Lords Sitting of 5 February 2003

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

The Lord Bishop of Newcastle
John Martin, Lord Bishop of Newcastle—Was (in the usual manner) introduced between the Lord Bishop of London and the Lord Bishop of St. Albans.

Supermarkets: Competition
2.40 p.m.
Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer asked Her Majesty's Government:
Whether they have taken sufficient action to protect both consumer and supplier interests, given the further likely consolidation of the supermarket sector.
Lord McIntosh of Haringey: My Lords, the current legislation enables the competition authorities to protect both consumer and supplier interests. As far as any imminent further consolidation is concerned, the Office of Fair Trading investigates and then advises Ministers whether any proposed merger raises competition concerns that would merit examination by the Competition Commission. Until the Enterprise Act provisions come into force, Ministers are accepting the advice of the OFT on whether to refer a case to the Competition Commission in all but exceptional circumstances. There have been no exceptional circumstances since the policy was announced more than two years ago.
Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for his reply. But does he accept that the Enterprise Act, when it comes into force, will still not answer all the concerns of British farmers and growers? Will the Government now take on board the recommendations of the Curry commission that the code of practice should be much strengthened so that it can address those concerns? As a great Francophile, will the noble Lord accept that the retail sector in towns and villages is much more vibrant in France? Does he think that the reason for that greater vibrancy is that French local authorities have, for some years, been empowered to refuse planning permission to superstores of over 1000 square metres? Does he further accept—
Noble Lords: Oh!
Baroness Miller of Chilthorne Domer: My Lords, I am sure that the House will be interested to hear that the Competition Commission reflected that the lack of planning safeguards was an issue.
Lord McIntosh of Haringey: My Lords, I do not know whether being called a Francophile is accusation or praise, in view of yesterday's meetings in Le Touquet.
I am aware of the additional planning controls that are available in France, but I am not sure that such planning issues arise from the potential consolidation of the supermarket sector. They happen whether there are four, six or 10 major groups.
We have agreed, following publication of the strategy on sustainable farming and food, that there should be review of the code of practice. We expect that review to take place at six-monthly intervals.
Lord Borrie: My Lords, does my noble friend agree that the ambitions of supermarkets to dispense prescriptions may have a seriously adverse effect on local pharmacies, to the detriment of the sick, in general, and the elderly sick, in particular, who find it difficult to get to out-of-town supermarkets?
Lord McIntosh of Haringey: My Lords, that question does not arise from the potential merger of supermarkets. Supermarkets could have ambitions to incorporate pharmacies, whether there are four, six or 10 major groups in the country. It is a controversial question. I understand the concerns that my noble friend Lord Borrie expresses, but it is not for me to answer them in the context of this Question.
Lord Hodgson of Astley Abbotts: My Lords, in view of the increasing use by UK supermarkets of global supply chains, do the Government remain satisfied that meat produced overseas and sold in UK supermarkets is raised according to standards of animal welfare comparable to those imposed on British farmers and producers?
Lord McIntosh of Haringey: My Lords, this is becoming difficult. The Question was about mergers, the likely consolidation of the supermarket sector. It is difficult to discern where the noble Lord's question comes from.

Medical Reservists: NHS Responsibiliities
2.45 p.m.
Baroness Gardner of Parkes Baroness Gardner of Parkes asked Her Majesty's Government:
What career protection they will provide for general medical practitioners, hospital doctors and consultants called up as reservists for the Defence Medical Services and how they will provide medical cover for the resulting National Health Service vacancies.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, the Reserve Forces (Safeguard of Employment) Act 1985 provides protection of employment for all reservists. In the NHS, employees, including consultants, and independent contractors, such as GPs, have entitlement, under contractual arrangements, to employment protection. Where temporary vacancies arise in the NHS as a consequence of call-up, responsibility for filling them lies with local NHS trusts and primary care trusts.
Baroness Gardner of Parkes: My Lords, I thank the Minister and would also like to pass on birthday greetings to the noble and learned Lord the Lord Privy Seal today.
I declare an interest in that I have a family member who may be affected. How will salary be paid to such practitioners—by the National Health Service or by the forces? If reservists are paid less by the forces than by the National Health Service, will there be a top-up? Will pensions be protected, so that there will be no loss of continuity for the National Health Service employee?
Lord Hunt of Kings Heath: My Lords, if the reservist's military salary is less than his or her remuneration package at work, he or she can claim additional financial assistance from the Armed Forces. Reservists can elect to remain with the NHS pension scheme or opt for the Armed Forces pension scheme benefits. If the reservist opts for the Armed Forces pension scheme benefits, any employee contribution must continue to be paid from the reservist's military salary.
Employers are entitled to receive an award made up of three elements: one initial replacement cost, ongoing administration costs and the cost of essential retraining on demobilisation.
Lord Walton of Detchant: My Lords, more than 10 years ago, I received a letter from the Oxford health authority thanking me for my honorary clinical services but saying that, as I had reached the age of 70, I could visit the hospital for social reasons but not to use clinical facilities. Under NHS rules, hospital doctors are required to retire at 65 but may continue on short-term contracts until they are 70. GPs retire at 70. Would it not be wise to suspend those rules so that doctors who are able and willing to serve the NHS beyond the statutory retiring age can do so in the present potential emergency?
Lord Hunt of Kings Heath: My Lords, I have a great deal of sympathy with that suggestion. We must avoid arbitrary age limits in the National Health Service and, indeed, elsewhere. I shall not mention Lords reform in that context. The department is considering such matters not only for doctors but for all people employed in the NHS.
Lord Clement-Jones: My Lords, is it not the case that the number of doctors required in the Gulf is
198
equivalent to two thirds of the number of current vacancies for doctors in the NHS? What evaluation has the Department of Health made of the effect of the possible loss of those doctors on the health service? What impact will that have on patients?
Lord Hunt of Kings Heath: My Lords, my understanding is that some 350 medical reservists have been sent call-up papers. Not all of those reservists work in the National Health Service; the term "medical reservist" covers other health professions and can also cover technicians.
The call-up of medical reservists may have an impact on individual NHS organisations, but I suggest that, as regards medical reservists, that impact will be fairly limited. Of course, we expect the NHS to do whatever is necessary to fill the gaps, but we are also determined that the NHS will play its part. Supporting medical reservists, when they are called up, is part of the responsibility of the National Health Service.
Lord Campbell of Croy: My Lords, have any reservists yet been called up for service in medical units because of the present situation in Iraq? The noble Lord will recall that reservists were the first to be called up, and were needed, in a similar situation several years ago. Have the present plans benefited from that past experience?
Lord Hunt of Kings Heath: My Lords, the answer must be yes. Clearly, reservists have been called out from time to time when our forces have been in action. As I said, 350 medical reservists have been sent call-up papers. That includes, doctors, nurses, other health professionals and associated support staff.

Norwich Prison
2.50 p.m.
Lord Quirk Lord Quirk asked Her Majesty's Government:
What is their response to the Chief Inspector's report on Norwich prison, published in January.
Lord Bassam of Brighton: My Lords, the report praised the work with young adults and on resettlement, but was critical in several areas. In some key areas the inspectorate found that procedures were in place but not being followed through. I am assured that progress has been made since September 2002. The Chief Inspector's recommendations will form an action plan which is being finalised. My honourable friend the Prisons Minister has asked to receive regular updates on progress.
Lord Quirk: My Lords, I am grateful to the Minister for that reply. Granting a few bright spots, unlike the devastating and damning report on Ashfield published this day, is it not the case that the report on Norwich is largely a litany of failure to fulfil recommendations— urgent recommendations—made in 1968? Given the Prison Service's solemn commitment to rehabilitation,

199
is it not deeply disturbing that such tiny numbers of prisoners are being given access to education and training?
Furthermore, is it not just plain shocking to read that this situation, and I quote from the report:
"was disguised by inaccurate statistics presented both to us",
meaning the Inspectors,
"and to the Prison Service"?
What action is now being taken?
Lord Bassam of Brighton: My Lords, there is no doubt that, in addition to identifying some areas where the prison was functioning well, such as resettlement and the young adult wing, the inspection found areas, as the noble Lord has said, where there is a great deal of scope for improvement. That was critical. It is true that areas such as general cleanliness and so forth were a major concern. Other areas of concern were highlighted; namely, the relationship between staff and prisoners, although generally the prison has a good record.
We share the concerns of the report. They will be actively pursued through a follow-up report being prepared by the governor and area manager. That action report will need to be adhered to rigorously. The noble Lord, Lord Quirk, is also right to point out some of the past failings in education provision. However, I must advise him that there are areas of education within the prison where outstanding work is being done. I believe that the report acknowledges that.
The prison aims to provide as much work and education as possible. Despite some of its problems, the prison expects to exceed education targets for this year at all levels. That is a tribute to the staff and the steady commitment of those involved in education at Norwich prison.
Lord Corbett of Castle Vale: My Lords, I chair the All-Party Penal Affairs Group. First, will the Minister explain why it takes five months from inspection to publication of the report? In this day and age, surely it can be achieved quicker than that. Secondly, why, when the Prison Service under Martin Narey is making such good overall progress, we have evidence of prisons slipping back? Is there any way of achieving uniform management standards across the whole of the Prison Service?
Lord Bassam of Brighton: My Lords, my noble friend always speaks with great knowledge on these issues. I believe that his last point is probably the most telling. It is critically important to ensure that there are high standards of management and leadership across the Prison Service. Martin Narey is deserving of great credit and praise for his efforts to achieve those standards.
I turn to my noble friend's first point which related to the publication of inspection reports. Noble Lords might have noticed that the gap between inspection and publication of the report on Norwich prison was around 15 weeks; that is significantly less than what
200
had, until recently, become an undesirable norm. I am advised that that is due to a revised protocol between the Chief Inspector and the Prison Service, which ensures that all reports are published to a quicker timetable. That should be welcomed by everyone.
The Lord Bishop of Lichfield: My Lords, I want, in particular, to return to the issue of work. Many prisoners are willing to take up opportunities—some have had to take up opportunities—to work in prison, as well as training. However, the report shows that there is a serious shortage of work for prisoners in Norwich prison. Is not work, as well as training, often a way of avoiding re-offending by prisoners on release?
Lord Bassam of Brighton: My Lords, as i have said from the Dispatch Box on a number of occasions, the Government recognise the importance of providing meaningful work and well-directed and well-targeted education. It is obviously the case that prisoners who enjoy both training and work will, on release, probably be much less likely to re-offend. As regards the work targets for Norwich prison, the purposeful activity target of 20 hours per prisoner per week was not attained last year. The prison achieved a level of 17.4 hours per prisoner per week. The report highlights that; it will be one of the important areas on which the follow-up report will focus. The governor will have to concentrate his or her activities on ensuring that that is achieved.
Lord Roberts of Conwy: My Lords, this is a damning report. Perhaps I may draw the Minister's attention to the Chief Inspector's introductory comment:
"This is a picture of a prison that needs urgently to energise its staff and management?
What steps can the Government take to ensure that the recommendations in this report, as well as the catalogue of recommendations in the 1998 report which have not been followed through, are fully implemented?
Lord Bassam of Brighton: My Lords, I have made it plain that the Government accept the important elements in the report which focus on critical and key failures. Drawing something positive from the report of the Inspector of Prisons, she says that Norwich prison is clearly capable of carrying out good work, as the relationships in the young adult wing and the work of the resettlement unit show. There are plans for further development which we welcome. However, the key is to ensure that prisons—in particular the Prison Service—are well-led and well-organised. It will be the responsibility of the governor—a new governor will be in post in the near future—working closely with the area manager to ensure that the recommendations made in the report are properly and effectively carried out.
The noble Lord raised the issue of the recommendations in the previous report. It would be fair to say that the prison has moved on—in some ways for the better, but in some ways there has been slippage back. Those recommendations need revising and

201
revisiting to establish how valid they are in the current situation. Taking that into account, yes, there is much work to do in Norwich prison. We accept that.
Lord Dholakia: My Lords, I am not sure whether the Minister and I are reading the same report. Perhaps I may draw his attention to the 1998 report and the serious concern about the failure to implement those recommendations. More than 50 recommendations made in 1998 have not been implemented. Where does the buck stop? Can the Minister put his hand on his heart and say, with the prison population now at 72,000 and expected to rise to 110,000 during the next five years, that reforms are possible?
Lord Bassam of Brighton: My Lords, I had hoped that I was not striking an apologetic tone for the way in which failures notified in earlier reports have not been met and matched by effective action because that is not the case. We want to ensure that reports are acted on. This report will have to be acted on for the reasons identified by many noble Lords today, on which they have made telling points. The Prison Service has a critical and important job. These reports are important in ensuring that we direct our activity towards securing its objectives—and that we intend to do.
Lord Morris of Aberavon: My Lords, is not the provision of education woefully inadequate right across the Prison Service? Is it not one of the reasons for the failure to avoid re-offending?
Lord Bassam of Brighton: My Lords, I made plain earlier the Government's commitment to ensuring that education facilities are in place. I acknowledge that the education service has an important part to play, and the Government have ensured that more resources are committed towards that. It is perhaps worth reminding your Lordships that in 2002–03 core funding of £65.7 million will be provided, an increase of nearly £10 million on the previous year. By 2003–04, core funding for education will increase to £85 million. The Government have attempted every year to increase funding for education—we are now guaranteeing an increase—because we recognise its value in rehabilitation work.
Lord Elton: My Lords, does the Minister realise that his assertions that the report will be acted upon are not convincing because the previous report was delivered to the same government and has not been acted upon? Does not the fact that the prison population has risen inexorably for several decades and the coincidence of this terrible, worst ever report on Ashfield—which we heard on the radio this morning—draw one to the inevitable conclusion that the only way to solve this problem is to send fewer people to prison? That means getting hold of young people before they become offenders and giving them a style of life and occupation which will enable them to become
202
productive citizens. When will the Government make that and not the containment of people in prison a policy priority?
Lord Bassam of Brighton: My Lords, I take the noble Lord's point very much to heart. Of course we need to create a society which is more at peace with itself and in which there is greater contentment among our young people. Obviously it would be more desirable if people did not commit offences but, when they do, and the offences are serious enough to merit a period of time in prison, they should be sent there. It is the duty of this Government—and of any responsible government— to ensure that that provision is properly made.
Lord Phillips of Sudbury: My Lords, given that the report shows a cut-back in training facilities at Norwich over the period concerned and that any prospect of rehabilitation and reform depends almost exclusively on effective education and training, when will the Government seek to have prisons give the same quantity and quality of education, particularly to young offenders, as the intensive surveillance and supervision programmes now give to young people in an out-of-prison context?
Lord Bassam of Brighton: My Lords, I hoped the noble Lord had listened carefully to what I said about our increased investment in education provision over the next two to three years. I am sure he will accept that it is very significant and a welcome change from policies adopted by previous governments. Let me repeat what I said. We recognise the value and importance of education. We are developing a programme to deliver further and higher standards of education. It will concentrate particularly on education with a work-related value because that will be of tremendous benefit. I hope that the noble Lord will support us in that programme.

Inland Revenue
3.4 p.m.
Lord Glentoran: My Lords, I beg leave to ask the Question on the Order Paper standing in the name of my noble friend Lady Wilcox.
The Question was as follows:
To ask Her Majesty's Government whether they agree with the view expressed by Mr Peter Back, a director at the Inland Revenue until 1995, that the Inland Revenue's compliance programmes and investigations into tax-evading companies are "in disarray".
Lord McIntosh of Haringey: My Lords, until his retirement from the Inland Revenue in 1995, Mr Back worked in one of the department's regions. In the eight years since, there have been profound changes in the Inland Revenue's responsibilities and how it does its work.
Lord Glentoran: My Lords, I can assure the House that I have the permission of my noble friend to ask the Question.

203
I thank the noble Lord for that reply. The Chancellor is currently increasing government borrowing while the main tax collecting agency is allegedly losing the fight against tax evasion. Is the Minister aware that the Revenue's business division brought in £600 million less in 2002 than in 2001, and that the total tax secured from all of the Revenue's non-compliance investigations in 2002 was £1.7 billion less than in 2000? Why is that?
Lord McIntosh of Haringey: My Lords, I, too, have read the article in the Guardian which no doubt prompted the Question. My response is given in the context that the Inland Revenue collects well over £200 billion in one year. The article and the Question concern the regulation and enforcement of tax obligations. The thrust of the Inland Revenue in recent years has been to encourage compliance—in other words. that people should pay the right tax and receive the right benefits the first time, rather than requiring enforcement action. It has been generally agreed that that is a successful policy— but, of course, it does not show up in the enforcement statistics. The chairman of the Inland Revenue has made clear that where taxpayers—including large business taxpayers—are not willing to co-operate with the compliance procedures, the Revenue will be aggressive and ruthless in following up. That will certainly be the case.
Lord Tebbit: My Lords, does the Minister agree that, if things are as they should be within the Inland Revenue, his Answer to the Question initially should have been a simple short "No"? Why could be not give that Answer? Why did he have to go into what one might describe as "hyper-flannel mode"?
Lord McIntosh of Haringey: My Lords, I thought I was pointing out the difficulty for Mr Back in being up to date with the current situation in the Inland Revenue. In my response to the supplementary question of the noble Lord, Lord Glentoran, I sought to explain to the House the way in which the Inland Revenue approaches these matters. I had thought there was general agreement on the proposition that assuring compliance is a more effective way of preserving tax revenues than subsequently looking to enforcement procedures and even prosecution.
Lord Brooke of Alverthorpe: My Lords, does my noble friend the Minister agree that one does not necessarily have to work for the Inland Revenue to keep abreast of what that department is doing? Is it not also true that this is the self-same Mr Back who, when self-assessment was being introduced into the Inland Revenue, forecast that substantial numbers of people would not submit their returns by the due date and that, as a consequence, the Revenue would send a substantial yield to the Exchequer for interest on late payments? The Revenue denied that situation would arise. In the event, Mr Back was proved right, and it is now a major money spinner for the Inland Revenue. Is
204
it not possible that he may be right this time round— as he was on the previous occasion—and the Revenue wrong?
Lord McIntosh of Haringey: My Lords, everything is possible, but that does not follow.
Lord Christopher: My Lords, I declare a past interest as a former general-secretary of the Inland Revenue Staff Federation. My colleague and noble friend Lord Brooke prompts me to rise. Like my noble friend, I know Mr Back. While I do not necessarily endorse what he said, his hyperbole is unusual. Ordinarily, I would listen carefully to what he had to say. I should also like to say—
Noble Lords: Question!
Lord Christopher: My Lords, I have a question—but it is futile not to preface a question with an explanation. The noble Lord, Lord Brooke, referred to self-assessment. I was one of four people who went to America with the then chairman of the board to look at the self-assessment system in America. We returned with a unanimous report that it was not suitable for the United Kingdom for many reasons.
Noble Lords: Order! Question!
Lord Christopher: Thank you, my Lords. You are very patient! My two questions—
Noble Lords: Feel free!
Lord Christopher: My Lords, my two questions are: first, to what extent do the problems in the Inland Revenue relate to the burden of self-assessment; and, secondly, to what extent have the extra burdens referred to by the Minister created a management problem in the Inland Revenue which should be examined?
Lord McIntosh of Haringey: My Lords, we have discussed self-assessment in great detail on a Question relating to that subject. I acknowledge that the noble Lord has particular expertise in this area and is entitled to ask whether self-assessment is an additional burden which causes deficiencies in other parts of the work of the Inland Revenue. I have no evidence that it does, but I should be glad to discuss the matter with him and to discuss it in front of the House.
Lord Elton: My Lords, in reply to my noble friend Lord Tebbit, the Minister said that securing compliance with the regulations is infinitely preferable to detecting and punishing infringement. Will he kindly pass on that view to the Home Office—as it is precisely what I was attempting to say about that department's handling of crime?
Lord McIntosh of Haringey: My Lords, I seem to be doomed today to take questions that bear no relation to the Question on the Order Paper. The Home Office

205
is represented on the Government Front Bench. I did not say that compliance with regulations was more important than enforcement; I said that compliance— in other words, people paying the right tax the first time—is more important.
Lord Newby: My Lords, does the Minister agree that the revenue achieved from the Large Business Office in respect of corporation tax fell by some 30 per cent in 2002 compared to the figure for 2001? Does he accept that, while there may be a greater degree of compliance and virtue, that degree of increasing virtue over a single year looks implausible? Therefore, should he not be taking Mr Back's criticisms more seriously than he appears to be?
Lord McIntosh of Haringey: My Lords, I agree with the noble Lord's figures. However, there is a further consideration in the make-up of those figures; namely, very large under-payments and very large receipts by the Large Business Office. The top 10 receipts in the year 2001–02 were £232 million; whereas in the year 2000–01, they were £663 million, which accounts for more than £400 million of the difference. Those very large cases take years to build up. The year in which they happen to fall is a matter of chance.

Traffic Lights in London
3.13 p.m.
Lord Higgins Lord Higgins asked Her Majesty's Government:
What percentage of the cost of installing extra traffic lights in London in the last 12 months has been met from central government funds; and what percentage has been met from local government funds.
Lord McIntosh of Haringey: My Lords, Transport for London is responsible for new traffic lights on both borough and TfL roads in London. New traffic lights on borough roads are funded from a central fund held by Transport for London to which the boroughs contribute on a per capita basis. Transport for London receives a block grant—GLA transport grant—of over £1 billion a year in support of its functions, but the Government do not provide any specific funding for traffic lights.
Lord Higgins: My Lords, I thank the Minister for that reply. Is it not clear that the expenditure from all the sources mentioned is not only wasteful but damaging? Is it not also the case that the new traffic lights are causing considerable congestion which did not exist previously and are resulting in pollution? They are affecting traffic not only in London but beyond; for example, on roads to the ports and the coast. Moreover, much of the congestion is affecting not only cars, trucks and so on, but public transport— which London is supposed to be in favour of encouraging. Is the Minister aware that, in the chaos south of Westminster Bridge the other night, there was
206
a queue of nine buses which were stationary for a considerable length of time? Will he refer this whole issue of traffic lights—which seems to have got completely out of control—to the Transport Research Laboratory?
Lord McIntosh of Haringey: My Lords, I think that the noble Lord is confusing two entirely different issues. His Question related to the cost of installing traffic lights in London. I answered factually about who pays the cost of installing them. He is now asking a supplementary question about the phasing of traffic lights. It is a perfectly legitimate question; but most of the complaints about traffic lights have been the result of changes in policy by Transport for London—which is its responsibility, not that of the Government. If the Question is about additional traffic lights, there are very few extra sets of lights. I believe that the problems described by the noble Lord, Lord Higgins, are problems of phasing.
Lord Peyton of Yeovil: My Lords, the noble Lord said that there were only a few extra traffic lights. Has he not been extremely fortunate in his recent experience? I know that the noble Lord is a great deal closer to the Mayor of London than I am—
Noble Lords: Oh!
Lord Peyton of Yeovil: My Lords, perhaps he would venture to explain the mind of the Mayor, and say whether it really is his intention, as it would appear, to turn the whole of London into a red light district.
Lord McIntosh of Haringey: My Lords, I do not usually seek to emulate the noble Lord's wit. If he wants to ask me a serious question, I shall try to answer it.
Baroness Hamwee: My Lords, does the Minister agree that, to the extent that there are some extra traffic lights, they are frequently to assist pedestrians—for example, at pelican crossings? I can cite an example on the South Circular road outside a primary school, where there are good reasons for installing a new crossing. As the Question seems to be focused on public spending, does the Minister further agree that attempting to protect pedestrians is a good way to approach public spending—in that it produces savings to the public purse—and that the re-phasing of traffic lights in central London by Transport for London has been in order to bring the phasing into line with the rest of the country and to give pedestrians sufficient time to cross?
Lord McIntosh of Haringey: My Lords, the noble Baroness is entirely right. It seems to be a feature of questions in this House relating to traffic in London that they are almost entirely from the point of view of private motorists rather than that of pedestrians or cyclists. It is useful to have that correction. The noble Baroness is right in saying that, in so far as there are a

207
significant number of extra traffic lights, they are additional provision to protect pedestrians. That is certainly true of the ones that I have seen.
Lord Crickhowell: My Lords, if the Minister believes that the problem is merely one of phasing and that it merely affects motor cars, will he take the trouble to go as far as Trafalgar Square—preferably not in his ministerial car—where he will discover that the siting of the new traffic lights on the west side of the square has caused a jam every day this week, all the way up Haymarket to Piccadilly, largely consisting of buses.
Lord McIntosh of Haringey: My Lords, as with all these matters, I shall happily ensure that Transport for London and the Mayor are informed of the comments made in this House.
Lord Faulkner of Worcester: My Lords, would my noble friend be interested in knowing that I took a bus from outside this House at 12.30 today and arrived in the Strand exactly nine minutes later, without any delay whatever in Trafalgar Square, where the traffic lights work and the construction of the islands is now largely complete?
Lord McIntosh of Haringey: Yes, my Lords, I think that the No. 77A and the No. 11 buses along the Strand are much quicker now that they do not have to go round Trafalgar Square. I do not think that I shall inform the Mayor of London about that!
Baroness Blatch: My Lords, is it just a case of "silly us"—of our being rather naïve in thinking that all these changes were about easing congestion? If they are about installing more traffic lights to aid pedestrians, then both problems cannot be resolved at the same time. I have certainly experienced new installations of traffic lights a mere matter of yards apart, where the only place one can safely stop between the sets of lights is on a pedestrian crossing.
Lord McIntosh of Haringey: My Lords, everybody has their own experience. There are 700 Members of this House and nearly all of them travel in London. I am sure that the Mayor would be interested to know of the experiences of all of us, but these are not issues of government policy.

Business of the House: Debates this Day
3.20 p.m.
The Lord Privy Seal (Lord Williams of Mostyn): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debates on the Motions in the names of the Lord Hanningfield and the Lord Lamont of Lerwick set down for today shall each be limited to two-and-a-half hours.—(Lord Williams of Mostyn.)
On Question, Motion agreed to.

Business
Lord McIntosh of Haringey: My Lords, with the leave of the House, immediately following this business statement, my noble friend Lord Bassam of Brighton will repeat a Statement which is being made in another place on sustainable communities.

Sustainable Communities
3.21 p.m.
Lord Bassam of Brighton: My Lords, with the leave of the House, I shall repeat a Statement made in another place by my right honourable friend the Deputy Prime Minister. The Statement is as follows:
"Last July I made a Statement to the House about the Government's plans for a step change in our policies for building sustainable communities. Today, I am publishing Sustainable Communities: Building.for the Future, a comprehensive programme of action to take these policies forward. Copies are in the Library.
"The future of our communities matters to all of us in this House and I would like to record my appreciation to the ODPM Select Committee for the work it has undertaken on these issues, including its recent report on affordable housing.
"Much of the communities plan is properly about housing. But sustainable communities need more than just housing. They need a strong economy, jobs, good schools and hospitals, good public transport, a safe and healthy local environment, better design, more sustainable construction, better use of land and much more.
"The plan is part of the Government's programme to deliver better public services, strengthen economic performance, and improve our quality of life. The history of housing over the past 30 years shows that all governments have failed to meet housing need; all governments have failed to provide sufficient long-term investment; all governments have failed to deliver enough affordable housing, and all governments have ignored the mistakes of the past—when we built housing estates, not communities. Not only did we under-invest in our housing, we used land wastefully, and too much of what was built was of poor quality and poorly designed.
"In 1970, we were building nearly 300,000 homes a year. Today, it is half that. but demand has increased. The result is a legacy of spiralling house prices, rising land values and a shortage of affordable homes.
"In London and the South East more and more young people and key workers cannot afford to live where they want. They are being priced out of their communities. In other parts of the country—in the North and Midlands—the housing market has collapsed and thousands of homes face demolition.

209
"While private house building declined over the past 30 years so did the condition of local authority housing. By 1997, the repairs backlog on local authority housing was a record £19 billion. Throughout the 1980s and into the 1990s, not enough was done. The problem just got worse.
"As more people moved into home ownership— many of them through the right to buy—local authority housing continued to decline. The 1.5 million right to buy sales since 1980 cost the public purse a massive £40 billion. And despite £29 billion in actual receipts, not nearly enough was invested in improving the housing stock.
"Local authorities were denied the money they needed to repair the homes of their tenants. Instead, capital receipts from right to buy were used to pay off the national debt.
"That is the legacy we inherited—fewer homes being built and the condition of the stock getting worse by the year.
"We decided the over-riding priority was to halt the decline. That is why we released £5 billion worth of capital receipts for housing refurbishment, why we established the major repairs allowance which released another £1.5 billion a year, and why we committed ourselves to make all social housing decent by 2010. And we are on track to do that, with over half a million homes already improved.
"So our first priority was to deal with the £19 billion backlog across the country. Now we must tackle the fundamental problems of high demand in the South and the collapse of housing demand in some of our most deprived communities.
"I shall deal first with the action we propose to tackle housing market collapse. I am talking about communities where properties have become almost worthless, where people on low incomes have become trapped in negative equity. In the worst cases, whole streets have been abandoned. In these places, there is no shortage of housing, but there is no sustainable community.
"Low demand requires a new approach, to recreate places where people want to live—not leave. This means not just tackling housing, but, where we can, rebuilding sustainable communities.
"We are already investing £5 billion over the next three years to help regenerate these areas, and we have set up partnerships in nine of the worst low-demand areas. And today I am announcing a new fund of £500 million to help those partnerships over the next three years.
"In some areas, the only option will be to demolish homes that are obsolete. We will make this easier for residents. Homeowners already get back the value of their home and the costs of moving. We now propose to increase compensation for the disturbance of moving home by over £1,000—the first increase since 1991. We also propose to prevent the automatic renewal of planning consents, which will reduce development on greenfield sites in low-demand areas.
210
"The issues in high-demand areas are different. Rising house prices and shortages of affordable homes, especially in London and the South East, are having a damaging impact on public services and the country's economic performance. We need a step change in housing supply, reversing the trend of the past 30 years.
"Two years ago, after extensive consultation, we said in RPG 9 that local authorities should provide for new homes at a rate of 62,000 each year in London and the wider South East. We put in place a plan, monitor and manage approach to planning, moving away from the failed predict and provide approach of the past. We said that if we used more brownfield land at a higher density, we could build more homes on the same amount of land.
"We are meeting our 60 per cent brownfield target and will continue to do so. We are also taking steps to push up density of build in the South East.
"These changes, together with the £350 million extra resources we are putting into improving planning and design, will increase the supply of new housing on brownfield land and the quality of what we build and where we build.
"Good planning means the right communities with the right homes and jobs in the right place. I emphasise "right place", because I want to make it absolutely clear that this is not homes everywhere and anywhere. This is homes in sustainable communities to meet the shortfall in supply—not suburban sprawl, not soulless estates, not dormitory towns.
"I recognise and share the genuine concern about our countryside. I remind the House that it was a Labour government who introduced the green belt. And it was this Labour Government who have provided access to the countryside and proposed the first new national park in the South Downs—which is being opposed by many Members opposite. And it was this Government who added an extra 30,000 hectares of green belt land—an area the size of the Norfolk Broads National Park.
"Now we are going further. Today I am giving a guarantee to maintain or increase green belt land in every region of England. We are creating a new body, the land restoration trust, to turn 1,500 hectares of derelict land in our towns and cities into new urban green spaces.
"We will provide resources for English Partnerships and the regional development agencies to reclaim over 1,400 hectares of brownfield land each year—an area the size of a typical town.
"In July, I announced four priority growth areas to help meet the shortfall in housing supply in the South East. Each of these offers an exciting opportunity for new design-led sustainable communities, such as the Greenwich Millennium Village and each maximises the use of brownfield land—accommodating growth in a sustainable way, with jobs, housing and regeneration going together. The Thames Gateway alone is the largest brownfield site in Europe. Plans for its development have been on the table for years.

