Lords Sitting of 19 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 Chelmsford.

Light Dues
Lord Geddes Lord Geddes asked Her Majesty's Government:
What is their policy regarding the abolition of light dues.
Lord McIntosh of Haringey: My Lords, we issued a consultation document entitled Light Dues Review: Meeting the Costs of Marine Aids to Navigation last summer seeking the views of the maritime industry on the structure of UK light dues. The issues raised in response to the consultation exercise are currently being considered and we plan to make a statement in the next few weeks. However, as we said in the review document,
"The Government does not believe that taxpayers generally should meet the cost of providing aids to navigation for shipping".
Lord Geddes: My Lords, while thanking the Minister for that reply, which does not surprise me, and ignoring for the moment the 1845 recommendation of the Select Committee in another place that,
"all expenses for the erection and maintenance of lighthouses be henceforth defrayed out of public revenue",
does the Minister consider it damaging to the UK economy to charge a tax on commercial shipping which does not apply to the UK's trading partners in the European Union other than Greece and Ireland? Given the benefit derived from the lighthouses of Ireland by all shipping going to and from EU ports in France, Belgium, the Netherlands and Germany, as well as the UK, would it not be more equitable for the expenditure of Irish Lights to be defrayed in whole or in part by the EU rather than, as at present, only by ships calling at English and Welsh ports?
Lord McIntosh of Haringey: My Lords, I am afraid that my research did not go back to 1845, but I am grateful for the history lesson. The noble Lord, Lord Geddes, makes an interesting suggestion about the EU defraying the costs. I do not think that that suggestion was made in the responses to the consultation. But, in so far as we are still considering the responses, I should like to feed the suggestion of the noble Lord, Lord Geddes, into the response process. As the noble Lord suggested by his first phrase, it has been mostly argued that the British taxpayer should pay the costs. I am not aware of any proposal that that should be a European Union responsibility.
Lord Campbell of Croy: My Lords, is the noble Lord aware that this tax falls very largely on British merchant shipping, which nowadays does not need lighthouses as other means of navigation such as satellites are used? As many vessels are exempted from paying, such as ferries, warships and tugs, are the Government considering a review of the situation?
Lord McIntosh of Haringey: My Lords, it was precisely the review of the situation to which I referred in my first Answer. The costs do not fall just on British merchant shipping; they fall on all ships entering British ports. It has usually been argued that that would result in ships not coming to British ports but going instead to continental ports, and that containers in particular would undergo transhipment. There does not seem to be any evidence that that has happened although we have had light dues in this country for many, many years.
Lord Bruce of Donington: My Lords, is the noble Lord aware that if it is proposed that these sums should be paid by the European Community, it is this country that will in fact pay?
Lord McIntosh of Haringey: My Lords, this country would certainly pay part of the sums as part of our contribution to European Union expenses. As I said, the suggestion of the noble Lord, Lord Geddes, is entirely new to me. I am not aware that it was made in the responses to the consultation document. The point made by the noble Lord, Lord Bruce, will have to be taken into consideration.
The Earl of Caithness: My Lords, does the noble Lord think that it is ethically right to impose a tax on a group of people for a service that they do not use in order to subsidise that same service for another group of people who do use it but do not pay anything?
Lord McIntosh of Haringey: My Lords, the tax, as the noble Earl calls the light dues, was in operation when he was a shipping Minister so he is very familiar with it. The tax, as he calls it, is imposed on those who use lighthouses, buoys and navigational aids for shipping. The noble Lord, Lord Campbell of Croy, reminded us of electronic means of navigation. A small part of the light dues is allocated to global positioning satellites, but it is rather a small part.
Lord MacKenzie of Culkein: My Lords, I declare a minor interest as a former lighthouse keeper. Does my noble friend the Minister agree that although there may be a case for reviewing the way in which light dues are applied to protect the commercial interests of British ports, there is no case for transferring the costs of British lighthouses and navigational aids to the taxpayer, and that the principle should be that the user pays? There should perhaps be a review of users to

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ensure that people who do not pay the costs at the moment do pay them. However, there is no case for transfer to the taxpayer, particularly as a great deal of the drive for that comes from foreign-flag shipping companies. I do not think it right that the taxpayer should pick up the tab for them.
Lord McIntosh of Haringey: My Lords, I entirely agree with my noble friend. I made that point clear in my Answer. Of course, we are prepared to look at different ways of making the charge. It is true that, for example, pleasure vessels do not pay the light dues. Nevertheless, the principle that the user should pay is fundamental.
Lord Glentoran: My Lords, I shall first confess an interest. I am a commissioner for the Irish Lighthouse Service, and have been for 18 years. Does the noble Lord agree that, in general, costs exclusive of lighthouse dues in the UK are considerably more expensive than many others in Europe? Does he also agree that that is very largely because the nations on mainland Europe tend to subsidise their ports, whereas ours are almost 100 per cent privately owned?
Lord McIntosh of Haringey: My Lords, it was the government supported by the noble Lord, Lord Glentoran, who were so keen to privatise ports, so perhaps he should take responsibility for that. I do not agree with him. There is no clear evidence that other ports in Europe are less expensive than in this country. We have to take into account, for example, charges for pilotage if we are to make a full comparison.
Incidentally, what sort of a House is this that has a commissioner and a lighthouse keeper among its Members?
Lord Burnham: My Lords—
Lord Greenway: My Lords—
Noble Lords: Cross Bench!
The Minister for Trade (Baroness Symons of Vernham Dean): My Lords, the Cross-Benchers have not yet spoken.
Lord Greenway: My Lords, have Her Majesty's Government had any success in persuading our EU neighbours to adopt a "user pays" policy on the matter?
Lord McIntosh of Haringey: My Lords, a lot of countries adopt a "user pays" policy. I do not have the statistics in front of me, but it is quite common outside Europe. It is a matter for individual member states rather than for EU policy.

