public.
"All the evidence shows that working together is crucial to the long-term success of the railway network. I can tell the House that over the past few months, despite the uncertainties of administration, the new management of Railtrack has enjoyed closer working relationships with the Strategic Rail Authority, as well as the rail regulator and the train operators—something which is essential if the network is to work effectively and efficiently to everyone's benefit.
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"The establishment of a public interest company in which the Strategic Rail Authority is represented will continue to foster this climate of better cooperation to the benefit of all concerned in terms of achieving the objectives set.
"The railways are of critical importance to the economic and social fabric of this country. There is now an urgent need to give the rail system stability. I believe that this agreement is the right and best way of building a modern and efficient network.
"I commend this Statement to the House".
My Lords, that concludes the Statement.
3.40 p.m.
Viscount Astor: My Lords, I thank the Minister for repeating the Statement made in another place. Does that mean that he is now responsible for transport matters in this House and will be answering Questions for that department?
The one bit of vaguely good news is that the Government have made a U-turn and are now paying £300 million to the Railtrack shareholders. I should remind the Government that almost 90 per cent of Railtrack employees are also shareholders in the company. Will the Government now admit— I do not suppose that they will—that Railtrack was not insolvent, it was the Government who made it insolvent? Indeed, I believe that the Government misled the High Court. They made Railtrack insolvent by withdrawing funding.
To turn to Network Rail, it is a public interest company. Can the Minister define that? It will not have any shareholders, so who will own it? Perhaps he can give us an example of other similar companies in the government portfolio with which we can compare it. Or is it something of totally new invention? I understand that its accounts will appear in the accounts of the Strategic Rail Authority. Does that make it a subsidiary of the SRA? Will it have independent auditors? Who will be responsible for the audit?
The Government say that they will stand behind the £14 billion of debt funding by a letter of comfort from the Secretary of State. The minute states:
"the Secretary of State would intervene in a timely manner to ensure that adequate funds would be made available to the S RA, or any successor body".
How will the Treasury account for those letters of comfort? Will that be on the Treasury books?
The public interest company will be accountable to its members. I understand that it will have 120 members. How will they be selected? I understand that that will be done by a special committee. Who will appoint the special committee? Will there be more than one person? Will it be the Secretary of State? How many directors will the company have? Presumably, it will not have all of those members on its board. How will the new entity be accountable to Parliament?
As I understand it, Network Rail will be responsible for track maintenance and special purpose vehicles will be set up for improvements to the rail system.

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Those vehicles will then sell the track to the SRA after they have improved it. Who will decide the price? How will that be decided? We want to ensure that we do not return to the bad old days of the cost-plus system.
Can the Minister tell us about the time frame? When do the Government expect to hear from the European Commission? Is that a matter of weeks or of months?
This has been a sorry tale. The Government had five years in which to solve the problems of Railtrack. I do not deny that it had problems; I do not deny that we did not get it 100 per cent right.
Lord McIntosh of Haringey: Oh!
Viscount Astor: But we did not get it that wrong. After all, since privatization—the noble Lord, Lord McIntosh, would do well to listen to this—rail travel, the number of passengers using the network, rose by 30 per cent. In spite of the terrible disasters, rail travel is now safer and the train operating companies have invested hundreds of millions of pounds in new rolling stock.
As I said, this has been a sorry saga. Sadly, as always, the victims have been the travelling public.
3.44 p.m.
Baroness Scott of Needham Market: My Lords, I thank the Minister for coming to the House to repeat the Statement. I place on record the support of those of us on these Benches for the start of a process that will move Railtrack out of administration and will place the railway infrastructure on a more sound and sustainable footing for the future.
Of course we believe that the public interest company is exactly the right way forward. Indeed, it would be extraordinary if we were to say anything else, because it was my honourable friend in another place who first suggested the idea of a public interest company as far back as last February. Almost a year ago to the day, the then Secretary of State commented that our proposals would introduce paralysis to the system. So I should be interested to hear what, apart from my honourable friend's oratory, persuaded the Government that a public interest company was the way forward.
We on these Benches have always taken the view that the interest of the travelling public must come first—that and recognising the importance of an efficiently functioning railway network for the economy of the whole country, but especially for London and the South East.
Railtrack shareholders who originally bought shares obtained them at bargain-basement prices estimated as undervalued by about £6 billion. Between May 1996 and entering receivership, shareholders received about £700 million in dividends. So we agreed with the Secretary of State when he said last October:
"new Government money will not be given to compensate shareholders".—[Official Report, Commons, 15/11/01; col. 961.]
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Why has that changed? Also, what will happen if at their extraordinary general meeting the shareholders decide not to accept the offer?
When the Government put Railtrack into administration, they said that they were not prepared to underwrite the company indefinitely or to offer a blank cheque. But we have heard today that they will underwrite it to the tune of £4 billion, but use a sleight of hand that filters the money through the Strategic Rail Authority. I join the noble Viscount, Lord Astor, in asking how that will be publicly scrutinised, especially by Parliament.
Privatisation occurred against a backdrop of an industry in decline. The industry was never set up to manage the kind of growth in passenger numbers already referred to. It is an often untold success story that 30 per cent more people than previously are using the railways. The new, improved SRA has been a major step forward and it is clear that the players in the industry are willing and able to work together now in a way that they have not been previously. That was clearly demonstrated in the way that the industry responded to the terrible events at Potters Bar.
But there are some difficult decisions to be made. Managing the balance of access to the track to grow the market and to maintain and enhance the network will need a clarity of purpose and a willingness to work together that we have not yet seen. Network Rail will be a key player in providing that. There is no merit in simply rebranding. The lessons of Consignia must loom large in our thinking. Clearly, removal of the profit element will remove one major difficulty that bedevilled Railtrack, but it is not the only one. How can the Government be so sure that Network Rail will not suffer the same management problems as Railtrack? How will the relationship between its operational board and its rainbow coalition of members brought together from the industry work in practice?
Finally, how does Network Rail know exactly what it is taking on? There is still no asset register, despite the work under way while Railtrack has been in administration, and Network Rail has said that it will take it another 18 months to provide such a register. Against that background, how can Network Rail be sure how much money it will need to invest?
It has been a difficult time for the industry, the passengers and the people who work for and own shares in Railtrack. Administration has been costly, costing about £1 million a day. It has led to a decrease in consumer and investor confidence. Let us hope that today's announcement marks a new chapter in the future of the railways.
3.49 p.m.
Lord Macdonald of Tradeston: My Lords, in reply to the noble Viscount, Lord Astor, yes, I have ministerial responsibility for answering Questions in the House on transport matters. I shall be ably assisted in that by my estimable and noble friend Lord McIntosh.
The noble Viscount suggested that Railtrack was not in an extremely difficult position. He said that it was not insolvent. When Railtrack came to the

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Government, it asked for what was virtually a blank cheque, for the suspension of the regulatory regime for several years and for the Government to support its share price during that period. I am sad to say that it became increasingly clear that the company was not in proper control either of its asset base or of its costs. That was why the Government took the action that they did and created the not-for-dividend public interest company about which the noble Viscount inquired.
The noble Viscount asked whether there were models for the public interest company. It is certainly the first rail network operator to be based on the model of a public interest company limited by guarantee, but such structures have been tried and tested at corporate level. I shall venture the example of BUPA, the successful private healthcare insurance company. It is, perhaps, the best known company limited by guarantee in the UK. There is also the more recently established Glas Cymru water company, which recently announced impressive preliminary results for the past financial year. In creating the company, we will, as the noble Baroness said, see money that might have gone to shareholders—as, understandably, hundreds of millions of pounds have done—reinvested in the railway.
The company will be limited by guarantee. The noble Viscount asked about auditing. The company will be consolidated into the accounts of the SRA. The auditors for Railtrack will continue to audit the new company, until the opportunity arises for the board to make decisions about any changes, as any company would do. The letter of comfort from the Secretary of State would not be a guarantee, as the noble Viscount will be aware. A Secretary of State could not fetter his discretion on such matters, but I am pleased to report that the evidence from the financial markets suggests that the company has been able to put in place financial arrangements that will assure the £9 billion that I mentioned.
As I said, there will be between 100 and 120 members of the company. The membership will be appointed by an independent appointments committee set up by the board inherited from the present structure of Network Rail. That board will include an appointee from the Strategic Rail Authority and will run the company along the expected lines. There will be representatives not just of those active in the industry—the train operating companies, the freight operating companies and many other interests—but of the public in the regions of the United Kingdom and other interest groups.
The noble Viscount inquired about the special purpose vehicle. Discussions are going on between the Strategic Rail Authority and Network Rail. We believe that understandings will be put in place on how the larger projects will be taken forward.
The SRA's accounts, into which Network Rail's accounts will be consolidated, will be laid before Parliament. They will show transparently how Network Rail is accounted for through the SRA. That is one of the advantages of the new structure. Network
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Rail is a private company, but it will follow the SR.A's strategic plan, which is itself subject to parliamentary scrutiny. With regard to the European Commission's time-frame, we hope that decisions can be made in the near future—in the next month or two. We go forward confidently with that.
I am grateful to the noble Baroness, Lady Scott of Needham Market, for the general welcome that she gave to the plans announced today. That welcome was, I think, amplified in notices that have been issued by the Office of the Rail Regulator, the Railway Forum and, as one would anticipate, the Strategic Rail Authority. I am delighted that there has been such a positive reaction. It is a great credit to those working in the industry that there has not been the kind of paralysis that one might have feared, had events developed in another fashion. We have done our best, with the help of the industry, to manage through the crisis.
The noble Baroness asked about compensation. I must make it clear that the moneys being offered to Railtrack are designed to encourage early exit, because of the benefits that the public would gain from an early decision. That is why the Government have put in our moneys alongside those of Network Rail. It is not compensation for shareholders; it is a recognition that the earlier the exit can be, the more financial advantage there will be to the public and the public purse. I anticipate confidently that the shareholders will look to the board for guidance. The guidance from the board will be that the offer is in the best interests of the shareholders.
I do not accept that the underwriting of the company represents any kind of sleight of hand. The £4 billion that we are seeing the SRA put in place will, in fact, be a form of quasi equity. Because the company will be a not-for-dividend company of the public interest model, it is important that it should have the resilience to be able to borrow. The £4 billion will be long stop money.
The noble Baroness asked why we thought that Network Rail would not have the same management problems. For one thing, the membership is representative of all railway interests. It has been made clear by the train operating companies—in many ways, the most important of those interests—and others that they want a company with well founded experience of engineering practice. So the emphasis will be on building a company that is capable of maintaining, operating and renewing such a vast network. It must also be a company whose management's interests are closely aligned with the targets set on the public's behalf by the SRA. Its management will, transparently, be under scrutiny inside a company that includes 120 or so representatives of the public interest.
The noble Baroness is right to point to the continuing problems with the company. The asset register is not complete. That is one of the saddest aspects of the whole affair since privatisation, which clearly was rather ill founded inasmuch as a price was put on assets that were never properly quantified.

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Despite the recent efforts of the SRA and of Railtrack itself, we are still short of all the information that we need. That is why we have put in the financial support for the company in such strong measure.
4 p.m.
Lord Marsh: My Lords, the noble Lord made the point that there is an implied guarantee here, as there must be at the end of the day by any government. However, I cannot help wondering why he is so optimistic about this one. Every financial restructuring of British Rail and similar railways around the world has always been under-estimated. As he rightly said, no government can place responsibilities upon their successor. All have finished up with the same conclusion—massive debts—and the only way of dealing with it by different governments has always been by cutting the investment programme. It is not like BUPA and I wonder why the noble Lord is so optimistic.
Lord Macdonald of Tradeston: My Lords, I listen with great respect to the noble Lord, Lord Marsh, given his long experience in industry, government and in particular the transport field. I accept the cautions that he states. Indeed, there were these recurring crises during the period when the railways were nationalised.
However, I do not accept that that is an inevitable cycle. I believe that with the structures we have put in place we probably have the enlightened self-interests around the board table of a kind which may not have been in place previously. I believe, too, based on the profound experience of decades of running a nationalised industry, but now, too, from the rather sad experience of the past six years of a privatised Railtrack, that there are lessons to be learned. If there is a criticism that I will readily accept, it is that we continued to be supportive of Railtrack perhaps beyond the point that it was cautious so to do. But we felt that we had to do everything in our power to make the system work and to give the management our support. Clearly, we came to this conclusion with some reluctance and sadness. However, having done so we decided to try to analyse and invest in full measure.
In terms of analysis, the noble Lord may concede that there is probably more of that now than in the past. The quality of it may be debated but we have analysed the problems very thoroughly. We have tried to create the framework for investment. We have now put in place short-term funding of around £10 billion. There will be about £7 billion for the so-called legacy problems inherited from Railtrack. As I said earlier, there will be the long-term support of the quasi-equity £4 billion which will persist over perhaps 50 years. Much of that is contingent liability. I would not expect much of it to be called. There will be a cap on the borrowings. But I believe that we now have a better sense of the scope of the problem and the moneys and policies in place to deal with it.
Lord Faulkner of Worcester: My Lords, does my noble friend agree that the principal reason that this is
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such an important and welcome Statement is because it is a very valuable step towards undoing the damage of the fragmentation of the railway caused since privatisation? Like the noble Lord, I wish that the step had been taken earlier, but the fact that it has been taken is extremely welcome today.
I endorse the point made by the noble Baroness about the way in which the industry is at last getting its act together. It demonstrated that after the Potters Bar accident. The welcome for the Statement from the rail regulator, the Strategic Rail Authority, the Railway Forum, passenger interest and others shows that there is broad support for the way in which the Government are now tackling this matter.
I ask specifically about the future of Mr John Armitt who addressed the all-party railways group earlier this week and impressed all the members of that group. Under his stewardship the number of delays attributed to Railtrack has now fallen from 50 per cent to 25 per cent and the record of signals passed at danger is now at its lowest level ever. I very much hope that Mr Armitt will be part of the future of the railway. I hope that my noble friend can give me some comfort on that.
Lord Macdonald of Tradeston: My Lords, I think that we would all agree, including noble Lords on the other side of the House, that there were defects in the way in which the railway industry was privatised. The conspicuous fragmentation of the industry would be one of the areas that we would hope the new structures would address. That would be true in the area of contracting and subcontracting to which Lord Cullen has drawn particular attention and on which I am sure the new management will begin to take action to remedy.
Like the noble Lord, Lord Faulkner, I was heartened by the way the industry pulled together after the tragic events at Potters Bar. I think, too, that the leadership shown by John Armitt in the short time he has been there will surely commend him to the new company if he is minded to stay with it. John Armitt comes with an engineering background of the kind I emphasised is so desirable and in need of strengthening inside Network Rail.
Like the noble Lord, I look at all the problems and sigh for all the difficulties and tragedies we have had in recent years. However, although bearing in mind the noble Lord's cautions, we now go ahead with cautious optimism.
Lord Renton: My Lords, will the Minister amplify his reference to the European Union? In particular, will he give an assurance that no European taxpayer outside this country will be required to help to contribute towards the losses incurred entirely in this country?
Lord Macdonald of Tradeston: My Lords, we have money in Railtrack at present from the European Investment Bank. But we have notified the European Commission on 31st May of the proposed package of financial support for Network Rail. We are simply