211
"We must now turn these plans into action. So today, I am announcing new seed corn investment of £446 million. This will attract extra private investment. With our partners we will set up new local development agencies in east London and Thurrock, which will increase the pace of development
"We are also investing £164 million over the next three years in the other three growth areas: Milton Keynes-South Midlands; London-Stansted-Cambridge; and Ashford. The four growth areas, with London, have the potential to deliver 300,000 more jobs and an extra 200,000 homes over the next 15 to 20 years. We must take that opportunity.
"All parts of the country need affordable housing, both for rent and for purchase. We are making £5 billion of our housing investment money available for more affordable housing over the next three years. This includes at least £1 billion more for key worker housing—trebling the current rate of investment. And it includes extra resources for affordable homes built using fast-track, modern methods of building and design.
"We will also tackle the problem of empty homes. In London and the South East, 70,000 privately owned homes have been empty for over 6 months. This is not acceptable. The House will be aware that local authorities can lease empty properties on a voluntary basis. It is our intention that councils should be able to bring empty properties back into use through compulsory leasing, as recommended by the Select Committee. I also intend to allow local authorities to end council tax discounts on empty homes.
"Many rural areas also suffer from acute shortages of affordable housing. So we are increasing the number of affordable homes built in small rural communities. And we have changed the regulations to make it easier to keep homes bought under the right to buy for local people.
"The Government are committed to home ownership, which has increased by 1 million since 1997. But we also want to protect the social housing stock. The right to buy is one way to help people into home ownership. But there are others that do not involve the loss of a social home. I believe we could make better use of these schemes.
"That is why today I am asking the Housing Corporation to lead a new home ownership taskforce to advise on ways of helping more tenants into home ownership, using the whole range of existing ownership schemes, without reducing the amount of social housing.
"Sustainable communities need a safe and attractive local environment. We have already given local authorities an extra £1 billion in the local government funding settlement to improve the local environment and cultural services.
"I am now backing that up with more funding. Over the next three years we will give: £50 million for neighbourhood wardens to help people feel safer; £41 million to drive up the quality of skills and
212
urban design; £70 million for community-led programmes to improve neighbourhoods; and £89 million to help local authorities to transform the quality of their parks and public spaces.
"All this will be supported by the proposals we will bring forward in our forthcoming anti-social behaviour White Paper and Bill, tackling issues that undermine our communities.
"The most basic requirement of a sustainable community is a decent home. That is why we are making sure that tenants will be involved right from the start in decisions about how their homes are improved. It is why we are investing £2.8 billion over the next three years to improve council housing. It is why we are making the private finance initiative easier to use and providing £685 million of new PFI credits to refurbish local authority homes. It is why we are providing an extra £60 million to improve conditions in private housing. And it is why we are providing £260 million to tackle the problem of temporary bed-and-breakfast accommodation.
"We also want to improve conditions for people in privately owned homes, especially older people and those on low incomes. As the House has often said, there are inadequate powers to tackle bad private landlords, who are making life a misery for too many of our people. I will publish draft legislation to license all houses in multiple occupation and introduce a selective licensing scheme to tackle bad landlords in low demand areas. In advance of legislation we are funding new pilot schemes to target bad landlords.
"The step change I have described requires a different approach, linking housing with regeneration, growth, transport, public services and good design. It also requires major reforms of our system of housing finance. We must move away from the top-down approach of the past and decentralise our policies and programmes so we can deliver regional solutions to regional problems.
"I am pleased to tell the House that for the first time we are publishing nine regional daughter documents that set out what this action plan means for all our regions.
"As I said in July, we will move towards pooling housing spend in regional pots. Housing strategies will now be drawn up at regional level by new regional housing boards involving key partners. English Partnerships and the Housing Corporation will also work together at the regional and national level, so that finding the land is directly linked with providing the housing.
"This is a comprehensive programme of action for sustainable communities that I hope will command support across this House. It is backed with substantial resources—£22 billion, which is a 40 per cent increase over three years and more than double the plans we inherited. That is a step change in resources by anybody's standards, but it is just a start. This is an enormous challenge for all of us. It is about people and the places where they live. It is about raising the quality of life. It is about working

213
in partnership. It is about taking a different approach. It is about creating sustainable communities. I commend this to the House".
My Lords, that concludes the Statement.
3.36 p.m.
Baroness Hanham: My Lords, I thank the Minister for repeating the extremely long Statement. I ask the House's indulgence if I go slightly over the normal amount of time in an effort to respond to some of the points. It is a very important Statement, as the Minister said. It is a diagnosis of a now well-known situation. The pity is that the Statement was well leaked before today, so this is not the first opportunity anybody has had to think about the items in it.
Good housing and a decent home are a sine qua non for leading a reasonable life. I believe that everybody in the House accepts that. However, since this Government came to power, there has been a substantial reduction in the amount of affordable housing being built and the amount of money available to local authorities to do that. The Government's enthusiasm for home ownership— reiterated in the Statement—has been dented by their attitude to the right to buy, which, to all intents and purposes, they have railroaded into abandonment by reducing the discount from £38,000 to £16,000.
The Deputy Prime Minister rightly rails against the loss of communities and acceptable standards of housing in the North of this country. If there had been a little more enthusiasm there for encouraging home ownership as well as an earlier interest in improving the environment and the property, the situation might not now be so dire.
From what is being said, it looks as though many areas of such housing will now be jettisoned. However, many factors—such as loss of jobs, poor economic prospects and lack of industrial and commercial development—have exacerbated the situation. It would be helpful if the Minister would say whether the partnerships of which he spoke will address those particular difficulties in areas where he says that houses are to be demolished. What is to be put in their place? How is it to be done? How are the commercial and economic aspects to be addressed?
The area of immediate interest in the proposals is the development of extensive areas of housing in the South East in particular. The Deputy Prime Minister has said that at least 60 per cent of this vast new development will continue to be on brownfield land. I acknowledge immediately that the Thames Gateway is almost entirely brownfield. However, he neglects to say whether that percentage is sufficiently sustainable to fulfil the ambition in other areas where there is to be an extension of existing housing, such as Milton Keynes and Ashford. I say that because I am advised that, within the proposed London/Stansted/ Cambridge area, it will be impossible to fulfil the 60 per cent brownfield requirement as there is no brownfield land. Will the Minister therefore give the
214
House some indication of how that is to be carried out? I also remind the House that that is a part of the country where a new airport is proposed.
I am bound to say that there is enormous concern about continuing development on the green belt. I am sure that the Minister will have seen the comments of the Council for the Protection of Rural England on the amount of land that could be subsumed under these plans. It is estimated that land amounting to the size of several major cities could be lost. If that is correct and large swathes of land are concreted over, it will matter not one jot when the Government point out that they created the green belt.
The Statement also extols the virtues of communities and recounts the problems of those wishing to work in the South East, particularly key workers who cannot find housing. However, it omits to tell us how the Government foresee communities being formed in vast areas of new housing even if all the infrastructure is in place. I can tell the Minister from experience that it is a very difficult proposition to place together a vast number of people who do not know each other and have no connection with each other and expect them to live in harmony and form a sustainable community. What will be done to help with that task? Who will have responsibility for seeking those who wish to live in these new areas, particularly those entitled to social housing? How will the serious consequences of social alienation be prevented? It is instructive that—despite all this new housing and accompanying social problems and the need to build sustainable communities—the Statement contains not one word about local government.
I particularly want to ask the Minister about the empty homes initiative and compulsory leasing by local authorities. The possibilities boggle the mind. Thousands of homes, particularly in London, are owned by companies or those resident or living abroad who must be perfectly entitled to keep their property empty if they so wish. The homes have all been bought privately and are owned privately. Do the Government intend to give local authorities powers to lease them compulsorily? On what basis can such action be justified? Will it depend on whether the premises are furnished? How is an assessment to be made of whether they are abandoned or just temporarily idle? There are, of course, empty homes within the statutory sector, but they would not require compulsory leasing; it is for local authorities to ensure that they are properly let. Even if the Statement explains nothing else—Statements sometimes fail to explain—I should be very grateful if the Minister would explain that matter.
Time prevents a more detailed look at this extremely important document. The Statement barely covers all of the points, although we have been promised nine supplementary documents to cover them. I note that most of the strategy relies on regional housing boards—yet another of the regional bodies that will ride roughshod over local authorities. How many of the proposals require primary legislation? How many of these matters will come back to the House for proper debate? If the proposals require legislation, will

215
they be included in the numerous Bills that we will consider. but most of which have started in another place?
3.44 p.m.
Baroness Maddock: My Lords, I thank the Minister for repeating the Statement from another place on sustainable communities. Most noble Lords will disagree with very little in the opening sections, which outline the Government's vision and give a very good description of past failures and the sums that the Government are talking about investing in affordable housing. My first question, therefore, is how much of that sum can the Minister guarantee will be new money?
The Statement raises other questions, particularly on deliverability and sustainability. In the lifetime of this Government, there have been White Papers, Green Papers, task forces, Statements, strategies and reviews covering the many areas that will help deliver sustainable communities. How can we be sure that this is not just another Statement and another booklet and that the actual implementation will not be far too slow?
I turn first to the concentration on the South East. I agree that there is an urgent need to tackle the real problem of the lack of affordable housing in an overheating economy. However, what are the Government doing to "warm up" the economies of the other regions? I am acquainted particularly with the problems of the North East. The South East is set to receive eight times the cash that the five northern regions will receive. How will that help this overheated economy to cool down? Unless we are serious about helping some of the other regions, is there not a danger of reinforcing the overheating and the North-South divide?
Secondly, we welcome the recognition that infrastructure—schools, hospitals and transport— must come before the new homes and not after them. However, can the Minister tell us what step changes will ensure a reversal of a story that has been quite the opposite over many years of development in this country? Perhaps that is in the document, which I regret I have not yet had time to read. What I have picked up is that, in the important area of the Thames Gateway, the Government appear to have reneged on their support for the CrossRail development which is key to enabling people living in the Thames Gateway to reach the jobs to the west of London.
Thirdly, how can we be assured that brownfield development can continue and empty homes can be refurbished and brought back into use at the rate that the Government hope? The Government have not even tackled the old problem of equalising VAT between new build and refurbishments. Doing that really would be a step change.
We welcome the prospect of local authorities being able compulsorily to lease genuinely empty homes. However, how does the Minister square that proposal with the fact that, although local authorities will be
216
able to change the council tax regime and receive more money from empty homes, it does not appear that they will be able to benefit from that revenue?
I turn to sustainability, and first to environmental sustainability. Can the Minister tell us what mechanisms the Government will put in place to ensure higher standards of energy efficiency and alternative energy use in these new buildings? What steps will they take to integrate sustainable urban drainage systems? If nothing changes in all these new homes, we will create enormous demands for water and enormous drainage problems in these areas. Has the Minister seen that, despite the fact that the Government have put in place regulations stating that new homes should display their energy efficiency details in a prominent place, few builders are complying and sales staff on sites are very badly informed about that type of information? There appears to have been no step change there.
As for economic sustainability. how can we all benefit from the proposed developments? Some see this as a bonanza for developers, especially those who already have land which will increase in value. Should not the Government use future land values to raise finance for public investment by acquiring land for public purposes, rather than simply enabling local landowners to become what some are describing as "instant millionaires". People are genuinely worried about that.
As the Minister said in another place. we have completed far fewer homes than at any time in the past 77 years. Many people believe that that is because developers currently make more money by developing the land banks they already have. As I think has already been pointed out, that is particularly important in terms of money for social housing. Although the Government have doubled spending on social housing since they came to power, most of it has been swallowed up by increasing house prices.
Finally, how sustainable are these proposals if they are to be quango led rather than community led? I do not understand why the Government are so focused on the undemocratic Conservative model of urban corporations which the Deputy Prime Minister himself opposed when he was in opposition. I hope that the Minister can reassure us that this vision is sustainable and deliverable and that it really will be a step change.
3.50 p.m.
Lord Bassam of Brighton: My Lords, I welcome the welcomes given to the Statement, variable in extent as they often are in your Lordships' House. But I am grateful for them nevertheless. I appreciate that they were genuine.
Many important questions were rightly asked. The Statement is important and significant. It is probably one of the most significant statements relating to housing and sustainable development that this Government, or any government, have had the opportunity—perhaps even the privilege—to make.
The noble Baroness, Lady Hanham, asked a number of important questions. She mentioned leaks. We are not responsible for leaks. People speculate

217
about the contents of a Statement. She questioned our approach to home ownership and right to buy. I make it plain from the outset that we continue to support right to buy. We have sought to iron out the wrinkles that have led to some abuse. We are committed, and continue to be committed, to ensuring the widest possible opportunities for home ownership. The Statement makes clear that we shall set up a home ownership task force to consider ways in which we can extend home ownership other than through the mechanism of right to buy. Although right to buy has been successful, it has absorbed a massive public resource—some £40 billion, as I said.
We are deeply committed to partnership. The noble Baroness, Lady Hanham, questioned our commitment to local authorities. I do not share her interpretation of the Statement. We believe that local authorities are absolutely central to the plan. That becomes clear when one studies the plan. I am aware that noble Lords will not have had the opportunity to study the details of the plan. A Local Government Bill currently proceeding through Parliament contains measures to ensure that decisions on these issues are taken locally, that bureaucracy is reduced and that there will be a much greater focus on improving people's quality of life. For example, the legislation will enable councils to fund major improvements through borrowing without government consent under a new prudential borrowing system and will enable councils and businesses to work together much better to solve local problems. Those provisions will make a significant difference.
The noble Baroness, Lady Hanham, asked how much legislation would be needed. We are taking steps to enable a legislative programme to be put in place to allow key partners, especially local authorities, to deliver the action programme effectively. The report states on page 58:
"We have three major Bills already in Parliament and will be publishing a fourth shortly".
All of those Bills relate to the role of local authorities. They will have a major and important role to play, as they have in the past.
I do not take overly kindly to criticism of our programme from the Benches opposite. The Conservative government made a major contribution to the present housing situation and our ability to develop sustainable communities. As a former chair of a housing committee and leader of a council I recall the year-on-year cutback in funding to invest in social housing, carry out repairs, cut the backlog, put new investment in place and deal with many of the problems that arise in the private sector. It is worth repeating that we inherited a £19 billion backlog of repairs in the affordable housing sector. Since 1997 we have taken steps to put that right. We are on target to achieve many of our objectives in that regard.
The noble Baronesses, Lady Hanham and Lady Maddock, mentioned green belt land and the need to ensure that we made best use of brownfield sites. We have stuck to our promise to ensure that development is focused on brownfield sites. We set a target of 60 per
218
cent in that regard. We have stuck to that target and we are on course to attain it. We have put important measures in place to ensure that the green belt is not just protected but is expanded. I knock on the head the myth that we intend to relax planning controls for green belt land. That is not the case. We are determined to stick to PPG2 which states that protecting the countryside from encroachment is one of the main purposes of including land in the green belt. That is precisely what we have done.
As the Statement made clear, we are committed to new parks. After all, a Labour government introduced the system of national parks. We are creating a national park in the South Downs. I believe that many of us are proud of that and are pleased to be associated with it. There is a presumption against inappropriate development within green belt land. That is a significant assurance. Since May 1997 there has been a net addition of some 30,000 hectares to green belt land which has been widely welcomed. By increasing density of build in the South East, as the Statement indicated, we can achieve our targets. I should have thought that that would be widely welcomed.
The noble Baroness, Lady Maddock, asked whether the proposals would be funded by new money. The relevant announcement was made last July. The allocation of money is set out clearly. I refer to the breakdown of figures in the document. We shall allocate £22 billion for housing, planning and regeneration. The plan indicates our priorities in considerable detail. I believe that the proposals are sustainable. I understand and recognise some of the issues that have been raised, particularly with regard to overheating. We shall obviously have to be very careful in that regard. However, we are faced with the awkward conundrum of high demand in the South— a desirable part of the country that is economically successful vis-à-vis the regions of Europe—and the need to have a more than adequate supply of affordable housing, especially for key public service workers. Our strategy must comply with our desire to drive up standards in the public services and to have an adequate labour supply in that sector.
I look forward to further questions. I recognise that I have not responded to all of the points that were raised and I hope that I shall be able to pick up some of them.
3.59 p.m.
Lord Hanningfield: My Lords, I refer to the two areas that the Minister mentioned that are situated near to communities in Essex. I am leader of Essex County Council. I welcome his remarks about the Thames Gateway but perhaps he will go into the detail of the infrastructure that is required. We all believe that that area contains brownfield sites which should be developed. We can do that provided we receive funding for infrastructure such as roads, schools and hospitals. Considerably more investment is required to achieve those objectives than has been mentioned today. Will the Minister comment more fully on the

219
Thames Gateway? We all accept that that area has much to offer in terms of providing housing and employment in the South East.
The area that particularly concerns me, and on which I would like the noble Lord to comment further, is that now described as "London—Stansted— Cambridge". The paper is about sustainable communities. We already have communities in Epping, Harlow, Stortford and Stansted, and I read in the evening papers last night that Bishop Stortford might get 40,000 new houses. That sort of conjecture and discussion needs to come to an end.
As my noble friend Lady Hanham said earlier, we already have the prospect of the largest airport in the world at Stansted, one twice the size of Heathrow. Communities are under extreme threat because of that. The conjecture is an added burden on everyone along the M11, from Epping to Cambridge and onwards. We are talking about sustainable communities, but that is destroying communities. We need to know what the Government plan for the area.
The Minister referred to using local government. We would like to be more involved. At the moment, we feel bypassed. The Government keep making Statements such as this, but we feel that we do not know what is happening. For the benefit of those excellent communities, we must have some more answers now, because they are being destroyed at the moment. Perhaps the Minister will give me a few more answers on that.
Lord Bassam of Brighton: My Lords, I am grateful to the noble Lord, Lord Hanningfield, for his intervention and, in recognising his long and valuable service in local government, for the importance of the questions that he asked.
We have set out the plan, the targets and the funding that will be available. In essence, the key is that we need to work very closely in partnership with local authorities and the RDAs. Some of the detail will need to be worked through in that consultation and in the development of the plans.
I do not know whether the noble Lord picked this fact up, but £446 million will be set aside for Thames Gateway with the new development agencies. A Cabinet committee chaired by the Prime Minister will plan for the development of the Thames Gateway. Clearly, there is much work to do to build up the detail. We will have to consult and work with all the agencies and bodies involved with that.
I very much welcome the support that Thames Gateway has attracted, as we think that much can be achieved there. The noble Baroness, Lady Hanham, referred to the fact that much of the land—nearly all of it, in fact—was brownfield and suitable for the sorts of development that we envisage to tackle housing shortages in that part of the South East. She also referred to existing capacity.
I want to make it plain that there is no return to the old days of predict and provide. For all authorities, not only in the South East, we will ensure that we work to the figures provided in the regional planning guidance.
220
We will also take a long-term view, as we need to plan for the long term so that we do not end up with a situation like that that we inherited as a government, which we all acknowledge has created difficulties.
The noble Lord, Lord Hanningfield, also raised questions about the London-Stansted-Cambridge corridor. That growth area links areas with strong economies and job-growth potential. As we identified in the plan, there are very significant employment and housing opportunities in that area. We need to study the potential and work with the agencies and local authorities involved.
I recognise the noble Lord's point about Stansted airport. That will have to be dealt with using existing approved plans. Future decisions on runways and so on are awaited in the airports White Paper. Within that corridor, there are important priority transport areas, such as the M11 improvements near Cambridge and Harlow. There are other considerations relating to the east-west rail connections and the need to ensure that we continue to improve routes in and out of London, so that the infrastructure is in place if we are to see the sustained growth that is possible there.
Again, there will be consultation. The RDAs, local authorities, central government agencies, development bodies and so on will need to work carefully together to get things right, so that the sensitivities of local people are met and matched. It is important that we take the plans forward with the maximum support to fulfil the needs and obligations of future generations also. If we do not meet and match them, we will fail future generations in their aspirations.
Lord Bridges: My Lords. I invite the Minister to clarify the reference to brownfield sites in the Statement, to which he referred more than once in his reply to questions from the Opposition. Is he aware that much unease and dismay has been caused by the Government's decision to classify gardens in villages in the rural countryside as brownfield? Can he tell us that that interpretation will not be followed in the ambitious and far-reaching programme contained in the Statement?
Lord Bassam of Brighton: My Lords, I recognise the importance of allaying the concerns to which the noble Lord referred. It would probably be best if I took that particular question away and looked at the issue that has been raised, because I want to ensure that my answer is precise and meticulous.
Baroness Billingham: My Lords, I warmly welcome the report on sustainable communities. It is a marvellous blueprint for decent homes and places for people to live. By implication, looking at the sums, it will involve more than a decent amount of money to enable the aspirations to become reality.
Perhaps I ought to remind noble Lords that I chair an urban regeneration company in Corby in the Midlands. As a result, I have been awaiting the report with enormous interest. I am pleased because our crucial blueprint for Corby—we launched the master

221
plan only last week in this House—is very much reflected and in step with the ideas in the document on sustainable communities.
Given the points raised around the Chamber, I should state quite clearly that the urban regeneration company is made up of a consortium of local authorities at county council and borough level, government agencies such as English Partnerships and EMDA and so forth, as well as the local communities involved. Everything that has come out of our master plan has come from the demands of the local community. We are not telling people what they want; they are telling us what they want, and we are responding to it. I believe that the plan has the potential to have an enormous impact in future.
The Thames Gateway is important, but the work being done in the Midlands is equally important. It is worth noting that places such as Corby have very low unemployment. We are an open door in that one thing that differentiates us from areas around us is that, where other communities might be somewhat wary of an influx of newcomers, we want to build 28,000 new homes almost immediately—as soon as possible. We look to the document as a source of funding.
I have two questions for the Minister. First, "sustainable" must surely mean having rail links. A weakness of our regeneration company is that at the moment Corby does not have a passenger railway station. I think that I read that £164 million was earmarked for Milton Keynes and the South Midlands. Will some of that money go towards providing that essential rail link which would unlock much of the potential of our scheme?
Secondly, while others will be nervous of the projected influx, we are more than ready, willing and able. Will the Government look at us as a pilot scheme, to see how some of their ideas in the document can be shown to work within the Corby dimension? We would be delighted to act as a pilot for that project.
Lord Bassam of Brighton: My Lords, the noble Baroness, Lady Billingham, is one of the most proactive campaigners on behalf of Corby and the surrounding area. I take to heart her comments, particularly that about the fact that much of the plan is based on good local practice and experience and on tried and tested strategies that have been melded together in our thinking to ensure that we meet the challenges of the future. The plan constitutes a brilliant opportunity to succeed because it is based on good local experience. It must succeed not just because it is an important government objective but because it aims to meet the needs of the future and to tackle problems from the past.
The noble Baroness made two points, the first of which was about the value of rail links. It is plain to all that we want to ensure that rail links are well maintained, and established and developed where they are essential. I obviously cannot give a specific response to her pitch for the rail link that she
222
mentioned. The partnerships that are in place and those involved in planning and implementing the communities plan will want to consider that in detail.
Secondly, the noble Baroness asked why Corby and its immediate environs could not be used as a pilot. That will be one of the considerations taken into account by local partners when establishing the overall plan. One of the unique features of our approach is that we have developed a regional plan for implementing and taking forward the programme for each of the nine regions. Our approach does not simply involve a national plan that is focused on one part of the country; there are nine simultaneous regional launches. The local regional documents are a good read and give a better feel for the way in which the scheme will be carried through. I am sure that Corby will be active in the Government's considerations and that the partners involved in implementing the strategy will play a full part.
Lord Sutherland of Houndwood: My Lords, I welcome the Statement's approach to government aspiration and planning—it is a fine Statement. I should declare an interest: I am non-executive chairman of the Quarry Products Association. As a result, I have a sense of the volume of traffic—heavy lorries—that will be generated before a development is completed. Will the Minister give an assurance that as part of the planning process, thought will be given to how that transport flow can be managed in order to minimise costs and disruption to the areas of a conurbation that abut on to, for example, the Thames Gateway site?
Lord Bassam of Brighton: My Lords, I am grateful to the noble Lord, Lord Sutherland, for his question. When developments are taking place, local environmental impact is obviously important. Many local authorities have "good builder" schemes in place, by which there is an agreed partnership with those involved in major construction projects to mitigate and manage the impact of the development on the local environment. That must be part of the planning process when the physical aspects of the communities plan are rolled out in detail. I am sure that we shall take careful note of the noble Lord's experience and knowledge in this field.
Baroness Dean of Thornton-le-Fylde: My Lords, I begin by declaring an interest: I am chairman of the Housing Corporation. I am sure that the Minister will join me and other Members of the House in expressing how regrettable it is that the noble Lord, Lord Rooker, was not here today to deliver the Statement, due to a family bereavement. As some of us know, he has put hours of work into the communities plan.
That plan involves a step change. None of us has yet had the chance to study the document and the nine supporting documents. There is still much work to be done. Perhaps in that alone, I agree with the noble Baroness, Lady Hanham, that it would be good to have more time in which to debate this detailed and complex issue, which covers so much.

223
From our point of view—housing is our raison d'être—one of the major changes in the government document is the recognition that sustainability is not just about housing; it also involves hospitals, schools, transport and the local infrastructure. The document covers that.
Regional housing boards will be critical. We have seen the end of local authority and housing corporation funding for housing. There will be a single pot, the distribution of which will be discussed within the regions and sub-regions. That will involve local authorities, economic generators, the regional development agencies, the Housing Corporation and the government office in the region. That is a step change and it is up to those organisations to make the arrangement work.
As a corporation, we are delighted to be given the responsibility of examining in a taskforce—I hate that term—or in a group all areas in the private and public sectors involving home ownership. That is another step change. There are many models out there but many of them are not used. We welcome that step change.
I return to where I started; that is, the sustainability issue. We and other agencies have been closely involved in developing the plan and we welcome the openness of the discussions. In view of the fact that this approach involves several government departments, has the Office of the Deputy Prime Minister secured commitments from other departments that they are part of the plan in terms of health, housing, transport and infrastructure? If not, the plan will not be deliverable.
Lord Bassam of Brighton: My Lords, I place on record two observations at the outset. First, I agree with the noble Baroness, Lady Dean, and extend our tributes to the noble Lord, Lord Rooker. I know from personal experience—I have worked with the noble Lord for some time—of his personal commitment to housing and to tackling housing issues. He was particularly proud of this Statement and all that is in it, and he has worked long hours to hammer it out. The Deputy Prime Minister and the team in the ODPM that has been working on it have spent much time putting the building blocks in place and working out how they cover all the angles. This is a genuinely holistic approach to many of the problems confronting the nation.
The other tribute that I place on record is to the noble Baroness, who has been tireless in her efforts with the Housing Corporation. She has played a key part in ensuring that the plan is deliverable. Her advice and wisdom has been brought to bear to ensure that this is a practical Statement with practical outcomes. I do not underestimate the hard work put in by the noble Baroness and the Housing Corporation in getting us to where we are.
The noble Baroness asked the key question: will the departments pull together to ensure that this approach is deliverable? The answer must be yes. I welcome the opportunity to advance it today and I welcome future
224
opportunities for us to debate the communities plan and ensure that it is kept on track. We must ensure that all departments work closely together when planning communities to ensure that those communities are sustainable. That requires putting transport in place— thinking about traffic—addressing the need for a community centre and ensuring that buses are available and that doctors are in place in surgeries. We want to create and generate healthy communities. We can best do that by working together to pool resources and activities and by having a shared outcome and a shared vision. That is key; yes, those commitments have been given and, yes, we intend to ensure that they are kept to.
Baroness Blatch: My Lords, will the Minister return to the question of my noble friend Lady Hanham and explain a little more about the issues raised in paragraph 328 of the paper, which refers to the leasing of empty properties? What defence will an owner of a property have when compulsory leasing is arranged? How will that happen and what do the Government envisage? What will be the definition of an empty property that is owned privately? Will the Minister also say more about building so many houses in the Stansted area in a sustainable way in terms of retaining the green belt in that area?
Lord Bassam of Brighton: My Lords, I consider it to be a scandal that properties have been empty for as long as they have and that the matter has not been tackled. Members of another place were very mindful of the issue. Empty properties are a vast untapped resource and we need to bring them into use. That is one of the clear objectives of this document and it is why we are adjusting the ability of local authorities to recover moneys against empty properties through council tax.
There will need to be consultation on the operation of the compulsory leasing scheme. Clearly, questions such as, "What is an empty property?" will have to be carefully thought through. There is no simple and easy answer to the noble Baroness's question with regard to that point. We shall be sensitive to the concerns raised about empty properties because we are required to get the matter right. On the other hand, I am sure that the noble Baroness will recognise that we must make good use of our stock. Every home that we can bring into occupation and use means that we can reduce the amount of building on land which can be better used for other economic purposes. That helps to ensure that we protect the green belt.
I know that the noble Baroness will not be entirely happy with that answer. But the detail needs to be worked through because it is a desirable objective. I am happy to invite the noble Baroness to repeat a point that I may have missed.
Baroness Blatch: My Lords, how is it sustainable to build so many houses at Stansted and yet retain the Government's pledge to maintain the green belt area there?
Lord Bassam of Brighton: My Lords, we made the objective clear. We do not intend to build on green

225
belt. That is our approach and we must stick to it. Obviously, important representations will be made locally when the plans are worked out. The partners who implement those plans will need to ensure that green belt is preserved. That is the Government's objective. We have added to the green belt, and I do not believe that any previous government can make that bold claim.

Local Government
4.22 p.m.
Lord Hanningfield Lord Hanningfield rose to call attention to the effects of government policy on local government; and to move for Papers.
The noble Lord said: My Lords, I am pleased to sponsor this debate and to see that the right reverend Prelate the Bishop of Truro will use it to make his maiden speech. We look forward to hearing him later.
In November, 19 Bills were announced in the Government's legislative programme. Nine of those Bills are of direct relevance to local government. Thus, an enormous amount of activity is currently impacting on local authorities. So now is a good time for us to have this debate. In future weeks and months, we are likely to discuss Bills covering planning, the regions and aspects of local government finance and performance. I hope that this debate will give us an opportunity to put those discussions in context.
As someone who has worked in local government for more than 30 years and is currently the Leader of a large county council—Essex—I believe that local government is very important to the health and democratic well-being of our nation. I also believe that local government delivers efficient and innovative services. For example, devolved budgets to schools, mobile libraries, neighbourhood mediation, sale of council houses, community care packages, bottle banks, advice centres for consumer affairs and rents-to-mortgages were all pioneered by individual local authorities in recent years.
Furthermore, Ofsted, the Social Services Inspectorate, best value reviews and, most recently, the Audit Commission's comprehensive performance assessment provide plenty of evidence to demonstrate that many local authorities provide high-quality and cost-effective services.
Despite those achievements, local government constantly has to fight to justify its position. That situation shows no signs of improving. We are currently seeing a number of developments which, taken together, threaten the future health and vitality of local government.
In my remarks today, I want to touch on two main areas that I believe will have a strong influence on the future health of local government: the new funding formula for the distribution of local government grant and the Government's policy on the regions.
Later this month, Essex County Council, in common with hundreds of councils up and down the country, will be setting its budget and council tax level. The Government provide local authorities with a grant for approximately two-thirds of their expenditure and local authorities are expected to raise the rest of the money that they need from council tax. In other words, levels of council tax are directly dependent on the amount of money received in grant.
That imbalance in funding leads to the so-called "gearing effect". Every extra pound of spending falls on the council tax payer. Therefore, for most councils, an increase of 1 per cent in spending beyond what the Government choose to fund in grant leads to a 4 per cent increase in council tax. I do not believe that that point is always understood. With a low grant settlement, the problem is obviously severe. In a moment, I shall use an example from my own council.
A degree of uncertainty is inherent in local authorities' financial planning because of the imbalance of funding. This year, further complications were introduced by the culmination of the Government's review of the grant distribution mechanism. The objectives of that review were laudable. In the words of the White Paper, the Government were to:
"Investigate thoroughly whether there is a better way of determining the distribution of revenue support grant which is simpler, more stable, more robust and fairer than the present arrangements".
No one could describe the new grant distribution system as simple. Certainly many would argue that it is not more stable, more robust or fairer than the old system.
In any changes to grant distribution methodology, there will be winners and losers. However, this is the first time that I have been involved in a situation where the mechanisms have been designed explicitly to create winners and losers. The new mechanism was never meant to be fair. Through what is described as "resource equalisation", the Government have shifted millions of pounds from authorities in the South East to authorities in the Midlands and the North.
Noble Lords will appreciate that the cost pressures on a county such as Essex—in the South East of England, bordering London—are immense. We have trouble recruiting social workers and teachers because we cannot compete with salary expectations. That situation can only get worse for many authorities in the South East—a point relevant to the discussions that we have just heard.
On education, we are exhorted by the Government to passport a minimum level of funding to schools. For Essex and 12 other authorities around the country, the money that we are asked to pass on to schools is more than the total new grant that we have received for the whole county council. That compares to other councils that have received up to £39 million more new grant than they have been asked to pass on to schools. Where is the equity in that?
The gap between the pressure on education spending and the grant increase brings out the gearing effect to which I referred earlier. I shall try to explain.
In Essex, the amount that we are being told to pass on to schools by the DfES is some £7.5 million higher than the total grant increase for the whole council—I refer not only to the education component but to the total increase. That adds more than half a percentage point to our budget. But, because of the gearing effect, it adds 2 percentage points to the council tax increase. Therefore, for pensioners and others who compare the increase in council tax with the price protection for their incomes, nearly all that they have been offered this year has been offset by our council tax increase, which is government-inspired. That extra money is going into schools. In Essex, those are the figures before we take into account any pressures from community care, highways, waste disposal and other services.
In common with most counties in the South East of the country, the people of Essex feel that the Government do not care. The gross inequalities that have been produced by this settlement are unsustainable. The Government have created a situation in which the most vulnerable members of society will be hit the hardest. Either we shall be obliged to cut services to the elderly and the disabled or we shall have to ratchet up the council tax. No one suffers more than the elderly, the poor, and others on fixed incomes when council tax rises sharply.
This is not a case of Essex whinging—it is more important than that. The points of principle are: first, that the grant settlement is not transparent and, secondly, that it is deliberately and explicitly unfair. Thirdly, there is a lack of stability in the end result. For example, Essex now receives £45 million of damping grant that will, over time, disappear, as we lose it out of our education service. In order to engage in medium-term financial planning we need to know whether we will lose that money next year, the year after, or in 10 years time.
The fourth point of principle relates to changes by the Government to the data of the settlement, which were being made literally days before we had to put the budget to bed. Fifthly, there has been no real move to reduce the ring-fencing of funding through specific grants, which the Government themselves promised to do. If anything, the situation has got worse. Sixthly, we are still subject to the problems caused by the imbalance of funding between central and local government. I hope that the Government's recently announced review of the balance of funding will take a radical approach to this question.
There seems to be a strategy of loading more onto the council tax; that is certainly what is happening in the South East. However, the Government are mistaken if they think that people in the South East, facing the highest house prices in the country, can afford to increase endlessly the amount they pay in council tax. Just as a limit was reached on domestic rates, so we may now be approaching the limit that people are prepared to pay on council tax.
I turn to the subject of regions, although I know that we will debate it again in the House. The Government's policy, set out in their White Paper
228
entitled Your Region, Your Choice, is to provide people with an opportunity to vote on whether they want an elected regional assembly in their area. On the face of it, that would seem perfectly reasonable, but this apparently reasonable position does not withstand much scrutiny.
First, the Secretary of State will decide which regions are to be allowed to hold a referendum on whether to have a regional assembly. Your region, the Secretary of State's choice. Secondly, any such referendum will be purely advisory. The Referendum Bill currently before Parliament would not prevent the Secretary of State from establishing an elected regional assembly even if there were an overwhelmingly negative referendum vote. Again—your region, the Secretary of State's choice. Thirdly, local people will have no say over which region they are in. The people of Essex believe that they live in the South East, not in something called the East of England. Your region, the Secretary of State's choice.
Fourthly, before voting in a referendum, the Boundary Committee will have conducted a review of local government structures, but the committee will not be asked to look for the best new local government structure under a region. It will not even be asked to look for the best new unitary structure under the region. It will be asked to look for the best wholly unitary structure in the existing two-tier areas under the region, leaving existing unitaries as they are, irrespective of how well they are serving local people at present. What is more, the Secretary of State will then have the power to implement those recommendations or to revise them as he sees fit. Again, it is your region, but the Secretary of State's choice.
At the polling booths, people will be asked to vote for an elected regional assembly. "What will the elected regional assembly do?" That is a question that they might legitimately ask. No one has been able to answer that question because there is, as yet, no legislation setting out the powers of the elected regional assembly. What we can guess from the White Paper is that elected regional assemblies will be required to enter into an agreement with the Government on key targets. The priorities of the regional assembly will thus largely be set, centrally, by the Government. Again, it is your region, the Secretary of State's choice.
I could go on but I fear that my point is made. The Government cannot present the move to elected regional assemblies as an exercise in democracy. It is not. My opposition to these proposals is practical. They constitute a massive and expensive distraction from our main focus which should be improving the delivery of public services.
I could say much more on the two topics to which I alluded in my speech. In addition to these points, I am sure that noble Lords will wish to explore the effects of other aspects of government policy on local government. The Government's modernisation agenda has created a small cadre of elite, quasi-professional councillors, and a much larger group of council members whose talents are not being fully