President Mbeki: Chequers Meeting
2.45 p.m.
Lord Blaker Lord Blaker asked Her Majesty's Government:
What was the result of the Prime Minister's recent meeting with President Thabo Mbeki of South Africa so far as it concerned Zimbabwe.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos): My Lords, the Prime Minister met President Mbeki at Chequers on 1st February. They discussed a wide range of issues, including Zimbabwe. We shared our views of the problems facing the country. President Mbeki said that his government are engaged in dialogue with the Government of Zimbabwe to address the difficulties there. The Prime Minister made the UK's position clear—that we want to see a return to good governance in Zimbabwe, including respect for democracy, human rights and the rule of law.
Lord Blaker: My Lords, I am grateful for that reply. Has not the abuse of human rights in Zimbabwe worsened since it was suspended from the councils of the Commonwealth in March last year? President Mbeki and President Obasanjo of Nigeria are two of the members of the troika, with the Prime Minister of Australia. Is it true that they do not wish to meet the Prime Minister of Australia and wish the suspension to be removed?
Is the noble Baroness aware that Mr Mbeki is reported as having recently told The Times that:
"African countries … should be left to deal with human rights issues in their own way"?
Will the Government make it perfectly clear to every member of the Commonwealth that, in their opinion, it is not solely for the African countries to deal with abuse of human rights when the principles of the Commonwealth are themselves abused, but for every Commonwealth country?
Baroness Amos: My Lords, the Government's position on the matter is quite clear and known by all Commonwealth countries. We firmly uphold the Harare principles. I agree that the human rights and humanitarian situation is worse this year than last year, and that Zimbabwe does not live up to the Harare principles. However, the matter is for the troika. I understand that the Commonwealth Secretary-General will review the situation in Zimbabwe and make a report to the troika. Even if the members of the troika do not meet, they will have to make a recommendation to the Commonwealth Heads of Government, who mandated them in that regard.
Lord Hughes of Woodside: My Lords, will my noble friend clarify that latter point? If the troika does not meet or make a recommendation, will the suspension

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be automatically lifted, or does there have to be a positive vote by Commonwealth countries in order to lift the suspension?
Baroness Amos: My Lords, we have not yet had a view on the matter from the Commonwealth Secretary-General, although my understanding from the Marlborough House declaration of last year is that the lifting of a suspension would not be automatic. Indeed, my view is that the status quo would prevail until the Commonwealth Heads of Government Meeting in Nigeria in December. We will have to wait and sec what the Commonwealth Secretary-General recommends to the troika and the outcome of that discussion.
Lord Avebury: My Lords, did the Prime Minister raise with President Mbeki the possibility of improving the flow of information to Commonwealth member states, in view of the fact that there seems to be a widespread lack of understanding of the worsening situation referred to by the noble Lord, Lord Blaker? That is particularly important in a week during which five opposition MPs and a judge were arrested for no reason at all. Will the Government discuss with the Commonwealth Secretary-General how all the information about the human rights violations can be collected and disseminated, possibly using the Secretary-General's website?
Baroness Amos: My Lords, I am not aware whether that specific point was raised in the discussion between the Prime Minister and President Mbeki. However, I can assure the noble Lord, Lord Avebury, that we regularly pass to our Commonwealth colleagues information that we have at our disposal not only about the deteriorating humanitarian situation but also about abuses of human rights. The noble Lord has raised on previous occasions the question of the Commonwealth Secretariat playing a more central role. As I have said previously, the Commonwealth Secretary-General will carry out a review of the Marlborough House declaration to put to the troika, and I shall raise with him again the possibility of the Secretariat acting in a more central role in respect of the flow of information.
Baroness Park of Monmouth: My Lords, I believe the Minister will remember that last November she told the House that the UN report on the pillage of the Congo by Zimbabwe would be sent to the Commonwealth. She also told us that the Government were already producing short information papers. Can she clarify whether the Government are sending those papers directly to the individual countries or whether they are being sent through the Commonwealth Secretariat, which is not quite the same thing?
As Zimbabwe is unable to speak for itself, can the Minister also say whether anything is being done to ensure that the whole Commonwealth sees, for example, Mr Fergal Keane's film about what is happening inside the country? Will the film shown last week, bravely filmed within the country by
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Zimbabweans themselves, also be shown? I cannot help feeling that a great deal of this information is ending up in pigeon-holes in the Commonwealth Secretariat office and is not reaching the countries themselves. It seems to me that that is the very least we can do for a country which is unable to speak for itself.
Baroness Amos: My Lords, I can confirm that the papers that we have produced are being sent directly to individual countries. I am unable to answer the noble Baroness's question about the UN report and the films that she mentioned. If she will allow me, I shall write to her and place a copy of the letter in the Library.
Lord Howell of Guildford: My Lords, was the question of extending and toughening the travel ban on Zimbabwe's leaders discussed at the Prime Minister's meeting? In that context, does the noble Baroness agree that it is a pity that the legitimacy of Mr Mugabe, who came to power on a massive voting fraud, is being greatly enhanced today by his welcome at the Elysée Palace?
Baroness Amos: My Lords, I believe the whole House is aware that it was our strong view that Mugabe should not travel to Paris. Last week, the continuation of the travel ban, the assets freeze and the arms embargo was agreed by the European Union. That remains the position.