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now seeking confirmation that that package is compatible with the Treaty of Rome. We have every confidence that it is.
Lord Maclennan of Rogart: My Lords, since this is not a company answerable to its shareholders, can the Minister be a little more explicit about the role and composition of the members to whom, presumably, the hoard is accountable? Can he say how the interests between the rail users and the operating rail companies are to he reflected in the membership? What guidelines are being given to this independent group which is to choose the members so that we can judge the extent to which normal corporate governance requirements are being satisfied'? Will it be decided that there will be independent auditing within the new company? Will there be, for example, remuneration committees which will have the job of reporting on those kinds of issues as well? It seems a somewhat circuitous process with the board nominating the members nominating the governing hoard. We need to know a good deal more about the rules which will he applied.
Lord Macdonald of Tradeston: My Lords, to restate, I understand that there will be between 100 and 120 members. There will be a board of the company which will transfer from Network Rail as presently constituted but will in time be populated by people who are nominated by the members. The Strategic Rail Authority will be guaranteed membership on that board and may well have special powers inside the articles of association. No doubt the details of the relationship still have to be worked out.
The sale and purchase agreement has only just been signed so it is still early days. The thinking is that train operating companies, freight operating companies or contracting companies—a range of private sector interests in the railway industry—will be represented. We would also look to other outside bodies: in particular to the Scottish Parliament, to the Welsh Assembly, the regional interests in England and the passenger interests. I am not able to give the noble Lord a quick run through of what the articles of association might say, but I believe that the structure will be more accountable, more representative and more transparent.
Lord Lea of Crondall: My Lords, does the Minister accept that many noble Lords strongly support this method of drawing a line under the present position for two reasons? First, the solution is robust; and, secondly, it is important that we return to a credible medium-term investment strategy for the industry.
Perhaps I may pick up the point made by the noble Lord, Lord Renton. Does my noble friend agree that essentially the European Investment Bank is a facilitator, a financial intermediary, for private sector investment in the international bond market, and that Britain, far from receiving a subsidy, does not receive its normal proportionate share of such international money? I believe that it is right to say that we receive less as a proportion of the EIB's investments, and have done over many years, than France, Germany, Italy or
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even Spain. A big challenge is spelt out in paragraph 20 of the Statement on the 10-year plan: £4.6 billion a year, which is £46 billion. Does my noble friend confirm that that is a challenge that has been taken up by the Government. The Statement says:
"the Government will, through the 10 Year Plan, increase the average annual investment".
But that must be in co-operation with fund managers—in other words the City of London. Do the Government intend to avoid the position in which the City of London sits on the sidelines with power without responsibility? Do they also recognise that, if we are in this together, there must be understanding of the way in which the medium-term plan, with the £46 billion, is put forward so that it is recognised by the international and national financial community as a viable, credible, medium-term plan?
Lord Macdonald of Tradeston: My Lords, I defer to my noble friend Lord Lea in his knowledge of matters European. I have listened with great interest to the points that he makes about the European Investment Bank. On the general finances, I believe that the most encouraging aspect of this development is the positive response that we have received from the financial markets. I also believe that the 10-year plan remains a positive framework inside which investors can make their judgments. The willingness of the financial community to come forward to support Network Rail in the first tranche of money that has been raised, must give us encouragement for the future. We still have quite a way to go. We await the extraordinary general meeting at which, I trust, the shareholders will want to approve the sale and purchase agreement and the deals that have been put before them.
As the noble Viscount suggested earlier. @@there is still some way to go before we can see how to take forward the special purpose vehicle. That discussion will have to take place between the SRA and Network Rail management. When I previously had responsibility for transport, there appeared to be a great enthusiasm in the City of London to work alongside us on the large levels of investment that we have assumed under the 10-year plan. I hope that, once the markets have had an opportunity to digest what is on offer and in prospect today, they will continue to take a positive approach.
4.15 p.m.
Viscount Goschen: My Lords, all noble Lords wish Network Rail well in undertaking the refurbishment of the infrastructure of the 1JK's railways. A number of issues have yet to be answered. The Minister drew attention to the fact that the fragmentation of the railways would be reduced by the introduction of the Network Rail structure. How is that so? One network operator, Railtrack, is being replaced by another network operator, Network Rail. Surely, by itself that announcement will not produce any reduction in fragmentation of the railways. Network Rail may well pursue different policies in the future in conjunction with the SRA. The fact that there is a new network operator makes no difference to the number of

1521
companies. Indeed, we have heard that major projects will be undertaken by the use of special purpose vehicles, which means more corporate entities and not fewer—so more fragmentation not less.
On corporate governance, I thought that the Minister said that the board would have a role in appointing a committee that, in turn, would appoint the members who, in turn, would exercise corporate governance over the board. That appears to be a rather circular structure. At a time when corporate governance is increasingly under the spotlight, particularly in the United States, surely great emphasis should be placed on reassuring investors, or those bodies that are to provide finance to Network Rail through debt, that proper corporate governance procedures are in place.
Thirdly, on whether or not Network Rail is a public company, I did not understand the Minister's argument about BUPA. Unlike BUPA, this body is the Government's own creation. It will undertake the Government's transport policy through the SRA and indeed it is underwritten by the Government. Why does that not make it a public company? The noble Lord drew comfort from the fact that the £4 billion underwritten by the SRA is quasi equity. Equity means ownership, so that implies that the SRA owns this company or at least a proportion of it. The SRA is a vehicle of the Government, so it must be a government company.
Perhaps the Minister will say why the Government are being so coy about public ownership of this body. If it were a public company, the Government would have fully nationalised Railtrack, and I understand that that word holds some powerful connotations for the Government. Had they nationalised it, they would have been able to borrow on the gilt market, the cheapest possible form of borrowing, to refurbish our rail infrastructure. I should be grateful if the Minister could give the cost difference between the Government borrowing the money straight on the gilt market in the conventional way and the new body borrowing money commercially. If he cannot answer that now, perhaps he could provide me with that information at a later date.
Lord Macdonald of Tradeston: My Lords, on fragmentation, the particular area of concern highlighted by Lord Cullen was that of the contractors and subcontractors. Across the industry I believe that it is now understood that there can be a degree of consolidation in the contracting regimes. Indeed, Railtrack had embarked on that course some time ago. I anticipate consolidation there. It is also possible that, following some previous declarations, the franchising process pursued by the Strategic Rail Authority would lead to a kind of consolidation and less fragmentation in train operation. I believe that the fragmentation can be reduced, but more importantly we need strong management and strong co-operation across the industry of the kind that has emerged in recent months.
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The noble Viscount, Lord Goschen, asked about the board committee. The company will be accountable to its members, but of course it will be accountable also to the independent regulator. It will have a network licence requiring it to be operated as though it were a stand-alone limited company. The board will eventually be elected by its members, although as I said, the Strategic Rail Authority will have membership of the board and retain special rights. The appointments committee will be independent and make its judgments independently when appointing the 100 to 120 members of the company. But it is difficult for me to describe in detail to your Lordships the articles of association of this nascent company.
The question of government borrowing is of such profound complexity that I am not sure that I can offer the noble Viscount a quick and ready answer. I shall see if I can come back with something to address his concerns.

Industrial and Provident Societies Bill
Read a third time, and passed.

Employment Bill
4.22 p.m.
Lord McIntosh of Haringey: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Employment Bill, has consented to place her prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Bill read a third time.
Lord McIntosh of Haringeymoved Amendment No. 1:
Page 32, line 20, at end insert—
"() Regulations under subsection (1) may include provision authorising an employment tribunal to have regard to a person's ability to pay when considering the making of an award against him under such regulations."
The noble Lord said: My Lords, in moving the amendment I shall speak also to Amendments Nos. 2 and 4. My noble friend Lord Wedderburn tabled an amendment on Report restoring tribunals' discretion to consider a party's ability to pay when making a costs award, which had, in effect, been removed by the decision in the Kovacs case. We agreed in principle with my noble friend and gave an undertaking to table a government amendment to enable the regulations to provide that a tribunal has the discretion to take into account a party's ability to pay.
The amendments we have tabled provide that tribunal regulations may include provision authorising a tribunal to take into account ability to pay when considering making a costs award in the employment tribunal or the Employment Appeal Tribunal, or an award in respect of preparation time. The detail will of course be set out in the regulations,

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on which there will be full consultation. We are grateful to my noble friend Lord Wedderburn for drawing the matter to our attention. I beg to move.
Baroness Turner of Camden: My Lords, in the absence of my noble friend Lord Wedderburn, who unfortunately cannot be here today—he has a hospital appointment—I thank the Minister for introducing the amendment. As he rightly said, the issue was originally raised by my noble friend Lord Wedderburn and we were given an assurance that the Government would table amendments to meet the points we made. It is deeply gratifying that that has been done, and I would like to place on the record my thanks to the Government.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 2:
Page 33, line 2, at end insert—
"() Regulations under subsection ( I ) may include provision authorising an employment tribunal to have regard to a person's ability to pay when considering the making of an order against him under such regulations."
On Question, amendment agreed to.
Baroness Turner of Camdenmoved Amendment No. 3:
Page 33, line 8, at end insert—
"()Payments of the kind mentioned in subsection (1) do not include any sums in respect of—
() time spent in the normal course of the execution of their duties by a party's directors, executives, managers or employees or by a person under a contract for services with a party, or
() advice given to, or work done for, a party by a legal adviser, whether employed by him or not."
The noble Baroness said: My Lords, the amendment is tabled in the names of my noble friends Lord Wedderburn of Charlton and Lord McCarthy. I have already explained that my noble friend Lord Wedderburn has a hospital appointment. My noble friend Lord McCarthy regrets that he is unable to be present as he is presiding at an arbitration case.
I return to the matter of preparation payments as provided for in Clause 22(2). The Minister may say that it has been thoroughly debated in previous stages, and I agree, but I remain disappointed that the Government have not addressed the main concerns of myself and my noble friends.
The amendment was drafted by my noble friend Lord Wedderburn. To put it simply, we believe that the possibility of facing heavy expenses if the case is lost intimidates a number of would-be employment tribunal claimants, including those who may have a well-founded case. Evidence exists—to which we referred earlier—provided by NACAB, among others, that solicitors acting for employers already attempt to intimidate claimants by threatening that there will be large, probably unaffordable costs, should the claim fail.
1524
If an employer is able to claim preparation expenses, which could be high, that could act as another obstacle to a would-be claimant. The Law Society has pointed out that the position of the parties is hardly equal. The claimant may prepare his case in the evenings on his kitchen table. It may be an onerous task, as the Minister has said, but not one likely to involve the kind of expenses an employer could claim. He could claim for the time of his senior directors, the members of his personnel department, administrative and specialist staff, and overtime pay.
It is to be noted that Judge John Prophet, president of the employment tribunals, has on a number of occasions voiced concern about this provision in the Bill. It will be recalled that on Report I followed his recommendation and tabled an amendment based on applying the Litigants in Person (Costs and Expenses) Act 1975. The Government did not find that acceptable. Indeed, when the Minister was asked if the Government intended Clause 22(2) to apply to directors, managers and employees dealing with the matter in the normal course of their duties, his response was that where companies are represented and incur costs, they can claim such expenses under costs.
Judge Prophet has pointed out in correspondence I have recently seen that that is misleading since costs can be awarded only where there is legal representation. The question remains as to whether companies will be able to claim preparation time for directors, managers and employees who are attending to cases as part of their normal paid duties or who are provided with paid advice by outside advisers or consultants.
The amendment strives for some equality between the parties. Obviously, the employer could make a much greater claim than the claimant for preparation time and expenses if the Bill remains unamended. My noble friends and I have been concerned about the issue, which is why we are raising it this final time at Third Reading, particularly as the president of the employment tribunals still shares our view. I hope for a favourable response from the Minister. I beg to move.
Lord McIntosh of Haringey: My Lords, in response to points made by noble friend Lady Turner and other noble Lords in Grand Committee, we tabled on Report an amendment to provide that a tribunal may not make an award for both costs and preparation time. That is a significant amendment that meets the key concern about the effects of the new provision for preparation time.
This amendment seeks to go yet further. Its first part seeks to exclude an award of preparation time in respect of work on the tribunal case which is within the normal duties of an employer or its employees and contractors. The amendment's effect would be to exclude employers almost entirely from preparation time awards. I understand that it is aimed at companies that employ staff to deal with personnel matters, but it could be argued that it would be within the normal duties of the manager of a small newsagent, for example, who pays the wages and hires and fires