229
utilised. Although all councils, including mine, strive to keep their members fully involved, the reality is that most councillors no longer have a part to play in the key day to day business of local authorities. Modernisation has consigned them to the margins.
In Essex, there are 79 councillors. For 69 of those councillors, the business of CPA, performance indicators, local government finance, planning changes and the other matters that we will discuss are of marginal interest. They do not understand what is going on. The Government's modernisation agenda should ensure that the concerns of local communities are met and linked to the day to day activity of local authorities. Local councillors are the means of achieving that link.
The more attention authorities have to pay to central government directives, the less time they have to pay to their local communities. We need to reengage our communities in local democracy. I look forward to hearing the views of your Lordships on these and the other matters of Government policy affecting local government. My Lords, I beg to move for Papers.
4.36 p.m.
Lord Woolmer of Leeds: My Lords, it is a pleasure to follow the noble Lord, and I am grateful to him for tabling the Motion. I shall touch on some of the issues that he raised, but the debate is wide-ranging by the nature of the Motion. I shall address my remarks around three themes: constitutional reform, regulation and inspection and funding.
On constitutional reform, the movement away from the committee system to either mayoral or leader cabinet arrangements has been the greatest constitutional change for decades. I believe that the changes have had a number of beneficial effects, although the noble Lord referred to some residual problems. I agree with him on those.
A cabinet with a maximum of 10 senior councillors is, by definition, required to handle large portfolios that deal with broad issues of public concern. There has been a move away from the concentration on committees supported by professional disciplines. A common development, for example, has been the establishment of a cabinet portfolio that oversees the quality of the local street environment. This contrasts with the trends that developed under the CCT model pursued by the previous government, which had the effect of fragmenting services.
As power has concentrated into a smaller, more visible and accountable group, there has been the growth of a more critical culture among non-executive elected councillors. That has disadvantages in terms of political party management, but it has also opened up public debate on contentious issues, which the committee system rarely generated. The constitutional changes have also sharpened the roles of officers and members, providing for greater clarity about who is making decisions, and increasing the speed with which they are made.
230
The movement away from committees has meant more time spent by the majority of members representing their ward issues, and with it a momentum for more localised delivery of services which meet the needs of specific communities. Many authorities are introducing new area management arrangements that seek to give effect to this.
Connected to the constitutional reforms has been an increased emphasis on consultation and partnership. Councils are undoubtedly better informed of local priorities, and what the public think of their services, than ever before, which in itself creates a pressure for change. The requirement to develop a community strategy with partners for the good of the local area has re-emphasised the responsibility on local authorities to act as community leaders rather than simply as providers of services.
My own city, Leeds, has been running the Leeds initiative since 1990, which contains most of the elements that the Government sought in the model of the local strategic partnerships. The partnership in Leeds has contributed strongly to that city's success over the past 10 to 15 years. Regardless of party political control, few would seek a return to the old system at local council level, certainly in my area.
While there remain problems of transition, particularly engaging non-executive councillors, as the noble Lord mentioned, the constitutional changes have been generally welcomed as providing for better-managed authorities. At national level the central local partnership operating since 1997 has provided a forum for leading members of the Local Government Association to meet and debate key issues on a regular basis with Cabinet Ministers.
I turn to regulation and inspection. It seems to me that local authorities are reviewed and inspected in a way they have never faced before. The comprehensive performance assessment process, introduced last year, provides relief from that if a local authority is performing its functions well. The purpose of the comprehensive performance assessment is, after all, not only to provide an external judgment on a council but also to provide a base from which external inspection can be planned in a manner more proportionate to the difficulties faced.
For authorities whose performance is good or excellent under the process, there is offered a substantial reduction over time in the number of controls, ring-fencing, inspections, statutory plans and so forth, which they have to produce. In my view, inspections introduced by the Government have exposed weaknesses that previous governments did little to resolve. Efforts to improve performance of councils can now concentrate intensively on those authorities identified as below par, while restrictions and limitations can be relaxed for those councils regarded as good or excellent.
I turn to the question of funding. As long as I can remember, local government has always pleaded poverty: that central government funding is not sufficient or not distributed fairly. Increases in local taxes have been the fault of central government. At the

231
same time local government often asks for more independence from central government and the right to raise a substantially greater proportion of its own revenues locally. The noble Lord referred to the 4:1 gearing formula. If local authorities were able to take control of, say, 50 per cent of their own fund raising, that would mean a 100 per cent increase in local taxes. There is a dilemma which we all recognise between the desire to achieve a greater degree of independence and the problem that gearing would involve in moving to that.
I, too, look forward to the discussion yet again in yet another review of local government finance. I have to say to the noble Lord that I do not have a great deal of optimism that a magic solution will be found to the problems I have experienced on and off in local government for what is now probably 35 years.
What is the record of central government funding for local authorities in recent years? Since 1997 under Labour Governments, central government grants to local authorities have increased by 25 per cent in real terms. That compares with a 7 per cent reduction in real terms in the last four years of the previous Conservative government. But, even faced with a 25 per cent increase in real terms, local government will still say that that is not enough.
The settlement for the next financial year announced in December will see total support from central government grant and business rates of over £51 billion, a cash increase of 8 per cent overall. That is by any measure a very large increase for local government yet the complaints, fears and worries I hear differ very little from previous years. Schools will receive an extra £200 on average per pupil and an extra £100 million is provided specifically to reduce the problem of bed blocking. That is not to say that there are no problems that need addressing, and noble Lords today will have their own list of such matters. All councils would like more central government funding and Leeds is no exception to that, along with Essex.
I share the concern about the problem of education funding and that in some cases local authorities are being asked to pass on more to schools than the total increase in their grant. I agree that that problem should be addressed. I look forward to the Minister's response and guidance on that later today.
With respect to local business rates, while I welcome the proposal to establish business improvement districts and the possibility of levying additional non-domestic rates, I believe that that does not go far enough. I should like to see the Government consider allowing local authorities to borrow in a prudential way within a prudential borrowing regime based upon the prospective increase in business rates—non-domestic rates—in areas of expansion. That 'would certainly help my own city.
There are problems of finance; it was ever thus. I see no early resolution to the dichotomy between desiring greater independence but at the same time having less pressure upon local tax payers. However, I believe that the changes in recent years have in some respects strengthened local government. When we look
232
critically at these issues we can emphasise the problems on occasions. However, still today local government provides essential services extremely effectively and well and, in my area at least, with enthusiastic involvement of councillors. Long may that remain the case.
4.46 p.m.
Baroness Blatch: My Lords, I congratulate my noble friend on selecting this topic for debate and on his opening speech. Like others, I welcome to the debate the right reverend Prelate the Bishop of Truro. We look forward to hearing what he has to say. I particularly do so because I happen to be a friend of the Dean of Truro, and the outstanding reputation of the right reverend Prelate goes before him.
I want to concentrate on government policy as it affects local government's responsibility for education. Each year, as the Government announce local government grants, extravagant language is used to describe the generosity with which Ministers are treating education generally and our schools in particular.
However, in the first six years of this Government, the size of the department has grown; numbers of political advisers and secondees to the Civil Service have also grown and that can be mirrored right across all Whitehall departments, especially those dealing with local government and public services.
Over the same six years the Department of Education and Science—now the Department for Education and Skills—has taken central control over much of local government services. We in this House all remember that central direction and control was the theme of the last Education Act. Increased bureaucracy at all levels has been created and imposed upon local authorities and our schools. Ministers bypass local authorities by making statements to schools, massively raising expectations without giving local authorities the resources to fulfil them.
Let us take, for example, the letter to schools from Mr Miliband, which stated:
"[We are] taking steps to ensure that the extra funding gets through to your schools".
That funding is the Government's grant to local education authorities. However, as my noble friend Lord Hanningfield stated, for 13 local authorities the amount of funding that they are urged by Mr Miliband to passport to their schools is greater than their increase in formula grant. I welcome the support of the noble Lord, Lord Woolmer, in saying that this issue must be addressed.
The only way that that can be achieved is to cut back on other services, to raise even more money through local taxation or not to passport the full amount to schools and to risk the Secretary of State using his powers, which were set up in the previous Act, to set minimum budgets for schools.
Ministers have given assurances that this power will be used only in extremis, but we have not had examples of what the Government mean by in extremis. For example, if an authority does not passport the money

233
to schools because it claims not to have had the grant to enable it to do so, will that be an example of in extremis? It would be helpful to have one or two examples from the Minister when he replies.
On this matter, local authorities are between the devil and the deep blue sea or—perhaps more apposite—between a rock and a hard place. Perhaps I may ask the Minister whether, if the Secretary of State chooses not to use his power against the 13 local authorities for the reasons I have already mentioned, Mr Miliband will write a further letter to those schools and authorities explaining why it is not possible for the local authorities to meet their obligations and that he understands their position.
I also ask the Minister what amount or percentage of the total education budget is held back to run the Department for Education and Skills; what amount or percentage is held back to fund centrally determined initiatives and projects, including ring-fenced funding; What amount or percentage is available to local education authorities; and, of that amount, what figure is directly available to be sent to schools?
We were promised fair funding and a simplified system. It is certainly not fair—I take some points made by the noble Lord, Lord Woolmer—and I have to say that it is definitely not simple.
Since the Conservatives left office six years ago in 1997, the level of specific projects and special grants— that is, the proportion of local authority and schools' budgets that must be ring-fenced and spent on government-set priorities—has risen from 4.5 per cent to 15.8 per cent. That reduces very substantially the ability of local authorities and schools to determine their own priorities and it substantially increases the bureaucracy which must be in place in order to manage the allocation of that 15.8 per cent of expenditure. It also renders worthless government promises to give more autonomy to local authorities and schools.
There are other tensions for local authorities and schools. For example, the level of teachers' pay for the coming year is unknown, and yet the Government expected local authorities to give detailed information about their budgets by 31st January—last week. There is also the cost of the 1 per cent increase in national insurance contributions, which must pre-empt—there is no choice—some part of any increase in grant.
What is the cost to education of the 1 per cent increase in national insurance? As a result of that increase for employees there will inevitably be tension between employers and teachers' unions, who will regard that 1 per cent increase as a bargaining counter for more pay. Teachers and education workers in London will not only have to cope with the additional national insurance payment but also with congestion charges of up to £1,000 per year. That will again not only increase pressure on the employees, but also on the employers for more pay.
Why do the Government propose to give power to local authorities to limit savings balances held by schools? Surely, the greatest disincentive to save is for government, either local or national, to claw back
234
those savings. Schools should be free to save both for the short term and sometimes greater sums in order to meet specific expenditure over a longer period. My suggestions as far as concerns balances are: first, to encourage schools to be more financially effective and to save where they can, and, when they do, to be allowed to benefit fully from their own efforts; and, secondly, to require governors to inform parents on an annual basis of the level of their balances and the purposes for which they are held.
Data from the most recent census are used to determine government grants. It is widely known that the census was unreliable. One Minister said that,
"losses in population for London boroughs had been due to the way that mid year estimates allocated migration changes".
That glosses over a real distortion in the data which, in turn, results in serious injustices for many London boroughs. What are the Government doing about the complete loss of confidence by the London boroughs in the census data?
Sixth-form funding is also an area of great anxiety. The learning and skills councils are responsible for funding post-16 education. They are unelected, unaccountable and they second guess the role of local education authorities. However, there is now evidence of reduced budgets to sixth forms by learning and skills councils through local authorities, even where numbers of pupils have not declined.
Secondly, although Ministers have directed authorities to passport funding to schools, the learning and skills councils have received no such letter from Mr Miliband. What is the explanation for that? Or should we accept that Ministers intend to put pressure on local authorities but not on the learning and skills councils?
Encouraging local authorities to prepare three-year indicative budgets in principle is a good idea, and I support it. But how on earth can they do that? The Government cannot guarantee levels of grant over a three-year period and they regularly change the percentage of specific and special grants. What guarantee is there that there will not be further tax increases, such as the national insurance increase? The outcome of the teachers' annual pay review over the next three years cannot possibly be known—it must be uncertain—and, as we all know, the staffing budget is the largest part of any education expenditure. Any indicative budget with such a level of uncertainty would at best be meaningless and at worst misleading.
The recently introduced reduction of workload for teachers, although welcome, presents problems for local authorities and teachers; £140 million has been made available against a predicted requirement to meet the obligation of approximately £1 billion. What will happen if teachers take the Government at their word that the workload will be reduced and the local authority and/or school is unable to fund the proposal?
The essence of what I have to say in this debate is that there is a serious mismatch between government rhetoric and spin on the one hand, and the facts on the ground. National government has grown; central

235
direction and control has grown and become almost stifling; unnecessary bureaucracy has also grown; the amount of resources held back at national level is now unprecedented; and the core funding to schools does not appear to match the massive expectation that has been raised by Ministers.
Schools could be better funded, not simply by bearing down on local authorities but by the Government leading by example and improving efficiency, reducing central control and bureaucracy, cutting the size of national government and devolving the moneys that could be released to local schools. On behalf of regional government I ask one final question: how secure is county government and, in particular, local education authorities?
4.58 p.m.
Baroness Maddock: My Lords, I also begin by thanking the noble Lord, Lord Hanningfield, for securing the debate on the effects of government policy on local government. Perhaps I may say how pleased I am, as I am sure are many noble Lords, that the right reverend Prelate the Bishop of Truro has chosen to make his maiden speech in an area that many of us hold dear.
I intend to talk a little about centralisation, a topic touched on by the noble Baroness. Since coming to power in 1997 the Government have talked a lot about decentralisation of power and in many aspects they have achieved it. They have also talked about the need to build strong and vigorous local government. But their record of action has been sadly disappointing, particularly in relation to local government.
Many who served on councils during the years of Conservative governments deplored the effect of their policies on local government. Therefore, it is particularly disappointing that the Government's actions have further reduced local authorities' influence in delivering local services. It is even more dispiriting because when the Government came to power in 1997, they signed the European Charter of Local Self-Government, but many of the changes that they have implemented since signing the charter have been entirely contrary to its aims. When Labour came to power in 1997, local government was struggling, as others have mentioned, with growing pressure on services and incredibly tight budgets. It was obvious that the quality of services was starting to suffer.
The Government attempted to respond to that challenge and gave some more money, but they massively increased the controls on how that money was spent and introduced a huge range of performance standards and demands for efficiency savings. The result has been that local councils have been emasculated and are struggling to be innovative in delivering services under that regime.
One thing that many of us who have served in local government for many years had been looking forward to was a change in the funding formula for councillors. Other noble Lords have given details of that, but in my area of Berwick-upon-Tweed, as a small council in a sparsely populated area, we expected to benefit from
236
the new regime. I am afraid that that has not come to pass. That is true of other authorities up and down the country.
Lest I pretend that everything is doom and gloom, it certainly is not. Local government still makes a vital difference to local communities despite those difficulties. One has only to consider the radical changes that authorities such as Liverpool have introduced after the Liberal Democrats took control to realise that a really good local authority can change the fortunes of its community.
We want to change the system so that such innovation is easier to bring about. We want authority for change and control to be firmly rooted in the community that it represents. That involves releasing local government from many of the forces of central government, especially targets, performance indicators and centrally controlled funding. We would like a minimum service standard to be assured, but local authorities should then be allowed to react to local needs and provide services in a manner and to a level that matches the local preference. The key judges of that are the local electorate, not central government.
People should be able to expect a basic service across the country, but there should be maximum flexibility for local authorities to determine their local priorities and develop their local distinctiveness to suit their area. There should be far less prescription from the centre. The noble Baroness, Lady Blatch, explained clearly the difficulties that education authorities are facing in that regard. Although standards should be set nationally, there should be no prescription on how councils deliver the service.
A radical overhaul of best value is one starting point for that. Best value should be about putting local people in charge. It should be a process that gives service users the tools fairly to judge the performance of their services, but it should also allow for local flexibility and variation according to local priorities. Most councillors would like a much less bureaucratic and much more strategic system. That would assist both councillors and local people to focus on the important choices for their communities, rather than worrying about losing points in all the various reviews and inspections that they face.
The specific grants regime was also mentioned by the noble Baroness, Lady Blatch. One of the most dramatic trends in local government finance, which has already been highlighted in the debate, has been the growth in central Government's use of specific grants as part of an overall settlement. We heard about that change in education but across the board, since 1997, almost 25 per cent of total support to local authorities now comes from specific grants. That means creeping nationalisation of the functions of local government, as it is a mechanism for directing how local authorities spend the finance available to them. As someone with an interest in housing, nowhere is the ability to make financial choice more restricted than in that area.
I find that especially distressing. I remember being a member of a council with many Labour councillors who sang loudly about their problems under the

237
previous Conservative administration. I thought that we might see something different, but we have been disappointed.
Some specific grant schemes involve competitive bidding processes, which can be a wasteful way to distribute scarce resources. Only the best bids win; about half of the applications are unsuccessful. That wastes a huge amount of time and resources, often of authorities that can least afford it. That hits especially hard small authorities with a small staff, for whom it is difficult to put together lots of good bids. Some schemes also require matched funding, which means that the authority must contribute some of its core funding to them. They may be the latest pet projects of the Government, but they may be fairly low down the local list of priorities.
Lastly, I turn briefly to the question of quangos. The Government have introduced many more quangos, as has been mentioned. Quangos and partnerships have become the pattern of local governance. That reduces the power and autonomy of local government. In the North East, there are 70 regional and sub-regional quangos, but only 23 councils. Many of those quangos have much bigger budgets than councils and can pay their board members much more than councillors. That is emasculating local government.
I recommend to the Minister some research conducted under the auspices of the Rowntree Foundation. Councillors recognise the value of working in partnership, but fear that their democratic role is being downgraded by the growing number of partnership policies introduced by central government. The Government should consider that research, which was conducted in Hull.
Change must be driven from the bottom up. Although the Government have said that that is what they want, steps in that direction have been slow. The best judges of the service quality in a local area are the people who live there. They should be primarily in charge of holding local government to account for what happens. They need sufficient information to do that; they need the opportunity to give the council their views; but, at the end of the day, local people should be in charge of the change. Central government seem to take some steps forward on decentralisation, but then they retreat. If the Government could properly grasp that concept and implement it, we would see a real step change—which we heard a lot about earlier in the Statement.
5.8 p.m.
The Lord Bishop of Truro: My Lords, one weekday evening last summer I was taking a service at Wadebridge in north Cornwall. Afterwards, there was the inevitable bun fight, but I said that I could not stay too long, because I would have to catch the sleeper train to be here in London at 11 o'clock. An old Cornishman heard that and told me sympathetically, "That London be a funny place. It's a long way from anywhere". Cornwall and its affairs certainly seem a long way from here. I think that I am the only person
238
who lives full time in Cornwall who is now eligible to sit in this House, although I know that many in this House care for, love and want the best for Cornwall.
We are fortunate in Cornwall to have an active, good county council. It is one of 22 described as excellent in terms of its delivery of services. County councillors and officers work hard together. But, given the present structure and scope of local government, they are simply unable to meet the hopes and aspirations of local people. Inevitably, there are statistics, which may help to back the point. In a table of GDP per head in which the UK's score is 100 and the south-west region's is 91, Cornwall scores 65. The corresponding scores of Wiltshire and Gloucestershire are 108 and 106 respectively. The UK average weekly earnings of full-time employees with adult rates is £349.79; yet in Cornwall it is only £255.85—nearly £100 less than the national average. Recently, north Cornwall was described as the worst paid area in the whole country. There is a good deal of seasonal employment paid at the minimum wage in the area.
As noble Lords will know, the county has Objective 1 status and may receive it again because the problems are so complex and deep-seated. Not only is postindustrial Cornwall affected, the traditional industries of farming and fishing are also in decline. Objective 1 money and match partnership funding have helped, but the problems remain. Regional government, as put forward in the Government's White Paper, will not help our situation in Cornwall. Bristol is about 200 miles away from the middle of Cornwall. In what is called the south-west region, Tewkesbury is closer to the Scottish Borders than to Truro. It is a strange area.
If there were a south-west assembly, Cornwall would have only two members. How could they represent in a meaningful, down-to-earth way the needs and aspirations of Cornish people? We need to strengthen the local; to emphasise it rather than lose its distinctiveness. That means that we need to look hard, for instance, at the role and purpose of something that we have not heard about today: parish councils. They are often written off or talked and thought about in a patronising way. Perhaps, if they were given more scope and power, they would become exactly what is needed: a forum close to ordinary people, concerned with matters that affect their daily lives. There is no use in Westminster legislating for that. Parish councillors and others functioning at that level need to be involved from the word go. They know, or stand a chance of knowing, what works or could work, rather than what should or ought to work. That will take time. But it will be time well spent, because it will strengthen democracy, helping people to feel that they have a stake in their own history rather than being objects in someone else's.
At present, Cornwall is an exciting place to be, with the Eden Project and the soon-to-open National Maritime Museum, Cornwall. All sorts of other things are happening. Attitudes are changing. The majority of district councillors in Cornwall want to create a new structure for local government. Cornwall County

239
Council backs a referendum on the question of a Cornish assembly. But if all that is to mean anything, a change of attitude is needed elsewhere.
One academic who spent years looking at Cornwall and its problems talks about distance deprivation. He uses a powerful image, saying that a map of Britain can be seen as roughly the shape of a human being, in which case Cornwall is the foot. If there is a problem in our feet, most often the cause is bad circulation. If that is the case, the problem that needs to be looked at carefully is not the foot, but the heart, for there the cause lies. Perhaps the man from Wadebridge said more than he knew when he remarked, "That London be a funny place. It's a long way from anywhere".
5.15 p.m.
Baroness Knight of Collingtree: My Lords, due to my position on the List of Speakers, I have the enormous pleasure and honour of referring to the splendid speech of the right reverend Prelate the Bishop of Truro. My noble friend Lady Blatch spoke of his reputation in Truro. I know of the wonderful reputation and respect in which he is held in Grantham, nearer my own home, and where the Lord Bishop stayed for a while. We all hope to hear many more speeches like his. Noble Lords speaking in this debate will watch keenly and carefully choose a subject to appeal to the right reverend Prelate so that he will also join in our debates.
We are all indebted to my noble friend Lord Hanningfield for introducing the debate. It gives me an opportunity to voice again my anger and disgust at the treatment of many good people who, out of a simple desire to serve their communities, agree to become parish councillors. Noble Lords may be astonished to hear that there are not queues of volunteers longing to spend their time in that way. Regular evenings in inadequately heated church rooms for no recompense, and with no powers to wield, are not everyone's idea of fun and games. Usually, the parish council chairman tries to persuade two or three neighbours whom he judges to be trustworthy and conscientious to join the parish council so that the parish can run its affairs.
But now the Government have imposed what parish councillors say is an intrusive and unnecessary requirement: to declare publicly details of their property and pecuniary situation. One such councillor, Mr Chris Garner, who served on Kings Langley Parish Council, saw no reason why he should do what he was told by placing in a publicly displayed register every detail of his financial and private interests. After all, there was a long-established rule, which was always adhered to, that any councillor with a financial or personal interest in a matter to be discussed in the council declared it openly before it was discharged, and did not speak or vote on the matter. No evidence has been put forward to suggest that councillors ignored that rule. Surely it is relevant that they get no pay whatever.
Mr Garner was yanked before an adjudication panel, prosecuted and is now disqualified. At least, he thinks that he is disqualified, but the tribunal did not
240
stop to say so. For a bunch so keen on revelation, it is odd that they kept it a secret. Mr Garner is not alone. Ten members of Kingsland Parish Council who have refused to disclose their financial interests are taking the Government to court claiming a breach of their human rights. Other parish councillors are watching the case keenly and waiting to join them as a result of what they are sure will happen.
The parish councillors in my village have told me that they are resigning because they will not put up with what is happening. I have two questions for the Minister. First, if it is thought essential for parish councillors to declare their status and interests, why cannot those details be kept within the knowledge of only the local authority concerned? Why must they be published in an open book, where everyone can read them, and for every busybody and gossip to mull over? Secondly, was a law passed and properly debated by Parliament that those decent. public-spirited, unpaid people should be so penalised for serving their fellow men? It is such a denial of the right to privacy and such a snooper's charter. If that is the law, who passed it?
It seems that it all came about as the result of an order made in November 2001. In the interests of greater accuracy, I obtained a copy of the order. I shall tell the House a little of what it says. It says:
"A member must regard himself as having a personal interest in any matter if the matter relates to an interest in respect of which … a decision … might reasonably be regarded as affecting to a greater extent than other council tax payers, ratepayers, or inhabitants of the authority's area, the well-being"—
noble Lords should bear the word "well-being" in mind —
"or financial position of himself, a relative or a friend or—
(a) any employment or business carried on by such persons;
(b) any person who employs or has appointed such persons, any firm in which they are a partner, or any company of which they arc directors".
Hang on a minute—all of that applies not only to the councillor; it applies also to his relatives. A little further down in the order, it says:
" 'relative' means"—
I shall take a big breath—
"a spouse, partner, parent, parent-in-law, son, daughter. step-son, step-daughter, child of a partner, brother, sister, grandparent, grandchild, uncle, aunt, nephew, niece, or the spouse or partner of any of the preceding persons".
I find it difficult to decide what the term "well-being" means. Does it mean that someone has cleared up the leaves or even the dog mess in the village street? If we suppose, just for the sake of argument, that an aunt or grandparent had established that it was better to walk in the street because the mess had been cleared up, one would—as far as I can see from that list—have to make all those factors available.
I do not think that Parliament ever considered the effect that such sweeping demands might have on parish councillors. Well, we know now. There is a heap of legal cases coming up because of it. The Government should be concerned, and I cannot help wondering why, when the powers are so wide-ranging and demand so many details, Parliament was not

241
properly consulted and made to understand the effect of what it was doing. Are the Government trying to destroy parish councils?
5.22 p.m.
Lord Dixon-Smith: My Lords, I am grateful to the right reverend Prelate the Bishop of Truro for reminding us, through the words of one of his countrymen—if I can put it that way—how far London is from so many parts of the country. If London is the heart of the country, the Palace of Westminster is, in many ways, the heart of London. In that sense, we here are even further from most places in the country. We forget that fact at our peril.
I am grateful to my noble friend Lord Hanningfield for introducing the debate. There must be something in the Essex air; two former chairmen of that authority speak today. I shall adopt a perspective that is slightly different from my noble friend's factual and detailed examination of what is going on. We spend so much time tending the trees of local government that there is a danger that we will miss what is happening to the forest. I do not know whether my views are those of an extreme backwoodsman or an extreme radical; I suspect that they are those of an extreme radical. For sure, I do not like what I see.
As approximately 20 per cent of public expenditure is administered by local authorities and has a great impact on all sectors of the community and the people, it is inevitable that central government will take a detailed interest in what goes on. It is also inevitable that central government will take unto itself responsibility for creating the burden of additional duties, responsibilities and obligations that local government must bear. It is also a fact that, over the years, central government has interfered increasingly with the structure of local government, changing the physical structure, internal administrative arrangements and financial arrangements. All those facts distract from the business of local government, which, as my noble friend said, is to provide good services to local people and communities.
The rising level of central financing and central intervention and control and the increasing central desire for conformity have tended to erode local control, local interest and local initiative. Increasingly, local government becomes the agent of central government. That is a cul-de-sac at the end of which can only be the loss of local control. Local government is close to the end of that cul-de-sac.
We should consider the changes in the financial arrangements—the new "Glorious Revolution" that we are supposed to have gone through. If I read things correctly, the position amounts to this: if local government conforms and lives within the strict parameters that the centre sets, the centre will allow a little more freedom in one or two areas. The stick of conformity is used to create a little more freedom, and it is hoped that the freedom will be seen and the effect of the conformity missed. I could put it more strongly than that, "Be a slave, and we will allow you to play a bit more".
242
We should also consider the new distribution formula. My noble friend went into it in considerable detail. Even the Government admit the perversity of the changes that they have brought about. The Government have introduced two new factors: floors and ceilings. There are floors below which a grant may not be reduced and ceilings above which it may not be increased. That is an attempt to reduce the impact on council tax payers in areas that are adversely affected. The fact that that change had to be introduced illustrates the difficulty. I accept that there is a great deal of history to what goes on and that the Government are building on what was done in the past. The trend that I am talking about has been going on for a long time, and it is weakening local government.
What is going on in the structure of local government? My noble friend discussed the impact of the advent of regional government. Central government is disturbed by local government. Counties and metropolitan areas with unitary authorities and districts are democratically elected bodies with a will of their own. All too often, they are prepared to take decisions that governments find inconvenient and unhelpful. That is as it should be.
What do the Government do to change that situation? In several instances, that democratic process, involving local communities, has proved an obstacle, so they invent the regional assembly. Once invented, the Government decide that the regional assembly will have a few more powers and the fig-leaf of democracy. They say that they are enhancing democracy and increasing devolution and local control. However, underneath the fig-leaf of democracy at the regional level, in the shire areas, as my noble friend has said, the county councils and district councils will have to go and a new structure will be imposed. When people vote in a regional assembly election, will they be aware that they are voting for not simply the creation of a region, but the creation of a new structure of local government in which the building of the new institutions, with newcomers, will mean that there will be strangers who will be more susceptible to government imposition and control?
The picture is immensely depressing. I do not like the world that I see in local government. My noble friend Lord Hanningfield is a brave man to stay within it. At some point there will have to be a change of climate and direction. We shall have to start our exit from that cul-de-sac. Under this Government, I see no sign of any move in that direction. I wish that I did. If there is not a change of direction, the day is not far away when local government will be simply the agent of the centre. At that point, public interest in it, which is pretty marginal already, will disappear completely. If that happens, the country at large will be the loser.
Lord Brooke of Sutton Mandeville: My Lords, it is a pleasure to follow my noble friend Lord DixonSmith—Essex's Castor to my noble friend Lord Hanningfield's Pollux. My noble friend Lord Hanningfield brought his long experience in local government most helpfully to the debate. He has also given us the opportunity to hear the notable maiden speech of the right reverend Prelate the Bishop of Truro. My late noble kinsman and my late noble relative served in local government in combination for 45 years on different authorities. I served on Camden Borough Council for only 17 months—although at the time I thought I was getting 17 years' experience from the process—so I come without a background in local government.
Yesterday, I employed the hours of the Divisions on House of Lords reform by looking up a particular quotation in Kipling about "lords of the parish pump". I fear I did not find it; therefore, your Lordships will be spared. However, I reached the stage, having read 800 pages of Kipling, where I suspected the quotation was perhaps by G K Chesterton instead.
I do not pretend that my party got everything right in local government. One academic on local government matters, with considerable access to private Conservative papers, opined that our own policy-making in local government declined once the people who had been heavily involved in it ceased to make those policies for us when in government. However, it will be a bonus to our party if new Labour centralisation drives Conservatives back to decentralisation in local government.
This is a large subject for a half-day debate. I am reminded of the moment in 1944 when Mr Churchill's government were defeated—the only occasion during the war—by 117 to 116 votes on an amendment by the late Lord Eccles who had just arrived in the House of Commons. It was proposed that after the war female teachers should have the same pay as male teachers. Because Churchill feared what Goebbels would do with the government's defeat, he made it a confidence measure on Report; it was reversed by 417 votes to 17. Voting beside the late Lord Eccles in favour of that amendment were the late Lord Thorneycroft, the late Lord Hailsham and my late noble kinsman. When it was over, Churchill summoned Lord Eccles to a private meeting. He said:
"Young man, I have much sympathy with the general proposition you were putting forward, but to introduce it as an amendment to an education Bill in the midst of this great conflict is like putting an elephant in a perambulator".
I have a sense that in trying to debate the whole of local government in half a day, we have the same sort of test. Therefore, one will inevitably be somewhat telegraphic.
First, I turn to finance. I am a veteran of the European Union Budget Council. Only those who have served on it know how complicated the budget systems of the European Union are. When the shift occurred between the two major parties in another place, I tried to remember the budget systems, but I
244
found that in eight years I had entirely forgotten how they worked. How much more is that the case in terms of local government finance when the system is changing the whole time? I believe that people behave in the way that they are treated. If central government does not give local government the impression that it is trusted, I fear that less than wholly trustworthy behaviour may emerge.
The proof of the pudding is in the eating. In the same dietary mode, it is often said that rural poverty is alleviated by the capacity of countrymen to grow vegetables in their back gardens. But the current doctrine on rural sparsity does not augur well for the countryside. I refer to the Kent figures, which were quoted immediately after the settlement. Kent has an increase in grant of 3.9 per cent, but it is required to spend 6.6 per cent more on schools and 8.6 per cent more on social services. I follow my noble friend Lady Blatch in quoting a recent comment from the Financial Times that specific grants are still increasing raster than general grants.
I am reminded of the manner in which my bank approaches me when it wants to change the way in which my account is being handled. It assures me that I shall be the beneficiary of the changes it makes. It always strikes me that the benefits receive from the change are less than the benefits received by the bank. I have quoted previously C S Lewis's remark that if one hears about somebody going around doing good to others, one can always tell the others by their hunted look.
A Labour Minister in another place defended the present settlement by saying:
"Some Labour MPs thought it had not gone far enough".
Returning to the European Union, I remember that we were unable to make serious and mature economic decisions on behalf of Europe except at six o'clock in the morning; and at four o'clock in the morning, the Irish Minister would say that unless the Irish received another 100 million ecus, Irish public opinion would not stand for it. We found it a little difficult to be convinced by that argument at four o'clock in the morning. A whole host of people in this country would be surprised by the observation that Labour areas had not done well enough from the recent settlement.
My second point concerns regional assemblies and planning. I have seen the reaction of the Local Government Association concerning the loss of democratic accountability on planning in the present plans. Although I saw that the Town and Country Planning Association was in favour of the strategic element in the policy, even it thought that the regional spatial strategies did not provide the right to a fair hearing. Unless regional assemblies are elected, decisions in planning matters will be taken by regional officials. But if regional elections are thus thought to be an incentive to vote for them in a regional referendum, one must allow for the fact that regional assembly constituencies look like being three times the size of a parliamentary constituency. Therefore, the link between the elected person and the voter will be greatly diminished, when it has been treasured in