Isle of Wight: Emergency Surgery Facilities
2.52 p.m.
Earl Howe Earl Howe asked Her Majesty's Government:
Whether they will confirm that emergency surgery facilities will remain on the Isle of Wight to support a consultant-led accident and emergency service, together with maternity and paediatric services.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, the future of services on the Isle of Wight is currently under discussion in the local process called "Healthfit", which embraces the development and shape of services in the whole of Hampshire. No firm decisions have yet been taken.
Earl Howe: My Lords, I thank the Minister for that reply. Is he aware of the enormous anxiety on the Isle of Wight that accident and emergency services at St Mary's Hospital may be withdrawn? The strategic health authority has not felt able to give any kind of guarantee about the future of emergency surgery facilities there. Is the Minister aware that, without emergency surgery, a full A&E service could not be delivered and that that would have serious implications for the population of the island, which numbered some 300,000 people during the summer?
Lord Hunt of Kings Heath: My Lords, I am aware of the anxieties being expressed. However, I hasten to add that this is the first stage of a process which will take some time. Consultation will take place over the next few weeks and months, and these matters will have to be considered by the people who make the decisions at the local level. However, on 28th January the chairman of the strategic health authority wrote to the local media saying:
"I cannot envisage the closure of accident and emergency services at St Mary's. The bulk of accident and emergency services will always need to be provided from local facilities, because of the need for urgent access".
He went on to say:
"It is worth clarifying that the section of the document"—
that is, the "Healthfit" document—
"referring to emergency care relates specifically to services for the most serious accidents and the most complex emergency surgery".
Lord Burnham: My Lords, I declare an interest as one who, in the middle of the night, was taken by ambulance to St Mary's Hospital in Newport. Is the Minister aware of the excellence of that hospital? Is he also aware that there is an awful lot of wet stuff between Newport and Southampton if it should prove necessary to take a patient from the Isle of Wight to Hampshire?
Lord Hunt of Kings Heath: My Lords, I was aware of the sea; I was not aware that the noble Lord had taken advantage of the excellent services provided by St Mary's Hospital. Of course, I take the point that the noble Lord makes. At present, in many serious cases where patients need to be moved to highly specialist services—probably in Hampshire—many would be seen and stabilised first within the local hospital. All those factors will need to be taken into account when the strategic health authority comes to make decisions. However, the time for decision-making is some way off.
Lord Oakeshott of Seagrove Bay: My Lords, does the Minister accept that we are not talking about specialised cases being moved on later? Does he accept, and will he tell the chairman of the strategic health authority, that the mainland is simply not an option if a person has an accident or a heart attack on the Isle of Wight?
As my noble friend pointed out, if an ambulance is called to Freshwater or Ventnor, it takes half an hour to reach the ferry. Storms in the Solent often mean that helicopters cannot fly. Only the car ferry is available, and that takes 45 minutes. There is an hour between sailings in the winter and two hours between sailings during the night in the summer. Therefore, it can easily take more than three hours to reach a hospital in Portsmouth or Southampton.
Can the Minister give an assurance not that the bulk of cover will be maintained—a matter causing great concern on the Isle of Wight—but that accident and
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emergency cover will never be cut to the standards which are more appropriate for a remote desert island than for 130,000 people living in southern England?
Lord Hunt of Kings Heath: My Lords, I am learning more than ever about the Isle of Wight and its geography. I understand the point that the noble Lord makes. But, ultimately, such decisions need to be made at the local level. The process being followed by the strategic health authority is, first, to gather together a group of professionals in order to map out an outline philosophy which will guide the process and, then, to consult informally many organisations and people within the whole of Hampshire and the Isle of Wight. All those factors will need to be considered. Of course, I understand the geographical constraints. That is why the chair of the strategic health authority wrote in the terms that he did. As I said, under current practice, many patients will go first to St Mary's Hospital for stabilisation and care and will then be transferred to more specialist centres on the mainland where appropriate. I believe that that will always be a factor in terms of the services provided within the Isle of Wight.
Baroness Blatch: My Lords, I declare an interest in that my husband comes from the Isle of Wight and many members of our family still live there. Therefore, we know the hospital in question very well. Is the noble Lord at least sympathetic to the notion that these considerations should not even form part of the review? For example, if it is not possible to perform an emergency caesarean section, a mother will have to leave the Isle of Wight about a fortnight before the baby is due because such complicated surgery cannot be carried out for the reasons that have already been given. But it is not unknown for helicopter flights to be cancelled and the frequency of sailings is such that sometimes even the boats are cancelled. Therefore, this issue should not even be part of the review process.
Lord Hunt of Kings Heath: My Lords, the local health service is engaged in the very early stages of the process. I believe that, instead of trying to micro-manage the local health service, it is better to allow it to take forward those discussions. The driver of change in the whole of Hampshire and the Isle of Wight is to ensure that the services are as effective as possible. I would not discourage strategic health authorities from taking on that responsibility.
I have said that I understand the geographical factors that make it important that the local services available on the island can deal with the cases that noble Lords have mentioned. I have also clearly stated that those factors will need to be taken fully into account by the strategic health authority, which has yet to make any decisions on this matter.
Baroness Gardner of Parkes: My Lords, following the comment by my noble friend Lady Blatch, and in view of the Minister's own statement that he fully understands the need for an emergency service, is he not able to confirm that it was unnecessary for this

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item to have been included in the consultation document? It should have been outside the consultation document, in which case the chairman of the strategic health authority would have had no cause to write to the newspaper to clarify the matter.
Lord Hunt of Kings Heath: My Lords, I could not disagree more. For the strategic health authority to say, "We will have a fundamental review of the way services will be delivered in Hampshire and the lisle of Wight except that as far as the Isle of Wight is concerned what is provided now will be set in stone for ever", would be irresponsible. Of course it has to consider the services provided across the whole of the county.
It is worth making the point that while referring to how to deal with highly specialist services, the outline document, which has already been published, also refers to how to expand primary care services and how to give greater access to local people. Surely, we should have confidence in the process. We should allow the discussions to take place, the strategic health authority to come to a view, and the formal consultation process to take place. We must hear in mind the statement made by the chairman of the strategic health authority, which I read to the House, which makes clear that A&E services will continue to be provided at St Mary's.