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staff to deal with tribunal applications. However, our disagreement with the amendment is more fundamental than the way it is worded.
Employers have to accept that in running a business they may at some point become involved in a tribunal complaint, and even if that complaint is not upheld by the tribunal they must bear the costs of defending the case, because to have a system of loser pays the winner's costs could have a serious detrimental effect on applicants in particular. That is part and parcel of running a business or company. But why should employers be expected, as a matter of course, to bear the costs and disruption of defending complaints which have been brought or conducted vexatiously or which had no reasonable hope of ever succeeding?
Preparation time awards will be awarded only in very limited circumstances—hopeless, vexatious, unreasonable cases. Those cases are exceptional and we do not accept that defending them should be considered part of the normal execution of duties.
The second part of the amendment proposes that preparation time payments should not include work done by legal advisers, including in-house legal advisers. Although we are aware that the power in new Section 13A(1) could conceivably cover time spent on a case by anyone, including outside lawyers, Sections 13 and 13A are clearly drafted on the basis that preparation time awards and costs awards will cover different matters; in particular, there is a prohibition on a tribunal making both kinds of awards to a party, as I have already pointed out.
We consider that the appropriate place for the detail on how preparation time awards are to be assessed is in the regulations. When we draw up and consult on the regulations, we will consider how best to give full effect to the prohibition on receiving both a costs award and a preparation time award. We intend that assessment of preparation time awards will be by reference to matters which are not recoverable in costs awards.
I understand that these amendments are motivated by concern that applicants may be deterred from bringing cases or may suffer disproportionately as a result of preparation time. Given what I have said about the exceptional nature of preparation time awards, I do not believe that they will. We know that tribunals use their costs powers with great care, but my noble friend Lady Turner and other noble Lords have raised concerns about the impact of Clause 22 and we have acted on them.
We brought forward on Report an amendment to provide that a party may claim costs or preparation time, but not both. We have just restored in Amendments Nos. 1, 2 and 4 the tribunal's discretion to take into account a party's ability to pay when determining whether to award costs or to set the level of costs, and we have included preparation time.
We have said that we will set out in regulations guidelines on how preparation time should be calculated to ensure that awards are reasonable and proportionate to the case. We shall consult very carefully with the tribunal judiciary to establish what
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guidelines they will find helpful and not over-prescriptive. In addition, tribunals will have the discretion to determine what is reasonable in each case. We have said that we will include consideration of a cap on preparation time or fixed amounts for elements of the award.
In addition, we have given an undertaking to address intimidation by representatives through better guidance on how the costs regime operates, to make it clear that the circumstances under which costs can be awarded are very limited.
I think that we have demonstrated our willingness to address the points of concern raised my noble friends Lady Turner, Lord Wedderburn and Lord McCarthy about the impact of costs and preparation time on applicants. The integrity and efficiency of the tribunal system relies upon a costs regime which is both fair and effective. I believe that that will be achieved through the Bill and the supporting regulations. For those reasons, I cannot accept the amendment.
4.30 p.m.
Baroness Turner of Camden: My Lords, I thank my noble friend on the Front Bench for that response. It is quite true that the Government have moved on the whole issue of preparation time since we first raised it. The reason why we have been so keen to advance the case for it once again at Third Reading is that we have striven to achieve what we perceive as a measure of equality between the parties. We felt that preparation time would be more likely to involve the employer in being able to claim a large payment rather than the employee.
However, I am gratified to learn that regulations are to be drafted which seem to take on board many of the points that have been made in the course of our debates. Furthermore, the employment tribunals will then have that guidance on which to base their decisions. In the circumstances, therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 23 [Employment Appeal Tribunal]:
Lord McIntosh of Haringeymoved Amendment No. 4:
Page 33, line 14, at end insert—
"() Rules under subsection (1) may include provision authorising the Appeal Tribunal to have regard to a person's ability to pay when considering the making of an award against him under such rules."
The noble Lord said: My Lords, I spoke to this amendment when I discussed Amendments Nos. 1 and 2. I beg to move.
On Question, amendment agreed to.
Clause 28 [Pre-hearing reviews]:
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)moved Amendment No. 5:
Page 35, line 10, at end insert—
"(1) Section 9 of the Employment Tribunals Act 1996 (c. 17) (pre-hearing reviews) is amended as follows."

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The noble Lord said: My Lords, in moving Amendment No. 5, I shall speak also to Amendments Nos. 6 and 7.
On Report, my noble friend Lord Wedderburn proposed an amendment which would have had the effect of restricting striking out at a pre-hearing review to the circumstances set out in rules 4, 7 and 15 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2001. I undertook to see whether we could table an amendment to Clause 28 at Third Reading which would encapsulate the spirit of my noble friend's amendment.
I believe that the amendment will do so by providing that a tribunal may not strike out at a pre-hearing review on a ground which does not apply outside such a review. The grounds for striking out proceedings under the 2001 regulations are contained in rules 4,7 and 15, and include failure to comply with an order or direction imposed by the tribunal or when the originating application or notice of appearance—or anything in it—is scandalous, misconceived or vexatious. The amendment does not specifically mention the rules, not least because future revisions may lead to renumbering.
As I said on Report, we have no intention of widening the grounds in the regulations on which tribunals may currently strike claims out, although we may consult on whether to amend rule 4 of the procedure rules to take into account the new powers that the presidents will have to issue practice directions, so that tribunals could strike out cases for serious failure to comply with them. The only change resulting from this clause will be that it may be possible to strike out at the pre-hearing review stage. This amendment will ensure that the grounds for striking out may not be wider than those applicable at other stages. I beg to move.
Baroness Turner of Camden: My Lords, I thank my noble friend on the Front Bench for moving the amendment. As he has rightly pointed out, this issue was raised sharply by my noble friend Lord Wedderburn during previous stages of the Bill. We were concerned about the provisions in the Bill, which seemed to confer wide powers to strike out. This has now been dealt with by the amendment before the House. The Government are to be applauded for taking note of what has been said previously on this matter.
On Question, amendment agreed to.
Lord Sainsbury of Turvillemoved Amendments Nos. 6 and 7:
Page 35, line 11, leave out "section 9(1) of the Employment Tribunals Act 1996 (c.17)" and insert "subsection (1)"
Page 35, line 15, at end insert—
"() Alter subsection (2) there is inserted—
"(2A) Regulations under subsection (1)(b), so far as relating to striking out, may not provide for striking out on a ground which does not apply outside a pre-hearing review."
On Question, amendments agreed to.
Clause 37 [Use of alternative documents to give particulars]:
Lord Sainsbury of Turvillemoved Amendment No. 8:
Page 41, line 32, leave out "of" and insert "on which"
The noble Lord said: My Lords, in moving Amendment No. 8, I shall speak also to Amendments Nos. 9 to 14. These are minor but necessary technical amendments to Clause 37 which will allow employers to use a letter of engagement or a contract of employment to satisfy the requirement to provide employees with a written statement of employment particulars.
A written statement must give a dale by reference to which it operates. Logically, any alternative document fulfilling the function of a written statement must also give such a date. The current text of Clause 37 refers to,
"the date of the document".
However, there may be uncertainty about the date of any particular contract of employment. Taken together, Amendments Nos. 8 to 13 therefore clarify the position by making the relevant date the one on which the document was given to the employee. With that made clear, new Section 7B(2) of the Employment Rights Act 1996 performs no useful function. Amendment No. 14 therefore removes it. I beg to move.
On Question, amendment agreed to.
Lord Sainsbury of Turvillemoved Amendments Nos. 9 to 14:
Page 41, line 33, after "document" insert "is given to the employee"
Page 41, line 34, leave out "of" and insert "on which"
Page 41, line 35, after "applies" insert "is given to the employee"
Page 41, line 37, leave out first "of" and insert "on which"
Page 41, line 38, after "applies" insert "is given to the employee"
Page 42, leave out lines 7 and 8.
On Question, amendments agreed to.
Baroness Miller of Hendonmoved Amendment No. 15:
Before Clause 41, insert the following new clause—
"POWER TO CONFER RIGHTS ON INDIVIDUALS: AMENDMENT
In section 23(5) of the Employment Relations Act 1999 (c. 26) (power to confer rights on individuals), the words "or otherwise" are omitted."
The noble Baroness said: My Lords, I regret having to table this amendment a third time. I say that not by way of an apology but to explain that I was compelled to do so by the Government's obdurate refusal to accept the deletion of two words from the Employment Relations Act 1999.
The amendment's positioning has changed. Originally it related to Schedule 7, which deals with minor and consequential amendments. The Minister is always polite across the Dispatch Box but when dealing with this amendment the noble Lord was patronising towards me. He said once that the amendment started with a bang and ended with a

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whimper. On another occasion, he gave numerous examples involving someone named Doreen. I would not mind except that, unusually for me, I doubted myself and wondered whether I had got it wrong. I sought the opinion of the eminent and learned noble Lords, Lord Ackner and Lord Brightman. They told me that this was not a minor matter and that the amendment was important but needed to be somewhere else—so I changed its position.
This wholly harmless amendment would delete what I originally believed to be tautology but the Government's obstinacy, coupled with the Minister's specious and meaningless arguments, convinces me that there is something more to it and that we must get rid of those unnecessary words.
Section 23 of the Employment Relations Act 1999 gives the Secretary of State the power to confer certain rights on individuals. Subsection (5) states:
"An order under this section may make provision in such way as the Secretary of State thinks lit, whether by amending Acts or instruments or otherwise".
I will return to the words
"in such way as the Secretary of State thinks fit"
but "or otherwise" must be removed.
On 4th December 2001, I asked the Minister what those words meant. He frankly admitted that he did not know. He subsequently wrote to me:
"The use of 'or otherwise' was intended to ensure that an order under section 23 could also apply to rights to individuals by means of a free-standing provision rather than by an amendment".
The words
"rather than by an amendment"
mean that the Government admit that "or otherwise" is in addition to an Act or a statutory instrument. What is a "free-standing provision"? My advisers and I scoured the text books but were unable to find any reference to a constitutional device named a freestanding provision. It is abundantly clear that the Government are trying to introduce a new device that will enable them to circumvent Parliament by use of a Ministerial decree.
My advisers and I looked for a similar provision elsewhere but could find none. Some time ago, I asked the Library: it was unable to find anything similar. Only today I received a letter from the senior Library clerk:
"We have searched the Lexis database of the statutes but have not found any further examples of the phraseology used in section 23(5) of the Employment Relations Act 1999".
In previous debates, I have repeatedly asked the Minister to explain "a free-standing provision" but all he wrote was that,
"this was simply a way to give the Secretary of State the flexibility to extend rights … in a way that seemed best from a drafting point of view".
He repeated the flexibility argument in all the debates but did not explain how the "or otherwise" powers would be exercised—despite my suggesting fanciful ways, such as press advertisements or handing out leaflets in Whitehall.
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On Report, the Minister admitted that the wording
"enables an order made under Section 23 to extend rights to individuals by means of a free-standing provision"—
again that meaningless phrase—
"in an instrument … rather than by an amendment to existing primary or secondary legislation".
What kind of instrument? I know only of statutory instruments. That comment confirms my suspicions about a ministerial decree. Fortunately, we have not yet reached the stage of allowing ourselves to be governed that way. The Minister also said on Report:
"It is merely a question of how an order under Section 23 is drafted".
Not so. The Minister admitted that "or otherwise" is an addition to the power to make a statutory instrument. The plain meaning of the words also make that absolutely clear. The Minister said that the words,
"do not mean that the Secretary of State can … extend rights without making an order".
If that is so, what is the "or otherwise" process? The Minister claimed also that,
"an affirmative order is required, as is stated in the legislation".".—[Official Report, 18/6/2002; cols. 702–703.]
On the contrary. Section 23(5) provides for rights to be altered in three ways—a new Act of Parliament; an instrument, which I readily agree requires parliamentary sanction; "or otherwise", for which there is no qualification or precedent.
As to the Minister's claim that the Secretary of State cannot extend rights without making an order, I remind your Lordships that Section 23(5) of the 1999 Act commences:
"An order under this section may make provision in such a way as the Secretary of State thinks fit".
I ask the Minister to convince me and your Lordships—so far, he has dismally failed—by explaining how that power would be exercised, if not by a new Act or instrument.
The Minister insists on treating the issue as trivial. In Committee he called it a "whimper." On Report, he condescendingly said that he would make a final attempt to explain the point to me. The Minister has totally missed the point. At the risk of continuing to bore the noble Lord, I tell him that the power to alter people's rights is not in issue but how those alterations should be made.
An Act of Parliament would be unobjectionable, as would a statutory instrument but "or otherwise"—importing as it does anything that the Secretary of State thinks fit—is not acceptable. It is a dangerous precedent that, despite the Minister's protestations, introduces the possibility of the Government bypassing Parliament. That provision should be removed. To quote the Minister, it is really quite simple. I beg to move.
4.45 p.m.
Lord Ackner: My Lords, I congratulate the noble Baroness on rigidly adhering to the principle that she enunciated. This is not a small and technical matter, as