245
planning matters in the past. It is a choice between the devil and the deep blue sea. If the devil is always in the detail, he is around in another capacity in the incredible complications of local development plans and planning arrangements.
Finally, one cannot but help ironically notice that the CBI is to campaign against regional assemblies on the strength of the cost over-runs of devolution in Scotland and Wales. One has an uneasy sense that, as classically with decimalisation, but also with all prior local government reorganisations, job inflation and cost inflation will occur. My instinct tells me that the reaction to my bankers which I described—who are not Greek but ostensibly and, indeed, obsessively, bear gifts towards me—will recur.
The Minister in another place is an old hand and an old fox at these matters, but he also has form. We can read what he has said about the benefits that all these reforms will bestow, but some of us were also privileged to sit with him through 270 clauses and 27 schedules in Committee in another place on the Greater London Authority Bill—I appreciate that it became much larger in your Lordships' House—and to hear his silver tongue tell us of all the benefits that strategic planning in London would bestow there. We have also now had the opportunity to taste the fruits of those reforms, and I have to say that trust is a two-way process.
The chief executive of Westminster City Council— the authority many of whose citizens I used to represent in another place—is no doubt gratified that his authority was one of the 20 or so rated as excellent by the Audit Commission, but he has been quick to point out that immunity from Whitehall for some councils does not protect the rest from suffering,
"the straitjacket of obtrusive inspection regimes and central government constraints that hamper service delivery".
To go back to those elusive "lords of the parish pump", to whom I referred at the beginning, I hope that it will not be too long before a government of my party are able to restore to them the freedom which the present Government have, in the spirit of 1945, when Whitehall knew best, sought to constrain. When Winston Churchill was preparing his speech to the Conservative Party conference in Blackpool towards the end of the 1940s, Geoffrey Crowther offered him the phrase, "Set the people free". Winston retired to the bathroom while the others continued to prepare the speech, and through the bathroom door they heard him saying, "Set the people free", "Set the people free", with a series of variations on emphasis. The emphasis is not important. What is important is the credo itself.
5.41 p.m.
Lord Hodgson of Astley Abbotts: My Lords, I, too, add my congratulations to my noble friend Lord Hanningfield on introducing the debate today, and to the right reverend Prelate the Bishop of Truro on his interesting maiden speech.
246
I am obliged to declare an interest—or, in my case, not an interest: I am not and never have been a councillor. Indeed, I am not a frequent participator in debates on local government finance in your Lordships' House. As a mere banker, I find the topic of local government finance too arcane and too intricate to get my brain round. But recent developments in the field—most notably the proposed local government finance settlement for 2003–04— seem to make the issue clearly discriminatory.
I hope that the House will forgive me if I use a personal example to illuminate this. I comfort myself with the thought that the ringside is perhaps the best place from which to watch events. I am lucky enough to own two houses—one outside Ludlow in south Shropshire and the other in central London in Kensington; one in the centre of the capital city and the other in one of the country's most sparsely populated counties, with an area about the size of Essex—with respect to my noble friends Lord Hanningfield and Lord Dixon-Smith—but with a population of about one-fifth, or 20 per cent, of the latter; one in a capital city, where there has been a dramatic rise in house prices and where the past 10 years have been a time of considerable prosperity, and the other in a rural area, hard hit by the decline in agriculture and the consequences of foot and mouth disease. This has given me the chance to see at first hand the impact of the local government finance settlement.
I find it very curious that the council tax payments for the two houses differ not as I would have expected—with Kensington having a higher council tax than south Shropshire—but the other way around. In the current year, 2002–03, my council tax in Shropshire for a band H house is £2,015; in Kensington it is £1524—a difference of £500.
Next year the difference will increase further as the Shropshire County Council has informed me that the council tax is to go up by 16.6 per cent. In case your Lordships should think I am concerned only about band H householders, I should point out that in south Shropshire that will mean an increase of £1.85 a week—nearly £100 per annum—for a band B householder.
I accept the argument of the noble Lord, Lord Woolmer of Leeds, about the rub of the green and that you cannot measure these things precisely—that is absolutely fair—but a difference of 33 per cent is a fairly strong rub of the green.
Why is this happening? I follow the argument of the noble Baroness, Lady Maddock. While the Government are talking about devolving responsibility down to reflect local conditions, they are doing no such thing. Let me take education in Shropshire as an example. Because the Government set the spending level for education—"passporting", I have come to learn, is the phrase we have to use— Shropshire is faced with an increase in its education budget of £15 million, a figure over which it has no control. Of this £15 million increase, £7 million will be covered by switches from specific grants to the revenue support grant, but Shropshire County Council still has to find the remaining £8 million.

247
And what is the increase in the revenue support grant for next year? Surprise, surprise—it is £8 million! I therefore agree with my noble friend Lady Blatch that this will leave county councils and local authorities with absolutely no surplus; they will have nothing further to spend. Even though some increases will be built in—for example, the national insurance contribution increase—there will be no increase for support of older people at home, for children's social services—and I have tabled an Unstarred Question, which will be debated later today, in which children's social services play an important role—for libraries, for highway maintenance or for rights of way, unless increases in the current council tax rates take place.
Education is not the only example. In a rural county such as Shropshire, to provide the Fire Service cover necessary to maintain safety there remains an excess over the SSA/FSS which the council tax payers have to fund.
The Government talk about resource equalisation but, having read the papers, on any objective analysis this represents nothing more than a cover for the diversion of resources to the Labour Party's heartland constituencies in the urban areas.
I conclude as I began. I find it extraordinary that a resident of south Shropshire—which is an agricultural community where many are not particularly well off— should be paying a council tax more than one-third higher than a resident of Kensington in the heart of the capital city. I look forward to hearing the Minister's comments on that.
5.47 p.m.
Baroness Gardner of Parkes: My Lords, I thank my noble friend Lord Hanningfield for introducing this interesting debate, to which I have listened with great interest. I arrived in the Chamber a couple of minutes late because, when the debate started, I was watching my noble friend on television and I realised that I could not leave the television and take the time to come up here or I would miss what he was saying. I was in a slight dilemma at that moment.
As a politician, I have been fortunate to serve as an elected member of a local authority and a regional authority and, since 1981, as an appointed Member of your Lordships' House. Throughout these many years, local government has complained of increasing government interference, and usually it has been a well justified complaint.
If ever I am asked by some young, enthusiastic, aspiring politician to compare those roles, my reply is that I found being a local councillor the most fulfilling. As a local councillor one is part of the small community that one represents; you are close to the people and able to be of genuine help because you are available locally and known personally to your electors.
As a member of the Greater London Council—the then regional government for London—I discovered a different situation. Voters really did not identify in the same way with their elected GLC members. Few could even name them, much less know their duties and
248
responsibilities. On the whole, they were perceived as remote and almost irrelevant, although in reality they had a considerable effect on people's lives.
Much the same applies to the Greater London Authority today. I happen to know who the local member is, but only because I am a politician. I am quite sure that a street poll would reveal a void.
Now the Government are proposing more regional assemblies. I do not favour them. The creation of the GLA has been costly and I am not at all satisfied that the residents of London are deriving any benefit from it. Each elected member of the GLA is paid a salary not much less than an MP and the cost of running the GLA, including payment of staff and members, is £52 million. The Mayor's office alone costs £2 million. If we include Transport for London and other responsibilities, the amount becomes £2.45 billion a year.
The Mayor is currently proposing a 38.4 per cent increase in precept for the GLA in the coming year. Based on a band D property, that is an increase in precept for the authority of £66.70, bringing the total precept to £240.58—an amount that would be added to the council tax charge payable to the local council; and the local council has no control over the precept of the Greater London Authority. Did those voting for the creation of the GLA realise that it would be a considerable added expense?
Last year, I would have said that the one real merit in having a Mayor for London, was to have a figurehead representing all the boroughs, the famous "voice for London". Now, with congestion charging looming, I am reserving judgment until seeing whether the system works. I am presently one of the many who find it quite impossible to register, as my Internet applications are repeatedly refused and it is impossible to get through on the telephone number offered. I await confirmation from the Chairman of Committees as to when and where we shall be able to pay our daily £5 from 17th February.
It is not only the Greater London Authority that is proving costly. The Welsh Assembly, supposed to be cost neutral, has running costs double those of the pre-devolution Welsh Office.
The Welsh Assembly was set up following a referendum with a very poor turn-out. Now, it is suggested that referenda should be held to decide on future regional assemblies. It was mentioned earlier that the Government will decide when and where such a referendum will be held. I consider it essential that there should be a certain minimum requirement for the percentage of voters taking part, so that any future authorities are soundly based rather than brought into being on a half-hearted result. The extra cost and bureaucracy involved should also be made clear as a factor to be considered in any referendum.

249
The Government are currently intending to change the planning laws. I welcome the proposal to speed up planning for major infrastructure projects, but I am unclear as to how the Government can reconcile this with their stated aim:
"better community involvement which takes into account the needs of all those with a stake in the system".
The Government have pressed local councils to have more fora for the public to attend and take part in meetings. Westminster City Council—assessed as a four-star level authority in the recently published table, the Comprehensive Performance Assessment— held such a meeting yesterday—a joint committee of social services and health committees—at a venue in the north of the borough to make it convenient for voters remote from Westminster City Hall in the south of the borough. Many officers and committee members took part as usual. The number of members of the public who attended was three.
This reminded me of the public meeting that we held in Havering, my GLC seat in 1970–73, to discuss the Thames Barrier. This was considered to be a matter of great importance to local people, whose homes would be saved from flooding if the barrier was built. The platform and a good many seats were taken up by officers and members. Public attendance was a handful.
It is much easier to interest the wider public in issues in theory than it is in reality. There is a small hard core of individuals who pursue every planning application—but the views come more from the amenity associations; again, it is those who are really interested who form the associations. An example is the case of the Paddington Basin, a development the size of Canary Wharf, where there were virtually no local residents in the immediate vicinity.
I note that the Government will provide financial assistance to planning aid ensuring that local people have cheap and easy access to applications and other documents relating to planning. I suppose that it is 10 years since I went to Westminster City Hall to inspect a planning application, but all these facilities were readily available in a one-stop centre then. There is nothing new in this. There was a photocopier available, and for a small payment you could copy any plan or other documentation.
I welcome the use of business improvement districts. These are already progressing well in London. I have in front of me a document produced by the London Development Agency, The Circle Initiative—One Year On", which gives details of the five inner London schemes: Bankside, Coventry Street, Holborn, Lower Marsh and Paddington. These schemes will enhance the areas and will be of great benefit to local communities.
The freedom for councils to use income from fines is again good news. Perhaps I may quote the Local Government Association:
"councils will perform better if they are free from the burden of regulation and control".
More freedom and less interference should be the aim.
250
Local people understand local needs. The noble Baroness, Lady Knight, expressed exactly what I felt. I view with concern the effect on parish councils of the need for councillors to make very wide declarations of their affairs and, I believe, to declare any item received with a value over £25. My parish council in Steeple Aston is very active and wonderfully effective. It is asking a lot for people to give up their time to serve on parish councils. The least the Government can do is to show appreciation and encourage their activities rather than give them unnecessary worries. Transparency is desirable and important in national and regional politics, but it can be taken too far.
As a Conservative, I am pleased to see from the Comprehensive Performance Assessment that 27 per cent of Conservative councils were excellent, against 12 per cent Labour and 11 per cent Liberal Democrats in the same category.
Of course, all council activities have to be funded. Management is important, but the local government finance settlement is the crux of the matter. According to a research note that I saw today the settlement for 2003–04 was due to be published today. Perhaps the Minister will tell us whether that has happened?
Some services imposed on councils by the Government are not fully funded. In Westminster, the cost of looking after asylum seekers is a considerable expense to the council tax payer and attempts to distribute asylum seekers outside London have not been successful.
It is possible that the Licensing Bill, when enacted, will impose quite a heavy expense on those councils, particularly in central London and other major cities, where enforcement in "stress areas" will need resourcing. Enforcement is expensive. At present, late night music and dancing licences produce an annual fee for a council and make a significant contribution.
Most councils act in accordance with their legal obligation. If, as is so often the case, the Government introduce laws or changes in the law that add to council duties, it is only right that government grants should reflect this in full. Historically, that has never been the case, and council tax payers have had to foot the Bill. In introducing the debate, the noble Lord, Lord Hanningfield, pointed to the situation in Essex.
In conclusion, I point out that since 1997 average council tax bills have increased by over 40 per cent— the equivalent of a 2p rise in income tax.
5.57 p.m.
Baroness Hamwee: My Lords, the passion of the noble Lord, Lord Hanningfield, for local government has never been in doubt. He is not one of the members of his party who might be said to be a "gamekeeper turned poacher", although I think that there are some—not in this House.
I thought that the right reverend Prelate the Bishop of Truro had chosen the subject of local government for his maiden speech as being less controversial than that of regional government, to which we shall come. I was delighted to hear his remarks, as we all were. I look forward to debating, on 20th February, local

251
distinctiveness in the regional context. I cannot help thinking that, if Cornwall is the "foot" of our country, we can all work out what part of the anatomy London is!
I declare an interest as a member of the Greater London Assembly, which is part of the Greater London Authority. I shall resist being drawn by the noble Baroness, Lady Gardner, into a debate on its virtues and vices. But I agree with the noble Baroness: being a local councillor has, for me too, been the most rewarding and real of the three political jobs that I have clone.
I recently met someone who, many years ago, had sought selection as a parliamentary candidate. He described how he was taken on a tour of housing estates in the constituency by the leader of the council. He was shown the estates, but he was not introduced to people. After two or three hours, the penny dropped that the leader of the council was saying: "This is my territory; as the MP, you will be number two, not number one, around here". I wonder whether the same is still the case. The duties, responsibilities and rewards of local government have been notably reduced for councillors over the past few years.
Like the noble Lord, Lord Woolmer, I want to start with the executive/scrutiny split, which is imposed by local government. None of us has referred to the big Downing Street idea of elected mayors, and I shall not go down that route either. I remain concerned about the effect on councilors—the career structure for those who are not members of the executive and the two classes that are created. We have set up something that is an even greater deterrent to entering public service. I am also concerned about the effect on officers, as the executive role blurs their position. I part company with the noble Lord on this point. Some cabinet members seem tempted to take the executive role as well as the title. Indeed, some feel that because they are being paid quite substantially, they should be in the town hall every day. I know of one London borough which has quite deliberately created what it calls a strategy committee rather than a cabinet. It has an executive, and the executive is its chief executive. It has been determined to continue to acknowledge that difference.
The public's interest is, as many noble Lords have said, in service delivery. One of the services is planning, which we will debate later this year. But I recall that when I chaired a planning committee, I spent a lot of time every weekend going round the borough looking at sites and talking to people who were affected by planning applications. I could not do that now—I would be disqualified from voting on any of those applications if I did. I think that central government have simply got it wrong—they do not understand what it is like on the ground.
Many duties have been imposed. There have been references to bed blocking—the fear that money will be paid in fines rather than going towards the service— and the Licensing Bill. In the Planning and Compulsory Purchase Bill, which we will come to later, it is for the Secretary of State to determine
252
whether major infrastructure projects are of national or regional significance, and it is for the Secretary of State to direct simplified planning zones. In the Greater London Authority Act 1999, the Secretary of State is mentioned more than the mayor. Some might think that a good thing, of course.
Much local government activity takes place through partnerships but they, too, are often imposed. Surely the very essence of partnership is that it is organic.
I should like to refer to CPAs. Because local government activity is being assessed, we have a regime of centrally prescribed performance indicators. I do not know how many are now set locally rather than centrally but I do not think that the number has increased very substantially. The noble Lord, Lord Brooke, called central supervision a straitjacket. One of the many criticisms that I have of the regime is the diversion of effort among those who are delivering local services to meet a target that someone else has set. However, I am very grateful that the terminology was revised so we no longer have striving and coasting councils.
I question the experience and expertise of those who are put in to oversee councils that are not doing quite so well. As I have asked before, what happened to the freedom to make mistakes?
Funding—arcane, complicated and highly political—is inevitably part of this debate. Will the Local Government Bill assist accountability to council tax payers who are also national taxpayers? We tend to separate out those capacities. Will the Bill assist transparency? External support has reduced. In principle, that is a good thing, but the gearing effect to which the noble Lord, Lord Hanningfield, referred is confusing not only for noble Lords. I do not say that in a pejorative fashion, as I count myself among them. The noble Lord said that it was not always understood—a masterly understatement. I used to find it extraordinarily difficult to explain it on the doorstep, particularly in the part of my ward which bordered on another authority under a different political regime whose finances were different, so that council estate occupants were paying far more in council tax than those in large houses across the road.
Reference has been made to ring-fencing by the noble Baroness, Lady Blatch, among others. My noble friend Lord Shutt called that special offers during a debate in this House. Ring-fenced grants are becoming earmarked grants, but whatever the language, as my noble friend Lady Maddock said, they are actually nationalisation. There seems to have been almost no consultation by the Government over the split of resources between earmarked and general grant. To inject a positive note, since the Government are unlikely to go down the route of local income tax, I urge them to have more meaningful consultation on the split.
We have recently gone through the funding review. As an official in the Greater London Authority said to me—and I thought he was generous in putting it this way—the rationale on individual decisions, as distinct

253
from the package, was not always clear. The review started in 1999, but, apart from education, I believe that work in any detail began only at the end of 2001, so there was relatively little serious consideration or consultation regarding most of the areas of spend.
Once we received the settlement, the announcement of the cash was made at the same time as the exercise was concluded. That does not seem to assist transparency or understanding of what is no less complicated a subject than it was under the previous government.
I have not managed to put the elephant in the perambulator, but I will end with one observation. We do not have a written constitution in this country. Local government is regarded as the creature of Parliament which, in effect, means that it is the creature of central government. That is not how I approach it; it is not how we on these Benches approach it. Our philosophy is that power is given up by the people—it is bottom-up, not top-down. I do not think that central government recognise that.
6.7 p.m.
Baroness Hanham: My Lords, I made a disgraceful omission earlier, which I would like to remedy. I did not pass this Bench's condolences to the noble Lord, Lord Rooker. I have done so personally, but not formally from this Bench. Rather belatedly, for which I apologise, I record our deepest sympathy for him.
Secondly, I congratulate the right reverend Prelate the Bishop of Truro on his excellent maiden speech. It is a delight to have somebody else in this House who understands local government. I hope that he will join in the many debates on this matter in the House in forthcoming months. We are delighted indeed to have him and congratulate him on what he said.
I think that everybody would recognise that there have been some excellent contributions to the debate. They demonstrate that there is a great deal of practical expertise in this House to which, I am afraid, the Government do not always listen. But there we are— if we keep on dripping the water, drip by drip we will get somewhere in the end.
I thank my noble friend Lord Hanningfield for instigating the debate. It is the second we have had in a fairly short space of time, and I never cease to admire the ingenuity of all noble Lords in bringing enthusiasm, excitement and knowledge to these debates. The Motion was deliberately widely drawn to emphasise the considerable responsibilities of local government, its importance to the local community and the amount of legislation that is coming forward that will affect it. The main elements have been referred to during the debate—the Local Government Bill, the Planning and Compulsory Purchase Bill, the Regional Assemblies (Preparations) Bill, changes to local government finance and now, today, the communities plan, which we discussed briefly on the back of the Statement and which will have many implications, bringing massive new development,
254
largely in the South East of England. We have discussed that already today, so I do not need to go into it any further for the moment.
In addition we have the impact of the result of the comprehensive performance assessment, from which it is plain, as my noble friend Lady Gardner has pointed out, that most of those acknowledged as high performing councils before the assessment was undertaken are Conservative councils. They are now expecting to reap the rewards of their expertise by gaining the freedoms promised by the Government and a lessening of the centralised control of continual inspection. The noble Lord, Lord Woolmer, in particular, drew attention to the adverse impact of these on local government.
Before I go any further, I remind the House that I am a member of the Royal Borough of Kensington and Chelsea council. Instead of just saying that it is a local council, I will enlarge and say that it is one of the high performing councils.
The one thing that most reasonable people looked for in the Government's blast of modernisation was evidence of a lessening of its impact on their lives. That will certainly not come about when the reality of the new finance settlement, carried out against the modernising agenda, means that even though the verbiage may have changed, there is once again a shift in resources as well as an intention in the budget that there will be real-terms uplifts in council tax. That will be exacerbated by the result of the local government financial settlement.
It is clear that as a result of the changes—which are nothing to do with the local authorities, but for which they will undoubtedly get the blame—the average band D council tax will be in the region of £1,000. Of course, averages hide the highest and lowest, as the noble Lord, Lord Hodgson, has demonstrated. As the noble Baroness, Lady Gardner, has pointed out, that will be inflated in London by the Greater London Authority's extra precept, which is increasing, and in Wales and Scotland—the neutral zones—by the increase in costs there.
That will not have been helped by the disappointing result of the census figures, which have shown a substantial reduction in population in many areas, consequently affecting the base on which grant is paid.
The Government's review of the formula for grant distribution has taken four years to bring to fruition. As the noble Lord, Lord Hanningfield, pointed out, it is as opaque and complicated as all those that have gone before, involving inexplicable shifts of resources from one part of the country to another and inadequate damping arrangements—floors and ceilings—for many authorities. Also, rather than the amount of specific grant being reduced, these have increased to about 16 per cent of the total allocation. It is clear that once again there are winners and losers as a result of the formula changes.
Governments used at least to pay lip service to the fact that the grant was a block grant, which, even if it was allocated against certain criteria, could be spent as each local authority felt was most appropriate to the

255
needs of its own community. That is now a forlorn hope. My noble friends Lady Blatch, Lord Hanningfield and Lord Brooke and the noble Lord, Lord Woolmer, referred to the iniquities of the requirement to passport a directed extra percentage to education and to social services. In a number of cases, those increases amount to more than the grant itself. My noble friend Lady Blatch drew attention to the danger of the impact that that would have on the local education authority's budget.
The direct result of the problems I have outlined is that the local authorities concerned will have to increase council tax or cut other services. That is a result of direct diktat from central government.
The Local Government Bill, which is currently being considered in another place, includes proposals for a new banding system for council tax, raising the spectre for those living in higher value properties in London and the South East of a substantial increase in that tax in the future. The Government need to remember that, while there has been a substantial rise in property values since the council tax was introduced, many people cannot access that value unless they sell their home. Their income has not risen in tandem with those increases by a long shot.
A major rise in council tax as a result of re-banding could have an effect proportionately as serious as the disastrous reduction in life savings and potential and actual pensions, the reason for at least some of which can be laid at the door of the Government's policies.
Noble Lords have also referred to the plans for regional government, which we shall discuss within the next few weeks. It is fair to say that they are seen as a direct and unwelcome threat to the current tiers of local government, particularly the county councils, but potentially to either tier, as it is apparent from the Bill that the Boundary Commission will be able to reorganise the lower unitary tier to a region.
That Bill is not yet law, so it is informative at least to note that consultation is already being carried out in putative regions so that the Deputy Prime Minister can take an early decision on those areas where it would be possible for him to unleash a Boundary Commission review before a decision is taken to hold a referendum. Experience seems to be that practically no one at present has any idea what regional government is about. Apart from the niceties of anticipating the outcome of legislation, it seems odd to try to canvass views on something about which a vast proportion of the population remains profoundly ignorant. As the noble Lord, Lord Dixon-Smith, said, will people be happy when they know what it is about and realise the implications? We shall return to that in more detail when the Bill reaches this House.
The threat to county councils is also raised in the Planning and Compulsory Purchase Bill and in the stated intention of transferring strategic planning to regional assemblies, to which has now been added the housing strategy. No one should underestimate the amount of change that is affecting or about to affect the whole of local government from top to bottom. While the Government say that they intend to devolve
256
their responsibilities, that is unlikely to happen. History does not support the view that such daring action ever transpires. It is more likely that local government will just become less local and government impact will remain at least the same as before. We will have plenty of opportunity in the next few months to test out the Government's intentions and to judge the value of what has been put forward in the various Bills that this House is still to consider. If today is anything to go by, I can promise the Government a robust and questioning passage of these measures.
6.17 p.m.
Lord Bassam of Brighton: My Lords, this has certainly been a wide-ranging debate and I have greatly enjoyed it. Like many noble Lords who have participated, I have spent many hours in local authority business. I spent all but four years of the previous Conservative administration as a councillor and was involved in local government in one way or another for pretty much all that time. The issues still have a strong and recurrent theme. They are about powers, centralisation, finance, the iniquities of central government as against local government and concerns about the way in which central government, the regions and local government never quite seem to work or get their act together. This afternoon's themes have a familiar ring and a familiar feel.
Like other noble Lords, I shall pick out some of the contributions to this important consideration of local matters. I pay tribute to the right reverend Prelate the Bishop of Truro, who clearly occupies a world that is strongly imbued with a sense of the local. His contributions to this debate and, I am sure, to debates in future will be widely welcomed for their richness and experience. I was much taken by his story about the man in Wadebridge telling us that it was a long way from London. The last time I was in Wadebridge it felt a terribly long way from Padstow. I had cycled there over the Camel trail, which had caused me some grief. I think that local is as local feels. It is certainly true that local government is very important to all of us. It felt that way when I was in local government, and that remains the case.
I congratulate the noble Lord, Lord Hanningfield, on securing this debate. Like me, he is an Essex man. I have great affection for that part of the world. I pay tribute to his determined efforts to represent Essex forcefully in every possible forum. Like him, I want to ensure that local government plays its part, as it always has in Essex, and remains strong. Local government filled that role when I lived in Essex and Essex County Council was kind enough to provide me with a reasonably decent education. I am sure that it will continue to do so, in one form or another, for generations to come.
I am pleased to have this opportunity to debate the changes we have made in relation to local government since we took office. We want to see local authorities which are autonomous and responsive to local needs. We want to ensure that councils have the right funding and legislative framework to enable them to move

257
forward on their agenda while taking account of the overall priorities on which the general public wish them to concentrate. I believe that the measures we have taken to date and the new measures proposed in the Local Government Bill, in other legislation relating to local government, and in other measures relating to the communities plan will do a great deal to enhance the status, standing and role of local authorities and ensure that they are much better placed to deliver the quality services that we and the public expect of them.
This debate also comes at a time when local government will no doubt be looking very closely at the reports and accompanying papers which were laid on Monday in another place dealing with the local government finance settlement 2003–04, to which many noble Lords have referred. The settlement makes this debate all the more prescient. This debate secures a useful opportunity to discuss that settlement, which confirms the good grant increases we are providing for councils next year—grant increases which provide an overall increase in general grant for authorities in England of 5.9 per cent.
I spent a little time today pondering some of the complaints we have received from noble Lords about the inequities of the settlement, and I was drawn to compare the settlements in the past three years with those in the last three years of the previous Conservative administration. I have made a careful note of the average settlements for Essex, Kensington and Chelsea, Shropshire, Westminster and Birmingham. In the last three years of the previous Conservative government, Essex enjoyed an average real terms increase of 1 per cent; Kensington and Chelsea, 2 per cent; Shropshire, 2 per cent; Westminster, 1 per cent; and Birmingham, 1 per cent. With Labour at the helm of central government, the comparable increases have been 5.3 per cent in Essex; 5.8 per cent in Kensington and Chelsea; 5.5 per cent in Shropshire; 5.8 per cent in Westminster; and 5.6 per cent in Birmingham. Those are the best like-for-like comparisons that we can make. It seems to me that my Government have a rather good record with regard to those local authorities. It is a record of which they can be proud.
The report mainly confirms the proposals we announced on 5th December 2002, and which we announced in this House at that time. We carefully considered all the 385 written representations we received within the consultation deadlines from the Local Government Association, the Association of London Government, local authorities, local authority groups, noble Lords and those in another place. We listened carefully to the issues raised by the 55 delegations which met with Ministers to discuss those finance proposals. It is perhaps unusual, as I suspect noble Lords who have served as Ministers in central government under either party will agree, that we have received 89 favourable responses to that settlement. However, when one looks at the general thrust of the settlement, pitched as it is well above the level of inflation, it is perhaps not surprising. We
258
decided to make one change to our original proposals for the methodology of grant distribution concerning the area cost adjustment. However, we did not believe that other changes would have been justified.
This year's settlement provides a good increase in money for local authorities overall and guarantees that all authorities will see at least an above-inflation grant increase. Most councils will receive substantially more. That means that since we took office we have been able to increase government grant, including money for specific initiatives, by 25 per cent in real terms. That compares with a real terms reduction of 7 per cent in government grant in the last four years of the previous government. That should allow councils to improve services while setting reasonable council tax increases, though, of course, that is their decision to take.
The use local authorities make of this money is a matter for them. Noble Lords will know that some authorities manage better than others, as various announcements have made clear. Many of those local authorities are Conservative and many are Labour; the point applies to parties across the board. The important point is that we care a great deal about improving the standards and quality of the services that those authorities perform. One of the changes we have made since taking office is to ensure that there is a comprehensive performance assessment of every local authority with education and social services responsibilities. We will be extending that to district councils in the coming year. That helps democratic accountability. We believe that quality of service and management should be a matter of public record. It will help motivate service improvement.
Having listened carefully to all the points raised in the debate, I can assure noble Lords that we are under no illusion that we are always able to solve all of the local authorities' ills. It would be unwise of any Minister or government to say that they could do that. However, I must put in context the concerns of those who spoke in this debate. On the matters raised concerning the level of grant, we have, as I said, been able in successive spending reviews to increase significantly the amount of grant support which local authorities receive.
There are funding increases particularly for education, the specific concern of the noble Baroness, Lady Blatch. This year, there will be an increase of £2 billion. The spending review provides for a further, year-on-year increase of £1.36 billion in 2004–05. That follows increases of £1 billion in 1998–99, and increases each year to 2002–03. That means that since we took office real terms funding per pupil has increased by an average of £690, a 24 per cent increase. Next year, it will increase by a further £200—a year-on-year real terms average increase of 6 per cent. By 2005–06, it will have increased by an average of more than £1,000 in real terms since 1997–98.
In addition, all schools will see their direct grant increase. A typical secondary school in England with 1,000 pupils will see direct grant payments increase by £50,000 in 2003–04. A typical primary school with 250 pupils will see its direct grant payments increase by £10,000 in 2003–04.