EU and NATO: UK Policy
3.2 p.m.
Lord Howell of Guildford Lord Howell of Guildford asked Her Majesty's Government:
What is now their policy on relations between the European Union and NATO.
Baroness Symons of Vernham Dean: My Lords, the Government welcome the strategic partnership in crisis management agreed by the EU and NATO. In particular, we welcome the comprehensive agreement that NATO and the EU reached in December 2002 to implement a European Security and Defence Policy based on NATO support. The EU and NATO are now finalising the detailed arrangements to give effect to that agreement.
Lord Howell of Guildford: My Lords, I am grateful to the Minister for that Answer. However, it is regrettable that your Lordships did not have the opportunity of a proper Statement yesterday on the dramatic events over the weekend, both in NATO and the European Union.
Clearly, it is pointless and unconstructive to demonise France and Germany. However, does the noble Baroness agree that it is refreshing to hear from the smaller countries of central Europe, and indeed, some larger countries, a different European voice which, as the Prime Minister rightly said, has just as much right to speak for the future of Europe as our
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large neighbouring countries? Will she encourage the Prime Minister to continue giving constructive support for this "other Europe", as he has done so far?
Will she also bear in mind that it is those countries that in many cases have just won back their independence after years of slavery which will not only resist anti-Americanism but will resist attempts to centralise power too much in the European Union and will rightly want to see their own independence properly protected? They will also resist the tendency of those in Berlin, Paris and sometimes London, to press for a super power status for Europe, which they do not like.
Baroness Symons of Vernham Dean: My Lords, not surprisingly, I have one point of agreement and one of disagreement with the noble Lord. We did, indeed, have an interesting argument yesterday, put forward cogently by the noble Baroness, Lady Williams, about the role of this House as an appropriate place to hold the executive to account when another place is in recess. That is an interesting point. However, I do not think that it can be elevated into the constitutional dilemma which seemed to grip some of your Lordships. I am hound to say that on this side of the House I believe that we have made rather a good job of being held to account on the issues concerned.
As regards the accession countries, I agree with the noble Lord. It is, indeed, refreshing to hear what they have to say. They have a real sense of history of conflict which in many ways is more recent than ours and possibly more recent than our friends in France. They have as much right to speak on these issues as Britain or France.
Lord Burnham: My Lords, in the cur rent circumstances, what has happened to the European Union rapid reaction force?
Baroness Symons of Vernham Dean: My Lords, the planning for the European Union rapid reaction force is taking place within the context of the Berlin Plus agreement. As the noble Lord will know, there is assured EU access to NATO for operational planning and the prospect of EU access to NATO military capabilities and common assets including, among other things, NATO's European command operations and the facilities of DSACEUR. The next step is to set out the detailed arrangements about how it will work. As I indicated in my Answer, those arrangements are well under way and we hope that they will be finalised by the end of this month.
Lord Wallace of Saltaire: My Lords, does the Minister recall that it has been the policy of successive American administrations since those of Presidents Eisenhower and Kennedy that after the recovery of Western Europe there should be an Atlantic

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community based on two pillars—European and North American—and that Britain should be firmly embedded in the European pillar? That is what I understand the December 2002 agreement to have restated. Is that still the policy of Her Majesty's Government?
Baroness Symons of Vernham Dean: My Lords, do not let us misunderstand each other on that important point. The fact is that there are some operations which are right to be undertaken under the auspices of the ESDP and some under the auspices of NATO. The two organisations or the two ways in which we can deal with this issue are not rival but complementary. They simply offer a different approach to crisis management depending on which countries are to be engaged. As your Lordships know, ESDP deals with crisis management and will be used only when NATO as a whole is not engaged.
Baroness Strange: My Lords, without wanting to hold my noble friend to account—like all noble Lords I believe that she is absolutely lovely—does she agree that we have two Houses of Parliament; that this House is one of them; that we are currently sitting; that we have the Lord Chancellor of Great Britain sitting on the Woolsack and the Clerk of the Parliaments sitting at the Table now?
Baroness Symons of Vernham Dean: My Lords, I have never shown any reluctance to be held to account in your Lordships' House and I do not do so today. Yesterday the noble Baroness, Lady Williams, raised the question of what should happen about holding the executive to account when another place is in recess. My point is that this is an interesting constitutional dilemma but it cannot be elevated into a general assault on the Government's willingness to keep Parliament informed and to hold ourselves to account. On those points I believe there is no doubt whatever that the Government have done a first-class job.
Lord Clark of Windermere: My Lords, now that the defence planning committee of NATO has reached an accommodation with Turkey for its application under Article 4 for defence planning, does the Minister agree that it is time for us to put that very damaging and regrettable incident behind us? Can she confirm to the House that all 19 members of NATO have confirmed that Article 5, which is the right to aid from all the other 18 states in the face of attack, is sacrosanct?
Baroness Symons of Vernham Dean: My Lords, I believe that that matter is now firmly behind us. The NATO decision taken on 16th February states that the DPC,
"notes that all Allies have reaffirmed their determination to fulfil all of their obligations deriving from the spirit and the letter of the North Atlantic Treaty towards Turkey".