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the Minister said; it is an important issue that gives rise to the question why on earth the words "or otherwise" were used. They must serve some purpose.
What does the phrase "free-standing" mean? I have heard of free range and of free-standing in relation to the law on fixtures and fittings but what does it mean here? The Minister has never indicated. Perhaps it means free-standing in the sense that the Minister or Government can operate by decree—for example, by placing a notice in The Times saying that as from the first of the month the following will be affected by the Act. There is nothing to stop that being done.
The Minister said that the affirmative resolution procedure would apply to anything done under "or otherwise". But, if one looks at the Act, that opinion is very difficult to sustain because Clause 50 on page 58 deals solely with orders and regulations.
Clause 50(2) provides that,
"Any power of the Secretary of State to make orders or regulations under this Act is exercisable by statutory instrument",
and it goes on to state that the affirmative procedure must be adhered to. But that is in regard to orders or regulations. We are not concerned with that, otherwise there would be no need to put the offending words in.
There is a very heavy onus on a government that have expressly taken power to make alterations in the only ways provided for—that is, by amending an Act of Parliament or by secondary legislation—to justify the addition of "or otherwise". I suggest that this is either a draftsman's aberration or, alternatively, that the Government want to ensure that they have every conceivable power to do what they wish. In the debate on Report, the Minister said in terms, "This does not give us any greater power". One then asks "Well, why have it? What are the words designed to do? To what are they directed?".
This raises an important matter. I rely on the views of my noble and learned friend Lord Brightman, whose wisdom on drafting knows no equal in this House or perhaps anywhere else. He said that this amendment is important and should be put appropriately in the Bill and not in Schedule 7. I hope that the Minister understands that this is not a small technical matter on which to patronise the noble Baroness. It raises an important, fundamental matter. It is for the Minister to justify what, on the face of it, looks like unlimited power.
Lord Brightman: My Lords, in supporting the amendment I intend to take a practical approach to the problem. I imagine myself as a judge faced with a case involving Section 23(5) of the 1999 Act. I read Section 25 and I learn that the Secretary of State has power to make an order granting specified rights to specified individuals in certain circumstances. I am told by the Section that the order may be made,
"in such a way as the Secretary of State thinks fit, whether by amending Acts or instruments or otherwise".
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So the Secretary of State has three options: he may use an amending Act; he may use a statutory instrument; or he may make the order "otherwise"—that is, in some other unspecified way. I shall assume in my imaginary case that the Secretary of State decides not to make the order by primary or secondary legislation but by an advertisement in The Times. My job as the judge in the imaginary case before me will he to decide whether an advertisement in The Times is enough.
A decision on that point will immediately confront me with the task of deciding what "or otherwise" means. I cannot avoid that responsibility. I must decide what "or otherwise" means. As a judge, I must try to reach a sensible decision, a sensible conclusion. The only sensible conclusion that I can think of is that "or otherwise" means "or some other reasonable means". I decide the case before me on that basis, hoping that I shall not be rapped over the knuckles by an appellate court.
The question now arises whether your Lordships are satisfied with an enactment which is so drafted that it is left to the discretion of the Secretary of State to decide what is a reasonable vehicle to use in order to change the law. In my view, such an enactment imposes a quite unacceptable burden on the judiciary and a quite unacceptable inroad into the democratic procedures of this country and should be rejected by your Lordships.
How is the judiciary to decide what are reasonable methods of changing the law other than the standard methods which are known to all of us? Flow is an employer to know whether the Secretary of State has made a valid order under the words "or otherwise"? How is the individual, who has purportedly had rights conferred on him by the Secretary of State, to know whether it is, after all, just an illusion because the Secretary of State has decided to use a device under Section 23 which some court decides is unreasonable?
Is this a precedent which those of your Lordships who today sit on the Government Benches would like to see in the hands of the Opposition if they one day sit on those Benches and form another government? To put the matter shortly, the words "or otherwise" are two words too far.
Lord Sainsbury of Turville: My Lords, as the noble Baroness indicated, we have debated this amendment on earlier occasions. I plead guilty to the fact that I did not think that this was a major issue. I apologise if I took it in a frivolous way. I have now looked at the matter in depth because clearly it is a matter of great concern to the noble Baroness.
Let me try to explain the nature of the situation. Looking again at the points she has made, I hope that I have identified the reasons for her belief that the term gives new and objectionable powers to the Secretary of State to by-pass Parliament. I can see how subsection (5) of Section 23 of the Employment Rights Act could be read in a way to suggest that it confers novel powers.
However, it is still my view that it does no such thing. Section 23 of the Employment Relations Act 1999 empowers the Secretary of State to extend the

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coverage of statutory employment protection rights by order, and not by any other means, to individuals not currently covered by them. Subsection (1) lists the legislation containing the rights in relation to which the power can be exercised. Subsection (5) permits the Secretary of State to make an affirmative order that extends any of the rights conferred by this legislation either by amending Acts and/or instruments or otherwise.
It is stated in Section 23(2) and again at the beginning of subsection (5) itself, that if the Secretary of State wishes to exercise the powers in this section to extend employment rights she can only do so by making an order. Section 23(2) states that,
"The Secretary of State may by order make provision which has the effect of conferring any such right on individuals who are of a specified description".
I believe that the noble Baroness must be reading "or otherwise" as if those words overrode this requirement, so enabling the powers in the section to be used without parliamentary scrutiny. If that were the position, it would clearly be objectionable in the way the noble Baroness has indicated, but I hope that she will see that that is not the case. The phrase,
"whether by amending Acts or instruments or otherwise"
in Section 23 sets out how the Secretary of State may make an order. It is not a list of the types of legislation she may use. It means in layman's terms, and terms which I can understand, whether by amending Acts or amending instruments, or by a new order that does neither of these things. It does not mean whether by amending Acts or by making instruments or by some other means.
The noble Baroness may say that it is ambiguous but, taken with the rest of Section 23, it clearly has the meaning which I have given it. Furthermore, any order under Section 23 must be affirmative. Section 42 of the 1999 Act states that,
"no order or regulations shall be made under sections 3,17,19 or 23 unless a draft has been laid before, and approved by resolution of, both Houses of Parliament".
As I sought to explain in our earlier debates on this amendment, its meaning is simply that, when making an order under the section, the Secretary of State can include provisions in it that extend employment rights, but do not amend any Act or instrument in order to do so. That is all that is meant by using the words "freestanding" although I accept that my use of that expression seems to have been confusing rather than enlightening.
Perhaps I may also explain that this is not the only use of the words "or otherwise" in legislation. I give two other uses of those words in other legislation. The first is Section 116 of the Finance Act 1991. That relates to regulations which provide that a charge to stamp duty does not arise or is reduced in certain circumstances. Section 116 provides that,
"regulations may make any provision in such way as the Treasury thinks fit (whether by amending enactments or otherwise)".
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Section 111 of the Local Government Finance Act 1992 relates to changing the reference in legislation to rates or rateable value of property. Section 111 states that where there is a reference to rates or rateable value, regulations may provide that that reference shall instead by such as is prescribed
"in such a way as the Secretary of State thinks fit, whether by amending enactments or otherwise".
So this is not a unique use of the phrase "or otherwise".
Nevertheless, the noble and learned Lords, Lord Ackner and Lord Brightman, have made very strong statements that they believe that this is not appropriate. Therefore, we have to take account of that very strong advice. We have to decide whether to do something which the noble and learned Lords, with all their experience, believe to be wrong in the circumstances and to balance that against the ability to have an instrument which stands on its own and, in those circumstances, gives slightly greater freedom to the Secretary of State.
In view of the very strong pleas by both noble and learned Lords that they do not believe the Government's measure is appropriate, on balance we are prepared to accept the amendment.
5 p.m.
Baroness Blatch: My Lords, before the noble Lord sits down, perhaps I may say that the Minister has been extremely ungracious. The noble and learned Lords, Lord Ackner and Lord Brightman, are highly respected Members of this House. But it is my noble friend Lady Miller who brought this matter before the House and the two noble and learned Lords. It is highly and extremely ungracious of the Minister not to accept the work of my noble friend, which deserves some credit at this stage of Bill.
Lord Sainsbury of Turville: My Lords, as the House will know, I have the very greatest respect for the noble Baroness, Lady Miller. She brought this point to the House and that was a very important thing. However, the point I was seeking to make, and which I stand by very clearly, is that we still believe that this is a perfectly proper situation, but given the very great experience of the two noble and learned Lords, we are prepared to accept the amendment. That is an appropriate way to make our decision although of course I accept that it was the noble Baroness who brought this matter to the House.
Baroness Miller of Hendon: My Lords, I thank the Minister for the gracious way in which he accepted my amendment. I also thank the noble and learned Lords, Lord Ackner and Lord Brightman, both of whom played such a large part in persuading the Minister to accept my amendment.
On Question, amendment agreed to.
Clause 48 [Work-focused interviews fir partners]:
Baroness Turner of Camdenmoved Amendment No. 16:
Page 56, line 19, at end insert—
"() The purpose of the interview shall be to advise the partner of available opportunities for employment or training (or both).
() Reduction of benefit under this section shall not be applied should the partner deem the employment or training on offer to be unsuitable in the light of his training, background and general circumstances."
The noble Baroness said: My Lords, the issue of work-focused interviews for the partners of claimants has been discussed both in Committee and at Report. I was not convinced by the arguments of the Front Bench on both occasions against the amendments that we put forward. We were advised by my noble friend Lady Hollis of' Heigham, the Minister for Work and Pensions, who dealt with this issue for the Government at Report stage—I am glad to welcome her to the Front Bench again today—that the purpose of the provision in the Bill is entirely benign. The intention is to ensure that the partners of claimants are fully advised as to employment and training opportunities available. There will be no compulsion on them to accept the opportunities held out to them. The sanction of loss of benefit only applies to their failure to attend for interviews. She asked herself whether such interviews should he made compulsory. She answered that herself by saying that if they were voluntary people do not turn up. When people thought that interviews were compulsory and a condition of benefit, they then turned up.
I believe that there may be another reason why people do not turn up. They believe that going down "the Social", which is how some of them describe it, may involve them in accepting jobs that they do not want or feel are unsuitable for them. I made it clear on both occasions when I spoke on this clause that I do not like it at all. The noble Baroness did not persuade me that it was a good provision to appear in an Employment Bill. I share the view of the noble Lords who spoke and said that the clause is really more appropriate for a social security Bill because it is a social security matter rather than an employment one.
In response to my query as to why a claimant should lose benefit because her partner—the claimant is often likely to be a woman—will not go down to the office for interview, my noble friend said that the benefit being paid was a family benefit although the Bill does make specific reference to the benefit continuing to be payable to the claimant. But if it is a family benefit I do not believe that it makes much difference to my case. A family benefit, and a reduction to it, is normally likely to impact more on the woman in a couple than on the man. Why should she suffer simply because he will not attend for interview?
Not all couples live in harmony. Many women stay with unsatisfactory partners for numerous reasons, as we all know. Out of sheer wilfulness, he may refuse to go for an interview. My amendment seeks to deal with one of the reasons why a partner may not be willing to go for interview. In her response at Report stage, the noble Baroness said that the sanction of benefit
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reduction only applies if partners do not respond to the requirement to go for interview. In other words, if employment is offered and refused, there will he no sanction. The sanction is lifted the moment the partner enters the office.
My noble friend says that the intention is entirely benign. I am sure that, so far as she is concerned, that is absolutely right, and certainly while she and her colleagues are in office I am sure that we can expect the legislation to be applied in a compassionate and benign way. But there is nothing on the face of the Bill to say so, and future governments may interpret legislation entirely differently. There is a case therefore for writing this important provision on to the face of the Bill. I hope that the Government will be prepared to look with more favour on the proposed wording. I beg to move.
Lord Razzall: My Lords, this clause—originally Clause 49, now Clause 48—caused considerable aggravation and concern to Members on all sides of the House. I do not think that we ought to let pass the concerns expressed both on the Minister's side and from these Benches as to the effect of the provision.
I strongly support the comments of the noble Baroness, Lady Turner. If the Government are prepared to say that the question of sanction is removed as soon the individual to whom the provision applies has actually turned up for an interview, then a large number of the concerns expressed on all sides will be removed.
We all accept, as the Minister says, that such interviews are often very beneficial for those who take part in them. All the evidence produced by the Minister in Committee and on Report demonstrates that they are beneficial in getting back into the workplace people who might not otherwise find that possible. However, the concern on all sides relates to the next stage; namely, that if it turns out that the job is not appropriate and is not wanted by the individual, that person then loses benefit.
If the Minister indicates that the noble Baroness, Lady Turner, is right when she says that the potential loss of benefit should stop at the moment when the individual turns up for the work-related interview, many of our concerns will be removed. I should be grateful for that undertaking.
5.15 p.m.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): My Lords, on reading the amendment I was genuinely baffled. My noble friend has long-standing experience in social security. When I joined the House and we were in opposition, she guided me through many of the traps of social security legislation. Indeed, we were busy setting traps for the then government to fall into—and occasionally we succeeded.
I am baffled because the amendment is narrower and less generous than what the Government intend and the second part of it seeks to avert that which cannot happen and is therefore redundant. I take it