259
Personal social services resources are increasing in real terms by 6 per cent a year. That includes an extra £15 million for carers; an extra £106 million for the children's services grant; a new grant of £170 million for access and systems capacity, which will increase to £542 million by 2005–06; and an extra £31 million extra for child and adolescent mental health services, which more than doubles the existing level of funding. We have also been able to increase funding for the environmental, protective and cultural services block.
On the method of distributing grant between authorities, I can assure noble Lords that we have made changes only after a long and considered look at the system. There was general agreement that the old standard spending assessment system was outdated and we needed a grant distribution for local authorities which was fairer and more transparent. We have had a series of debates reflecting the wide range of views held on the formula grant review. We have held meetings with technical groups. We have held complex discussions with local government, and had detailed meetings with other government departments.
Only after all that did we put forward suggestions for changes last year. We carefully considered all responses received during consultation on those suggestions in putting together our proposals for the new formula grant distribution system. The result is a grant distribution system that removes outdated and inadequate indicators. The system now is necessarily complex—we could not justify distributing £40 billion of public money without some complexity—but we have simplified its structure. The system is now based on a basic level of funding with top ups for various factors such as deprivation, high labour costs and sparsity.
Questions were asked about census and population data and their veracity. Many authorities have put arguments to us on this issue, or have asked us to consider using their own figures. Our position now remains as it has been: we must use the best data available at the time on a nationally consistent basis. To do otherwise would lead to a large element of judgment being used in terms of what data to use and would not be fair. Therefore, we are going to use the population figures provided to us by the Office for National Statistics.
The ONS is confident that the approach taken for the 2001 Census provides the most accurate estimates of the population both nationally and for each of the 376 local authorities in England and Wales. As such the ONS has no plans to revise the 2001 population estimates. I know that a number of councils have been talking to ONS about the methodology used to get those figures. If ONS does make any such revisions, we shall have to look at the position at that time. We shall need to consider the situation carefully, and if appropriate we shall be prepared to issue an amending report.
Resource equalisation was raised. The grant distribution system has always equalised for authorities' relative ability to raise council tax income. If we did not do this, taxpayers in areas with a high tax
260
base would pay much less than those in areas with a low tax base. For 2003–04 in line with the principles we set out last summer, we are bringing the system into line with reality by equalising at broadly the national average band D council tax, instead of at the previous unrealistically low amount.
The system is complex. The noble Lords, Lord Dixon-Smith and Lord Hanningfield, and the noble Baroness, Lady Maddock, referred to the complexity. We have tried to ensure that we develop a radically simpler system. That is not easy to achieve but we have tried to secure that objective.
One of the things that we are trying to do is to get away from telling councils what to do with council tax. That matter was mentioned in the debate. We believe that the local authority is best left to determine its level of local taxation in consultation with its electorate. Ultimately, the local electorate is best placed to pass judgment on that matter. This Government have awarded historically high levels of grant increase and use floors and ceilings to moderate the impact of distributional changes. These factors should enable all authorities to deliver improvements to public services while setting reasonable council tax increases.
The noble Baroness, Lady Blatch, referred to the important issue of the passporting of the increase in education funding. This is the amount which government tell councils should be spent on school funding. We inherited that policy and have refined and developed it. The Government do, of course, have a longstanding interest in the increases of school spending from year to year, which authorities with education responsibilities will want to take into account in setting their budgets. I understand that almost all authorities have notified the Department for Education and Skills of their proposed schools budget. A substantial majority intend to pass to schools at least the target amount suggested by DfES. We shall consider the remainder over the next few days and will announce the decision within the 14-day deadline. I can assure the House that we shall be taking all relevant factors into account, including each authority's own submissions, when reaching that decision. Any use of the reserve power will be limited to a very small number of authorities in exceptional circumstances.
In addition to this financial framework, we have devolved power and responsibility so that local decision makers have more opportunity to shape services. I am at a loss to understand from where the conspiracy theory of increased centralisation comes, particularly when one considers the most recent of our legislative proposals. Those that extend freedoms and flexibilities have been widely welcomed by local government, the Local Government Association and many individual local authorities. The best performing local authorities at their peak of performance will have more freedoms and flexibilities extended to them. I find it hard to take from noble Lords opposite who, after all, were in government for some 18 years—
Baroness Blatch: My Lords, how are the noble Lord's comments consistent with 15.8 per cent of

261
special grants decided by government and the amount of direction that takes place as regards passporting? That is all central government direction; it is not about the freedom of local people to make local decisions about local priorities.
Lord Bassam of Brighton: My Lords, I shall try to address that point before I conclude my remarks. The poll tax was imposed upon us. Local authorities were prevented through rate capping from setting local budgets. Those matters are important elements in the history of the way in which local government finance developed. This Government want to move away from the theory of "We know best". We want to ensure local responsibility. I recognise that passporting is an important issue and, as I said, we shall be sensitive to local concerns.
The other important point that the noble Baroness raised relates to ring fencing. We have received strong representations on that issue. Ring fencing was not invented by this Government, we inherited it. I fully recognise the concerns in that regard. We have given a commitment that we shall reduce the current figure of about 12.5 per cent to 10 per cent over the next three to four years. We have listened carefully to the representations made by local authorities and their representative associations in that regard.
The Government's determination to change the way the centre interacts with authorities has been well received by local government. I look forward to the forthcoming legislative programme and the changes and improvements that it will introduce. At the heart of our reforms lies a desire to improve local authority performance. That is why we have concentrated on improving political management and freeing up local authorities so that they are best placed to respond in innovative ways to address their own local problems.
The debate has been most informative and instructive. I take great heart from it and from the welcome that has been expressed for aspects of government policy from a not altogether uncritical audience on the Benches opposite. I congratulate the noble Lord, Lord Hanningfield, on introducing the debate. I thank him for all his many years of hard work on behalf of local authorities to ensure that they are best placed to deliver the services on which their local populations and residents are so dependent.
Baroness Hanham: My Lords, before the Minister sits down, I hope that he does not think it totally churlish of me to thank him for a long response on local government finance. However, there were a great many other points raised in the debate to which I regret to say he has not responded.
Lord Bassam of Brighton: My Lords, the noble Baroness rightly says that many issues were raised. It was not possible to respond to all of them within the limited time available. Perhaps we should have more debates on this subject. I shall try to ensure that the points that I did not cover are dealt with in correspondence which I shall circulate extensively.
6.39 p.m.
Lord Hanningfield: My Lords, I thank the Minister for his reply. As he indicated, we should have more debates on this subject. We shall perhaps return to these issues on a future occasion. We shall discuss many of them when the relevant legislation reaches this House. I thank all noble Lords who have taken part in the debate. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

University Teachers: Pay
6.40 p.m.
Lord Lamont of Lerwick Lord Lamont of Lerwick rose to call attention to the levels of pay of university teachers; and to move for Papers.
The noble Lord said: My Lords, I am grateful for this opportunity to open a debate on the extremely important subject of university teachers' pay. I am also particularly delighted that so many people have put their names down to speak in the debate, people who are much more qualified and experienced than I in the world of universities and university teachers' pay.
In a way, the debate is a first for me, because as an ex-Treasury Minister it is the first time that I have ever expressed any sympathy with any pay claim. I believe that it is the first time that I have done that in my life. It is also the first time that I have ever participated in a debate to, at least by implication, support an increase in public spending. It is a Bateman cartoon situation, but I hope to explain why I have come to my view.
A number of friends have asked me why I have chosen to initiate the debate. The answer is simply because I have observed the problem through my contacts with universities—with my own university, Cambridge, and the university in my old constituency, Kingston. For the 25 years that I was the Member of Parliament for Kingston-upon-Thames, the constituency had a large number of academic staff living in it. I have been conscious that the problem has been with us for some time and is getting worse.
One thing that has always puzzled me a little is how some public sector workers capture the sympathy and imagination of the public. One minute it is nurses, then firemen or doctors. It has even been miners, but never university teachers. However, the figures for university teachers' pay tell a very dramatic story, relatively speaking. University teachers taken as a totality—I realise that that is open to question—represent some of the worst paid jobs in the public sector. Despite the importance that teachers in our universities ought to have, given that they are responsible for educating our children, there is little support or concern expressed about their pay.
I have raised the matter before, as the noble Lord, Lord Davies, will remember, because he answered my Question on it. I stressed then that I did not raise it in any partisan sense, and I repeat that today. As the statistics that I will give illustrate, the problem goes

263
back a long time. If for a moment it is necessary for me to put on the odd white sheet of repentance, I will willingly do that as well.
Britain's universities are and ought to be a great national asset. We have two or three universities that are certainly the best in Europe and among the best in the world. However, many people believe that our universities may have been slipping and that, if the long-standing problem of pay is not addressed, they may slip further. It is possible that our enviable position on Nobel Prize winners, for example, has slipped in recent years.
I emphasise that I am not interested in the subject or initiating the debate for reasons of what is called, in an ugly phrase, national economic competitiveness. I have always been deeply sceptical about arguments that all education is a form of investment. No doubt specific forms of training and skills may increase national competitiveness, but universities are much more important on a wider basis than that. They are part of this country's quality of life. We value learning for learning's sake, scholarship for scholarship's sake. Above all, universities give people an opportunity to fulfil themselves.
It seems as though I have been trying to secure the debate for almost a year, but it is opportune now in the sense that, accidentally, it comes shortly after the White Paper. That White Paper has many good points, but many people will agree that one of its disappointing features was that it did not deal more explicitly with the subject of pay. Some of my noble friends may think that rather an odd assertion for me to make. How could I be so naive as to think that a White Paper would deal with the subject of pay? They never have in the past, so it would be extraordinary now.
However, there were reasons this time to think that the White Paper might have dealt with pay, given that the Prime Minister has expressed recognition of the situation facing us. He commented in December that,
"the pace of college lecturers' pay increases has been nowhere near those in the rest of the public sector, never mind the economy as a whole. In the long term, it is going to be difficult for us to maintain a really strong world class university sector … unless we make sure we are able to attract and recruit people on decent salaries".
Given that acknowledgement, one might have expected the White Paper to be more up-front on the issue.
Of course, the White Paper and the Government have announced the allocation of a considerable sum of money for the next few years—a 19 per cent increase in real terms for the next three years. However, the question raised by vice-chancellors is whether the sum will leave anything for increases in pay because so much in the allocation of finance in the White Paper is localised, one-off, or relates to special premiums, market supplements and centres of excellence. I am not saying that increases in pay should not be tied to performance, but the Government have so many of their own special pet projects that there seems little reason to hope that somehow the money will penetrate
264
through the system. There is little if anything left for general increases in pay, as the vice-chancellors have pointed out.
The most striking figure for university pay is that academic pay over the past 20 years has increased by only 4 per cent in real terms, compared to an increase in average earnings of 45 per cent in real terms. Such a difference must have an impact on universities' ability to recruit and retain staff, because that is a huge lack of movement compared to other salaries. 'The problem of retention is not confined to only a few subjects, but is manifesting itself across all academic grades in large numbers of different areas. According to a report from the Universities and Colleges Employers Association, the worst affected subjects include law, engineering, accountancy and biological sciences.
A particular concern is the low level of starting salaries in higher education. The starting salary for lecturers is now just over £22,000 while for a researcher at a pre-1992 university it is just over £18,200. At a post-1992 university, it is the astonishingly low figure of £11,932. Few salaries in the public sector are as low as that. It is lower than that of a lift keeper on the London Underground or a Railtrack level-crossing keeper. I know that some people feel that some universities are of lower or questionable quality, but we ought to ensure that quality is higher and pay researchers much more. There can be no justification for paying such a miserable sum. Most researchers will have spent at least three years after their degree gaining a PhD, and many will have post-doctoral experience.
I turn to the position of lecturers. By mid-career, a lecturer in Britain earns about £33,000—less than a schoolteacher may make after five years. A typical City economist will earn five times what a typical economics lecturer will earn. Many people, conscious of that, believe that there is a limit to how long highly qualified and very able people will put up with such earnings and wonder whether Britain is heading for the same sort of recruitment crisis as we have experienced in schools.
It is already extremely difficult to recruit top-line economists. Professor Andrew Oswald of Warwick University said:
"University pay is a disaster and will destroy quality in the long run, by not attracting our most talented graduates into academic life. We need a fundamental revaluation of pay if we are remotely to compete with the salaries offered by top jobs and American universities. For economics, pay would have to be doubled or trebled".
Pay will not, of course, he doubled or trebled but the warning that he gives does not appear to be far off the mark. Top banks and finance houses are staffed 'with many people with PhDs, yet last year there was no British-based student doing a PhD in economics.
Higher education is a global market-place. There is a market for top-level people throughout the world, but we do not have the capacity to pay world-class salaries. In the long run, the answer might be for the Government to set universities free from state control so that they can choose competition rather than central control and abandon the "nationalised industry" model with which they still stick. There is an

265
argument for letting institutions decide what fees to charge, which courses to offer and what pay to give. The Government have chosen neither one thing nor the other and, whatever the Minister says in response to this debate, they remain responsible, by the funding that they provide, for what universities will be able to pay in salaries.
In 1999, an average full professor at Oxbridge or a top London college earned £50,000 annually, which is the same salary as that for a grade seven Whitehall civil servant, which used to be called a principal. In comparison, the top seven American universities pay, at senior and junior levels, roughly double what is paid at our top five universities. The average professorial salary at the Manchester Business School at the University of Manchester is just more than £54,000; of course the non-professorial academics there, most of whom are eminent in their fields, get considerably less than that. The average salary that the MBA students are paid in their first job is £54,000.
What really concerns me is that the problem may get worse. It has been estimated that higher education will have to recruit 42,000 academic and related staff simply to maintain the current student:staff ratio, and 20,000 to replace those current aged 55 and above who will be retiring in the coming decade. In 1999, 36 per cent of academic staff were already eligible for retirement. On top of that, more lecturers will be needed to teach the additional students in order to meet the Government's access targets. There is also the subject, on which I am sure other noble Lords will touch, of the worsening pay gap between male and female academic staff.
I raise this subject because I believe that there is concern that our universities face losing their preeminent position simply because they cannot recruit on a basis that compares with the best in the world. One academic whom I know well but who does not want to be named—the academic is very eminent in the field of economics—asked 27 heads of department in the Russell and 94 Group universities which British economics departments they would rank in the world's top 10 for research. Eighty per cent of them put the LSE in the top 10 but only one-third included Oxford, Cambridge or UCL, and the trend is downward. In world research rankings, LSE ranked third or fourth in the 1970s and 1980s but in the 1990s it was 12th. Oxford and Cambridge similarly declined in those ratings in the 1990s.
I look forward to the Minister's reply. This is an extremely important subject. I hope that the Minister will not simply say that universities are autonomous institutions and that these matters are to be resolved in the pay machinery. In fact, we all know that the finance that is provided carries assumptions about pay. The Prime Minister has acknowledged that problem. Surely, having acknowledged it, it is time for it to be addressed openly. My Lords, I beg to move for Papers.
6.56 p.m.
Lord Morgan: My Lords. I declare an interest as one who has been a university teacher for the past 44 years. I am currently a member of the Oxford modern history faculty and the Queen's College, and in both cases I am unpaid. That serves to make one point underlying the excellent Motion of the noble Lord, Lord Lamont. Universities commonly cannot afford to recruit, hold or retain younger people, and therefore have to turn to grizzled veterans such as myself—we come cheap or we come free.
The university profession has never been well paid in my lifetime. I became a university lecturer in 1958 on a stipend of £650 a year. Years later, as a vice-chancellor, I was ashamed to offer able young people stipends of around £13,000 or £14,000, which was not a great deal more. As the noble Lord pointed out, there is not much that universities can do; they have no industrial muscle and are victims of the system.
There were compensations in 1958. We had pay scales then that were linked to the Civil Service and the hospital service, and we had prospects of research funding. Even in Swansea, my own relatively poor university—financially—it was possible to have research funding, write books, become a senior lecturer and afford a car. That was a breakthrough in my life. The Robbins report made us feel honoured and important figures. It was the only time in our history that we took university funding and universities seriously.
There was also a more leisured existence. If it is not too frivolous, I mention that I opened the batting for the university staff cricket team, playing. I believe, against the noble Lord, Lord Sutherland—and I believe that we won on that occasion. That is not so trivial a point, because in those days universities could afford, and hired, young men—I do not say athletic young men. It is a not altogether trivial comment on the times that the cricket team for which I played no longer exists because the profession is ageing: fully one-third and more are close to retirement or are in the age bracket in which retirement is possible.
The university teaching staff represent the cutting edge of the Government's priority, yet they are consistently under-remunerated. University teachers have had many grievances under Conservative and Labour governments. The noble Lord said that he might wear a white sheet, which may or may not be appropriate; however, I believe that it is correct to say that repentant sinners are likely to make it to the Kingdom of Heaven or have an above even chance of doing so. I therefore welcome that repentance.
Elsewhere, we have discussed the following problems: bureaucracy; university teachers not having proper facilities; the fact that the fabric is not maintained; and how, generally, the university system is in debt.
I do not believe that university teachers have been treated with basic respect. Many different kinds of accusation have been launched at a relatively defenceless and yet very meritorious group of people. We had the Laura Spence affair, in which a pack of lies

267
was told about my college—Magdalen. Latterly, Margaret Hodge spoke about universities putting on "Mickey Mouse" courses—the poverty of the language perhaps indicating the poverty of the vision. The Prime Minister says very little about university teachers because no doubt they are considered as public sector workers.
I greatly welcome the new money and I welcome a great deal of Charles Clarke's recent Statement. But, as the noble Lord indicated, the question is whether it is possible that, particularly in the newer universities— which the noble Lord did not say so much about—the money will go towards administrative and other costs of access rather than towards remunerating the staff. There were ominous remarks from the Treasury about universities frittering away that extra money—that is, through higher pay to their staff. That makes 19th century mill owners sound like candidates for ''Who Wants to be a Millionaire?"
As the Association of University Teachers has often shown, the general level of university finance has been consistently poor. The White Paper rightly emphasised the diversity of roles played by different universities. Universities fall into different categories, but what they have in common is that all their employees are exceedingly badly rewarded. As the noble Lord pointed out, there has been an increase of 44 or 45 per cent for professionals measured by the comparators but only 4 per cent at best for university teachers. Indeed, in recent years, the pay increase has fallen below the rate of inflation.
That is an almost uniquely bad record among trained professionals in our country. As the noble Lord rightly said, it produces problems for certain disciplines and, in particular, for the more professional ones, such as law, accounting and especially education. As I mentioned earlier, more than one-third of academic staff are now in their 50s and eligible for retirement. It is a contracting, as well as an ageing, profession.
The main features are clear. The first is the very poor starting salary—£18,000 or so for researchers and £22,000 for lecturers. Universities need particularly able, highly trained people. They are likely to enter the profession with a doctorate and perhaps also with another higher degree. They are likely to enter the labour market when they are in their mid-20s and, in the case of women, perhaps older than that because of family responsibilities. Now, they may also bring with them a potentially very large inheritance of debt from their experience as students. Yet they are offered very poor rewards and it is no surprise that universities find it difficult to recruit. It is no surprise to me that latterly so few of my own undergraduates went into teaching of any kind, whereas in the 1960s many became school teachers and, indeed, university teachers.
The second feature is a very long pay spine and a poor expectation for later stipends. That is the case everywhere. London weighting has effectively been frozen for a decade. With regard to my own university of Oxford, it is difficult for a university teacher to live in Oxford and to buy a house and so on, as it is for a
268
policeman, a postman, a nurse and those in other occupations. Yet, as the noble Lord rightly said, these institutions—particularly Oxford—must compete with Harvard, Stanford and MIT. Problems are also experienced in some of the newer universities with which I am familiar, such as the Universities of Glamorgan and Greenwich. I am fearful that, following last week's pay statement, some of the newer universities will be frozen out in what is increasingly a two-tier system.
Another point that I recall from my own experience as a vice-chancellor is that universities were commonly required to keep an unnaturally high proportion of people on short-term contracts. As temporary or part-time staff, they formed a kind of underclass in the academic world. They were often exploited and, in effect, helped to drag down the whole salary system.
I welcome many of the features of the Statement made by the Government a couple of weeks ago and those of the White Paper. It seems to me that, for the first time for five years, the present Government have the basis of a policy for higher education. I could possibly even learn to love the access regulator if I thought about it for long enough.
However, once again, as has frequently been the case over the past 20 years or quarter of a century, the people who will make it work—those at the academic coal face, or chalk face—may well be left out. We already need 20,000 staff to replace existing staff who are in the retirement age bracket, and as many again if the Government's proclaimed access target of 50 per cent recruitment is to be met.
I find all that deeply saddening and depressing, particularly as I have enormously enjoyed my own professional career, in spite of the lack of financial reward. University lecturers are needed to fulfil the Government's priorities. Universities are perhaps needed to contribute to economic revitalisation but are needed far more widely as cradles of civilised values. They are rare and precious institutions which are simply not being recognised in present policy and have been scandalously neglected for two or three decades.
My noble friend Lord Davies will reply to the debate. He is a distinguished educationalist and one with a very keen sense of history. He will know how in the Labour Party we have honoured the great teachers and scholars, such as Tawney, Laski and GDH Cole. We used to celebrate figures of that kind. Under so-called "new" Labour, they feel deeply and shamefully neglected. I say to the Government that, unless new Labour acts now to recognise the value of our university teachers and to pay them properly for the first time for more than a quarter of a century, that profession will feel simply betrayed. as they have been betrayed previously, and the Government and the country will suffer for it.
7.7 p.m.
Lord Brooke of Sutton Mandeville: My Lords, it is a pleasure to follow the noble Lord, Lord Morgan. I believe that he and I share a common descent from Wales. We certainly share a youth in Hampstead, and

269
we have a common affection for cricket. I also regard him as a walking archive of political history. I congratulate him on the vividness of his speech covering the past 44 years, and I enjoyed his reference to the cost of living in Oxford.
I always remember with affection the book written by my former philosophy tutor, the late Marcus Dick, on the subject of Oxford, published by Batsford and illustrated by A F Kersting, in which he made the shrewd and perceptive observation that, if dons had been allowed to marry 30 years earlier, north Oxford would have looked like Bath.
I also congratulate my noble friend Lord Lamont of Lerwick not only on giving us the opportunity for this debate but also on setting out the case so clearly in every aspect and dimension of it.
I declare an interest as Pro-Chancellor of the University of London. I do not speak for that university; nor did I consult it in advance of the debate. I was at the Treasury at the same time as my noble friend Lord Lamont. Perhaps it is for him, as the more senior, to wear a penitential shroud, but I share that experience with him and I. too, have some form.
In 1978–25 years ago—I made a speech in another place on higher pay in higher education, which I argued was needed. The noble Baroness, Lady Warwick, who was formerly with the Association of University Teachers, knows that, during my time as the Minister with responsibility for higher education when she was at the AUT, she never once quoted back that speech at me. I always attributed that to her innate chivalry rather than to negligence.
I spoke in 1978 in the context of individual cases and national aspirations. The AUT sent me a detailed brief for this debate, as I am sure it did to other noble Lords. It is not because the AUT chivalrously ignored me on that previous occasion that I am not deploying its arguments this day but because I believe that it is pushing at an open door on the general thesis that university teachers need more pay. That issue is not an issue, unless that is the reverse of a tautology.
What is an issue is what problems we seek to solve, not just at the individual level but at national level. I remark in passing that the AUT briefing established the coincidence that academic pay had risen in real terms by 4 per cent, not just in the past decade but in the past 20 years. That may be right; it is not impossible, but it does not immediately look to be so. However, as I said before, it does not invalidate its overall case.
There is common cause between us that a large number of university teachers will soon be retiring, a proportion exacerbated by the freeze on the number of new university appointments during the early and mid-1980s when the then freeze on university student numbers occurred.
The noble Baroness, Lady Warwick, and I today heard my noble friend Lord Waldegrave of North Hill at the Parliamentary and Scientific Committee lunch describe a visit of his to Caltech when he was my predecessor as higher education Minister in 1982. He
270
recounted how his interlocutor there had said that of course, the American higher education and research constituencies had more money than their opposite numbers in the UK but that the British Government had spared our higher education and research constituencies the morass of paper work through which the Americans had to wade. My noble friend today remarked wryly that in the past two decades the British Governments of both parties have thrown away that particular advantage.
I cite that because in filling the jobs the AUT have identified, it is not only pay, however comparatively unattractive, which is the deterrent to entrants to higher education teaching of the highest quality, but also the thickets of bureaucratic thorns with which we have surrounded them. Thus, though we have a pay problem to resolve, we have other problems to resolve too, especially at a time when there are so many other attractive opportunities for able young people to pursue, not least academically in North America. The Royal Society election lists already draw attention to that particular migration.
As to the pay issue, I think your Lordships' House agrees that that is a problem we must collectively solve if our ambitions are genuine to remain in the world league in this area for which history, it is not wholly unreasonable to say, has prepared us. I have never had responsibility to determine these matters in a higher education institution, though I was profit accountable and thus met a payroll for 18 years in the private sector and was ministerially responsible for pay and conditions in the Civil Service for four years in the Treasury. From both those experiences I can validate the belief that money is not necessarily a motivator but that lack of money is undoubtedly a demotivator.
My understanding of universities may be imperfect because of not having served directly in them, but as I understand it there is freedom for university management to determine pay for individual professors, or most of them, within the resources that universities have, but the posts below that are subject to national determination. However, within that generalisation I gather that management would be potentially free to exercise its own determinations but are—I hasten to say properly—constrained by union agreements.
If we are genuine about seeking to fill the gaps that will soon appear in teaching ranks with entrants who will be of the same class as their predecessors or better, against the additional disincentive that bureaucracy has created, we must seek to adjust the balance so that university management feels freer to manage. The benefits of that freer management accrue to the institution as a whole, for a healthy and successful institution will always be a more effective and generous employer.
When the policy of overseas students paying the cost of their tuition was introduced, considerable latitude was built into that policy as to how costs should be interpreted, but the benefits of that latitude were not swiftly secured because universities were apprehensive that the then UGC might penalise them for whatever

271
interpretation they used. It would be sad if apprehensions about the higher education teaching unions paralysed university managements as this impending crisis unfolds but at a time when some help is at hand in terms of greater resources both from government and from higher tuition fees. I take great comfort from the Prime Minister's choice of his new Secretary of State for Education, but I gather that the AUT is opposed to higher tuition fees. I ask it sincerely through the agency of Hansard to believe that in this it may be mistaken, especially if it has its own members' interests at stake and at heart.
However, it is not unreasonable for the unions to expect the rest of us to put our hands into our pockets in terms of endowment. I am a graduate of an American business school as well as of a British university and I know how much more demanding and well organised the former is than the latter at eliciting endowment help from their alumni.
My own rule of thumb is that if you wish to endow your Alma Mater with an income flow of a penny a day inflation proofed for ever, you need to put in a capital sum of £125. A real terms penny a day for ever is not wealth beyond the dreams of avarice, but nor is £125 or modest multiples of it an enormous sum to deprive oneself of. We cannot expect charitable foundations or corporations to solve these endowment problems alone unless we put our own hands in our pockets.
I realise that the Chancellor is concerned—the noble Lord, Lord Morgan, alluded to this—that universities should not get further resources or freedom to raise them unless they can prove they can manage them well. In this instance he could scarcely say that higher pay is not required against his fear of pay dissipation in the reform of other public services, but I can see that he will be the readier to give British universities the resources and freedom to raise them if the professionalisation of university management gathers further pace.
We have in this a chicken and egg situation. During the war my family kept chickens and I can remember as if it were yesterday a day when the family gathered round a chicken which was temporarily incapable of expelling an egg. I can remember too the various methods of lubrication we had to use. The same need for lubrication rests on all of us in the present chicken and egg case, but a great deal of our future potential as a nation rests on us in our generation making our own contributions or concessions to ensure that that lubrication exists.
The great Earl of Chesterfield was once in the great George Whitefield's congregation when the latter was painting a word picture of a sinner moving towards a precipice. The sinner was poised on the very brim when Whitefield paused, and it is a tribute to him as a preacher that in that moment of silence the Earl of Chesterfield cried out, "By God, there he goes".
The universities of this country are not poised on the brim of a precipice, nor is any purpose served by such rhetoric. But, to coin a phrase, we are at risk, even if in slow time, of proceeding like Gadarene lemmings into
272
the sea. Unless we solve the problem of this debate, a gentle decline into international mediocrity lies ahead of us.
7.18 p.m.
Lord Watson of Richmond: My Lords, I, too, congratulate the noble Lord, Lord Lamont, on creating this opportunity for your Lordships' House to focus on the pay of university teachers. Perhaps I should declare several interests. I chair financial appeals at both Oxford and Cambridge. I am a visiting Fellow at Oriel and an honorary professor at Birmingham. However, as we are discussing pay, I too, like the noble Lord, Lord Morgan, would note that I do not get paid for any of those involvements, which is all too familiar to all Members of your Lordships' House.
However, the involvements I have fuel my concern over the impact of present levels of university pay. The point has been made in part, but I shall repeat it. We need to recruit, so it seems, an additional 42,000 academic staff by 2010, the target date for the 50 per cent objective for university education. By that time, coincidentally, almost 50 per cent of academic staff will be on the verge of retirement. The problem is particularly acute in certain areas: 47 per cent in terms of' mathematics; 45 per cent in physics; 44 per cent in engineering and 40 per cent in chemistry.
Will we be able to recruit 42,000 academic staff by 2010? The prospects at the moment are bleak. The answer to that question must be that it is highly unlikely. The UCEA report, Recruitment and retention in employment in UK higher education, finds a situation that has steadily deteriorated over the past four years. There are specific areas where the urgency is greater than others; for example, computing and information technology, engineering, biological sciences and medicine. These areas are clearly important to our national competitiveness and, indeed, to our sense of well-being. Also particularly badly hit is accountancy, but I am not sure that its impact on national competitiveness and our sense of well-being is quite as unambiguous as the others.
We all know that starting salaries in higher education are low by comparison with other professions. The noble Lord, Lord Lamont, has already pointed that out in contrast with the Civil Service, but they are dangerously low when compared with levels in the United States where there is the magnet of alternative employment.
Will the extra funding for higher education in general, and the 19 per cent in real terms specifically for university funding over the next three years that the Government announced in January, help? Yes, of course it will, but on its own it will not be enough.
In many ways, January's White Paper, The Future of Higher Education, was robust, ground-breaking and positive. But it acknowledged that if British universities are to compete internationally and bridge the funding gap, including that on pay, they must raise much more money. That is critical to the issue of pay. That will mean a cultural change in some universities,

273
although my personal experience in trying to help raise money at Cambridge for chemistry and at Oxford for German language endowments has persuaded me that those two universities are increasingly aware of the need for private and corporate giving, and, indeed, are increasingly adept at achieving it.
In the 19th century, Cardinal Newman wrote:
"A university is an Alma Mater, knowing her children one by one, not a foundry or a mint or a treadmill".
Twenty-first century universities will of course not become mints but they will have to make a great deal of money in order to survive and be competitive. A key to that will be knowing their children one by one. The databases of alumni are really vital to future fundraising by universities and maintaining contact with alumni is absolutely essential.
I have a number of concerns and questions for the Minister. Many in this House, and more broadly in the country, feel that there is a danger that the decision on top-up fees may in the future reduce the generosity of graduates towards their Alma Mater. I think that matter must be addressed.
Secondly, and this is the main point that I wish to make today, there is a sense when reading the White Paper, and one feels it also more broadly with government policy, that there is still this rather touching belief that somehow the private sector—the corporate sector—will step in as a kind of Santa Claus and redress the balance and fill the gap caused by shortages of public funding. The atmosphere for raising money—corporate giving—by universities and indeed other charitable institutions, but particularly by universities, has never been tougher. We are really pushing water up the hill. The combination of the collapse in capitalisation values of companies and what has happened to the stock market collectively and accumulatively has transformed the atmosphere. I think we are in for a real struggle.
It would be quite wrong to allow ourselves to believe that, when we have done as well as we can from the government side, somehow automatically the corporate world will step in and fill the gap. I do not believe that. I wish it were true, but I think that it is no longer so.
In the White Paper there was reference to establishing a task force to look at corporate giving. I think that that is a priority that needs a great deal of fresh thinking. I ask the Minister what progress is being made with that. I note from the White Paper that the task force's terms of reference include encouraging potential donors,
"to promote the existing incentives for individual and corporate donation";
in other words, making the most of the charitable status of universities and current Gift Aid mechanisms. My question for the Minister is: why only existing incentives? We are in a changed situation. The atmosphere for corporate and individual giving has significantly deteriorated. In this situation I believe that it is very important to throw the thinking much wider and to look at a whole range of other
274
possibilities. The White Paper makes the comparison, for example, with endowments between American universities—and Harvard in particular— and British universities. That gulf is absolutely colossal. But, it is not an accidental gulf; it is there in significant part because of the tax benefits and the arrangements that have been made and which are part of the culture of corporate and individual giving in the United States. We should look at that matter again if we are serious about maintaining the competitiveness of British universities.
I have a further question. Will No. 11 urgently review the possibilities and open its mind to other possibilities?
The White Paper is encouraging in saying that the Government will explore how we could provide "matching funding" to incentivise university fundraising. If the Government go down that track, it is very important that the criteria for matching funding are not so prescriptive that they are self-defeating. It will be important to open the criteria for matching funding.
Finally, we face a kind of crisis on university pay. It is a crisis that is not wholly upon us, but which will progressively become more acute. The Government have taken a significant initiative in the White Paper. The universities themselves will clearly need to be increasingly imaginative and flexible in creating differentiated and differentiating pay packages, particularly if we are to attract people in the sciences to teaching in the universities. It is important that universities are willing to look at the question of differentiation.
The issue will not go away. This debate, which was introduced by the noble Lord, Lord Lamont, is useful and timely and this House must raise the question again and again. I believe—slightly differently from the noble Lord, Lord Lamont—that our competitiveness as a nation in no small part turns on our ability to attract and retain the best teaching skills in our universities.
7.29 p.m.
Lord Hannay of Chiswick: My Lords, the timeliness and topicality of this debate initiated by the noble Lord, Lord Lamont, almost goes without saying. It comes two weeks or so after the publication of the White Paper on the future of higher education, of which this topic is an integral and essential feature. I hope that it will enable the Minister to say rather more about the pay of university teachers than was contained in the relatively sparse references to the subject in the White Paper. It also provides an opportunity for Members of this House to contribute to the Government's thinking during the consultation period that runs until the end of April. Those are all good reasons to thank the noble Lord, Lord Lamont, for his initiative.
In declaring an interest as pro-chancellor of the University of Birmingham, I add that that post requires me also to chair the university's remuneration committee, which brings me into direct touch with the