Declaration of War: Parliamentary Approval
3.9 p.m.
Lord Hooson Lord Hooson asked Her Majesty's Government:
Whether it would be constitutional and lawful for a declaration of war to be made by the United Kingdom without the prior approval of Parliament.
The Attorney-General (Lord Goldsmith): My Lords, it is well established that the conduct of foreign affairs and defence policy are matters that fall within the Royal prerogative. It would, therefore, be lawful and constitutional for the Government, in exercising the Royal prerogative, to make a declaration of war or to engage United Kingdom forces in military action without the prior approval of Parliament.
However, as my right honourable friend the Prime Minister has made clear—notably when he appeared before the Liaison Committee on 21st January of this year—in the event that military action is taken, Parliament will be consulted. He made clear that Parliament should be given the opportunity to express its view and that in any event there will be a vote in the House of Commons.
My right honourable friend was not able, for reasons which are entirely understandable, to undertake to guarantee that in all sets of circumstances the vote would take place before action is taken. None the less, I hope that the House will find, as I do, much comfort in what he said. He will be making a Statement on Iraq in another place on 24th February and a further debate on Iraq is scheduled in this House for 26th February.
Lord Hooson: My Lords, I thank the noble and learned Lord for that reply, which was rather a relief to hear. Does he agree that Royal prerogatives are archaic? They belong to an era when there was an absolute monarchy and depended on the doctrine of the divine right of kings. In the modern age, is it not absolutely essential—in the unhappy event of a declaration of war being required—that the democratic legitimacy for that declaration can come only from a decision of the Prime Minister in Parliament, which is approved by Parliament? Does he give an undertaking on behalf of the Government that if that situation arises not only will the Prime Minister consult Parliament but also that he will be bound by its approval?
Lord Goldsmith: My Lords, the Statements of my right honourable friend the Prime Minister, to which I have already referred, make clear that in the event of the United Kingdom taking military action there will be a vote in the House of Commons. He has also underlined the importance of government having the support of Parliament in going to war. I repeat the caveat that he cannot promise that in all sets of circumstances that can necessarily be done before action is taken. So having the support of Parliament is a matter of political practice. There has already, noble

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Lords will agree, been a great deal of consultation with Parliament in the debates, Statements and Questions which have taken place in this House and in another place.
The legal position is also clear. The decision to use military force is, and remains, a decision within the Royal prerogative and as such does not, as a matter of law or constitutionality, require the prior approval of Parliament.
The Earl of Onslow: My Lords, is it not a fact that without the approval of the House of Commons to grant supply, the Royal prerogative cannot apply? Does the noble and learned Lord foresee the possibility of the totally joyous outcome of a large chunk of Labour Members of Parliament voting against the Prime Minister and his being supported in his office by the votes of the Tory Party opposite? That would be Parliament functioning at its absolute best and most appropriate in making sure that the Royal prerogative, when used, has the supply it requires.
Lord Goldsmith: My Lords, I start by making plain that I disagree absolutely with the noble Earl about such an outcome being a joyous event. I cannot for the life of me imagine why anyone would think that it would be a joyous event.
My right honourable friend the Prime Minister—I hope all Members of the House agree—has worked extremely hard in order to solve a very important international situation. So far as concerns the question of Estimates, of course it is right that all departmental expenditure needs the approval of Parliament in accordance with approved parliamentary estimates. In the event of any expenditure incurred by the Ministry of Defence exceeding its Estimates, obviously parliamentary approval would be needed. That is not the situation we are in at the moment at all.
Lord Craig of Radley: My Lords, is not a declaration of war a very significant event? In fact it has not occurred for many years. Perhaps the noble and learned Lord could remind the House when war was last declared by any government in this country.
Lord Goldsmith: My Lords, the noble and gallant Lord is absolutely right. The last time there was a declaration of war was in 1939. It is not necessary to make a declaration of war these days. Since then, we have been involved in a number of armed conflicts. The existence or not of a legal state of war is nowadays irrelevant for most purposes of international law. The application of what used to be called "the law of war" and the status of prisoners of war depends upon the existence of an armed conflict, which is a factual situation and not a question of a declaration of a state of war. Whether there is a state of war might still be relevant for certain purposes of domestic law; for example, as regards the application of certain private contracts referring to war. Apart from that, the noble and gallant Lord is right: a formal declaration of war is not necessary.
The Lord Bishop of Chelmsford: My Lords, does the Minister agree that, in the words of the Pope:
"War … is always a defeat for humanity"?
Lord Goldsmith: My Lords, the position has been discussed in this House and in another place on many occasions. As the EU extraordinary meeting on Monday concluded, war is a last resort. But, inspections cannot continue indefinitely. Iraq has a final opportunity to resolve the crisis peacefully and in the words of those conclusions:
"The Iraqi regime alone will be responsible for the consequences if it continues to flout the will of the international community and does not take this last chance",
which, by unanimous resolution of the Security Council, it was given in November last year.
Lord Wallace of Saltaire: My Lords, does the Minister accept that the extensive use of the Royal prerogative, which continues across a range of government provisions, makes the case for continuing a programme of constitutional reform rather than abandoning the programme to which the Labour Government were committed in 1997, which they now appear to have exhausted?
Lord Goldsmith: My Lords, the noble Lord raises a much wider question than that which I have conic to answer. So far as concerns the specific application of the Royal prerogative, to which the Question of the noble Lord, Lord Hooson, related, I hope that the Answer I have given is both clear and, by referring to the unequivocal Statements of the Prime Minister, gives much comfort to Members of this House and to others as to the importance attached to Parliament.