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that my noble friend seeks assurances from me rather than a full slogging-out of the issues behind work-focused interviews.
The amendment seeks, first, to narrow the scope of the interview to a meeting about available employment and training opportunities; secondly, it seeks to avert a reduction in benefit where the partner deems the employment or training on offer to be unsuitable in the light of his or her training, background and general circumstances.
To take the first part of the amendment, the work-focused interview is designed to find out about the individual—his or her level of skills and experience—and to explore the broad range of information and support available to help them look for work should they wish to do so. The interview will also include advice about possible benefits, about best-buy packages, which our research shows are very important to lone parents trying to calculate whether they should or should not go into work. It possibly covers childcare issues and support services for a carer who would like to go into work for a short period but does not know what the resources are, and that applies to their partners as well. That is what the interview is for. It is not simply to discuss suitable jobs or training opportunities.
My noble friend's amendment would turn the interview into something much narrower and much more akin to the fortnightly intervention meeting—the sign-on interview— attended by those claiming JSA. My reading of the interview is more generous and more comprehensive than that. My noble friend is turning the interview into the very thing that she has criticised on previous occasions.
The second part of the amendment seeks to protect the benefit of the claimant and his or her partner from a reduction should the partner deem the available employment or the training on offer to be unsuitable. But as my noble friend recognises, no one will be required to accept available employment or training as a result of the interview. Regardless of whether or not it is available, all the partner has to do is to take part in the interview. If he or she does this, no question of a reduction in benefit arises. I am happy to give the assurances sought by the Liberal Democrat Benches that at the point someone comes in to be interviewed any question of sanction is then dropped. That will follow three efforts, including, if necessary, a home visit, but certainly personal contact to make sure that people understand the situation.
The push of my noble friend's amendment seems to be that a partner should be required to look for and consider suitable work or training and that, if it is available, it should be taken up; and that the only grounds on which the sanction should not apply is if the work or training is unsuitable. In that sense, the amendment goes far further that the Government think appropriate or sensible and is well beyond the scope of this provision. My noble friend seeks in the second part of the amendment to avert that which cannot happen.
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I am profoundly surprised by my noble friend's amendment. If I were seeking to do what she seeks, she would surely deplore it. In the first part of the amendment, she is narrowing the supportive, wide-ranging interview effectively into a JSA sign-on, and in the second part she is assuming that people will be required to work when they will not. The first part is less generous; the second part is simply not relevant. I hope that with that response again on the record in Hansard my noble friend feels that she has the commitment that she was seeking and will feel able to withdraw her amendment.
Baroness Turner of Camden: My Lords, I thank my noble friend for that response. In view of what she said, my hope is that when regulations are written in respect of the Bill, as I am sure they will be, or guidance is given, this will be made absolutely clear to the officials who are charged with responsibility for applying the Bill's provisions.
My noble friend is right. I was seeking confirmation of what she has just said; namely, that there will not be pressure on people to accept work or training, or indeed any other recommendations, and that the sanction will be applied only if they fail to show up for interview; and that the possibility of a sanction will disappear as soon as the partner goes through the door of the benefit office. In the light of that, I am willing to withdraw the amendment.
Baroness Hollis of Heigham: My Lords, my noble friend uses the phrase, "goes through the door of the benefit office". It is clear that we expect the person to engage in the interview in a sensible way, not just go through the door, come out again and say, "I've signed in". But with that qualification, so that there is no misunderstanding, my noble friend is right.
Baroness Turner of Camden: My Lords, in view of that response, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2 [Statutory dispute resolution procedures]:
Baroness Gibson of Market Rasenmoved Amendment No. 17:
Page 64, line 29, at end insert—
"() In the case of bullying, the appeal may be instituted by either the employee, the manager or the employer."
The noble Baroness said: My Lords, in moving this amendment, I shall speak also to Amendment No. 18. I have re-submitted these amendments because of the helpful way in which my noble friend the Minister responded to them on Report. He recognised the importance of the issue of bullying at work, about which many people are worried. As I said on Report, that was evident in the large number of people—more than 90—who attended a meeting in June at the House.
I know that the Government believe that there are problems with the definition of bullying at work but I recall that many years ago, when we first discussed racial and sexual issues involving harassment and

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discrimination, it was said then that the definition of those phrases would be the difficulty. I believe that the difficulty could be overcome.
I do not wish to go into the arguments that I put forward at previous stages of the Bill. I do not see the point of reiterating the remarks that I made on Report and at Second Reading, when I detailed what happened to those who are bullied. I pointed out the detrimental effect it has on them and often on their families and friends. That has been well documented, as have the effects of a culture and ethos of bullying at a workplace.
On Report, the Minister signalled that between Report and today more thought would be given to the issue of bullying. I look forward to hearing any new thinking on the matter. I beg to move.
Lord Lea of Crondall: My Lords, I support my noble friend, who spoke to Amendments Nos. 17 and 18. We tabled the amendments to follow up the debate on Report on llth June at cols. 173 to 178. The position was clarified when the Minister stated that:
"Employees can raise allegations of bullying under grievance procedures",
and that,
"employers can use their disciplinary procedures against employees who are accused of bullying".—[Official Report, 11/6/ 02; col. 176.]
For many of us, that clarification was a step forward. The question that now arises and which it would be very timely for the Minister to shed further light on, is how the matter will be made clear when the regulations are enacted. We are now at the stage of the Bill when our minds turn to the small print.
How the House will be kept up to date on the enactment of the regulations is one thing but there is a wider audience on this issue. Everyone in the employment relationship will have a wider interest, including employers and trade unions, in how they will be familiarised with the implications of this Bill. The relationship between this legislation, these codes and other procedures is a good illustration of it and one which the Minister may wish to comment on. We have made quite a step forward if the Minister confirms that our understanding of this is correct.
Lord McIntosh of Haringey: My Lords, these are the same amendments that we saw on Report on the treatment of cases which involve bullying. They seek to allow the employer or manager to initiate an appeal against a step two decision under the standard statutory procedures for both dismissal and discipline and grievances in cases involving bullying. The current procedures only permit an employee to request an appeal.
I said on Report that I would meet my noble friends Lady Gibson and Lord Lea to discuss those concerns. We had that meeting this morning which I thought was very helpful and productive. We all agreed that bullying represents a major source of workplace stress and, in its extreme forms, can threaten the health of individuals. The solution I propose involves that point.
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Most organisations are aware of this issue to some degree but a significant number have no policies to deal with it. These organisations need greater help and support. I am pleased to announce that as part of the Government's ongoing strategy to address workplace bullying, we intend to set up an advisory group to the Health and Safety Executive and the Department of Trade and Industry to advise on the establishment of a new management standard for anti-bullying policies in the workplace. It will be one of a range of management standards which the Health and Safety Executive will draw up.
We plan to invite well-known experts in the field to act as members of the advisory group. Once the management standard is set and adopted, it will be applied by the HSE when advising organisations about good practice in dealing with bullying. They have a highly respected team of officers in the field who are well placed to deal with this issue.
We believe that this is a sounder basis for progress than invoking statutory procedures for bullying. We see real difficulties in that approach. There is the problem of assigning a precise definition to bullying, which my noble friend Lady Gibson acknowledged. It is unclear what the term "manager" might mean. That term is not used anywhere else in the statutory procedures. It is intrinsically difficult to assign a right to appeal to third parties; voluntary procedures do not provide for this in general and we have based the statutory procedures on existing practices.
We recognise that managers or others accused of bullying might want to have their voice heard. I believe that the statutory procedures allow for this. Managers are also employees. They would be entitled to use the statutory procedures in exactly the same way as their junior colleagues. Aggrieved managers could raise a separate grievance with their employee about the way they have been treated by their employer's consideration of another employee's complaint about bullying.
That approach makes more sense and avoids introducing unusual steps into the procedures. I make it clear that the Government understand the point which my noble friend Lady Gibson made very effectively on Report. There is a growing awareness of bullying as a workplace issue. There is already excellent guidance and information on bullying, which is published by the HSE and ACAS. The existing ACAS code on disciplinary and grievance procedures discusses the special circumstances which may apply in cases of bullying.
My noble friends Lady Gibson and Lord Lea asked how we can increase awareness of these codes and potential remedies. They put forward a valid analogy going back to when the issues of racial and sexual harassment were first raised around 20 years ago. We shall be doing more to raise awareness of good practice and entitlements.
The DTI in close collaboration with ACAS, the Small Business Service and others, intends to launch a major initiative to publicise the Bill, giving full

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advance notice and guidance to interested parties before the various provisions, especially the statutory procedures, come into effect.
ACAS will need to revise its code and guidance to reflect changes brought about in the Bill with the introduction of statutory minimum procedures. The HSE would need to publicise the existence of the proposed management standard when adopted.
I hope I have assured my noble friends that awareness of the Bill and its implications for bullying will be effectively made public and advertised. I hope that on the basis of what I have said, the amendment will be withdrawn.
5.30 p.m.
Baroness Gibson of Market Rasen: My Lords, I thank my noble friend the Minister for that answer, which I am pleased with. Although I would have liked the word "bullying" in the Bill or the regulations, I am happy to know about the future work of the Health and Safety Commission and I look forward to it. I am aware of the good practice and the work of the officers in the field from my former time as a commissioner in the Health and Safety Commission. They are experts in that area. I am happy that they are to be involved.
I place on record my sincere thanks to my noble friend the Minister for his understanding approach to the amendments. It is good to debate when an employer and I mostly agree. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 18 not moved.]
Schedule 4 [Tribunal jurisdictions to which section 32 applies]:
Lord McIntosh of Haringeymoved Amendment No. 19:
Page 68, leave out lines 31 to 34.
The noble Lord said: My Lords, the amendment tidies up the wording in Schedule 4, which lists the jurisdictions to which the admissibility regime will apply. It removes two jurisdictions from the list—the Employment Tribunal Extension of Jurisdiction (England and Wales) Order and the corresponding order for Scotland. These two orders ensure that tribunals can consider certain breach of contract cases in which the employment relationship has already ended. In other words, former employees can bring claims of breach of contract to tribunals. Current employees must use the courts to resolve contractual disputes with their employer.
Our stated policy is that the admissibility regime will not apply to former employees except when constructive dismissal is claimed, so there is no need to include these jurisdictions in Schedule 4 because they apply to ex-employees only. The amendment therefore removes unnecessary wording from the schedule.
I am about to commend the amendment to the House, but as it is the last amendment on Third Reading and we have applied the excellent tradition of not making speeches on the Motion that the Bill do
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now pass, on behalf of my noble friend Lord Sainsbury and myself I express my appreciation to all Members of the House who have taken part in proceedings on the Bill. I thank the Opposition and Liberal Democrat Front Benches, but also those on the Government Back Benches who subjected us to intensive interrogation. We had 10 very difficult sessions in Grand Committee. I shall not conceal from my noble friend Lady Turner that she and her friends caused us a great deal of grief.
Changes have been made to the Bill. My noble friends clearly felt passionately about the issues that they were raising. I hope that my noble friend Lady Turner agrees that the Government's attitude has not been set in stone, as the noble Lord, Lord Wedderburn, described it at the outset. We have made changes that my noble friends Lady Turner and Lord Lea and other friends with trade union experience have welcomed. We even made a recent change that was inspired by the noble Baroness, Lady Miller of Hendon. All of that has meant that the consideration of the Bill has been proper, in parliamentary terms.
I also pay tribute to the Bill team from the employment relations division of the Department of Trade and Industry. They have worked long and hard to great effect to ensure that the arguments for the Bill were put as well as feeble Ministers could put them and that the importance of debate in your Lordships' House was recognised. I beg to move.
On Question, amendment agreed to.
Lord Sainsbury of Turville: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass. —(Lord Sainsbury of Turville.)
On Question, Bill passed, and returned to the Commons with amendments.

Regulation of Investigatory Powers (Interception of Communications: Code of Practice) Order 2002
5.34 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Filkin)rose to move, That the draft order laid before the House on 8th May be approved [29th Report from the Joint Committee].
The noble Lord said: My Lords, the order has been made in exercise of the powers conferred on the Secretary of State by Section 71 of the Regulation of Investigatory Powers Act 2000, which I shall refer to from now on as RIPA. Section 71(1) of RIPA requires the Secretary of State to issue codes of practice relating to the exercise and performance of powers and duties under RIPA. This code of practice relates particularly to the interception of communications, as set out in Part I, Chapter I of the Act, and not to access to communications data, which is covered separately in Part I, Chapter II of RIPA.