275
subject of today's debate. It also leaves me after each committee meeting with a feeling of shame and embarrassment at the salaries that universities pay their academic staff.
I do not want to bore the House by reciting more statistics about academic pay relative to other sectors. Others who have preceded me have already set out the basic facts. I was particularly struck in an earlier debate by the illustration given by the noble Lord, Lord Moser, of how the relative salaries of civil servants and academics have diverged during the past five decades to the detriment of the latter.
If that divergence reflected a judgment of our national priorities, it would be a sad commentary—I say that as a former civil servant. It probably does not; it is probably a lot more haphazard than that; but the hard fact is that after many years of imposed efficiency savings, universities have been starved of the resources to pay their academics at a time when student numbers have been increasing exponentially and the demands on academic staff expanding. It is hardly surprising if teaching standards have declined and that the need to raise them is, rightly, one of the key themes of the White Paper.
The White Paper is surely right to underline the twin objectives of our whole higher education system— research and teaching—and to argue that the latter has tended to be the poor relation of the former. But it then proposes many more remedies and resources for research than for teaching. It fails to recognise that, whereas many academics who specialise in research have a number of ways to supplement their salaries, those who concentrate more on teaching than on research are less favourably placed in that respect.
So low pay impacts on teaching in particular, yet we are living through a period of rapidly expanding demand for university teaching. The targets for increased and wider access mean that that demand will continue to rise in the years ahead. If nothing is done to improve academic pay and, in particular, to make a career focused on teaching more attractive, the outcome will surely be a loss of quality.
That would be extremely damaging to the future of our whole society and to the prospects for our competitivity in a knowledge-based global economy. After all, the vast majority of university students do not end up doing research. Their years at university are the ones in which they acquire a lot of the knowledge and some of the skills with which they go through life. If they are well taught in that period, that contributes to a public as well as to a private good. If they are less well taught, that has clear negative implications.
It is also my experience that the inadequacy of academic salaries contributes to the basic conservatism and risk-aversion of our higher education system. If the rewards of success and imaginative effort are small, why on earth exert yourself'? If universities cannot reward high performance adequately, if they cannot attract the best and the brightest, we risk programming ourselves for mediocrity. The Government continually call for more effective management and governance in our
276
universities. Much has been done and achieved; and no doubt more remains to be done; but it is hard to do so if one is deprived of the means for motivating people and if retaining the people of highest quality is made more difficult.
That brings me to one of my favourite bugbears: the excessive bureaucracy that has been heaped on universities in recent years. It is bad enough to pay academics too little; it is even worse to do so and at the same time to require them to devote an increasing amount of time and effort to tasks that relate to neither of their main objectives—research and teaching. If the Government were to devote serious effort—I noticed some reference to this in the White Paper—to reducing the bureaucratic burden on universities, that in itself would contribute to a reduction in the impact of inadequate pay on academic recruitment and retention.
That must sound like a long list of complaints, but I do not want to sound merely grudging about the recent White Paper. In many respects, it is a breath of fresh air. It contains some excellent proposals that we will no doubt debate more fully at a later date. But in almost every respect, what is in the White Paper is a case of jam not today, not even tomorrow but many tomorrows away. The cash flow from tuition fees will not begin to have a major impact until about 2009. That is far too long to wait to address the long list of weaknesses arising from the inadequate pay of university teachers.
So I hope that the Minister will be able to say a good deal more about how that gap is to be bridged and how remedies can begin to be found in the mean time. In any case, perhaps he would answer a specific question: whether, as is being said, there will in fact be no additional resources for teaching in universities this year, rather than the 6 per cent in real terms that is trumpeted by the Government whenever they speak on the subject.
The conventional wisdom, when the Government provide substantial additional resources to a sector of the economy, is that those resources must not be, as it is said, "frittered away" in pay increases. Indeed, I noticed that the noble Lord, Lord Lamont, with great generosity recognised that he had expressed that view in earlier times, when he was Chancellor of the Exchequer. This debate demonstrates that that conventional wisdom is inappropriate to apply to the pay of university teachers at this juncture.
The University of Birmingham has managed to recruit only 50 academic staff under the age of 30 in the past five years. If that trend continues, in 10 or 20 years' time, we shall not have the world-class universities that this country wants and needs.
7.37 p.m.
Baroness Warwick of Undercliffe: My Lords, join other noble Lords in thanking the noble Lord, Lord Lamont, for providing this timely opportunity to discuss one of the most crucial issues facing the higher education sector, which is especially close to my heart as a former general secretary of the Association of

277
University Teachers. I hope that the noble Lord will not mind me savouring for a moment the vision of him in repentant shroud, as I spent the five years or so of his Chancellorship knocking on the door of the Treasury seeking money for university salaries. I declare an interest as the chief executive of Universities UK.
There are about 117,000 full-time and 24,000 part-time academic staff in our HE institutions. Including support staff, the total number of staff employed by the sector is more than 300,000. Each noble Lord who has spoken has highlighted the problems of low academic salaries in the sector, which are recognised by everyone in the sector and, as the noble Lord, Lord Lamont, said, was recognised by the Prime Minister just before Christmas.
We have growing problems in recruiting and retaining staff in many areas. As research carried out last year for Universities UK and the employers' organisation, the Universities and Colleges Employers Assocation, showed, a fifth of all universities and HE colleges now experience difficulties most of the time when recruiting academic staff, especially in subjects such as computing, law, engineering and education, which have all been mentioned. About a fifth of all institutions also face difficulties most of the time recruiting administrative, technical or clerical staff. Almost half of our institutions have difficulty most of the time when recruiting manual staff.
As everyone has acknowledged, the primary, but not the only, cause of those problems is uncompetitive salaries compared to those available elsewhere, particularly the public sector. For instance, pay increases for schoolteachers and NHS staff have now badly affected recruitment of the academics needed to train those staff. In some areas, by no means only London and the South East, pay levels for support staff are well below those for similar staff in local labour markets. There are also problems in our medical schools. A survey last year of medical and dental clinical academic staff by the Council of Heads of Medical Schools suggested that there were 73 unfilled posts at clinical professor level and 136 at clinical senior lecturer level.
Meanwhile, the attractiveness of salaries in the private sector has had a major impact on universities' ability to recruit and retain experienced staff to teach in such areas as economics, accountancy and law. The attraction is so great that it is now difficult to encourage many graduates to do postgraduate work, the first step towards an academic career. Several noble Lords mentioned the size of the challenge that institutions face in recruiting new staff in the next few years.
Why exactly do the problems in recruiting and retaining staff matter? In the academic field, for example, staff-student ratios have got radically worse. That has meant a radical worsening of the student experience. The diluted contact with staff has been tackled in several ways, including teaching by postgraduate students. That results in mutual gain, because it helps to prepare postgraduates for teaching roles. But, it cannot be a long-term solution. It is
278
essential to maintain the availability of pastoral and learning support through academic staff, because that is what students value most. Universities have gone to great lengths to preserve the standards of their degrees. In an internationally competitive market for students, they could not do otherwise. But continuing pressures on staff as ratios worsen will damage the student experience and threaten standards and quality.
On 22nd January, universities learnt how much they will receive from the 2002 spending review settlement—overall, a 6 per cent increase year on year. The sector in general recognises that that is a necessary start to reinvesting money in a sector that has seen more than 25 years of cuts. It is certainly welcome. But, as is always the case, we now have the major task of unravelling exactly what that will mean for the universities' bottom line. There are always strings attached to funding increases, and this White Paper is no different. We welcome the continuation and increase in the funding earmarked for rewarding and developing staff. But, at present, there is a lack of clarity about how the money can be used to modernise pay structures. I predict that simply tacking performance rewards and market supplements on to the present rickety, old arrangements will be a sure route to many employment tribunals.
So it is vital to change pay arrangements. That is already happening under the auspices of the new Joint Negotiating Committee for Higher Education Staff. I hope that it will bring in new structures better to serve the needs of our diverse institutions. Those new structures will help to ensure equal pay for work of equal value; respond to developments in the delivery of teaching and learning; and offer clear links between staff contributions and their rewards. I hope that the money to reward and develop staff will allow universities to reform their pay structures in that way.
But there are serious issues that we need to watch out for. I agree with the Government that wider use of market supplements is necessary to tackle many of the problems highlighted today. But they are not a panacea. Used rashly, they would exacerbate the equal pay problems that everyone in the sector is working to eradicate. That is an outcome that neither my noble friend nor I want.
Then there is the dog that didn't bark. One of the glaring omissions from the White Paper is any mention of support staff and how they should be properly rewarded. If we focus too much on academic salaries and forget the pay of non-academic university staff, we risk selling short both the staff and the students who depend on them.
Recently, one Government proposition in particular caused the university world some confusion: that average salaries in the UK were higher than those in the US. Heaven knows what indefatigable researcher came up with that, but it flies in the face of the experience of academic pay in the US that many colleagues in this country have. If experience is not enough, let me give noble Lords two reasons for doubt. First, the definition of a university in America is wider than in the UK. So a consideration of the whole US

279
sector might well include institutions that would not be called universities here. In addition, a large swathe of academic salaries in the US cover only nine months of the year, whereas they cover 12 months here. But, in any case, as other noble Lords said, when one compares salaries like with like, professor with professor, senior lecturer with senior lecturer, the proposition does not stand up.
What other issues does the White Paper highlight? There is hound to be a lively debate on differential fees for undergraduates, both in this Chamber and in another place. However, I hope that we will look at the impact of increased levels of graduate debts on postgraduate choices. For example, will increased debts deter graduates from the expense of postgraduate research? What impact will that have on the supply of tomorrow's university teachers? I hope that my noble friend can assure us that the issue has been, or will be, considered as a matter of urgency. The noble Lord, Lord Brooke of Sutton Mandeville, referred to the Parliamentary and Scientific Committee lunch that we both attended today. At that meeting, a senior academic from an academic family sadly told me that neither of his recently graduated children were prepared even to contemplate the prospect of becoming academics even though they were well qualified to do so. That experience is writ large in similar families across the country.
Finally, I share with the Government an awareness of the need to recruit, retain and reward the brightest and the best in our universities. But I urge my noble friend to bear in mind that the problems that universities face are not confined to high-flying academic staff. A recognition of the essential role of support staff in achieving the academic excellence that the Government want to see would be a welcome step. I hope that the Minister will agree.
7.47 p.m.
Lord Quinton: My Lords, I, too, declare an interest. Until 1987 I was in direct receipt of university payments. Since then, I have received a modest pension in recognition of my past services. But I do not think that that should debar me from taking part in the debate, because everything I shall say is non-retrospective. I am not urging any rectification of past deficiencies but looking to improvements for the future. We must all be grateful to the noble Lord, Lord Lamont, for raising the matter. I am glad that it was not raised in too comprehensive and massive a form— for example, in a debate about the welfare, well-being or future of universities. Rather, the debate is tied to a particular feature of the problem: payment.
I propose to talk about a smaller sector of the university world than that discussed by most previous speakers. I shall explain why later. On an autobiographical note, as a university teacher I soon became aware that university teachers were discriminated against financially. That theme emerged over time. Other employees seemed to get increasingly well paid, but university teachers did not. So I introduced research of a highly sophisticated character, with the Oxford University Gazette in one
280
hand and Whitaker's Almanack in the other. I consulted several past numbers of both to see how professorial salaries compared with Civil Service salaries. Someone—I cannot remember who it was— suggested earlier that the salary of a principal in the Civil Service was roughly equivalent to that of a professor in a university. My experience was that professors were gradually sinking and that lecturers were not much above doorknob polishers in the Civil Service. The gap was getting larger and larger.
Where does that have its most deleterious effect? It produces a brain drain. We used to talk about a brain drain 30 or 40 years ago. In the natural sciences, it was already as serious as it is now, but, in my experience, the brain drain had a mild, playful quality. Fairly tweedy characters of no great pretension or ambition went off to fairly tweedy colleges in the United States of no great pretension or ambition, and that was an acceptable and tolerable move. That is no longer the case. Now, the very best people go to North America.
I shall take the example of my own discipline, philosophy, because I know more about it. It is not difficult to discern what is going on in respect of the merits of newly emerging philosophers; it is a bit like football. It is a close, tight-knit profession, and judgments pass from mouth to ear. A fair consensus— never universal, of course—is usually reached on someone's abilities. Over the past two decades, about eight people of the highest ability have emerged. Seven of them are employed in the United States; the eighth is very young and may not yet have made up his mind. There is a fearful creaming-off of emerging academic talent.
Other noble Lords spoke about the problems of the lecturing profession as a whole. They are serious, but I am not sure that the problem is not even worse at the top. Sooner or later, there will be nothing left. I fear that Britain will become a sort of academic Nepal, sending its best young people off as Gurkhas to the academic frontline in the United States, either never to return or to return, battered and bemedalled, when they are not much use for anything.
It is a serious problem, but how much does it matter? Some would say that it does not really matter and that the system can get on perfectly well without such glamorous figures. I am not sure that that is so. In what I will call—rather repulsively—a cultural domain, the role of the star is nearly as important as it is in a football team. They are objects of emulation. They are great invigorators. In particular, academic disciplines can get somewhat ossified, if nobody comes along to— I mix my metaphors atrociously—move the goalposts and bring about a different view of how the subject should be conducted, the direction in which it should go and the things that it has hitherto neglected and should now take up. That is not the work of decent, ordinary, middle-level academic performers; it is the work of remarkable creative and original people. Such people are the salt in the fine, nutritive educational pie, and it will be a disaster, if they are all creamed off.
I cannot give anything like the dramatic figure that I gave for philosophers for, say, historians. However, even on the TV, the two great historical performers of

281
recent times are British academics, one of whom has been in the United States for a considerable time and the other of whom has just gone there.
As has been said, the suffering of all academic staff is not solely a matter of pay. It is also a matter of what might be called in good trade union language "conditions", by which I mean the distribution of the workload and many other things. Such things may seem trivial, but they include things such as the ability to get to conferences or access to secretarial staff. The noble Baroness, Lady Warwick of Undercliffe, referred to the problem of support staff. My experience of university life was that there was little of it, and there was little assistance to be obtained. No doubt, things have picked up a bit in our more technological world.
Does it matter? I said that it did. I cannot quantify such things, but it matters more intensely than the problems of the broad mass of lecturers. The problem with lecturers is so obvious, immense and immediate that something will have to be done about it, unless we are prepared to let the whole university system disintegrate. The departure and non-return of the people about whom I am speaking will not cause the disintegration of the university system but will cause a lack of savour. The word "mediocrity" has been used from time to time. There will be an approximation to the condition of Spanish universities in the eighteenth century. I do not think that anyone will be insulted by that comparison.
There is another reason why it matters. There is a great tradition of remarkable university academics in Britain, and it would be terrible if it died down and everybody became Mr Chips-like. I do not say that Mr Chips-like persons are not splendid, but they need some rat-like genius there to ginger the whole thing up intellectually. What would it have been like if Wordsworth, Coleridge, Byron, Shelley and Keats had been seized by Harvard, Yale, Princeton, Columbia and Berkeley as full-time permanent poets-in-residence? We would have had to make do with Crabbe, Felicia Hemans and Robert Southey. What would have happened afterwards? How could a tradition have been kept going after such a fearful lacuna? That is the menace that hangs over us.
It matters most of all from the point of view of stimulus, invigoration and vitalisation of subjects. I also hope that we might see a patriotic motive for sustaining and retaining our most gifted people and not letting them float away to employment elsewhere. I hope that, in what must be a massive re-thinking of university remuneration, they will not be left out.
7.58 p.m.
Lord Sutherland of Houndwood: My Lords, I thank the noble Lord, Lord Lamont of Lerwick, for introducing the debate at such an appropriate time. We have all benefited from his initiative. It is a particular pleasure to follow my colleague, the noble Lord, Lord Quinton, who is a distinguished philosopher and academic. He spoke with
282
characteristic skill, accuracy and style. I shall not, however, rise to the bait and respond to the coat-trailing of the former vice-chancellor of the University of Aberystwyth about cricketing skills. I shall not deter the House with a detailed account of what I can only regard as the Welsh equivalent of what the Australians call "sledging".
The needs that we confront are clear. They are twofold. First, we need a baseline for salaries that is adequate and appropriate for all competent professional staff in the university system in Britain, of whom there are very many. They ought to be treated as professionals and be able to share in the steady increase of national wealth in a way that they have not hitherto been allowed. Equally, we must ensure that those who have international excellence—for all the reasons just given by the noble Lord, Lord Quinton, and by others—can be persuaded that their families can stay here and enjoy a respectable quality of life. They are not seeking huge salaries. But, on the other hand, they have responsibilities to families and to ageing parents. They ought to be able to remain in this country; they ought to be retained here and, if necessary, recruited back.
Many general comments have been made. I shall particularise and draw to your Lordships' attention a specific individual. I refer to a university teacher who is acclaimed internationally for the quality of his teaching. He attracts students to his own classes from around the world and, indeed, from his native city. Political and intellectual leaders recommend him to their best prospects, to their best pupils and to members of their own family. Not only is he a skilled and dedicated teacher, but his books are in great demand. Indeed, it is safe to say that they will be in demand a century or two after his death. Yet, even he, as a full professor, has to offer bed and breakfast, at an agreed rate, to his pupils or to as many of them as he and his wife can accommodate. One might judge him to be the veritable paradigm of an academic who knows what it is to be a penny short of the full shilling.
Who then is this exemplar of the matter before us today? It is safe to say that he will not mind or be embarrassed that his name is placed on record in Hansard for all to behold. It is, in fact, Dugald Stewart, one of the great figures of the Scottish Enlightenment, who lived and taught in Edinburgh for several decades at the end of the 18th and beginning of the 19th centuries. Why mention him? Is it simply an attempt to say that the academic poor are always with us, and always will be? Certainly not; because he, Dugald Stewart, managed to obtain a quality of life better than most academics could afford today. His exceptional gifts as a teacher brought their own rewards which were tied to his reputation, his competence and his teaching practice. He was allowed to supplement his limited stipend from the public sector by putting a price on the practice of his gifts. Like other professors in his university, he was permitted to charge each student who chose to come to his classes a per capita fee to supplement his public sector salary. One might

283
say that was an early precursor of top-up fees, which helped to deal with the inadequacies of public sector academic salaries.
Of course, there is no one-to-one correlation. I am not suggesting that university teachers should stand at the entry to their classrooms asking for brown envelopes to be handed over as the students go in. There is no one-to-one transfer from Dugald Stewart's time to our own, nor vice versa.
However, there are lessons in this. Before I draw out two—I think that they are very clear lessons—let us be momentarily fanciful of what it would be like if Dugald Stewart were alive today and trying to practise in this way to enhance his meagre earnings. The key experience that he would have, in addition to being an excellent teacher and researcher, is he would be regulated.
On Monday, the funding council would send him an e-mail followed up by a hard copy wishing to be reassured that he was not using his additional teaching income to subsidise his research, and vice versa. That would take an hour or two to justify.
On Tuesday, the cold wind of the research assessment exercise would blow through his study in the form of a letter from his vice-chancellor—I say to the noble Lord, Lord Lamont, yes, we too have sinned—writing to him to point out that he may be spending too much time making beds and preparing breakfast for his student lodgers. Does that leave enough time to prepare his four peer-reviewed papers for the next research assessment exercise? So he would have to deal with that.
On Wednesday—oh, the delight of Wednesday— there is a new form of regulation: the access regulator would wish to know the postcodes of the home addresses of those students who come and lodge with him during university terms, lest he gets the balance wrong.
On Thursday, the Quality Assurance Agency would ask the reasonable question whether the charging of fees at a personal level was not interfering with the entry standards of his particular classes.
On Friday comes a self-imposed home goal by the university: the local ethics committee would check up, with the help of the director of finance, that he was not undercutting student hostel prices in the services that he and his wife were offering.
Yes, of course, that is silly. But it is a picture of the bureaucracy and the degree of regulation from which we suffer today in the university world.
I have two messages. The first can be taken from the 18th and 19th centuries: public sector sources of funds must take account of salary differentials between university teaching and other professions. Noble Lords who have already spoken have given adequate evidence of the need to do that. I simply emphasise a point that I made previously. The council of British professors of computing science has conducted a study of the number of chairs which lie vacant in Britain in this key subject simply because salaries are not sufficiently attractive to ensure that the next
284
generation will be taught at an appropriate level. There must be an adequate base within the public sector as the structure hangs at the moment.
Secondly, the increasing burden of regulation on universities must be set aside to allow them the freedom necessary to recruit and to retain especially those staff of the highest calibre. We must be allowed the freedom to find whatever may be the 21st century equivalent of Dugald Stewart's capitation fee.
8.6 p.m.
Lord Oxburgh: My Lords, I declare an interest. Most of my working life has been spent working in or for universities in this and other countries. Most recently, until two years ago, I served as rector of Imperial College. At present, I am an honorary professor at Cambridge. I should also like to echo the sentiments expressed by those who spoke earlier in thanking the noble Lord, Lord Lamont, for raising the important matter of university salaries and for his very clear exposition of the current problem.
Pay in our universities is a disgrace to our society. It is damaging to our system of higher education and, indirectly, the long-term prosperity of the country, not to mention its cultural heritage. I do not believe that the Government should have any direct involvement in or responsibility for how people in universities are paid. However, successive governments do bear responsibility for funding higher education at such a low level that very little money was available for salaries. As a vice-chancellor, I saw salaries as but one expression of the general underfunding of universities, and I believe that salaries have to be considered in that general context.
The majority of universities in England derive the greater part of their income from teaching. Over the past 25 years, the unit of resource—the average sum paid by government to universities for each undergraduate taught —has approximately halved. Over that same period, student numbers have increased by approximately a factor of three, so that today more than 40 per cent of young people in England go to university.
How did universities cope with this reduction in resource? They did so in a number of ways. First, they looked for improved efficiency, and of course increased numbers offered some opportunity to reduce overheads. Secondly, those that could, subsidised the teaching of UK teachers from other income, particularly that derived from teaching students from overseas, who paid the full cost of their studies. Needless to say, that was an option that was available largely to the better known universities.
And then—and this was serious—virtually every university was obliged to defer long-term maintenance and to accept that their buildings, their classrooms, their lecture halls and their laboratories would become progressively more dilapidated.
I have personal experience of the consequences of that from my time at Imperial College. We had negotiated and won, against international

285
competition, a major contract for research with a US-based multinational company. The day arrived when the relevant vice-president was due to come to London with his entourage for the formal signing of the agreement. They arrived and. quite reasonably, asked to see the laboratory in which the collaborative work was to be carried out. We took them to see it. It was neat; it was clean; it was fully equipped to do the work. But its most recent refurbishment had been in the late 1930s and the outside of the building was far from prepossessing.
They said little as they went round but, as they came out, they said that they wished to discuss some details privately. Half an hour later, with some embarrassment but quite firmly, they said that they could not proceed with the agreement because, although they knew that the work would be good, they felt that the reputation of the company would be damaged if it became known that work important to them was carried out in such surroundings. That was not a good day.
Universities also saved money by giving less personal attention to students. The average number of students per teaching staff member increased from around 10 in 1986 to more than 18 in 2000. But, finally, they saved money on paying staff, at every level— secretaries, technicians, maintenance staff, lecturers, administrators—and the consequence is the levels of pay and the recruitment problems that were referred to earlier.
Of course, as officials and Ministers to whom I used to make these points were quick to point out, a reduction in resource does not necessarily mean that the reduced resource is inadequate. It could simply mean that the provision had been too generous and that there was fat to be trimmed. All I can say is that, although purchasing parities make fair comparisons difficult, British universities have for a number of years been run very inexpensively by any fair international standard of comparison.
The other argument was that there was no case to increase university salaries because there were always applicants for posts that were advertised. This is, of course, generally true—but it is rather facile to conclude that this proves that pay levels are adequate. There will always be those who wish to teach in universities, but many will simply not be up to the job. I believe that many universities have been obliged to appoint people with lower levels of attainment than they would have wished simply because they had to have someone to teach the students.
Perhaps a clearer indicator, however, is that even when it has been possible to appoint first-class young people they have not stayed in the profession for very long. I have seen many who were prepared to take a first job as a junior lecturer on pay that, although not very good, at least offered a better standard of living than they had had as a research student and, above all, allowed them to continue working in the discipline they loved. That was all very well for a year or two, but then, naturally enough, they married and had
286
families—and it was at that point that many found that they could not manage and resigned to take posts outside the system that paid better.
Another significant indicator is the difficulty in filling research posts. At the time I left Imperial College we had an alarming number of research posts, paid at junior academic levels—but, admittedly, without long-term prospects—which we simply could not fill. True, there were plenty of applicants but they were simply not good enough. A few years earlier they would have been snapped up by first-class people.
The Government's White Paper on the future of higher education is to be broadly welcomed— although I hope that the process of consultation that it invites will lead to a number of significant changes. The most important element of the White Paper is that, for the first time, it gives government recognition to the fact that there is indeed a funding crisis in our universities and, unless something is done about it, the system will slide into mediocrity. That is important.
This is not the time to discuss the White Paper in detail. There are new funds for research and infrastructure and these are certainly to be welcomed. It seems to me, however, that when allowance is made for the various new initiatives that are contemplated, the unit of teaching resource, which underpins the finances of many institutions, remains, in real terms, very much as it is today. Top-up fees may help some universities but certainly not all.
These days, the term "university" is almost as all-embracing in this country as it is in the United States. Different universities do different jobs, in different ways and in different parts of the country where costs may be different. This means that there must necessarily be differences in salary levels to match a wide variety of different situations. But it seems to me that, in spite of the opportunities offered by increased fees, the current proposals do not go far enough towards meeting the fundamental costs of running any university and thus are unlikely to do much for general levels of pay.
Universities are important to this country. Our long-term prosperity depends on the quality of the education that they offer. That quality ultimately depends on having the right staff. No one takes a job in a university expecting to become rich; nor should they. But equally, they do not want to feel poor. Work in a university at one time—as my noble friend Lord Sutherland pointed out—had many attractions. Let us see whether we can put some of them back and help universities to attract and retain the staff that they need to ensure that our universities have a future that matches their distinguished past.
8.16 p.m.
Baroness Sharp of Guildford: My Lords, I, too, thank the noble Lord, Lord Lamont, for introducing this timely and important debate. I declare an interest, having spent most of my life as an academic. I was recruited into that profession in the post-Robbins expansion. On leaving Cambridge, I spent three years in the Civil Service, and married a civil servant. I joined

287
the staff at the LSE in 1963. I believe I am right in saying—the noble Baroness, Lady Warwick, can correct me—that the noble Lord, Lord Chorley, was then secretary of the AUT. I can distinctly remember him saying to me: "We are at long last breaking the link between the academics and the Civil Service. This can only be to our benefit". How wrong he was. I ended my career running a research group on a professorial salary well below the grade 7 maximum at that time. It is sad to see the degree to which academic salaries have fallen way behind not only Civil Service salaries but local government and other public sector salaries.
The facts and figures have been recited by many speakers. I do not think that there is any point in my repeating them. Like others, I was delighted that, just before Christmas, the Prime Minister picked up the 4 per cent real increase over the past 20 years as compared to 45 per cent elsewhere. In the days when I was a academic it was not quite so bad as that. I used to use the example of the 1 per cent real increase and 37 per cent outside increase, which was the position in about 1998.
There is no doubt that starting salaries in universities are much too low, as are career prospects. I used to recruit young lecturers. They would now receive a salary of £22,000 at age 27 or thereabouts, at point 7 on the scale, having done a Master's degree and a PhD. Seven years later, at point 14, a lecturer receives £30,000. That is not too bad, but let us look at the comparators: a school teacher, even without outside responsibilities, would be earning somewhere in the region of £32,000; an environmental health officer would be earning £41,000; a major in the Army £45,000; a grade 7 principal in the Civil Service, at the top end of the scale, earns £45,000; and a police inspector £42,000. The lack of prospects over the medium and even the long term—after all, the average professorial salary is now about £50,000 or £52,000— is combined with the responsibilities that lecturers are now expected to bear.
We have cited the number of professions in which it is difficult to recruit—these are largely where there are obvious jobs to go to outside, such as IT, computing, engineering, economics, accountancy and so forth— but in other areas there is a surplus of people applying for lecturer posts. Why? There are a number of interesting issues here. To some extent we lock people with a PhD into a career. I have known a number of students who, having undertaken a PhD, apply for a career in, say, journalism or broadcasting, and are told, "You are too specialist for us". These are bright students who do a Master's degree and go on within the university environment to do a PhD. Their ambition becomes to achieve within that university environment, which is fine, but sometimes we lock them in.
288
We have also increased the number of contract researchers. Almost 50 per cent of those employed in universities are contract researchers, and their ambition is to get a tenured lectureship.
Earl Russell: My Lords, will my noble friend look a little lower down the scale than contract researchers? The House will believe I have no objection to increasing the pay of university teachers, but does my noble friend agree that the financial shortage suffered by students is far more severe than any suffered by any university teacher? If I wanted to discuss a problem with students and it was necessary to do it over lunch, there was an expression of fear on their face even at the prospect of the ordinary student refectory until I said that of course I would pay for the lunch. This amounted to at least an extra 5 per cent pay cut. Is that right?
Baroness Sharp of Guildford: My Lords, I agree with my noble friend in that students have a rough time of it, particularly in London. There is no doubt that a deterioration in the quality of staffing is not in the students' interest.
In some cases there are, strangely enough, plenty of applicants and so what I call the Bain test is not always passed in this area. Another aspect is the influx of people from eastern Europe, southern Europe and Asia who are filling posts in our universities. Thank heavens they are, because in some cases we would not have filled the posts without them. ft is a strange phenomenon that while we are shipping out some of our brightest and best, particularly to the United States, we are pulling in others. Sadly, not always do we fill posts with people of great distinction, although it is, to my mind, surprising how many people remain in the profession.
Chickens eventually come home to roost. My generation—those who were the post-Robbins expansion—are all retiring. My noble friend Lord Watson, who is not in his place, said that we need to recruit 42,000 new academics over the next eight years. It is extremely difficult to get British students to become research students in many of these areas. We are not renewing the seed corn. As is happening in mathematics and physics, we are not training enough people to teach the teachers. This is a dangerous situation; we do not have enough teachers in schools or universities. This has long been a problem and has been recognised. Dearing looked at it and said that we must have a detailed review of university pay. We had the Bett review, which discovered systematic discrimination against women and ethnic minorities in universities. There were some very bad employment practices. However, surprisingly little has been done, apart from the 3.5 per cent settlement this past year. The charts from the AUT show how flat the pay is.
What are the Government now proposing? One of the problems is that it is not clear how much new money is coming through for teaching. A round figure of 6 per cent a year and 19 per cent overall is lovely, but, as the noble Lord, Lord Oxburgh, said, it incorporates a great deal of money for scientific

289
research. Precisely how much is coming through for teaching? The letter from HEFCE says that the £170 million that was given for 2002–03,
"will be consolidated into institutions' core grants from 2004–05 and, in addition, I am making available an extra £50 million in 2004–05 and £117 million in 2005–06".
It is not clear how much money is coming through to the teaching profession. Is it a total over the next three years of £337 million? Given that we need about £100 million a year to make good an inflation increase in the region of 2.5 per cent. that will mean only a 1 per cent real increase in pay.
Are the THES figures on funding per student correct? They suggest a 0.1 per cent increase in 2003–04, a 0.2 per cent increase in 2004–05 and a 0.6 per cent increase in 2005–06.
The White Paper promises some money, but it is with strings attached. As the noble Baroness, Lady Warwick, said, it is not a bad idea to attach some strings. A lot of restructuring—"modernisation"—is needed in university management methods. Nevertheless, it is hard to criticise the universities too much for lack of performance. Money will become key in relation to performance. The performance of universities has been surprisingly good in the circumstances. The White Paper notes that the research performance is very strong. OECD surveys show that 96 per cent of students in Britain are satisfied with what they have got here. I have taken students from France and Germany who love the British system because they see much more of academics and others.
Sadly, chickens eventually come home to roost. There may be a long lag because people are captured with a PhD and locked into the profession, but eventually the problems are coming home to roost. The brightest and the best are not entering our university system. We are not renewing the seed corn. Unless something is done to reverse the situation and attract some of our best young people into our universities, although, as the noble Lord, Lord Quinton, said, we will not collapse completely, we will, as the noble Lord, Lord Brooke, said, slide, like Gadarene swine, into general mediocrity.
8.28 p.m.
Baroness Blatch: My Lords, I, too, thank my noble friend Lord Lamont for initiating this timely debate. I shall also follow him in confessional mode in a moment or two. I also declare an interest. It does not match the impressive qualifications of those who have spoken so far in the debate, but I am the mother of an academic. After achieving good A-levels and taking a gap year, he gained a first in chemistry with physics, then went on to do a doctorate. That was followed by two years' research at Tokyo University. Having returned from Japan, he is now working in a university and, at the age of 34, is earning £22,000 a year. That compares with his twin sister, who is a flight lieutenant in the air force, who has been earning since she left college at 21 and is earning a good deal more. I speak with some personal feeling in the debate.
290
It saddens me deeply to be standing here debating the level of pay of university teachers. Almost four years after the Bett report so clearly spelt out the situation unfolding in our universities, the situation is serious and the Government have failed to address it.
The figures on university pay are shocking however one looks at them. In comparison with other jobs, university lecturers have fared badly. According to estimates in the Bett report, they were paid on average between 5 per cent and 30 per cent below equivalent jobs in the public sector. The pattern is even more exaggerated if one includes jobs in other sectors.
Research published last year by the National Association of Teachers in Further and Higher Education indicated that the level of pay in the United Kingdom is among the lowest in the developed world. In a league table measuring the average spending power of academics, the UK came out tenth out of fifteen, only marginally above Mexico. Canada positively puts us to shame, with academics earning the equivalent of £72,700 compared with a mere £21,800 in this country. Before the Minister himself says it, I shall—like my noble friends Lord Lamont and Lord Brooke—admit that lecturers' pay was in decline before the Government came to office in 1997. However, there has been the Dearing report, the Bett report, the introduction of tuition fees and an even greater expansion of student numbers as the 50 per cent target has been put in place. Still the issue of further and higher education pay has not been addressed.
The consequence of neglecting the cause of university lecturers will inevitably create difficulties in recruitment, retention and motivation. Low salaries will discourage those best qualified for the job from applying. That is especially the case in fields which require lengthy training and where significantly higher salaries can be earned in the private sector, such as science, business, information technology and professionals such as lawyers and accountants. However, this will over time force universities to recruit from a much smaller pool of candidates which will result in a poor standard of applicant. Equally damaging is the tendency to start new lecturers higher up the pay scales than would usually be deemed appropriate in order to attract good candidates to the job. That creates distortion in staff retention as those staff quickly progress to the top of their scales and can go no further.
It is too easy to see the role of university teachers as narrow, as those who inhabit the ivory towers of academe. How wrong that perception is. The work and the quality of university teaching and research impacts on every aspect of our lives and on the health, wealth and cultural well-being of our country. Since the publication of the Bett report, the Government's only response has been to deny that they were responsible, arguing that it is simply a matter for the universities themselves. Although there have recently been signs of greater funding, the increased number of students has more than absorbed any financial benefit. In fact, unit