Water Bill [H.L.]
3.17 p.m.
Baroness Farrington of Ribbleton: My Lords, on behalf of my noble friend Lord Whitty, I beg to introduce a Bill to amend the Water Resources Act 1991 and the Water Industry Act 1991; to make provision with respect to compensation under Section 61 of the Water Resources Act 1991; to provide for the establishment and functions of the Water Services Regulation Authority and the Consumer Council for Water, and for the abolition of the office of Director-General of Water Services; to make provision in connection with land drainage and flood defence; to amend the Reservoirs Act 1975; to make provision about contaminated land so far as it relates to the pollution of controlled waters; to confer on the Coal Authority functions in relation to the discharge of water from coal mines; to extend the functions of the Environment Agency in relation to the Rivers Esk, Sark and Tweed and their tributaries so far as they are in England; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Baroness Farrington of Ribbleton.)
On Question, Bill read a first time, and to be printed.

Business of the House: Standing Order 47
3.19 p.m.
Baroness Symons of Vernham Dean: My Lords, on behalf of my noble and learned friend the Lord Privy Seal, I beg to move the Motion standing in his name on the Order Paper.
Moved, That Standing Order 47 (No two stages of a Bill to be taken on one day) be dispensed with on Tuesday next for the purpose of taking the Income Tax (Earnings and Pensions) Bill through all its remaining stages that day.—(Baroness Symons of Vernham Dean.)
On Question, Motion agreed to.

Export of Works of Art
3.20 p.m.
Lord Strabolgi Lord Strabolgi rose to call attention to the 48th Report of the Reviewing Committee on the Export of Works of Art 2001–2002 (Cm 5662); and to move for Papers.
The noble Lord said: My Lords, I am glad to initiate this debate and I suggest that it is particularly apposite as this is the 50th year of the reviewing committee, which was set up following the Waverley report on the flow of works of art abroad. The criteria under which the committee works have stood the test of time. There are some who want a complete embargo on the export of all art works, but that would surely be unfair to owners if a world price could not be established. Our system, whereby a temporary deferral is placed on the work in question to enable us to find the funds to match the auction price, is the best. If funds are not forthcoming after a few months, the deferral is lifted and the work goes overseas.
A great many works of art have been retained by that method. Those have mostly been the lower-priced items, which are nevertheless an important part of our national heritage. The problem arises, and has become particularly acute recently, with the more expensive items—those worth more than £1 million. The value of major masterpieces has risen to astronomical levels in recent years. Indeed, the director of the National Art Collections Fund has said that we may soon expect the first £100 million painting. That makes for a difficult situation, especially if the item is part of our historic heritage.
The Government have done something to ease the situation. The Treasury has agreed that the total amount allocated for the acceptance of art works against tax—known as the "in lieu" system—can be raised to £20 million in any one financial year. By that method, the National Gallery was able to acquire the charming little Cimabue that had recently been identified in a house in Suffolk. It is the first Cimabue to enter the collection and fills an important gap.
On the other hand, the funds made available to the Heritage Lottery Fund have been reduced by other calls being made on lottery funds. The National
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Heritage Memorial Fund, which is a fund of last resort, is the subject of an inquiry into its future by the department and its funds are continually being reduced. Perhaps my noble friend Lady Blackstone will tell us when we may expect the result of that report when she replies to the debate.
The Waverley report reminds us that that fund was established in memory of those people in the Armed Services and civilians who gave their lives in the Second World War. Many older members of the population will consider it disrespectful to their memory if the fund is wound up or merged with the Heritage Lottery Fund. Indeed, the report states that the fund should be replenished to the earlier level of £12 million. I am glad to say that the ceiling for the "douceur", whereby owners who offer a work of art to a gallery are allowed some reduction in inheritance tax, is being increased to £20 million.
The NACF, through the generosity of its members, has been a great help in retaining items that would otherwise have gone abroad. The Resource/Victoria and Albert Museum Purchase Grant Fund assists with the purchase of items costing less than £300,000, but which are important to our heritage, which are given to the collections of non-national museums and galleries. The fund is provided by the Council for Museums, Archives and Libraries.
Why cannot we adopt the American system whereby a donor of a work of art to a museum is excused tax—even, in some cases, being able to keep it in his own home until after his death? That has enormously enriched American museums. I have been trying for years to persuade successive governments to adopt a similar system, but the Treasury will not budge.
The report admits that there has been only limited success in retaining the most expensive works of art. After the deferral period, those are invariably exported—usually to the United States. Can we possibly compete with American museums, notably the Getty Museum of California, which has bought the enchanting Raphael, "Madonna of the Pinks", from Alnwick Castle, which had recently been on loan to the National Gallery? That highly important painting would cost £34.8 million if we were to match the price offered by the Getty.
It has been starred by the reviewing committee and it is at present under a temporary deferral. I understand that my noble friend the Minister is willing to extend the deferral for a further six months to enable matching funds to be raised. I hope that we shall be successful, although that is a huge sum to raise and one can think of so many other demands on the public purse. Could we not have a public subscription? I remember that that happened in the late 1950s to retain the large and highly important Leonardo cartoon, which is now in the National Gallery.
The sale of the Raphael will help to improve the gardens at Alnwick. As Sacheverell Sitwell said, our country houses are one of the greatest contributions to our national culture. At present, their owners are having a difficult time following the outbreak of foot