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The interception of communications code of practice relates to the exercise and performance of the powers and duties set out in Chapter I of Part I of RIPA in respect of the interception of communications. The code supports the Act by providing clear and unambiguous guidance on the lawful interception of communications in the United Kingdom. The code was welcomed in another place as providing helpful guidelines and more clarity about the interception provisions in the Act. I hope that it will receive similar support in your Lordships' House.
Section 72 of RIPA provides that any person exercising such powers or duties shall have regard to the provisions in such codes of practice. Section 71(3) requires all draft codes of practice issued under RIPA to be published and requires the Secretary of State to consider any representations made to him about the draft. Public consultation on the interception of communications code of practice lasted from 25th September 2000 to 17th November 2000. The results of the consultation have been made available on the Home Office website.
I shall say a few words about the policy background. The provisions in the Regulation of Investigatory Powers Act 2000 relating to the interception of communications replace those in the Interception of Communications Act 1985 to take account of two issues: first, the movement and development of new technologies, and secondly, Human Rights Act obligations. Importantly, they also provide for the first time for a statutory code of practice to be approved by Parliament.
The interception code of practice sets out how the provisions contained in Chapter I of Part I of RIPA regulate the interception of communications. It remains the case that the Secretary of State is required to issue a warrant authorising interception only for the purposes set out in the Act. Secondly, warrants may be applied for only by the security and intelligence services, the police, Customs and Excise or the Chief of Defence Intelligence.
The code sets out the procedures to be followed by agencies when applying for an interception warrant from the Secretary of State, as well as giving guidance to agencies and others on giving effect to warrants and the disclosure, copying and retention of material obtained through warranted interception. The code also sets out how, under RIPA, interception can lawfully take place without a warrant in specific circumstances, such as when there are reasonable grounds to believe that all parties have consented to an interception. Importantly, it provides guidance on the necessity and proportionality considerations that must be taken into account to ensure consistency with ECHR and Human Rights Act obligations. The code has the support of the law enforcement and intelligence and security services and, importantly, of the Interception of Communications Commissioner, who provides independent oversight of the process. I commend the order to the House.
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Moved, That the draft order laid before the House on 8th May be approved [29th Report from the Joint Committee].—(Lord Filkin.)
Baroness Anelay of St Johns: My Lords. I can be very brief. As always, I thank the Minister for his careful explanation, during the course of which he referred to the welcome given in another place. He carefully quoted the words of my honourable friend Dominic Grieve. I confirm that, in the spirit of joined-up opposition, I agree with my honourable friend. We welcome the making of the order.
It may be appropriate for me to make clear that the order is vastly different from the two RIP orders that were most recently withdrawn by Mr Blunkett, the Home Secretary. I had laid Motions against those orders in your Lordships' House. I recognise that this order is benign. I was grateful that the Government thought again on the other two and took a proper course of action.
Lord McNally: My Lords, perhaps I may also exercise joined-up opposition. In another place my colleague, Richard Allan, the Member for Sheffield Hallam, supported this order. I believe that Mr Allan must be among those best qualified to speak on high technology matters. He is a real computer and Internet "geek"—I am sure that he would not mind that description. I probably occupy the opposite end of the scale of understanding.
However, I have certain battle honours in this matter. I am glad to see the noble Lord, Lord Bassam, in his place. Together with the noble Lord, Lord Cope, the noble Lord, Lord Bassam, and I spent many happy hours going through the rather Orwellian-sounding RIP Bill to get it on to the statute book.
Perhaps I may also take a moment to welcome the noble Baroness, Lady Anelay, to her new role in taking on the Home Office brief. I left the Home Office brief for the joys of broadcasting and she moved in the opposite direction. I can only tell her that, from my own experience of four years with the Home Office brief, she has many interesting hours on that Bench ahead of her if I know Home Office legislation.
As to RIPA and the passage of the order tonight, I believe that the noble Baroness has put her finger on a matter of which the Government must now be well aware. During the passage of the Bill, concerns were expressed on all sides of the House about civil liberties and the constraints that needed to be put on the authorities in their use of powers.
I commend the initiative of the noble Baroness, Lady Anelay, in making clear that her side of the House would pray against the recent orders, as shall we. The Government must think very hard before they try to extend their powers under RIPA. We are going to test Ministers very hard on necessity and proportionality. Those were included in the Bill with great thought and they will be applied, particularly in this House, with great vigilance. I believe that it is a liberal—with a small "I"—but important principle

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that limits should be placed on the powers of the state; that is, limits on what the authorities are entitled to know about an individual.
I also accept that, as the Minister mentioned in introducing the order, the world has changed dramatically since 1985. RIPA is required both in terms of new technologies and, indeed, globalisation. Not only has the economy globalised; so have crime and terrorism. It is a matter of getting that balance right.
In terms of ministerial responsibility, the concern for proportionality in relation to the necessity of and respect for civil liberties does not fly out of the window with ministerial office. Ministers do not change sides when they take office. We hope that Ministers look at these matters with an eye to defending those principles. When Parliament gives the security services and other agencies of state the powers to intercept and to bug, it is very important that the political masters apply strong and stringent tests in defence of civil liberties. I hope that recent events have demonstrated that certainly on these Benches an acute examination will be made of any attempts to extend the powers, together with an examination of the justification for them.
As I am sure the noble Lord, Lord Bassam, will confirm, the Bill had a thorough going over in this House. The protections which appear in the Act, and which are reflected in this code of practice, were inserted for a very important reason—a reason relating to civil liberties and human rights, to which we all adhere.
5.45 p.m.
Lord Filkin: My Lords, I thank both Opposition Benches for the way in which they have responded to the code. I also take on board with some anticipation the Gypsy's warning that they both offered in terms of the order that is not before us tonight. As noble Lords know, my right honourable friend the Home Secretary has signalled that we shall reflect and consult and then come back to the House. On that occasion I am sure that noble Lords will, indeed, give an acute examination of what we place before them.
I believe that the Act itself has been a good process. Thus far, it has been implemented in a thoughtful way because it seeks to do exactly what the noble Lord, Lord McNally, signalled. It recognises the reality of the threats to our society in terms of criminality and terrorism and yet, at the same time, it seeks to tread the very difficult tightrope of not being other than robust in protecting society while not abandoning the values that underpin why we believe that that society is worth protecting. I believe that the Act and this order do that neatly.
The Act has a code which, for the first time, sets out in extremely clear English language, which I found pleasurable to read, the principles on which public bodies must act and the principles against which they will be called to account.
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As the House knows, the Act also set up two mechanisms to ensure that it was not viewed simply as a piece of paper. The first related to a tribunal's investigatory powers to deal with complaints by individuals when they felt that they had been wrongly or inappropriately investigated. The second concerned the independence of the interception of the Communications Commissioner, who clearly has substantial powers to investigate what government are doing under the powers of the Act.
I believe that that threefold structure is a good one. We look forward to its implementation and, it is hoped, to the effective use of the powers to intercept criminals and terrorists in a way that respects the values to which we adhere.
Lord McNally: My Lords, before the Minister sits down, during the passage of the Bill one area caused concern. It was that economic well-being would be seen as a catch-all. I believe that the code removes that fear, but I wonder whether the Minister will comment on that.
Lord Filkin: My Lords, economic well-being is not an all-encompassing power. Clearly one could argue that economic well-being encompassed almost anything that happened in society. But economic wellbeing had to be related in some way to the issues contained in the Act—that is, the security of the state or criminality. I believe that Members in another place discussed BMW and what was happening in the West Midlands. Clearly, simply the fact that a company might change its ownership in no way touched on the security of the state, even if people had views about whether or not that was desirable. It had to be relevant to security or criminality.
On Question, Motion agreed to.
Lord Grocott: My Lords, as noble Lords know, the next Business is an important Unstarred Question on the Ministry of Defence Skill Force pilot schemes. I shall end my oratory at that point because my noble friend Lord Bach has arrived, with perfect timing.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): My Lords, before the noble Lord, Lord Freeman, rises to his feet, perhaps the House will permit my making a brief intervention. I am delighted that the House has not had to be adjourned. I apologise if I have caused difficulty. I was fortunate today to be invited to the Royal Jubilee Portsmouth Armed Forces ceremony from which I have just returned. I hope that that has not caused noble Lords any inconvenience. I am amazed at how expeditious the House has been today.
Baroness Anelay of St Johns: My Lords, as prior notice had been given that the sitting would be suspended until 6.30 p.m. to await the return of the Minister —that is not a criticism of the fact that the sitting would be suspended —my noble friend Lady Seccombe is not in her place and would not want to miss the opening speeches. I shall ask one of my

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colleagues behind me to go immediately to the Whips Office and ensure that she comes forthwith to hear the speeches.
Lord Grocott: My Lords, I beg to move that the House do now adjourn during pleasure until 6 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 5.52 to 6 p.m.]

Skill Force Pilot Schemes
6 p.m.
Lord Freemanrose to ask Her Majesty's Government how successful the Ministry of Defence's Skill Force pilot schemes have been in addressing the problems of school truancy and exclusion.
The noble Lord said: My Lords, when the Minister returned, he kindly said that he hoped that the House had not been inconvenienced. There has been absolutely no inconvenience. One knows what pressures Ministers are under. I am very pleased that it is this Minister—the noble Lord, Lord Bach—who will be replying because of his position in the Ministry of Defence and also, I suspect, because of his interest. So we are very grateful.
Indeed, there is some advantage to your Lordships. Because this is last business we are allowed a little extra time—12 minutes—on what I believe to be an important subject. I also thank other noble Lords for taking an interest in what may seem to some arcane subject but which actually is extremely important and presages important further changes in the future.
I declare an interest as the president of the council of Reserve Forces and Cadets Associations in the United Kingdom. For the benefit of your Lordships, the Reserve Forces and Cadets Associations, which many of your Lordships will remember as the TAVRs—the Territorial Army and Volunteer Reserves—fulfils an important role. The council is the overarching body which looks after the 13 independent associations covering the different regions of the United Kingdom.
For the purposes of the debate, I put on record that there are 125,000 cadets in the United Kingdom. Later, I shall have something to say about their role, and their complementary role, to the skill force initiative. But I am speaking in a personal capacity. I do not in any way intend to speak for my colleagues up and down the country who are perfectly capable of speaking for themselves in the reserve forces and cadets associations. However, I believe that I capture the spirit of support of many of them, both those who staff the individual associations and those who sit on the governing bodies.
I say at the outset that I very much welcome the initiative of the Ministry of Defence in launching the Skill Force initiative. I congratulate the Government on the initiative. I hope very much that it will continue and grow. Therefore, I hope that there will be very much a multi-partisan approach to the issue today.
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It may help your Lordships if I briefly try and describe what Skill Force is. Clearly, the Minister will give more information, but for those who read a debate sometimes it is helpful at the outset to see the context of the debate rather than going directly to the Minister's speech and then reading backwards.
Skill Force is staffed by former warrant officers and officers from the Armed Forces. They provide skills training to—typically—14 to 16 year-olds. At the moment, the total is about 1,200. That is 1,200 set in the context of 125,000 in our cadet organisations. Those youngsters perhaps have been playing truant from school and/or have been disruptive in the classroom and therefore have been excluded.
Skill Force takes those youngsters for one day a week, perhaps two half days, out of school—they must go back to school for the other four days—and provides them with some non-military training, skills we would describe as "essential skills" such as how one works in a team; how one relates to and communicates with people—courteously and politely and directly; how one tackles everyday problems; how one organises one's day; how one relates to one's parents; and how one relates to one's teachers. These are basic skills which will lead in some cases to, for example, the Duke of Edinburgh's bronze award or other qualifications.
The purpose, I understand, is that when youngsters reach 16 they stay on at school for further education in the sixth form, enter some form of training scheme or go into employment. They do not become a social walking disaster and end up either on probation or in prison or, as adults, replicating their past behaviour.
I understand that the early results have been encouraging. For those who have participated in the scheme so far, attendances at school are up—in other words, truancy rates are falling—and fewer have been excluded by teachers for disruptive behaviour.
All that is good news. I want to make the point forcefully that this scheme is non-military. The youngsters are not in uniform; they are not handling weapons. It is unlike the American scheme—the Junior Reserve Officer Training Corps scheme—which is very much aligned with the services. It perhaps has some of the same purposes as the United Kingdom scheme, but this is non-military.
Briefly, perhaps I may sketch the background to the problem of truancy. We know that the Government have set a target to reduce truancy by one-third during the year 2002–03. Extra money has been provided for schools to tackle poor behaviour. The figures do not seem to have changed very much—even in the last reported year—over the last five years. But, on average, about 1 per cent—and here I am talking about pupils in maintained secondary schools—regularly have unauthorised absences from school of at least half a day a week. That is a disturbing number. These children are playing truant.
There is, I believe, a great correlation between truancy and lack of educational achievement. Frankly, truancy is related. There is a higher degree of

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correlation with schools in deprived areas, and, therefore, perhaps a lack of parental support in some cases.
We know that education welfare officers and local police patrol the streets to find truanting children. Police have the power to return children to school. Education welfare officers talk to parents and remind them that they have a legal duty to make sure that their child is at school.
Many of your Lordships will have seen the recent BBC report. In May, almost 12,000 children were caught playing truant in sweeps of the streets and surrounding areas close to the school in 34 education authorities in England with the worst absenteeism record—12,000 children.
Sanctions we know about and which have been discussed in recent weeks are imprisonment of parents, cuts in benefit payments and police in schools. I am not addressing those issues. I am supporting the concept of Skill Force, which is more about encouragement and trying to teach basic human skills to youngsters in this category.
The criticism made in some quarters—I believe it is a minority—that somehow this initiative is in competition with the cadet forces is misplaced. I cannot trace at the Ministry of Defence any switching of resources away from supporting cadet organisations to Skill Force. I hope that those who read this debate will be reassured on that point.
It is interesting to note that the aims of the cadet organisations are similar to those of Skill Force. The stated aims of the cadet organisations, although there are slight differences as between the Sea Cadet Corps, the Army Cadet Force, the Air Training Corps and the Combined Cadet Force, are to help young people towards responsible adulthood, to encourage valuable personal attributes and to foster confidence, self-reliance, initiative, loyalty and a sense of service to others. If that does not encapsulate what we hope for from Skill Force, I am not sure what else we could ask. Its difference from the cadet organisations is that they use military themes, based upon the culture and ethos of the single services.
But the main aims are similar. It is interesting to note that about one-third of youngsters on Skill Force projects either have been or are in the cadets. So there is an overlap, which is significant.
On behalf of some of my colleagues who work in and support the reserve forces and cadets organisations, I hope that we shall be able to provide administrative backbone support for that initiative—perhaps by providing some of the administrative arrangements, housekeeping and financial book-keeping.
I pay tribute to the team at the Ministry of Defence associated with the initiative. In particular, Dr Moonie MP, the Parliamentary Under-Secretary of State for the Armed Forces, has given it tremendous support. Colonel Cross and Mr Gary Lewitt, of the Ministry of Defence, have been extremely supportive and have pioneered much of the work.
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We should congratulate the Government on the extent to which they have achieved joined-up government here. The Department for Education and Skills and the Treasury seem to be playing a full role. Indeed, the Treasury is substantially funding the scheme; the money is not coming from the Ministry of Defence budget to any significant extent. We should congratulate the former warrant officers and officers involved. They provide an excellent example to the youngsters and receive a good employment. When my noble friend Lord Cranborne was a Minister, he introduced an initiative similar to this. It did not get off the ground. I tried unsuccessfully to do so myself, 15 years ago, when holding a similar position to my noble friend.
I hope that noble Lords visit the pilots. I visited the pilot in Islington. I was extremely impressed by the youngsters; they were intelligent and interested. I hope to welcome them to the Houses of Parliament to give them a tour. I am sure that it is an entirely different world from the one to which they are accustomed. The scheme deserves support and continuation.
This may be a small financial step for the Ministry of Defence, but it is a giant step for joined-up government.
6.12 p.m.
Lord Hardy of Wath: My Lords, I congratulate the noble Lord, Lord Freeman, both on the initiative that he has deployed to secure this debate and on the analysis that he presented to the House. The Skill Force proposal is one of considerable value. Although I shall suggest its widening, that does not mean that I support its replacement.
As I am extremely interested in the Air Training Corps, I was grateful for the noble Lord's explanation that there is no conflict between it and Skill Force. I certainly agree that I should not want the Ministry of Defence to deploy resources away from the cadet forces, because they probably provide the best recruits that the Armed Forces receive.
However, the principle could be applied in a way that would be rather more a service of prevention of disruptive behaviour and exclusion from school. I trust that the House will have some sympathy with the arguments that I shall deploy.
I was a schoolmaster a long time ago. As a young teacher, I realised—I realise even more as the years pass—how much I was helped by older colleagues with substantial experience in the Second World War. Because of that experience, they had a broader approach, were more mature and probably had a more marked sense of humour, which their experience had developed. They were very good at the job.
I accept that teachers' position today is rather different; it is a different society. There are more broken homes and there is more marital breakdown, greater criminality, the drugs problem, and so on. There is probably a higher proportion of irresponsible parents. That is why I can see an argument for the extension of the approach commended by the noble Lord.