291
funding per student declined after 1997—I admit that it was declining before—and is now only fractionally greater than it was in 1997, six years ago.
As I understand it, universities will receive increases of £50 million in 2001–02, £110 million in 2002–03 and £170 million in 2003–04. I wonder whether the Minister can clarify—as the noble Baroness, Lady Sharp, asked—the promise that,
"£l70 million will be consolidated into institutions' core grants from 2004–5".
Taking 2001 as the baseline, does that mean that the baseline in 2004 will have increased by £330 million and that, until any further increase is announced, that £330 million—not the £170 million, but the £330 million—will be consolidated? Will that level of expenditure be sustained at least in real terms? Will any fees for tuition be truly additional to that consolidated figure?
As the noble Lord, Lord Hannay, asked, how will higher education fare in the interregnum when fees cease to be paid up front and are paid back only much later? There will be almost a decade of difficulties. It would be helpful to know how that period is going to be bridged.
Action by the Government has perhaps been prompted by the target of having 50 per cent of 18 to 30-year-olds entering higher education by 2010. For that we shall need 22,000 extra university teachers in addition to the other 20,000 already referred to. What proportion of the £50 million, £110 million and £170 million will be absorbed by the intake of additional students entering as a result of the 50 per cent target, and what proportion would be expected to address the pay crisis? Interestingly—I believe that my noble friend Lord Lamont raised this point—what is the gap between male and female earnings in higher education, and what would be needed to bridge that gap?
We have just found out from the Government's White Paper that any increases in funding are expected to be met by increasing top-up fees that the students themselves must pay. The Government claim that students can afford it, for over the course of their lifetime their salaries will be 50 per cent greater than those without degrees. That certainly is not true if they decide to go into academia. For a recent graduate looking to continue in research or teaching at university will not only be burdened with a debt of £30,000 plus but will also face the promise of a salary considerably lower than what he or she could command elsewhere in the public sector, let alone in the private sector. Further, if the Government persist with the target of 50 per cent of students entering university, it will not be the case that postgraduate earnings will be that much greater than non-graduate earnings. The basis for evidence for graduate salaries being used by the Government is historic and does not reflect, or take into account, contemporary employment of graduates.
On top of that, to add insult to injury, the Government have created an access czar to meddle in the admissions policies of universities. Any compromise of standards is patronising. Social
292
engineering entry into university is not the answer; improving education at school level is the key to preparing young people for entry into higher education. The brightest and most talented of our young people, irrespective of background, should enter higher education. Postcode, family history and blind prejudice against private and/or selective education should play no part.
Unless something changes, the future for academics will not be without serious challenge. They face additional workloads as a result of the slavish adherence to the 50 per cent target. Their level of pay, which was an issue six years ago when this Government came into office, is even worse in real terms today. They are now stripped of independence and academic freedom through interference from a Whitehall czar with powers to levy a fine—I use the words of the noble Baroness, Lady Ashton—dictating criteria above and beyond academic ability on which to base selection of students.
The passage in the White Paper on pay is troubling.
Earl Russell: My Lords, does the noble Baroness agree that the fact that students need to depend on a couple of thousand pounds a year in support from their parents is a bigger obstacle to expanding access than any created by any university?
Baroness Blatch: My Lords, there is a debate to be had about the plight of students and the deterrent effect of fees but I am afraid that we do not have time to address that at the moment. I hope that the noble Earl will forgive me if I move on speedily.
The passage in the White Paper on pay is not only short but also troubling. It appears to suggest more meddling by government-appointed monitors making judgments about performance pay. Perhaps we should add Saturday to the five-day week of events described by the noble Lord, Lord Sutherland. The noble Lord, Lord Morgan, referred to London weighting allowance. I believe—I stand to be corrected—that the London weighting allowance for university teachers and lecturers is lower than that of teachers, policemen and others who receive London weighting.
Amazingly, and despite the Government's best efforts, we are so blessed that there are still those who are prepared to dedicate their professional expertise, time and energy to teaching and research in Britain's universities. Despite everything we still have excellent university teachers, but I cannot help but fear that that will not continue. Professional satisfaction through academic freedom and fair remuneration should be the aim. Good staff will not wait for ever but will run out of patience and choose instead to move abroad, where they can enjoy a dramatically improved quality of life, or work in the private sector where the value of their skills is recognised and rewarded.
Fortunately, that trend can be reversed. The Government should abandon their 50 per cent target and concentrate on creating more high quality vocational options in further education. Standards of entry should not be compromised. Prejudice against

293
selection on the grounds of academic ability to enable pupils from poor homes to make greater progress should be abandoned, and the Government should stop meddling with access arrangements. They should also reduce the army of bureaucrats to be engaged under the new proposals to monitor and second guess our institutions.
University staff are not seeking salaries comparable with the top of the private sector. If they were, they would have left academia by now. They seek fairness and recognition of their worth. Unthinking expansion of student numbers risks putting an undue burden on our academic staff, and over time will adversely affect standards. Whatever the outcome of the debate, a way must be found to attract the most talented staff and to retain them if the bleak scenario described by my noble friend Lord Lamont and others is to be avoided.
8.41 p.m.
Lord Davies of Oldham: My Lords, we are all grateful to the noble Lord, Lord Lamont, for introducing the topic at what is, as he rightly said, a timely moment. I appreciate that what he described as a penitential moment was in fact a scene-setter to give the background to the position that we face on the resources for support for students in universities. The problem with regard to academic pay goes back over two decades.
The noble Lord will also recognise that it is with the very issue on which the noble Baroness, Lady Blatch, was critical of the Government—our approach to student finance and support—that we are exactly addressing the problem of how on earth to ensure that universities are adequately funded. University pay has been accurately identified on all sides as a problem, and we must seek appropriate resources to put into universities in the long term.
In the short term, the Government have acted in advance of the White Paper and the long-term proposals on student finance. We have planned investment in higher education to ensure that public spending on it will have reached almost 10 billion, an average increase of more than 6 per cent above inflation in each of the next three years. In that period, spending per student will rise by 7 per cent over and above inflation compared to the figure for 2003, and universities will have received a 34 per cent increase in funding over and above inflation compared with the total for 1997–98.
I do not pretend that that commitment solves every problem of the salaries and incentives required for every area of staff in every university in the United Kingdom. It is not the Government's job to do that. As has been identified by several noble Lords, it is absolutely right that the issue of distribution of pay is part of the negotiating machinery between the higher
294
education institutions and their staff. However, the Government are under an obligation to provide adequate resources to make that possible.
Baroness Sharp of Guildford: My Lords, could the Minister clarify precisely what the 34 per cent increase that he mentioned covers?
Lord Davies of Oldham: My Lords, that covers the increase in expenditure—34 per cent over the figure for 1997—that we will have achieved by 2006. That indicates that, for the first three years of the Labour Government, we carried on with spending patterns established by our predecessors. As I suggested through the figures that I gave a few moments ago, we are proceeding towards ensuring that higher education gets the resources that are necessary in the short term.
I pay tribute to the achievements in higher education. We should recognise that despite our difficulties, the United Kingdom's higher education system has one of the highest completion rates in the world. According to the OECD, only three other countries have a higher rate. Our higher education system performs better than that of many of our significant competitors. The earnings premium for UK graduates relative to upper secondary education is among the highest in the OECD. Employer demand for graduates is strong and has remained strong throughout a period of rapid expansion and against a background of a rapidly changing labour market. Graduate earnings are higher, and their unemployment rates lower than those of non-graduates. That forms the background to our longer-term proposals for funding and the student contribution.
I recognise that it will be difficult for us to return to aspects of the halcyon days of the late 1950s and early 1960s. I, too, recall the Robbins report and the esteem with which higher education was held at that time. We recognise that there are now many other competitors for esteem in the nation. My noble friend Lord Morgan will recognise that we are set on a strategy to recover ground lost over two decades, and the Government's intent is represented in the figures for the next three years and in the long-term strategy for improving resources for universities.
Baroness Sharp of Guildford: My Lords, I am sorry to interrupt the Minister again but does he agree that, given the increased numbers going to university now and the importance of university education in relation to globalisation and competitiveness, it is somewhat strange that we are spending a lower proportion of GDP on universities than we did in the late 1970s?
Lord Davies of Oldham: My Lords, that is indeed the case; I cannot pretend that we can turn the figures around overnight. The noble Baroness will recognise the Government's intent and the inevitable result of our proposals. I cannot forecast the spending round for 2008 from the Dispatch Box this evening but what the Government are doing is clear. Over the next three years, we will show a percentage increase and we are

295
ensuring, at considerable pain, that resources will be available to enable us to increase the percentage of resources devoted to higher education. In that process, the Opposition will present all sorts of challenges to our strategy for increasing such funds for the future. The noble Baroness will recognise the intent for education as a whole and for primary and secondary education.
None of us doubts that that investment must clearly relate to the question of university pay, because universities are their people, especially their academic staff. However, I bear in mind the important point made by my noble friend Lady Warwick that we should recognise that staff other than teachers contribute to the essential welfare and success of university teaching. This evening's debate is predominantly about academic staff. If we fail to recruit and retain the high-quality staff we need, a gradual if barely perceptible decline into mediocrity will follow. That was rightly identified by several noble Lords.
I recognise the point made by the noble Lord, Lord Watson: we must consider the question of additional resources. It is recognised in this country that we have been less successful than other countries at tapping into other available resources. None of us expects to adopt overnight the alumnus culture of the United States. He rightly said that we must consider developments in the corporate world. We will inevitably operate in the economic environment that obtains at the time. I hear his words of warning. I assure him that the committee or taskforce that will address this issue will shortly be set up, and it will take his points into account.
The noble Lord, Lord Quinton, made a valuable contribution to the debate by reminding us that universities recruit not only in a national but, increasingly, in a global labour market. Of course, they are struggling to employ the best academics and, to do so, they need to be able to pay competitively.
As reflected in the debate, there is evidence of continuing and worsening difficulties in recruitment in certain disciplines. In other areas, the issues are not so pronounced. But we all recognise that if we are not able to produce sufficient numbers of undergraduates in accountancy, law, business studies, IT, certain branches of engineering and the professions allied to medicine, then the country will be much the poorer in every respect. It is important that we have the necessary teachers to provide a service for such students.
I heard the lament that the salaries of university staff cannot be compared to the higher earnings of people who enter the City and that economists who teach in universities earn only one-fifth of the pay of people in the City. I believe that that is bound to be the lot of a number of university staff. They pass on knowledge, inspiration, opportunity and experience, which guarantees that students who enter other occupations will earn more than they do. What has been successfully advocated this evening is not that we can expect university salaries to match the lavish heights of
296
those of their students but that a decent standard of living is required which will guarantee adequate recruitment.
I agree with noble Lords that university staff have not done well in winning pay increases in recent years. In his introduction, the noble Lord, Lord Lamont, identified graphically the shortfall in comparison with other increases in earnings over the past two decades and the fact that academic staff had failed to match those.
We acknowledge that the recruitment and retention of staff is an issue. That is why we put in the extra resources. HEFCE has distributed money to institutions in return for human resource strategies which address issues of recruitment and retention, staff and management development, equal opportunities, rewarding good performance and tackling poor performance.
I hear noble Lords say that there can be an excess of bureaucracy and that HEFCE attaches too many strings to the money distributed. But surely we are also right to say that we hope to see a narrowing of the gap between the pay levels obtained by women lecturers and men in higher education. We cannot pretend that that is not an important national priority; nor can we stand idly by and pretend that universities should not ensure that they make progress in that area. In case anyone in the House is under the illusion that higher education has a splendid record in terms of equality of provision between men and women, that is not the case. I give way to the noble Earl.
Earl Russell: My Lords, I apologise to the Minister. But is he aware that the heaviest pressure for publication falls upon women in the last possible years of child-bearing, and that therefore there is a discriminatory impact, which arises from government policy?
Lord Davies of Oldham: My Lords, noble Lords will recognise that we have powerful influences to bear. We are committed to ensuring that that type of issue is tackled. But I am making the most obvious point with regard to pay—that is, it is entirely right that we should expect the strategies adopted by universities to ensure greater equality.
As the noble Lord indicated, we acknowledge that more needs to be done. Over the coming period, the Government will pursue a twin-track strategy for academic pay. First, they will build on the progress achieved through funding for institutional-level human resource plans. In addition to that funding, we are providing extra resources—£450 million in 2004–05, as has already been referred to, and £117 million in 2005–06. That will form part of the rebalancing of funding so that new resources come into the sector not only through research and student numbers but through strength in teaching.
A significant theme in tonight's debate is just how important is the quality of teaching to the development of our higher education successes. We want to remove the bureaucracy of the ring-fence and give HE

297
institutions the freedom to spend this money as they see fit. However, we also want to sustain the cultural change that the human resource strategies have begun. Once individual institutions have strategies in place which demonstrate to HEFCE that they will take steps to move towards market supplements or other differentiated means of recruiting and retaining staff and commit themselves to rewarding good performance and enhancing good teaching, their earmarked funding will be added to their individual baselines.
We are especially keen to see better pay differentiation for teachers, with institutions rewarding those who teach well. Therefore, from the additional funding for teaching excellence which we have identified over the next three years, we shall ask HEFCE to release funds to those institutions which can demonstrate that it will be spent on rewards for their best teaching staff.
As a further measure to help institutions recruit, retain and reward the calibre of staff needed, we are also introducing "golden hellos" for new lecturers in shortage subjects, some of which have been identified tonight. From 2003–04, three tranches of 1,000 new lecturers will receive payments adding up to £9,000 over three years' service for introduction into HE.
Nor are we neglecting the need to invest even more in our very best research institutions. Following the spending review, we announced that we shall increase spending on science and research in 2005–06 by £1.25 billion a year compared with 2002–03, around 30 per cent in real terms. Included in that is an increase in the recurrent research funding we allocate via the Higher Education Funding Council for England of £270 million by 2005–06 compared to original plans for 2002–03.
The Government are also providing £120 million per year from 2005–06 to increase the research councils' contribution to indirect costs of research projects. Several noble Lords emphasised the issue of red tape and that certain aspects of the human resource strategy place obligations upon universities. However, we have set up a better regulation task force under the Vice-Chancellor of the University of Warwick to bring to the attention of government and identify ways in which the bureaucracy imposed upon higher education can be reduced. He and his committee will report to Ministers. The group is not just to implement the report's recommendations but also to take a wider view of what needs to be done to streamline processes in the sector. That will help to remove existing overburdening higher education bureaucracy and prevent new burdens from being introduced. I hope I can assure noble Lords that representations which have been made in this debate and on other occasions about the demands on HE staff are being addressed in that way.
We shall invest in developing and rewarding talented researchers. Institutions will have more scope to allow talented researchers to concentrate on research. To improve the attractiveness of PhD study, there will be an increase in the minimum research
298
council-funded PhD stipend from £8,000 this year to £12,000 by 2005–06, with extra resources for areas where recruitment is difficult, to bring the average up to over £13,000. I am sure that that will be welcomed in all quarters of the House. Extra resources will be made available to increase the average salary of a research council-funded postdoctoral researcher by £4,000 by 2005–06.
I recognise that a debate of this kind is an opportunity to identity to the Government ongoing problems, never to congratulate the Government, although I did receive from the noble Lord, Lord Oxburgh, a precise and welcome recognition that the White Paper does not reach every conceivable target, nor will it be welcomed in every quarter. It is an onus of intent built upon real expenditure over the next three years, but also a commitment to the painful process of how we increase significantly the resources available from society to meet its needs in terms of more highly trained people going through our universities and extra numbers going into higher education. It should guarantee that quality education will continue to be provided at a level to which we are accustomed and that universities will continue—what we should all recognise, and I think we do in this House—the excellent job that they do.
Our universities' record of achievement is acknowledged by the financial settlement that we have put in place. Higher education has not done well from public funding in the recent past. Since 1997 we have invested more, but this settlement shows that we are very serious in our commitment to HE. We are reversing years of under-investment with an increase in funding for higher education that averages more than 6 per cent above inflation for the next three years. It means that every part of the university world will be able to plan for the next three years in confidence on the basis of a secure future funding scheme which is substantial and generous.
These extra resources will help our universities to begin to upgrade buildings, to recruit and retain the best academics and to improve and expand teaching and research. The settlement demonstrates our commitment to ensure that the standards of teaching and learning in our universities are high and continue to improve. Students are entitled to high-quality teaching and those who teach well —just as those who carry out high-class research—are entitled to have their success rewarded properly.
The debate today has been constructive. There have been indications that in certain areas we need to move as rapidly as possible in order to meet the needs of HE staff. I emphasise that at the highest level, as noble Lords have recognised, the Prime Minister identified the problems with HE salaries before Christmas. We now have put in place a funding strategy that gives the universities an opportunity to close those gaps. Rome was not built in a day. I do not need to tell a former Chancellor of the Exchequer that it takes time for public expenditure to go through the system and to work effectively.

299
As noble Lords have indicated, it is also the case— and the noble Lord will know —that the Treasury is a hard task master, and that the way in which moneys are spent is always under its watchful eye. I am sure that he will appreciate that in introducing the debate today he has given the Government the opportunity to place on the record the fact that he has identified a problem, which we fully recognise, and we intend to meet the challenge that lies ahead.
9.2 p.m.
Lord Lamont of Lerwick: My Lords, I thank the Minister for his reply and all noble Lords who have spoken in the debate. I am the only non-expert who has spoken. All speakers seem to have been former lecturers or lecturers, heads of colleges or heads of universities. But the consensus has been quite clear. I think that there is a degree of scepticism whether the problem really will be tackled, despite the settlement that has been made. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

Attention Deficit Disorders
9.3 p.m.
Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts rose to ask Her Majesty's Government what plans exist to reduce the impact of attention deficit disorder, attention deficit and hyperactivity disorder, and hypoglycaemia on social behaviour and academic performance.
The noble Lord said: My Lords, I am very pleased to have the chance this evening to draw the Government's attention to the problems faced by children and adults who suffer from attention deficit disorder and attention deficit and hyperactivity disorder, known as ADD and ADHD, and to ask the Government about their plans for tackling these problems.
ADD or ADHD are behavioural disorders characterised by persistent patterns of inattention, hyperactivity, impulsiveness and emotional instability. While the simple words "attention deficit" and "hyperactivity" explain the basic behaviour pattern they do not—indeed cannot—describe how a child with severe ADD/ADHD behaves.
One head teacher asked to describe an ADD child said:
"Short concentration span—and I mean short—seconds rather than minutes; an apparent inability to consider anyone besides himself; a determination to do exactly as he wants and a facility for creating continuous mayhem to draw attention to himself; an idea of what is funny that the other children outgrew in Reception class; there is no point in sanctions, punishment, exclusion because he seems unable to learn any lessons".
I became interested in the subject because I have a son—and boys are 10 times more likely to suffer from ADD/ADHT than girls—who was diagnosed as suffering from a mild form of ADHT. In consequence, he found it difficult to progress academically and to form friendships with his peers. His siblings—and, I fear to say, his parents—found his behaviour
300
unpredictable and uncomfortable. When we were told the diagnosis, we were given a piece of paper that described in the gloomiest of terms the prospects for ADD/ADHD children: more likely to leave school without qualifications; to become addicted to drugs; to be unemployed; to commit crime; and so on.
The solution normally proffered by the medical profession is that children should be given the drug Ritalin. Ritalin is a strong stimulant that helps to iron out the child's mood swings and helps him to concentrate. But, as your Lordships can imagine, parents think long and hard before putting their child on to a permanent daily dose of a stimulant similar to amphetamines. It would be helpful if the Minister could tell us whether there has been any study of the results of prolonged use of that drug.
Families with ADD/ADHD children need help. To get help, they need joined-up government across the Department of Health, the Department for Education and Skills and local social services. The key is early diagnosis, so that families, schools and, where appropriate, social services are aware of the condition. Taking medication can then become the norm. By contrast, children who are diagnosed later have probably already experienced several years of underachievement and failure and are more likely to be oppositional and unprepared to co-operate with medication, thus in many cases condemning themselves and their families to a living hell.
Although medication undoubtedly has an important part to play, it is not the only help for which parents may reach. Indeed, for some children it does not work at all; for others it may lose its effectiveness in their teenage years. Alternative approaches can be tried: for example, homeopathy, specialist exclusion diets, cranial osteopathy, megavitamin therapy, together with behaviour modification therapy, psychotherapy and others. We need to know more about their relative success and to inform parents, teachers and social workers about them.
Every effort needs to be made to destigmatise the condition. Sufferers from ADD/ADHD are not unemployable. Indeed, with the right help and support they are capable of, for example, the sustained, focused effort that characterises many successful entrepreneurs and businessmen.
We need to spread more awareness of the condition among the teaching profession. It is estimated that 90 per cent of teachers have had no special training on how to recognise the symptoms of ADD/ADHD.
Most importantly, we need immediately to begin a programme to build awareness among social workers. For the most part, they do not seem to appreciate the strain on a family living with a severely ADD/ADHD child. There is therefore little or no respite care. Rather, too many social workers have been inclined to see erratic behaviour by a child as evidence of child abuse. No one suggests that there is any malice in that; I am sure that everyone's intentions are good; but there is profound ignorance that we must tackle.
Some people have suggested that ADD/ADHD results from an inability of sugars to be broken down in certain parts of the brain. The behaviour patterns of an ADD/ADHD child certainly in some cases replicate in an extreme way the condition of a person suffering from hypoglycaemia. He becomes increasingly unreasonable as his sugar levels drop. Other ADD/ ADHD children react violently to drinks and food, such as Coca Cola and chocolate, containing high levels of sugar, which make them uncontrollably hyperactive. A study should therefore be made of ADD/ADHD in connection with hypoglycaemia and sugar levels in the body.
It must be admitted that a cost is involved in taking all the actions that I have mentioned, but a cost is also involved in not taking them—in family breakdown, truancy and erratic behaviour in school, unemployment and, I fear, in some cases, calls on the probation and prison services. In short, if we fail to act, we are condemning a large number of people to a life of chronic underachievement and unhappiness.
Anecdotal evidence suggests that the problem is increasing. I say anecdotal because it is not a notifiable condition; indeed, in many cases, it may never be diagnosed. Further, some of the increase may be precisely because people are more aware that the condition exists, but there has undoubtedly been a dramatic rise in the parallel neurological condition of autism. We know that from Scotland, where census data have enabled an accurate assessment to be made.
So why has there been that increase in those conditions and what can we do to reverse the trend?
It is unlikely that there is any one single cause. Genetics and heredity will probably be found to play a significant part. But what other factors are in play? One matter looks increasingly likely to be a significant contributory cause: the requirement in this country that every baby receives three injections in the first 16 weeks of life as immunisation against diphtheria, tetanus and whole cell pertussis—whooping cough, to laymen—(DTwP). As I understand it, each standard dose of the vaccine used in the UK contains 50 micrograms of a substance called thimerosal. Each dose of thimerosal contains 25 micrograms of ethylmercury. Mercury is a highly toxic substance. That means that, by the 16th week of life, every baby in this country, with an inevitably fragile immune and nervous system, has been injected with 75 micrograms of ethylmercury.
In reply to a Written Question that I submitted on the safety of the practice, the noble Lord, Lord Hunt of King's Heath, replied:
"In 2001, the Committee on Safety of Medicines (CSM) reviewed the available data … and advised that there is no evidence of harm caused by doses of thimerosal in vaccines … The Institute of Medicine (IOM) in the United States also published a detailed review of the evidence … in October 2001. The IOM findings were consistent with CSM conclusions".
That reply was, in the famous phrase, "economical with the actualite". The Institute of Medicine report actually states
302
"The Committee concludes that the evidence is inadequate to accept or reject a causal relationship between exposure to thimerosal from vaccines and the neurodevelopmental disorders of autism, ADHD, and speech or language delay",
but,
"the hypothesis is biologically plausible".
The Written Answer from the noble Lord, Lord Hunt, continued:
"In addition to the above studies, evidence from a recent study by M. Pichichero et al (published in the November 30 2002 Lancet) showed that giving vaccines containing thimerosal does not raise blood levels of mercury. The findings of this paper suggested that ethylmercury is rapidly eliminated from the blood after administration intra-muscularly".—[Official Report. 16/12/02; WA74.]
Again, I am afraid that the Written Answer was less than full-hearted. The department ought to be aware that Dr Pichichero, who, in any case, is an immunologist not a toxicologist, sampled the blood of only 33 children—too small a sample to catch a statistically significant number of children who would be allergic or hypersensitive. Furthermore, the issue is not whether undischarged mercury would be present in the blood but whether it would be retained in the brain. Dr Pichichero failed to check that. He also failed to carry out faecal tests, which is how most mercury would be discharged.
I know that the Government will probably tell us that the mercury in the thimerosal given to infants in this country does not exceed the "safety limits". However, what major studies have been carried out to demonstrate the proper safety limits for exposure to ethylmercury by small infants? What about the reactions in premature babies, whose developmental age is less than that of babies born at full term? What about the reactions of a baby who has suffered trauma at birth? What about those who have an allergic or hypersensitive reaction to mercury? The figure that has been suggested to me is 18 per cent of the whole.
In answer to another Written Question, I asked the noble Lord, Lord Hunt, what research had taken place into allergic reactions to thimerosal/mercury-based vaccines, especially among infants. The Minister's reply related to skin rashes and local swelling at the site of the injection. But what about the unseen reactions? Can the Minister and her department be certain that there is no possibility of neural damage in the brain or to the immune system? For example, studies were carried out on 900 children born in 1987 in the Faroe Islands whose mothers had eaten mercury-contaminated whale meat. They showed that subtle cognitive deficits, detectable by sophisticated neuropsychometric testing, were associated with methylmercury levels previously thought safe.
All of that can be debated, and no doubt the Minister's officials have prepared a polished brief containing an elegant rebuttal. However, it is incontrovertible that in July 1999 thimerosal was removed from all childhood vaccinations in the United States and Australia. Clearly, the authorities there felt uneasy.
I must make it clear that this is not an attack on immunisation. Immunisation is an important part of child healthcare. But it is a question of what goes into

303
the vaccines. Thimerosal is not an essential part of a vaccine; its function is as a preservative. There is a mercury-free vaccine licensed in this country under the name Infanrix DTaP. Although it is more expensive, that would be a small price to pay compared to the cost of a child with neurological damage.
Above all, parents have a right to be informed about the choice to be made. At present, parents who know that the more expensive DTaP vaccine exists can demand it from their local GP and be given it. However, it is a hidden choice. Most people know nothing about it and will not be told about it. Inadvertently, they will continue to permit their children to be injected with mercury-based vaccines. Parents are entitled to know the full facts and to be able to prevent their child taking unnecessary risks.
For the future, the only satisfactory answer is for the potential risk to be eliminated. I hope that, in her reply, the Minister will be bold enough to say that the UK will follow a long list of developed countries and remove thimerosal from vaccines forthwith. We owe it to the unhappy individuals who are, or families who have, an ADD, ADHD or autistic child to ensure that in the future children do not have to run this risk.
9.16 p.m.
Lord Astor of Hever: My Lords, I congratulate my noble friend Lord Hodgson of Astley Abbotts on introducing this important debate and setting out so clearly the problems faced by ADHD children, their parents and their siblings. My noble friend raised the important issue of mercury-based vaccines, and I look forward to the Minister's response. I declare an interest as the stepfather of a daughter with ADHD, and my wife is patron of ADDISS, the Attention Deficit Disorder Information and Support Service.
Unless one has lived with ADHD and inattentive, overactive and impulsive children, one has no idea of the tornado effect that it has on the entire family. Many families, particularly those with undiagnosed ADHD children, cannot grasp why they suffer. Often, such families are torn apart. That is made worse by the fact that ADHD is a hidden disability. People often judge first what they see as odd or naughty behaviour.
My noble friend rightly said that early diagnosis was the key, but recent surveys suggest that less than a quarter of children with hyperactivity are recognised as such. Barriers exist in recognition in primary care and in the provision of child and adolescent mental health services. Doctors, psychiatrists, mental health workers, social workers and teachers could prevent many problems from worsening but do not, mainly because they are not properly trained to understand ADHD or the early intervention strategies that could be put into place. In its guidance on ADHD, the National Institute for Clinical Excellence commented:
"Access to child and adolescent mental health services is variable, with long waiting times in some areas".
There are no departmentally endorsed models for diagnosing and treating ADHD. Why not?
304
When there is a lack of recognition and diagnosis, we end up with adults with non-productive lives. They suffer from low self-esteem, feel misunderstood or unlovable, think that they are stupid, lack confidence and have a propensity towards needing mental health services. There may also be substance abuse, career failure, costly mental health problems, crime and antisocial behaviour. Our prisons are full of ADHDers— up to 50 per cent, in some cases—at a huge cost to public funds. Many have no education and can never succeed or be re-educated, even in prison, because they still cannot read or write. When they are released, many relapse into crime because they have no skills or training other than a life of crime, drugs and depression.
We must improve our ability to recognise ADHD. We must also have better acknowledgement by doctors and mental health professionals of the growing concerns and problems related to ADHD. Health service provision is provided differently throughout Scotland, Ireland, England and Wales. Providers have in place their own guidelines. Within some authorities, referrals from a family GP to CAMHS will not be considered. How will the children's national service framework take into consideration ADHD and child mental health? Will it contain some guidance of a general nature on referral and assessment?
Many adolescents with ADHD, who receive special educational needs, are being permanently excluded from schools. Inclusion as a concept was a sound idea. However, it is impossible to implement the system without education and training for teachers and staff who have to cope on a realistic basis, day after day, with disruptive pupils. We need to design better institutes of education that offer education to anyone who has a different learning or behavioural style. We need to train our teachers in different teaching styles for people who learn differently. We have a tidal wave of behavioural problems in our classrooms. Disruptive behaviour wears down teachers and interferes with the education of non-ADHD pupils. And still we do not take on board the idea of learning difficulties, which seem to be multiplying.
Those who receive little or no education, due to exclusion, are being lost in the system, especially when involved with the criminal justice system. There, diagnosis of ADHD is not taken into consideration by youth offending teams and within young offenders' institutes. ADHD is not recognised as a disability by youth offending teams. When young people leave such an institute, they are in a very grey area. The transition from child mental health services into adult services is virtually non-existent for those not involved with the criminal justice system. For those who are involved, there is no transition into adult mental health services.
Adolescents with ADHD, who may be sentenced, do not receive the appropriate treatment or education they require. On release from a penal establishment, the special educational provision that they require is not being provided. Also required is some form of provision of health and education for these young persons on release from such establishments.