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and mouth and because visitor numbers are much reduced due to the crisis. It is important that those beautiful houses should be preserved. If the sale of a very expensive work of art helps towards that end, it is surely justified. They may be lost to the country, but they are not lost to civilisation. They go to the United States, with its wonderful museums, where they will be equally well looked after and seen and appreciated by many people.
I would make an exception for items that are an integral part of our national heritage, such as the fine Reynolds full-length portrait of Omai, the notable from Tahiti, who was brought back by Joseph Banks from Captain Cook's first voyage and became popular in 18th century society. That is a fine portrait and every effort ought to be made to keep it. I understand that it is valued at about £12 million, which is surely an attainable sum. Every effort should also be made to help the Tate Gallery to acquire it. My Lords, I beg to move for Papers.
3.28 p.m.
Lord Renfrew of Kaimsthorn: My Lords, once again it is to the noble Lord, Lord Strabolgi, that we owe the opportunity to debate the annual report of the Reviewing Committee on the Export of Works of Art. What a pleasure it is to hear the noble Lord introducing the debate in his usual effective way. I believe that he is now the oldest of the hereditary Peers who sit in your Lordships' House. We hope that he will be doing so and speaking so effectively for many years to come.
The reviewing committee serves several important functions, among which are, first, the creation of a breathing space, by the deferral of an export licence for a work of art brought before it; and, secondly, the formation of a record of the major works of art satisfying the Waverley criteria that leave Britain—in most cases, never to return. The reviewing committee performs both functions impeccably. But, as it says,
"virtually all the really expensive items that come before us go abroad as a result of lack of funds".
The noble Lord, Lord Strabolgi, made that point well, and I shall return to it in a moment.
It was in a debate initiated by the noble Lord, Lord Freyberg, in May 2000 on the 45th report that we last had the opportunity of debating the issues. The noble Lord is the youngest hereditary Peer in your Lordships' House. We wish him at least the 56 years—if my computation is correct—that would enable him to attain the current age of the noble Lord, Lord Strabolgi, and many more besides. In that debate, I questioned whether the committee was giving sufficient attention, under its obligation to supervise the export system generally, to the export of illicitly traded antiquities that had entered this country in recent years.
Those issues are fully discussed in the present report in its reference to the advisory panel on illicit trade. I note the reviewing committee's view that the advisory panel or its sub-committee, which contain all the necessary expertise, should continue in existence at
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least until the original recommendations have been implemented. As a member of the advisory panel, that is a welcome comment. It places the responsibility for considering such matters squarely within the scope of the advisory panel. It is helpful that a member of the reviewing committee—currently, Professor Rosemary Cramp—sits on the sub-committee. I hope that the Minister in her reply will feel able to accept the reviewing committee's view.
I note the reviewing committee's support for the first outstanding recommendation of the advisory panel; namely, the proposal for a new criminal offence,
"dishonestly to import, deal in or be in possession of any cultural object knowing or believing that the object was stolen or illegally excavated, or removed from any monument or wreck contrary to local law"
which was supported by the Government and, I am happy to say, the Conservative Party and the Liberal Democrats. It was encouraging, therefore, that the proposal was embodied in a Private Member's Bill, the dealing in Cultural Objects (Offences) Bill, drafted with the assistance of the advisory panel and brought before another place by Richard Allan MP on Friday 7th February. It will have disappointed everyone concerned with heritage issues that the unusually extensive discussion accorded to the two Bills dealt with earlier that day effectively scuppered progress on the dealing in Cultural Objects (Offences) Bill. Many of us consider the legislation urgently necessary for the protection of the heritage internationally as well as nationally.
Discussions on the matter continue in this House, in its corridors, and in another place. I shall not comment further now, except to say that, first, the Bill is needed; secondly, it is supposed to have all-party support; and, thirdly, noble Lords can expect to hear more on the matter soon.
Before moving on to the central problem, I draw attention to an important statement by the reviewing committee:
"While we have expressed surprise that so few archaeological artefacts (which are zero-rated for licensing purposes) ever come before us, it is not clear to what extent, if at all, there are further breaches of the export licensing rules".
Does that not reflect an extraordinary and disquieting state of affairs? Does it not suggest that things are not working as well as they ought—although, certainly, through no fault of the reviewing committee? Why are licences not being applied for? Can the Minister explain that circumstance? If not, will she invite the advisory panel to explore the matter further?
The main problem arising from the report, which it puts plainly, is that the most expensive works, thus in some cases the best ones, now get exported anyway. The noble Lord, Lord Strabolgi, dealt with that point effectively. The reviewing committee can put an export stop on them for three months, or even longer, but if the money cannot be raised, away they go.
I am no more convinced than the noble Lord, Lord Strabolgi, that every work of art should be retained in this country just because it has been here for 50 years. But the attrition to the nation's store of works of art continues, despite the good efforts of the Heritage