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I do not suggest that we can use the Armed Forces to replace teachers. A few months ago, I visited a primary school close to my home and went into five classrooms. There were five non-teaching assistants—good, local ladies. They were not teaching. They were tying shoelaces for the little ones; they were helping to issue equipment; they were listening to children read. They were, as it were, a cross between mothers and teachers. They are valuable in primary schools.
There may still be a place for such assistance for the younger age groups in secondary schools, but the most useful auxiliary assistance—especially for schools that are socially deprived or where the disruptive behaviour problem is especially marked—could be provided by ex-servicemen.
Many people will have seen the television programme, "Lad's Army", and think that that is what the services are like now. From my experience, it was rather accurate, but that was a long time ago. Today, we have professional rather than conscript forces. Servicemen in all three services are led rather than bullied. Those who have served, who have given their 20-odd years and are coming out with enormously valuable experience and a capacity of man-management that may be unequalled in other parts of our society, could make an extremely valuable contribution by assisting schools in their pastoral role.
Many teachers today may feel uneasy dealing with disruptive children. Many of them may not feel especially eager to encounter the more obnoxious parent. People with substantial military experience would not be quite so deterred. They would have a confidence and maturity to deal with the problem which may not be readily available in the school staff room. They could certainly deal with truancy.
We must accept that a substantial proportion of children playing truant from school are doing so with the full knowledge and approval of their parents. We must also accept that the irresponsible parent is unlikely to go to the parents' meeting or to co-operate with the school. A pastoral fulfilment of the skills of the senior non-commissioned officers of our Armed Forces could make an enormous difference.
Schools may be uneasy at first at the arrival of a sergeant major—especially where staff think that "Lad's Army" represents the service that we have today. But they would rapidly find that the children would be provided with a role model far better than others that may be held before them.
So I strongly welcome Skill Force. I trust that it will complement the cadet forces, which are most useful. But I also believe that we could extend the pilot scheme to ensure that there is involvement within the school to counter the disruptive tendency and to provide a means to prevent problems that will otherwise fuel criminality for a long time ahead.
6.18 p.m.
Baroness Blatch: My Lords, I first thank my noble friend Lord Freeman for introducing the debate and for his lucid explanation of how Skill Force works. It has my full and unequivocal support. I also declare an
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interest. My daughter and son-in-law are both serving officers in the Royal Air Force. I was myself a fairly lowly member of the Royal Air Force more years ago than I care to mention. My husband served in the Royal Air Force as a test pilot. I serve at present in the Air League Council and am an Air League Council member on the National Air Cadet Council, which is a body sponsored by the Ministry of Defence.
I know that my noble friend's description highlighting the important role of cadets is supported by the noble Lord, Lord Hardy of Wath, who has a long-standing interest in cadets and an active interest in the work of the Air Cadets, as I do myself. We need no persuading of the contribution that they can make. I lose no opportunity—and the noble Lord has taken this opportunity—to say how much the work of all cadet forces has contributed to turning around the lives of young people. Many young people who are not secure at home and do not have the support of a loving and nurturing family have, by one means or another, found their way into cadet forces. Their life has been turned around, and they have made positive contributions to their community from then on. They have also become more fulfilled themselves and have acquired skills that set them up for life.
For a long time, education has been an interest of mine. The noble Lord, Lord Hardy of Wath, made a point about early intervention and the contribution that could be made by former members of the Armed Forces and members of the cadet forces in our schools. When the noble Lord spoke, I was reminded of a neighbour of ours from the time when our children were very small. We were talking about the unexpended energy of young people, of which there is a great deal. It is a problem. Often, if children expend their energy at all out of school, they do so in the wrong way. I remember my neighbour saying that it would be a good idea if ex-members of the Armed Forces, particularly physical training instructors, could be used when there were early signs of disruptive behaviour in the classroom. They could work with disruptive children out of the classroom, so that they could go back into the classroom. There was a deep intake of breath from those who heard her say that, but here we are, so many years later, making the same comments. My noble friend Lord Freeman talked about something much more sophisticated, which would use the talents and expertise of the Armed Forces and the cadet forces and the disciplined, structured way in which they operate to benefit other young people.
My noble friend referred to another of my noble friends, Viscount Cranbourne, and to a similar MoD scheme that did not get off the ground. In fact, it did get off the ground. At the time, I was a Home Office Minister and my noble friend Lord Cranbourne was a Minister at the Ministry of Defence. We had some difficulty in convincing the Department for Education that it was a good scheme, but we were undaunted, and our two departments jointly funded a scheme at Applecross on the Wills estate on the west coast of Scotland. The idea was to bring together for three, four or five weeks a group of vulnerable young people who

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were, perhaps, living slightly on the edge and getting involved in petty crime, and a group of young leaders, including young civil servants, people from the Probation Service and—the Ministry of Defence's contribution—cadets. Those people were put together there for a month and given activities.
The weakness of such schemes is often exposed when the young people are sent back to their communities. That is when all the good work that has been done with them out of that environment is undone. However, there was a wonderful voluntary organisation called Fairbridge that supported the young people as they moved back into their community and built on the work that had been done in Applecross. The rug has been pulled out from under that project. That is the only note of dissension that I shall introduce to our debate.
The scheme is now living rather hand to mouth, looking around for ways of sustaining itself. I am pleased to say that the cadet movement found the scheme very valuable. Not only were vulnerable young people benefiting, but the young potential leaders were benefiting too. They were improving their leadership and management skills. When the young people were together, the vulnerable young people found that there were things that they could do better than the so-called leader and management group. That was a wonderful aspect of the scheme, and there were benefits all round. The scheme, which took place in a beautiful part of the country and was supported by the most amazing voluntary effort by the cadet forces, the MoD and the Home Office, had a great impact on the lives of the young people.
It is important to try to keep such schemes going. There is a tendency in government, when something is well established and working, for civil servants to look around for something more novel and leave other schemes to fend for themselves. I must plead guilty to having done that in my time in government. Some schemes provide disproportionate benefit to the community, and I would like to think that they would continue.
I warmly thank my noble friend for giving us the opportunity to recognise the work of former members of the Armed Forces and of the cadet forces and to put in a plea for a little help from their friends. I know that the Minister is such a friend.
6.25 p.m.
Lord Trefgarne: My Lords, like every noble Lord who has spoken, I must declare some relevant interests. I served in the Ministry of Defence with my noble friend Lord Freeman. Subsequently, I became a vice-chairman of the Army Cadet Force, and I am now, along with my noble friend Lady Blatch, a member of the Air League Council. I have had a long interest in the cadet forces and am a warm supporter of the work of the ACF, the Air Training Corps and the Sea Cadets, although the Sea Cadets are more loosely connected with the Ministry of Defence than are the other cadet forces.
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I agree strongly with the case put by my noble friend Lord Freeman for the initiative to which his Question refers. Retiring NCOs, in particular, are an enormously valuable resource, which we should employ to the national good. The expansion of the Army Cadet Force, for example, has often been constrained by the availability of adult instructors. It is always desirable that they should include considerable numbers of former Army NCOs. In past years, there have also been policemen. They were not necessarily retired policemen but may have had time available to bring their expertise and experience to bear on the instruction of young people. Several years ago, when I was concerned with such matters, we sought to expand the Army Cadet Force to include many more girls. Initially, that move was seriously constrained by the availability of female instructors, although, eventually, that problem was overcome.
We must make it clear that the cadet forces are not just recruiting agencies for the Armed Forces. They are much more than that. They are youth organisations that provide a focus and a range of activities for young people. Often membership of a cadet force does not lead to a career in the Armed Forces, nor is it intended to. The cadet forces are an enormously valuable resource for the purposes that my noble friend Lord Freeman described, ably supported by my noble friend Lady Blatch and the noble Lord, Lord Hardy of Wath.
Nowadays, comparatively small numbers of cadets join the Armed Forces. Because the cadet forces are so active in urban areas, and in inner-city areas in particular, they play an enormously valuable role in the way that has been described. So, I support the Skill Force initiative. It is said that additional resources will be required if the initiative is to be expanded to the 100 or so units that are hoped for. I hope that the additional funds can be found, whether they come from the Ministry of Defence or anywhere else. It is a crucially important initiative for the young people of our country, and I support what my noble friend Lord Freeman and others said.
6.29 p.m.
Lord Redesdale: My Lords, I also thank the noble Lord, Lord Freeman, for initiating the debate. Unlike the other speakers, I had not heard of Skill Force before I saw it in future business. I found it difficult to work out what it was about, until I got some briefing. I am not a great expert, unlike previous speakers. My qualifications are slightly less lustrous than theirs. I served only as an officer in the TA—perhaps "served" is not the right word—having been dragooned into the CCF over 20 years ago.
The Skill Force scheme is outside the military-uniform environment. (My experience relates to the CCF. We wore shirts which seemed to be made of the coarsest fibres known to man.) That has to be a good thing. Skill Force is a progressive scheme. Its aim is to tackle one of the major problems facing the educational system today—exclusion. Exclusion is the nuclear option in the education system. For schools it is to a degree a mark of failure but it also demonstrates

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the limitations of the options available. It has detrimental effects on the pupils' future education and prospects.
Skill Force is not the only scheme which seeks to deal with the problem of exclusion. Young@now is an organisation which works with local pupil referral units. Its Jolt Programme supports disaffected young people by building on their latent skills and abilities outside conventional academic structures, helping to re-introduce them into mainstream education. It does excellent work.
Another organisation with which I am closely associated is in the North East. It is an art project called Kids Kabin and works with younger children. One of the problems is that exclusion often starts at an early stage. That body seeks to use art and free expression to give the children esteem.
From briefings and research I have undertaken, Skill Force seems an extremely progressive scheme. The brochure sets out optimistic, even aspirational, targets: 100 per cent to achieve the Duke of Edinburgh's award scheme; 100 per cent to achieve a Level One OCR Certificate in Preparation for Employment; and 100 per cent to achieve the St John's Ambulance 3 star Young Lifesavers Award. A hopeful target is a 50 per cent reduction in school exclusion. However, from the pilot project that figure seems not to be optimistic but achievable. That has to be related to the many years' experience of the instructors who go into schools. With schools being given outside resources, the teachers view the scheme as worth while. It is good that the scarce resources of the school are not used in that area.
I foresee one problem. Funding for the scheme seems to come from the Treasury. The Treasury is not known for its never-ending supply of largesse. Therefore, I have one question. Which department will be given the responsibility in the long term for this extremely successful scheme? Perhaps the MoD should take it up in the long term. Although the project is not seen as a vehicle for recruitment, it presents the Army in an extremely good light. Those excluded, and other school children, could become valuable members of the Armed Forces. Having worked on TA recruitment, I know that the Army is seen less and less as a favourable career path. The military are not seen as the natural career option for people at present.
Skill Force is an excellent scheme. Having worked with many children through some of the activities of Kids Kabin, I believe that its real success is demonstrated in an article written by the children. They said that they were going to school so that they would not be thrown off the Skill Force project which they enjoyed. That has to be seen as a mark of success.
6.36 p.m.
Baroness Seccombe: My Lords, as we seem to be in confessional mode, I can only declare that I was a Sea Ranger for a number of years and enjoyed that very much indeed. I am enormously proud of my elder son who this year completes 25 years in the TA.
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I join other noble Lords in congratulating my noble friend Lord Freeman on highlighting the Skill Force initiative and bringing it to the attention of Members of your Lordships' House in such an explicit and interesting way. Like other noble Lords, I very much support measures that assist young people who are at risk of becoming disaffected with mainstream education. I am sure that we all agree that it is vital to re-engage with these young people so that they can reap the benefits from some type of formal education.
I understand that Skill Force is a scheme modelled on one that originated in the USA. Pilot schemes were launched in this country as the Armed Forces Youth Initiative in September 2000. It was then modified and expanded 12 months later to include 47 schools. In addition, it was renamed the Ministry of Defence Skill Force. Trained instructors who had served in the UK forces were initially allocated to the pilot schemes. I understand that the American scheme is a far more disciplined one and I presume that because of its success the Government adopted the initiative. However, I understand that today the only common factor of the two schemes that remains is that ex-servicemen are recruited to mentor in schools.
Truancy is the scourge of our age and made more disturbing by the fact that many parents do not appear to be taking a responsible approach to the widespread problem. Indeed, as my noble friend Lord Freeman outlined, truancy patrols working in May found that almost 12,500 children were absent from school. Around half of those stopped were with a parent. What chance do those children have if their parents take such a cavalier attitude?
Many of the candidates for this programme have a history of truancy. As a result, they are often way behind their peers, their level of achievement is low and their self-esteem is negligible. Government statistics reveal that truancy has increased by 11 per cent over the past five years. It is now a problem of major proportions.
I believe that many of these young people have not had the advantage of discipline in their lives at home and as a consequence find it hard to conform to the rules and regulations imposed on them during their school day. They appear to find it difficult to arrive on time, to learn basic skills or to be a part of everyday school life. More alarmingly, they can be a disruptive influence and cause the rest of the class to miss out. It is, therefore, in the interest of everyone that action is taken to try to get them interested in some form of learning.
The standard of discipline within our schools is worrying and I believe made worse by the Government's decision in 1998 to reduce exclusions of disruptive pupils regardless of the circumstances. This decision undermined the authority of heads and teachers and has led to more violence. I am delighted that the Government have now reversed this disastrous policy and I hope that heads and governors will now have real power to make decisions on exclusion based on individual circumstances.