305
There needs to be a departmentally endorsed model in place for those young persons with mental health needs such as ADHD who, for whatever reason, have been sentenced. More training and closer inter-agency working and understanding between youth justice, local education authorities and health services is clearly needed, especially in the light of the health service's increasing involvement in the provision of prison health care services.
I turn finally to the treatment of ADHD. Are the Government satisfied with the implementation of NICE's recommendations on the treatment of ADHD? What do they intend to do to ensure that they are followed?
A new drug may be available as an alternative to Ritalin. Strattera, a non-stimulant, was approved for use in the United States last month. Results found it was as effective as Ritalin, but had fewer side effects. Can the Minister tell the House when Strattera might be available in this country?
9.25 p.m.
Lord Colwyn: My Lords, on behalf of the noble Earl, Lord Baldwin, I apologise for him not being here. I know that he was keen to take part in the debate. I met him briefly yesterday. He is en route to somewhere on the River Nile and regrets not being able to offer his experience to the House. He has spoken on this subject on many occasions and he is sorry to miss the debate.
Hyperactivity, attention deficit, hyperkinesis, minimal brain damage, minimal cerebral dysfunction, Attention Deficit—Hyperactivity Syndrome are all descriptions of one of the biggest growth areas in medicine, particularly in the United States, of the problem child—the child who cannot concentrate, cannot sit still, has difficulty eating and sleeping, cannot adapt to new situations, over-reacts to new stimuli and, through his unpredictable behaviour, makes life a hell on earth for family, teachers and everyone around him.
As my noble friend Lord Astor said, ADHD is not a true disease but a collection of symptoms and behaviours that are scored, and if a threshold score is reached or surpassed a diagnosis is applied. The popularity and increase in these diagnoses is concomitant to the approval by NICE of methylphenidate hydrochloride as the treatment of choice. These central nervous system stimulants, which are chemically close to cocaine and amphetamine, are potentially addictive and have the paradoxical effect of changing users into a calmed, soporific state.
A study in the New England Journal of Medicine of 8th April 1993 concluded that hyperactive children have something in their make-up—their genes—that causes them to have a generalised resistance to thyroid hormone. As early as 1973, the late American paediatrician and allergist, Ben Feingold, introduced the theory that foods containing salicylates, aspirin like substances such as artificial colours and flavours,
306
were mainly responsible for hyperactivity. He found that reducing a child's intake of sugar or artificial additives or locating possible allergies could help.
Although study after study backs Feingold's theories, many standard clinicians still label his approach a fad and are happier to reach for their prescription pad and sentence a small child to many years of stupefying, potentially addictive medication. The makers of Ritalin advise that the drug should be the last resort, but it now tends to be the treatment of choice. In my brief research for this debate, I have become aware of agencies and schools which will withdraw support for these children if drugs are not given. I believe that I am right in saying that, contrary to the principles of evidence-based medicine, the drug has never been tested on children. It should not be used on children under the age of six, but frequently is and is rarely monitored.
I shall be interested to hear whether the Minister has any information about the extent of the use of this drug in the UK. A study undertaken by researchers at Express Scripts Incorporated, a Missouri based pharmacy benefits management company, appearing in this month's issue of Pediatrics, reviewed prescription claims for 178,000 children throughout 1999 and found that about 4 per cent of prescriptions examined for children aged between five and 14 were for stimulants, including Ritalin. The lead researcher, Emily Cox, and her colleagues said that while they did not determine if higher prescription rates represented overuse or if lower rates represented underuse, "both may be occurring".
These variations should be examined,
"to reduce the risk to children from unnecessary drug therapy, as well as the negative health and emotional consequences to children with untreated medical conditions".
It is very important that food sensitivities and the effect of food additives are ruled out before drugs are even considered. A study in the Lancet in 1985 showed that 62 out of 76 overactive children—that is 82 per cent—treated with an elimination diet improved, and the behaviour of 21 became entirely normal. The most common offenders were invariably artificial colours and preservatives. These results have been replicated frequently.
Other foods can also provoke hyperactive symptoms—as can nutritional deficiencies. Dr Melvyn Werbach from the Los Angeles School of Medicine has studied the effect of nutrition on a variety of so-called mental illnesses, including childhood hyperactivity. One such trial suggested that the symptoms of some hyperactive children are due to a deficiency of brain serotonin. Giving such children Vitamin B6, which is required for the conversion of tryptophan to serotonin, has been shown to increase whole blood serotonin. Vitamin B6 can achieve better results than Ritolin without any of the serious side-effects, yet the Government recently tried to ban the nutrient or restrict its dosage to ineffective levels. The EU is now committed to severely restricting natural nutritional supplements, giving more power and control to the pharmaceutical industry to extend synthetic and artificial chemicalisation rather than

307
natural, unadulterated nutrients in foods. I know that the noble Lord, Lord Hunt, is sympathetic to concerns on this issue.
Hypoglycaemia is often associated with hyperactivity and ADHD. It is a principal element in pre-menstrual tension and may be a contributing factor in the increasing proportion of offending females. I have been in contact with Peter Bennett, whose work primarily focuses on offenders. He has recently routinely found that children and adults with behavioural problems have hypoglycaemic symptoms arising from mineral deficiencies. These are aggravated by inappropriate diet, eating disorders and substance abuse. For some people, even good foods can be harmful. Intolerance to a number of foods and chemicals is always found in those diagnosed as having ADHD or who are excluded from school and have special educational needs.
I should be interested to hear the Minister explain why there is rejection of most of these findings. The relationship between behaviour, whether at home or in an institution, and nutrition regularly appears in the media. There was an item about this on the "Today" programme on Monday; and my noble friend Lord Baldwin has frequently mentioned it in this House. Yet the obvious is ignored.
The solution to a child's problem or to an offender's behaviour may only be a matter of some careful detective work to locate the culprit.
Peter Bennett, who has wide experience of working with children and offenders both as a senior police officer and as a nutritionist, has repeatedly communicated with statutory agencies over the past 15 years, and has appeared in courts and at educational tribunals. He has invited agencies to participate in privately funded projects and, even after so-called commitment to partnership working by the agencies, has been routinely ignored and rejected without reason.
The Home Office seems to take this matter seriously. Ten years ago, under the guidance of my noble friend Lord Ferrers, it provided £5,000 for research into the extent of hyperactivity in persistent young offenders. I believe that it is now supporting plans to raise over £2 million for further research into the links between nutrition and behaviour. I should be grateful if the Minister would undertake to follow this latest trial—for 10 years ago the trial, which involved 100 young offenders compared with 100 matched non-offenders, showed that 75 per cent of the young offender population had hyperactivity and associated conditions including intolerance or allergies, mineral deficiencies and excess toxic heavy metals. The findings were published, but were seemingly totally ignored by the Home Office.
The modern medical approach to hyperactivity must realise that it does not stem from a single cause. Dr Sidney Baker, director of the Gesell Institute of Human Development in New Haven, Connecticut, emphasises that short attention spans and impulsive, restless behaviour are indicative of "individual chemical imbalance"—anything from nutritional
308
shortages to constant exposure to allergens or food additives, a situation often exacerbated by the typical American or British child's constant consumption of,
"altered, sweetened, fatty and refined foods".
I thank my noble friend Lord Hodgson for introducing this debate. I should apologise to him for not going down the thiomersal route, as a dentist trying hard not to use amalgam fillings but realising that there are some situations where they do have to be used.
I conclude with a brief mention of nutrition and the prison population. Historically there has been a recognised association between deleterious nutritional health of offenders and their offending behaviour. The Minister will be aware of the Aylesbury study, in which a group of 231 prisoners given nutritional supplements committed an average of 26.3 per cent fewer disciplinary offences compared with a placebo-based group.
There is no claim by researchers that malnutrition causes crime. What is being established beyond reasonable doubt is that prisoners have significant nutritional health problems compared with law abiders. Treatment with appropriate nutrients has a beneficial effect on the behavioural health of offenders. There is no harm from such treatment and little cost or resource implication. Indeed, there is potential for considerable savings in criminal justice and the cost of crime.
9.35 p.m.
Lord Lucas: My Lords, I am very grateful to my noble friend for giving us the opportunity to have this debate. There is no way that my speech will compare with the three previous ones. I have never sat in this House and listened to three opening speeches of such quality. I am totally in awe of them. Doubtless the Minister will surpass them, but I will have to wait for that.
I see something of ADHD in my business of running the Good Schools Guide. It is an extremely difficult condition for a school to deal with. Teachers are just not trained to deal with the level of disruptiveness from someone who has ADHD to any level. It is a quite exceptional school that has the support and understanding that enables it to welcome children with that condition. I can count 5 per cent of the schools that I know, which I would otherwise regard as good, which feel confident in dealing with ADHD.
I have known it in the children of my friends, and it is an extraordinary thing to live with a child who has it, even for a weekend—a human whirlwind who will not be controlled and cannot be directed is, at the same time, an absolutely wonderful and delightful child.
This is a condition that we have to get a grip of. It is difficult, because dealing with it stretches across so many departments of state. At a very early stage of their existence, the Government set out their principles of an evidence-based approach, as in NICE, which is a great progression in terms of its principle, and joined-up government. These are the two things that we need to consider in dealing with ADHD. When you

309
look at government as a totality and human beings as a totality, this is an expensive and difficult condition that requires a co-ordinated, long-term and thought-through response.
I think it was my noble friend Lord Astor who mentioned that there is a considerable problem with ADHD being misdiagnosed as child abuse. This is just a matter of training. The people who are making the diagnosis have to understand what ADHD is, but many of them refuse to recognise it as a diagnosis. If you have a kid with this condition and the reputation of the local social services is that it gets picked up as child abuse, you steer a million miles away from anything approaching the sources of help to which you should have access. Once you are in the maw of social services and they think it is child abuse, it is a horrific experience.
I can remember taking my daughter to hospital because she had stuffed a bean up her nose playing with a broken necklace. There was a quarter of an hour of quizzing as to whether she had stuffed the bean up her nose or I had. It is a frightening experience even at that level. If you have a child who is as clearly behaviourally difficult as an ADHD child, you want to know that if you take them to social services, the first question will be, "Has this child got ADHD?", rather than, "Is this child being abused?". We need that level of understanding in social services if parents are to get access to the help they need early enough.
Schools need to have access to the expertise on how to deal with these children in school, keeping them in school and controlling them. A lot of that is to do with having a resource in school—certainly in a larger school—such as somebody who knows the answer and can sit in class and help the teacher. You cannot teach these things in teacher training college—teachers pick them up with experience. If there is someone in the school who can come and sit with you and show you how little Jimmy can be made into a constructive member of the class, it is much easier for the teacher to deal with a child who otherwise will wind him up extremely fast and will be straight out in the corridor, off to the headmaster and, ideally, out of the school if the master has anything to do with it. That needs to be tackled at a basic level of a school's understanding. That means making sure that the training and understanding are there.
My noble friends have said that we need to look at the causes. They are multiple, but there are certainly common exacerbating factors. I have come across two or three such children in my life and it is clear that diet affected all of them in terms of the intensity of their systems. Different aspects of their diet were involved, but it was important that they kept to a certain pattern and when they did so they were much less uncontrolled than they were when they stepped over the boundary. Sugar is the one that I remember having a particular effect on a child. Just a spoonful of sugar makes the medicine go down, but my goodness it made the child go up like a balloon and it would take half an hour to come down off the high. In a school, with a drinks vending machine and with the sweets being about the
310
only edible thing in the tuck shop, it is very difficult to keep children who have even an element of that in their make-up under control.
As my noble friend Lord Colwyn and others have said, many of these kids end up in prison. There is very little understanding in the Prison Service of dyslexia, let alone ADHD. If you can start to tackle these things and get at them, you have an extremely receptive population, because by then they are grown up. They no longer have the uncertainties of being teenagers and having to go through all the changes of life. Underneath it, an awful lot of young offenders really want to become ordinary people. You can provide an enormous amount of motivation if you can show them the way, but you cannot begin to show a kid with dyslexia or ADHD the way unless you have first diagnosed and understood their condition and are tackling and getting at them in a way that they can appreciate and return. There is so much to be done on training and understanding. I hope the Government will set about that.
There is research to be done. As my noble friend Lord Colwyn said, it is expensive. A decent research study is bound to cost £2 million because you are following kids for a longish time. You need a large enough population. A couple of million pounds is about what it takes for a decent study.
There are people out there who have done little studies showing the way. There are people on the Internet making a great deal of money out of parents by selling cures. However, there does not seem to be any support from the Government in just monitoring the people who are doing the work. If the work is being done, you might as well monitor it and start to see whether there are ways of catching these kids early and curing them.
Suppression of the symptoms with a powerful drug cannot be the right answer. It is a wrong turning for medicine to think that you cure something by suppressing those sort of symptoms when you should first be looking to see if you can find a cure. There will be lots of people experimenting, because parents are desperate for it. They do not like the idea of sticking powerful drugs into their children all the time. All the Government need to do is watch what is going on and spend some money monitoring it to see which ones, on analysis, really turn out to be effective.
Curing 25 per cent of the kids is probably the best we are going to do because there is such a wide spectrum of causes. If we can find ways to do that in a pattern of children, we will make a lot of difference and will leave only the really difficult cases on the drugs that are necessary to suppress their symptoms.
I hope we get a positive response from the Minister. Taking a 10 or 20-year view, we can do a lot to make sure that this is much less of a problem for our children, for our schools and for our prisons.
9.44 p.m.
Lord Addington: My Lords, I thank the noble Lord, Lord Hodgson, for initiating this debate. I also congratulate him on providing an occasion when the

311
shade of blue on offer has been a very caring and thoughtful one. I should also point out, as my noble friend Lord Roper remarked to me, that we Peers who have lately taken a bit of a battering—those of us here by accident of birth—are in the majority for this debate.
We increasingly talk about a hidden disability or a disability spectrum in which certain similarities are shared. I am glad that the noble Lord, Lord Astor, is in the Chamber. When we last discussed autism, in admiration I teased him for championing the case for placing autism in the fabric of consciousness. Autism has indeed become the sexy and fashionable disability and people are opening their minds to it. However, I doubt whether the spectrum will ever extend to all such disorders. Someone with mild Asperger's, for example, might simply have a tendency to train spot. People such as the "Rain Man" may have a genius for mathematics or for drawing beautiful buildings. Such people may be regarded as cuddly and friendly. Others may think they are brilliant. Some used to say that all dyslexics were brilliant and geniuses. We have proved them wrong about that.
As the noble Lord, Lord Lucas, rightly said, only a very small number of schools can deal with pupils with attention deficit disorder and still give the other children in the class anything like the education they deserve. When dealing with students with special needs, schools must never forget that those without a disability have rights as well. It is a very difficult teaching and education issue.
As has been rightly said, it is often the prison system that finally deals with many of these problems. I have done a considerable amount of work with the Prison Service in relation to dyslexia and its diagnosis. I suspect that dyslexics stand a better chance of survival in prison than those with attention deficit and hyperactivity disorders because they are less likely to antagonise others. People with these disorders behave as they believe is normal, but such behaviour can antagonise everyone around them.
Children with these disorders may not have caring and supportive parents. As I have said at least a half dozen times in this Chamber, the disabled must choose their parents carefully. Disabled children with parents who are sufficiently informed and have sufficient time and money to support their child will stand an infinitely better chance of getting through life in reasonable shape than those without such a background. It has always been thus. The point is particularly true of children with hidden disabilities. It has to be made clear that these children are not simply being antagonistic. They have a problem that is not self-induced.
I suspect that to identify these children only once they reach the classroom will be too late, and organised, structured teaching and the pressure on them at that point will be far too great. We will have to rely primarily on social workers and the medical professions to identify these children unless it is done in reception classes. Special educational needs coordinators could be trained to do identification work.
312
However, the identification problem is always worse on the margins. It is just the reverse of battlefield medical techniques, by which the most extreme and difficult cases are dealt with first. We need work on the identification criteria.
This debate has concentrated on the chemical stimulants, whether naturally provided or artificially given, to treat this problem. I cannot help feeling that everyone holds the right opinion on this matter to some extent. However, I sound a note of caution. If Ritalin is the only show in town, let us not refuse it totally. If Ritalin makes someone's life bearable. that person should not refuse it. However, if a better drug becomes available, I say, "Get it quick". The long-term benefits of prescribing a more effective drug to which more people respond and which has fewer side effects will be massive. If a type of behaviour has been identified that can be treated with drugs, those drugs should be prescribed. Let us not worry whether the treatment comprises vitamin supplements or adapting someone's diet. We only get one shot at the matter.
Prisoners who suffer from the disorders we are discussing have been referred to. Some prisoners become calmer as a result of their problem being identified and treated. However, in my experience prisoners are at least 21 years of age before they calm down and become more accepting of the situation. Young offender institutions comprise the most fear-driven environment that anyone can imagine. When I worked in that field for a brief period, one or two old lags told me that they would rather serve three years in a prison than two years in a young offender institution. Young offender institutions are much more violent and unpleasant than prisons. Some adult prisoners will have had enough of being threatened, stabbed or attacked while they are asleep. I refer to the charming things that occur in prison. They may calm down as adult prisoners and be prepared to accept treatment. However, that is a case of the last chance saloon or of damage limitation. We must try to address the problem at an earlier stage.
Diet affects all of us. Some people discover that they have mild or serious allergies. I believe that there is an interrelation between diet and the disorders we are discussing. But to what extent does diet affect these disorders? I have learnt far more from listening to the debate than from reading the copious briefing notes that I received. I believe that there is a wide range of methods for dealing with these disorders. Some of the disorders may be related to non-tolerance of sugar, wheat or dairy products. Processed white flour does not affect that many people but strong rye bread does.
We must study the effect of chemical stimulants and ensure that people are aware of those studies. Everyone tends to turn to the product with which they are familiar. At present we are rather better informed with regard to psychological problems than we are with regard to physical problems in this field. I am sure that everyone with a disorder will have heard someone else say, "It is due to your background". I was told that I had developed dyslexia because for several years I was a member of a single parent family. I was told that

313
in the early 1970s. Everyone tends to "go back to nurse" with this problem. Psychological programming is far more ingrained than we care to admit.
The Government should devote a considerable amount of money to research in this field to get the right answers. However, we should not decree that because there may be a problem with one of the current solutions we should not use that solution. There is no point in starving today in the hope that one might get a meal tomorrow. We must address the problem now but we must also undertake long-term research. If we do so, we may not pick up such a large bill in the future in terms of the consequences of these disorders.
9.54 p.m.
Earl Howe: My Lords, as the quality of tonight's speeches has shown, my noble friend Lord Hodgson has done us a huge service in raising this seldom debated topic, for which I thank him. In a number of ways, tonight's debate has followed on rather neatly from the excellent one held in this Chamber last week and led by the noble Baroness, Lady Warnock, on the subject of special education. I commend her speech in particular to all noble Lords, because the worries that she voiced have a direct bearing on many of the concerns raised this evening.
If my noble friend has done nothing else today, he has certainly struck a blow for joined-up services. He is right in that the issue of ADD and the children affected by it straddles a host of policy areas, such as health, education and social services, to name the most obvious. He has of course done a great deal more. I do not propose to repeat his extremely interesting line of questioning about the aetiology of ADD and related conditions; I will simply say that from where I sit his ideas and hypotheses merit the most serious study. I hope that the Minister will take it on herself to pursue them through her department.
This week, I read a most persuasive paper recently published in the United States, which concludes that the likelihood of a causal relationship between mercury in vaccines and autism is very great. If that theory is borne out, it has the most profound implications. I wholly agree with my noble friend that a great deal more research is needed. It is interesting to see that, in the United States, the Centers for Disease Control and Prevention have recently Commissioned a major epidemiological study into ADD and ADHD, to be carried out by three universities. The aim of the studies is to improve our understanding of ADD in children, why and where it occurs and on what scale, and how best to treat it. All being well, the research should advance public health policy-making considerably. If the Minister would like details of that programme, I should be happy to supply it to her afterwards.
My main concern in the time available to me is to pick up some of the political themes that have emerged this evening. In contrast to my noble friend Lord Astor, I am very fortunate in having four normal, healthy children, none of whom have any sort of
314
learning difficulty. To prepare for the debate, I therefore had to do quite a bit of reading up about ADD and what it means. All speakers have emphasised what a devastating condition it is, but let us be clear: we are dealing with a condition, or rather a range of conditions, that can literally lay waste to young lives. Families are pulled apart. Unspeakable disruption is caused in school classrooms. In the worst cases, of which there are many, ADD and ADHD can lead to crime and mental illness in adult life. They are not conditions to be belittled or in any manner of speaking brushed aside.
Why is it that against that sort of background we in this country seem incapable of giving ADD and ADHD the attention and input that they deserve? Parents or healthcare professionals involved as advocates for the children will tell us that in many areas of the country it is like banging one's head against a brick wall to try to get schools and LEAs to acknowledge that a child who is aloof, unfocused, fidgety and who sometimes causes untold disruption in schools has something wrong with them. To suggest that that "something" not only needs treating, but requires special educational provision to be made is often the subject of huge confrontational argument, sometimes lasting years. Time was when local authorities regarded themselves as being in partnership with the ordinary citizen and the families that they were there to serve. How often does one see that concept articulated nowadays?
As the noble Baroness, Lady Warnock, observed last week, confrontational litigation and appeals tribunals are proliferating in the field of education. As she pointed out, the reason is that the issue rests more on affordability than on need. Appeals by parents of children with special educational needs are now increasing faster than at any time since 1997, a process that ironically is itself a huge consumer of resources. Those resources, it hardly needs me to say, would be much more profitably directed at the care and treatment of children. Sadly, I believe that there is strong resistance in the UK to acknowledging fully those disorders and the impairments that they bring.
That is not true of many professionals, who are leading the way in our understanding of ADD. It is now recognised that what many people previously thought were separate disorders actually interweave in various ways. In Sweden, researchers found that 87 per cent of children with ADHD had at least one other coexisting condition. It would be illuminating to conduct similar research here because the findings from Sweden have profound implications. If a child presents but does not conform totally to the criteria for a particular disorder because he or she displays miscellaneous other behavioural symptoms, one frequently gets confusion and an opportunity for LEAs to use that confusion to say that the child is not suffering from ADHD. In those situations, there is outright resistance to any special provision for the child and there is frequently the suggestion that the behaviour that the child displays is the fault of the parent. I shall return to that rather sinister theme in a moment.

315
The notion that a child may have several disorders running alongside one another has been powerfully explained by a British child psychologist, Lisa Blakemore-Brown. She used the metaphor of a tapestry to illustrate that a child may present with various threads of difficulty; for example, ADD combined with Aspergers, or ADHD with a language impairment. Those threads may appear to be the same as those in another child but each individual will have his own unique weave of problems. The key to helping a child is discovering what threads are there and how they are interwoven. I believe that Lisa Blakemore-Brown's book, Re-weaving the autistic tapestry, should be required reading in every LEA—and in the Department of Health. It is very persuasive.
That means that labels such as ADD or ADHD are often unhelpful. Children who straddle diagnostic categories have no single, readily identifiable label, which all too often means that they get no recognition and no help. Those are the children who become exceptionally vulnerable in our system. The kind of disorders that can present alongside ADHD include subtle language and social impairments, motor impairments, obsessive disorders, tics and dyslexia. The more tangled the tapestry, the less likely it is that its constituent parts will be recognised and the more likely it will be that a child will grow older with no support whatever.
Children with unmet meets either have to be coped with in school, as my noble friend Lord Astor said, or they are excluded when their behaviour becomes intolerable. If they stay in school, they are merely controlled and contained during the day. That is like keeping the lid on a pressure cooker. The pressure cooker explodes once the child is in the safe confines of home.
At every step of the way, an LEA can make life a nightmare for families. Parents battle sometimes for years to get recognition and often have to spend large sums of their own money trying to find out what is wrong with the child before being forced by the LEA to go to a tribunal. They spend more money on expensive legal advice. Even if the parents win a tribunal hearing, they may well find the LEA telling them that they need not think that they have won just because the decision has gone their way because it will be taking the whole matter to appeal in the High Court. That sort of bullying by LEAs is commonplace. If I ask the Minister for nothing else this evening, I ask the Government to confront these issues head on and to make it their business to find out the scale of resistance by LEAs and schools to the very idea of special educational needs. Does the Minister accept that if, for instance, a child's ADHD or autism is not understood or accepted, the imposition of punishments and zero-tolerance policies as a tactic to try to improve a child's behaviour is doomed to fail? Yet that kind of discipline is meted out to children whose ADHD has been clearly identified by psychologists but whom the school or the LEA steadfastly refuse to assess.
316
Listening to the concerns of parents and taking them seriously at an early stage is fundamental to providing the right type of help for children, but very often that simply does not happen. However, worse still, we are increasingly seeing in schools and local authorities a culture of blame against parents.
Underlying that is one of the most pernicious and ill-founded theories to have gained currency in childcare and social services over the past 10 to 15 years. The theory states that there are parents who induce or fabricate illnesses in their children in order to gain attention for themselves. The name given to it is Munchausen's syndrome by proxy, or factitious or induced illness—FII, as it is now known. It is a theory without science. There is no body of peer-reviewed research to underpin MSBP or FII. It rests instead on the assertions of its inventor and on a handful of case histories. When challenged to produce his research papers to justify his original findings, the inventor of MSBP stated, if you please, that he had destroyed them.
Yet that theory, which conjures up images of abusing, and potentially even homicidal, parents, is one that has been accepted at the highest levels in government without any caveats whatever. I do not doubt—how could I?—that dreadful and appalling cases of child abuse, and even the attempted murder of children, have been committed by some parents and carers. The case of Victoria Climbié brings home to us that abuse and murder of the most terrible kind is a very real fact of life.
That is not the issue here. My concern is that MSBP, or FII, has so deeply insinuated itself into the language and thinking of social services that it has become an all-purpose label for problem parents and children. A loving but apparently fussy mother, who, on behalf of her sick child, badgers a school or a GP to take her concerns seriously, can suddenly find herself accused of abuse. Once she has a label of MSBP pinned on her, it is very difficult to remove it. That type of case excites what is now an ingrained culture of suspicion in which the normal presumption of innocence disappears.
Last year, the Department of Health issued guidance on FII. Nowhere in that guidance is the possibility of error in diagnosing FII even alluded to. Yet there is a whole range of difficult-to-diagnose conditions in children—ADHD being one; Asperger's being another—where the symptoms are seized upon by adversarially minded social workers as a manifestation of abusive parenting.
Against that background, the official validation of MSBP and FII has come as manna from heaven to local authorities which look for ways to avoid making special educational provision for children. It gives an authority the excuse to say that the child is perfectly normal and that any behaviour he displays is the fault of the mother.
Despite the findings of the Griffiths inquiry, the Government have sadly failed to take that message on board and have instead allowed the proponents of MSBP to hijack the whole system. The Minister would

317
earn my eternal gratitude if she were to follow through those concerns in the Department of Health. The situation is a scandal.
As we have heard, much of the solution to these problems lies in better training for teachers, social workers and doctors. But, above all, it lies in listening to parents and in early intervention and treatment— the earlier the better. I hope that the debate tonight will take us a short way towards that goal.
10.10 p.m.
Baroness Andrews: My Lords, this has been an extraordinary debate. I am grateful to the noble Lord, Lord Hodgson of Astley Abbotts, for giving us the opportunity to explore an area of child behaviour which is complex and distressing. I do not think we have had the opportunity for a debate of this kind in your Lordships' House. I have been impressed by the evidence of research that needs to be done, and that research is being questioned and used in evidence in terms of practice. It has been a thoughtful debate, which has demonstrated the cross-disciplinary nature of this issue in terms of both psychiatric practice and policy.
With the leave of the House, I shall speak for 15 minutes rather than the 12 minutes I have been allocated. I shall reply to some of the issues raised but cannot reply to them all. I am well aware that extremely challenging and difficult questions have been raised. I shall do my best to ensure that noble Lords receive a written reply to questions which I am unable to answer tonight, which will be circulated.
The noble Lord, Lord Hodgson, identified the need for support for children with attention deficit and hyperactivity disorder (ADHD) and hypoglycaemia in terms of social behaviour and educational attainment. The language used in tonight's debate ranged from the academic to the intensely personal. We heard the description of children causing a human whirlwind; and of the graphic impact which children who are so disturbed have on their families, schools and ultimately the community, as the noble Lord, Lord Astor, explained in powerful detail, in terms of so many of them ending up in prison and youth offending situations. A range of issues have been debated, covering a range of departments. Most of my remarks will be concentrated on education. As the noble Lord, Lord Addington, stated, we have to start at the earliest stage of development. However, I shall also refer to what we are doing in terms of mental health policy and special needs.
It is extremely difficult for parents, teachers and social workers to deal with a condition which is complex; which traditionally and historically has been misunderstood; which has the confusion of a number of different symptoms and which involves overlapping conditions. It has been extremely easy to confuse the normal boisterous behaviour of children with a condition which is neurologically different, is much more serious and needs a very different prescription. That is part of the problem with which parents and
318
everyone involved in the diagnosis and response struggle on a day-to-day basis. We have to face the fact that these are complex situations.
When we admit that, we have to acknowledge that one of the key solutions must be the sharing of information between all the professionals involved. This is hardly a rare disorder. We know that approximately 5 per cent of all school-aged children suffer with some form of ADHD. That is a high figure. The study undertaken by the Office for National Statistics in 1999 estimated that about 1 per cent of children suffer from hyperkinetic disorder at the extreme end of this spectrum. We are conscious of the need to monitor that situation and keep that information up to date. That survey will be repeated in 2004 so that we shall have better evidence of numbers.
The noble Earl, Lord Howe, stressed the importance of parental understanding and referred to the burden of blame that is sometimes laid on parents because of the confusions caused. One optimistic and positive assessment has come from the framework of assessment for children in need, which clearly states that the importance of making a proper diagnosis is partly so that it will release parents from feeling that they are to blame and from other people assuming that they are to blame. At the highest order of policy making that is a statement in which we can take confidence.
The link between hypoglycaemia and children's behaviour has been mentioned. Hypoglycaemia is normally associated with diabetes, but can occur for other, more mundane reasons, related to an inadequate or unbalanced diet. It has been suggested that hypoglycaemia may be a significant factor in the causation of ADD and ADHD.
However, evidence that emerged in the 1980s, which supported the use of elimination diets in the treatment of ADHD, has not been sustained over time, but we know—and noble Lords have referred to many different aspects of the relationship between diet and behaviour—that children seem to react badly to certain types of food. Obviously parents pick that up and respond accordingly by withdrawing the food and so on. But research has discovered that special diets are of limited value. I say that because—having seen some of the weight of research in the field—we can produce research evidence to justify such a statement. I am happy to share it with the House.
I asked the Department of Health to show me some of the research or to list it. That was greeted by a rather loud laugh because one research review that was produced had at least 70 references. Paradoxically, we have so much research in this field—it is one of the most finely researched areas of child development— but we seem to have no universal understanding of its cause, although we now think that at the hyperkinetic end there is a genetic link.
I turn to diagnosis of children with the symptoms of hyperactivity, impulsiveness and inattention to detail and management of the condition. The noble Lord, Lord Lucas, described their impact on the classroom. It is devastating for a teacher with 30 children in the

319
class. The diagnosis depends on the symptoms being present before the age of seven, but it is more reliably made when zthat diagnosis can be tested both in the home and at school, so that one can see the persistent pattern of behaviour. Effective treatment must involve a full specialist assessment, which will form the basis of the treatment plan.
The treatment plan must involve the school. Specialist paediatricians and psychiatrists are increasingly involved. They can go into the school and suggest ways to manage the child in the classroom with, and sometimes without, additional classroom help. It can involve restructuring some of the ways that they are taught. I want to talk more about these 'ways of teaching that can be used when one is trying to manage—and I have a little experience of this—a difficult child in the classroom. All this can only take place—as the noble Earl, Lord Howe, sincerely said— where there is a genuinely joined-up approach.
These children often not only have attention deficit disorder but associated disorders regarding language, writing and reading ability. So they present a multi-dimensional problem. Parents need as much reliable information as possible. That is an absolute sine qua non. In fact, the Department of Health has helped that process. It has grant-aided the ADHD National Alliance, supported the Royal College of Psychiatrists, and a very helpful and clearly written fact sheet has been produced for general circulation.
In terms of the general treatment of medical needs, the key guidance on procedures and protocols was set out in 1996 in a document by the DfES and the Department of Health entitled Supporting Pupils With Medical Needs In School. That guidance includes advice for teachers on the recognition of the medical condition, the appropriate steps for teachers and school staff and individual healthcare plans. Teachers of pupils with medical needs require information, not only about the nature of the condition but on access to medication and what action to take in cases of emergency. That is obviously critical in the case of ADHD if a child has been prescribed Ritalin because he would be at the severe and specific end of the disorder. But the National Institute for Clinical Excellence states that it is best given as part of a comprehensive treatment. Its study in 2000 found the treatment to be very effective for more extreme cases. However, it also recommended that children receiving Ritalin should be regularly monitored.
Although the noble Lord, Lord Colwyn, did not put it in these terms, by implication he raised the issue of over-medication. NICE also estimated in 2000 that there were approximately 48,000 children in England and Wales who met the criteria for hyperkinetic disorder but who were not receiving treatment. So we may be under-medicating children who could benefit, but some practitioners may be more generous with their treatment. Since the NICE guidance was issued, there has been a modest increase in the number of prescriptions issued.
320
I can tell the noble Lord, Lord Astor, that the guidance is scheduled for review by NICE later this year. He asked when Strattera is likely to be available. I have no information about that, but will be happy to find out and write to him. Problems for schools occur when Ritalin is administered during the school day. Slow-release drugs, which are becoming available, will make it easier to treat that condition.
The partnership that must occur at classroom level is supported by the SEN code of practice. Noble Lords will know that we have spent hours debating the SEN code of practice during the past two years. It emphasises the critical role of parents and that there must be a partnership. Paragraph 7.60 of the code makes specific reference to the range of interventions for schools to use to support pupils who are hyperactive and lack concentration. The code of practice is regularly monitored by Ofsted; it represents a major step forward and ADHD will receive the greater profile that it deserves because of the code.
To backtrack to younger children—the noble Lord, Lord Addington, referred to the need for early intervention—the SEN code is underpinned by the £25 million package announced in 2001 to support SEN in the early years and provide additional training for those teachers and trainers who are involved with the youngest children. We are also funding a range of pilots that will test different models of joined-up practice across health and education which will have specific benefit for children who fall into that category. The early support pilot programme deals with children aged zero to two with a range of different abilities. There are 28 new projects that are testing means of getting information to parents, treatment and setting up general arrangements.
Most importantly, the first set of guidance promoting children's mental health in early years in school settings was published in June 2001. It is designed to help teachers working alongside mental health professionals to intervene effectively with children experiencing mental problems. The guidance contains a whole section on ADHD. I should be delighted to give noble Lords further information about that. Accompanying that was guidance on a series of snapshots or specific approaches to help primary school classrooms.
Supporting that, which concerns effective learning management, we have a range of behaviour strategies that fall under the banner of the National Behaviour Strategy under which new training materials and packages are being produced on behaviour and attendance. They will be available from 2003, supported by local best teams in education and training which are located in the areas with the highest street crime. Sixty LEAs will be involved in that. That is all coming together to produce a robust, innovative package of additional targeted help from which children with ADHD behavioural problems will benefit. We are spending £66 million on that.
Teacher training was raised. Young teachers and teachers in training obviously have to be able to manage and implement the SEN code and manage

321
behaviour in the classroom. The curriculum reinforces that. Extremely important questions were raised about the nature of social work and how its role will change. In response to the noble Lord, Lord Lucas, the reference to the framework for the assessment of children in need and their families highlights the need for social workers to consider underlying conditions such as ADHD when assessing children's needs. New social work training to be introduced in September 2003 will include elements covering child development, mental health and communication skills. The national service framework for children refers to the range of disabilities, including ADHD. The findings will be published shortly—this month.
Difficult questions on vaccination were raised. I wish to be very careful in what I say to the noble Lord, Lord Hodgson, who warned me of his question. I will say at this point that I have been unable to find any evidence to support his hypothesis. The Committee on Safety of Medicines has reviewed the available data relating to possible neurotoxicity and ethylmercury in vaccines, including attention deficit disorder. It has advised that there is no evidence of adverse neurological effects caused by the ethylmercury content of the vaccines. The view is supported by the World Health Organisation. The noble Lord raised a series of detailed questions following on from earlier parliamentary Questions. I do not want to confuse the
322
issue further. I would much prefer to write to him in response to his questions. I wish that I had more time—
Lord Hodgson of Astley Abbotts: My Lords, I understand that the questions are detailed, but they are very important. There is a great body of concern out there. In the noble Baroness's response, will her officials address why the United States and Australia have withdrawn thimerosal from the vaccines? Class actions are happening there on a vast scale, not without reason. There is concern there that cannot be brushed aside as was done slightly in some of the Answers that I have received.
Baroness Andrews: My Lords, I can give the noble Lord that assurance.
We are spending much more money. For the first time ever, we have a target for improving the mental health of children and adolescents. We are putting £140 million into that, which will be a great step forward. The grant circular has just gone out to local authorities. Viewed in conjunction with all the other measures that I outlined as regards education and special needs, we are not only giving AHDA a higher profile, we are well on the road to ensuring that we can deal with it more effectively on behalf of parents, children and society.
I am sorry that I do not have time to address the youth offending issues. I will write on behalf of the Home Office.
House adjourned at twenty-eight minutes past ten o' clock.