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Many of these disruptive pupils have probably lacked discipline all their lives. A lifestyle without boundaries known, accepted and understood can lead only to erratic behaviour where everyone suffers and the one who suffers the most is the young person out of control.
That brings me to my first question. Why was it decided to have a less structured form of the American programme if its success was based on a more formal approach?
At the same time as we are expressing our concern about one group of young people, we must not forget, as many noble Lords have confirmed, that another group has been mentioned: I refer, of course, to the cadets of all the services. As my noble friend Lord Freeman has said, 125,000 dedicated young people, week in and week out, are involved in training activities. As we have heard from noble Lords, they are decent young people who have their lives under control. They are role models for others and move on to become responsible citizens. The cadet forces have a close link to both the regular and the reserve forces and they provide a youth service much valued in the civil communities.
The Army Cadet Force is a valuable source of high calibre recruits to the regular forces and provides a military footprint within the country. It is significant to note that in the year 1999–2000, 20.2 per cent of young soldiers and apprentices to the regular Army came from the Army Cadet Force and nearly 19 per cent to the TA. It acts as a link between the Armed Forces and the civil community.
I believe that there is a case for expanding the cadets, which will have the benefit of involving young people in discipline and team work at an early age. That should develop their sense of responsibility, and reduce the rates of truancy, exclusion from school and street crime by young gangs. I believe that the Ministry of Defence should examine how the cadet forces can be enlarged and provide the appropriate resources, within its budget, to fund that valuable organisation. With other noble Lords, I applaud the achievements of those cadets.
It would be helpful if the Minister would publish, or deposit in the Library, the British Market Research Bureau's report on the results of the Skill Force pilot scheme in Norfolk and Newcastle. Funding for the Skill Force scheme is from the "Invest to Save Budget". As we have heard, it is backed by three different ministries: the Ministry of Defence, the Home Office and the DfES. That funding is for a set period. My second question is similar to that asked by other noble Lords: what will happen when that funding ceases? Another question that I must ask relates to the DfES guidance for those working with children. Have the instructors undergone local authority checks as to their suitability to work with children?
The debate has been interesting and informative and we have heard very positive points on the success of the scheme. Working with these young people must be
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demanding and exhausting and I should like to pay tribute to those instructors and their assistants who have brought a new vision to these pupils. Skill Force is giving young people the chance of a new start and it is an exciting initiative. We hope that those young lives will be transformed and, having attained positive results, that they will develop into useful and contented adult citizens. I wish the Minister well with this important work.
6.43 p.m.
Lord Bach: My Lords, we owe deep thanks to the noble Lord, Lord Freeman, for enabling the House to discuss the Skill Force initiative. I found his speech generous and positive in its approach. It was an outstanding opening to this short debate. I also thank all other noble Lords who have spoken on this important subject. I have a request to make of the noble Lord. When he brings some of the children who have benefited from this scheme to the House I ask that I can be privileged enough to meet them because it would be a joy to do so.
I want to consider briefly the range of contacts that the MoD has with young people. So wide are those contacts that the Ministry of Defence has signed up to implementing the core principles of "Learning to Listen", which enable the views of young people to be heard and acted upon. Each year, 200,000 to 300,000 young people have direct contact with the Armed Forces through their recruitment efforts. The activities range from climbing walls with the Royal Marines to solving problems in teams with REME. There are also opportunities for longer attachments aimed at enhancing self-esteem and confidence.
Secondly, as has been mentioned, there is the cadet movement, in which some 127,000 young people voluntarily engage in extra-curricular activities designed to promote qualities of responsibility, self-reliance, personal endurance, perseverance, self-confidence and discipline. And I would like to take this opportunity to pay tribute to the 23,000 or so adult volunteers involved in the cadet movement who make it such a success.
Nor should we forget that the MoD is responsible for providing educational facilities to the children of service families serving abroad. That is done through an agency of the department, Service Children's Education, which looks after the needs of 15,000 young people from nursery schools to sixth forms.
Turning now to the Skill Force itself, I shall say something about its origins. As may be well known by some noble Lords, Skill Force was created by members of a local regiment in Newcastle to offer local schools access to the skills and expertise that the Army has to offer. They were concerned that many children whom they knew were becoming disaffected with school. The Army, the Newcastle education business partnership and local teachers designed the scheme for and in Newcastle, and at that time it was called "Relaunch".
The aim then was to offer a different approach from school that would re-motivate the pupils and reengage them with school. The course gave pupils the

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chance to drop two GCSE subjects which they were unlikely to pass, and in their place to study a range of achievable awards and qualifications. The pupils selected for Skill Force came for a variety of reasons; many due to disaffection and some because of low self-esteem. The one constant feature was that they needed something outside the national curriculum. The scheme was a resounding success locally and received much support from schools, parents and the local community.
That is how the scheme came into being. In answer to the first question put to me by the noble Baroness, Lady Seccombe, the scheme, as it has developed, was based on those early days. It was not based on the United States' scheme. It is a British product.
In 1999, the scheme in Newcastle was selected by the Ministry of Defence as one of its contributions towards the Government-wide commitment to youth inclusion. Skill Force, as it became known, was launched as a pilot in Newcastle and in Norfolk in September 2000 with three schools in each area, involving 150 pupils. That cohort of pupils is now leaving school with many having successfully completed all of the Skill Force challenges.
The selection of rural Norfolk for the second project was a deliberate attempt to establish whether or not Skill Force could flourish beyond the urban setting. The essential features of the scheme remained the same, but what is important is that each area retained a large degree of flexibility. That ability to adapt to suit local circumstances has been a key factor in making Skill Force such a success.
As I said, participants drop two GCSEs in order to take part in Skill Force, which offers a variety of awards and qualifications. The course has at its core the Award Scheme Accreditation and Development Network, bronze/silver, normally called the ASDAN award. That is a modular, vocational award teaching the practical skills needed for later life. An example would be pupils having to work out the various costs of purchasing a bicycle on a credit card, with a bank loan or on a credit agreement. That type of activity not only develops number handling skills, but also demonstrates the real life cost of credit.
The first award that most students achieve on Skill Force is the St. John's Ambulance young life-saver award. That is normally completed by Christmas of year 10 and enables pupils who have had little success in academic school life to achieve a widely recognised and respected award. The certificates are then presented in front of the whole school, boosting immeasurably the recipients' pride and confidence.
Pupils also take part in the Duke of Edinburgh's award at bronze level. This experience has also been extremely positive. The pupils often show reticence at the start about some activities, such as community service—which is hardly surprising, as they are unlikely to have taken part in anything like that before— but they quickly develop a sense of pride and ownership in the community projects. A striking example of this is in North Lanarkshire, where pupils have built bridges in local authority country parks.
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For many it is the first time they have had the opportunity to show the results of their work to a wider audience. And the one-week expedition, which forms part of the Duke of Edinburgh's award scheme, has been very popular, giving a real sense of achievement.
As the project has developed, the curriculum has improved and grown. At present, several teams are piloting additional qualifications. Those range from the junior sports leader to the Oxford Cambridge and RSA first certificate in preparation for employment. Skill Force will always have local variations in the curriculum not only because of local circumstances but also to bring in new ideas. The ability to adapt to suit circumstances, local requirements and pupils' needs and to carry out practical and relevant work is one of the underpinning principles of the project.
The other major characteristic is that recently retired service personnel undertake the project and use their instructor skills to deliver the courses. There are many advantages, not least the respect pupils have for service personnel. After all, not many pupils would consider stepping out of line when the instructor is an ex-Royal Marine.
I should point out to the House that Skill Force personnel are not teachers, although some may use the experience to decide if they want to take up the profession, which is also important. They are selected by the LEA and are accountable to the head teachers of the schools in which they work. Their standards are extremely high: Ofsted inspectors grade them as either very good or excellent. In response to the noble Baroness, Lady Seccombe, checks are rightly made.
From a single project in Newcastle in 1999, Skill Force now teaches 1,200 pupils in 47 schools. The selection of areas for the new scheme is based on economic deprivation indicators and educational attainment figures. Local partners, in most cases the LEA or education business partnership, manage the new schemes. They also contribute towards the costs: partnership funding is a core principle of Skill Force. Central government funding comes from the MoD and the Treasury's Invest to Save budget after a joint bid by the MoD, Department for Education and Skills and the Home Office. Due to the popularity of the scheme, 45 out of the 47 schools have asked Skill Force to take on an additional year group of pupils next September and I am pleased to tell the House that funding has been secured.
The debate's title is about evaluation of the scheme's success. We have ensured that the project has been regularly evaluated from the outset. A rigorous, full and independent evaluation of Skill Force was carried out by the British Market. Research Bureau against its aims of reducing truancy, lowering exclusions from and improving attitudes to school, and preventing pupils leaving schools at 16 and not entering further education, employment or training. I will do my best to ensure that the evaluation is published, although I cannot give a firm guarantee.
The latest evaluation concentrating on the original Newcastle and Norfolk schools has shown good news. Reducing truancy levels is a key element in the strategy

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to reduce youth and street crime. Skill Force has helped to maintain attendance rates of over 90 per cent in children otherwise expected to display sharply declining attendance. Exclusion levels have also reduced dramatically. One Norfolk head teacher said,
"There are youngsters that would have been excluded by now from school if it hadn't been for Skill Force. Some of them have got very challenging behaviours but there has been a noticeable improvement, there's also been a noticeable improvement in their attendance".
The continued engagement of those young people must also have the effect of reducing juvenile crime.
The scheme has also had a positive impact on the emotional and mental health and well-being of participants. Another head teacher said,
"Some have blossomed quite positively during the course and have become much more confident, much more able, much more articulate and much more able to cope with things".
The evaluation process also seeks the views of the children, who state that they are now much better team-workers and have a greater respect for others. Ninety-seven per cent of children enjoyed Skill Force. These are pupils who on the whole have not had a positive experience of education.
One pupil stated,
"Skill Force is the main reason I get up on a Monday morning".
Nearly six out of every 10 participants felt that their grades had improved since starting Skill Force, and just under half considered that they received fewer detentions. In the evaluation study, 20 per cent of Skill Force participants claimed to take part in voluntary activities outside school, compared to only 7 per cent of non-participants. Skill Force participants also showed increased involvement in out-of-school sports and youth clubs.
The scheme has been extremely well received by teachers. All teachers interviewed were positive about the impact it had upon their pupils; including children in the school not on the scheme. Here is a stunning quote from a head teacher in Newcastle:
"I think schools should jump at it, they should take it, they should run with it, they should make input into it, they should press for its development throughout the country really, we really ought to be doing this in every town".
Over half of parents have reported more positive behaviour and attitudes which they attribute directly to Skill Force. Ninety-seven per cent are pleased with the scheme, 33 per cent consider their children more
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mature, 14 per cent consider them more confident and 12 per cent consider them more positive. The effects of Skill Force on the participants are obviously highly beneficial but others gain as well. The constructive removal of disruptive pupils from classes means that the remaining pupils can make faster progress. The rapid changes in personality that the Skill Force young people undergo result in a reduction in disruption in those classes which they continue to attend.
As one boy remarked, being disruptive in Skill Force was not particularly sensible, so being disruptive in class was a bit silly too. A headmistress said that last September was the quietest start to a school year she could remember. These results are exemplary and the Skill Force personnel, both on the ground and in the Ministry of Defence, are to be congratulated, as are the children themselves, on having taken part in what is always a deliberately challenging series of courses and studies.
The outcome of the evaluation of the Newcastle and Norfolk pilots was presented to interested parties in April this year. Among those present were officials from the Department for Education and Skills. I am delighted to announce in Parliament tonight that new Skill Force projects are to be set in 11 further areas; an effective doubling of Skill Force. I am sure that that announcement will be well received. The Department for Education and Skills has offered to fund the new projects. Funding will come from the behaviour improvement programme as part of the government-wide street crime initiative.
Skill Force started as a way by which army personnel set out to help disaffected youths in Newcastle. It is now delivering results in schools across England and Scotland and has earned the unanimous praise of this House. It is truly a bottom-up success story that has changed lives for the better. We all hope that it will continue to do so. Again I thank the noble Lord, Lord Freeman, for bringing this important scheme to our attention this evening.

Tax Credits Bill
Returned from the Commons with an amendment disagreed to and with an amendment proposed in lieu thereof, and with the remaining amendments agreed to; the Commons amendment in lieu was ordered to be printed.
House adjourned at seven o'clock.