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Lottery Fund. Moreover, the report emphasises the attrition suffered by the National Heritage Memorial Fund, to which the noble Lord, Lord Strabolgi, referred, and suggests that the Government should find Treasury resources to restore the fund to its £12 million level and to reinstate its annual grant of £ 12 million per year. The grant has recently fallen to £5 million per year in cash terms—the diminution is naturally more extensive in real terms. But the problem is wider. Is the Minister aware that the Historic Houses Association estimates that 26 per cent of capital repairs at historic houses are funded each year by sales of works of art, representing this year £17 million of sales of artworks? Can that situation be allowed to continue?
I have the privilege of sitting on the committee of the National Art Collections Fund. I am sure that noble Lords are already aware that this is the centenary year of the art fund. They may not know, however, that the gross value of the works considered by the art fund at its most recent monthly meeting just 10 days ago was over £73 million. That includes £34.8 million for Raphael's "Madonna of the Pinks" and £12.5 million necessary to prevent the export of Sir Joshua Reynolds's "Portrait of Omai", to which the noble Lord, Lord Strabolgi, referred.
But the identity of the new owner of the Reynolds portrait has not been revealed. He, she or they have declined to permit public exhibition for the purposes of an appeal. Can the Minister confirm those disquieting facts? Does she not feel that the law might be changed to ensure that, when an export stop is granted, the identity of the applicant for export licence is revealed, and the object is made available for public display during the stop? Otherwise we will have an anomalous and unsatisfactory situation.
The Art Fund has done its best by offering a grant towards both paintings, but given that the annual total that it could offer to museums and galleries last year was around £5.6 million, it is clear that its resources are limited. Attention will now be focused on the Heritage Lottery Fund. It is a matter for grave concern that museum and gallery purchasing funds have suffered so much attrition in recent years, not least during the tenure of the present Government, that more and more claims are set at the door of the Heritage Lottery Fund. At the same time, the National Heritage Memorial fund has not been restored to its former levels. As a former trustee of the British Museum, I remind noble Lords that, like other national museums and galleries, the purchasing funds that it can make available for works, whether or not they are intended, or likely, to be exported, are now derisory. The situation is grave.
The nation cannot be expected to keep all the treasures that the owners of stately homes may feel constrained to sell. But is it doing enough to ensure that we can keep a significant proportion of them? That is the question that the report of the reviewing committee poses effectively, with full documentation. The answer is clearly no. We are grateful to the reviewing committee both for its excellent work and for its candour.
3.38 p.m.
Lord Beaumont of Whitley: My Lords, when I put down a Question on this subject for Answer on 22nd January this year, it was drawn to my attention that the noble Lord, Lord Strabolgi, had submitted this Motion for the ballot. We agreed that we should both go ahead with our submissions. I did not get a satisfactory reply to my Question, so I am all the more glad that the noble Lord was successful in the ballot and has initiated this debate today.
The problem is simple: the rich get richer, and the poor get poorer all over the world. That applies nationally and globally. Globally speaking, it means that there are many rich countries that can outbid Britain for works of art in a public auction.
One possible solution might be for the Government to provide more and more money, but, as we were reminded yesterday in the debate on hospital care and discharging, priorities are the grammar of politics. No one should accuse the Government of philistinism for refusing to pay the ridiculous sums demanded in the global market for works of art. The second solution, on which, I think, the noble Lord, Lord Strabolgi, and I agree, is that the Waverley terms, which are too wide, should be narrowed. There is no reason why "The Three Graces", for instance, should be regarded as a national treasure, although I accept that, had it remained in its original place, there might have been a case for keeping it. On the other hand, there is every reason to keep the portrait of Arkwright by Joseph Wright of Derby. I read in today's paper that it is the latest work to be considered for retention. If we did not spend our time trying to raise immense amounts of money for works of art that are, by nature, cosmopolitan, we would have more money to spend on works of art that are very much part of our heritage and history. We really should try to keep such works.
When answering my Question the other day, the noble Lord, Lord Davies of Oldham, said that the arguments against such an approach—of which, lie implied, he approved—were that there would be damage to the market and problems with enforcement. There will always be problems with enforcement of the laws that we pass. It is not beyond our powers to devise methods of keeping the real treasures of this country here to the benefit, first of all, of our nationals. I am not certain what is meant by damage to the market. The immense sums that are made by the big auction houses are not part of a market that anyone would think of as normal. They are quite beyond that. I should be grateful if the Minister could say what damage would be done to the market merely by restricting the Waverley criteria to cover works that really are part of our heritage. Perhaps, we should go on to make it illegal to export such works. We must keep that part of our heritage.
The noble Lord, Lord Renfrew of Kaimsthorn, is a great campaigner in the field, and we all respect him. He talked about the attrition of the stock of works of art that we have in this country. There is no attrition of works of art in this country; good contemporary art is created all the time. Anything that we lose is

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balanced, in some respects, by what we gain by having a living artistic heritage. That is not to say that I think that all the modern art being produced is worthy of inclusion in that category, but some is. It is interesting that there is a big exhibition of the works of Graham Sutherland coming up. He is undoubtedly one of our first-rate artists. There are many other artists painting today—not always those looked up to by the Serota tendency—who are very good We should value them, and, if we have money to spare, we should spend it on them.
In the mean time, we must take every possible step to preserve our real heritage. If we cut our cloth to suit our purse, we will be able to do that effectively. It is a worthwhile debate, and I hope that we will get some cheerful thoughts from the Minister and some constructive suggestions.
3.46 p.m.
Lord Freyberg: My Lords, we are all indebted to the noble Lord, Lord Strabolgi, for initiating the debate and for introducing this important subject so forcefully.
As the noble Lord, Lord Strabolgi, said, the Reviewing Committee on the Export of Works of Art is in its 50th year. It is to be commended for the work that it does in highlighting exceptional items that are in the process of being exported and providing a stay of execution of some months. However, it is left to other bodies such as the museums that want the artwork, the Heritage Lottery Fund, the National Heritage Memorial Fund and the splendid National Art Collections Fund—now, as the noble Lord, Lord Renfrew of Kaimsthorn, said, in its centenary year—to try to raise the increasingly large sums of money that will prevent the works from leaving Britain.
Alas, it is ever more of a battle to keep even a few major works of art here. As other noble Lords said, the committee's recent report in 2001–02 declared that the most expensive objects on which they put export stops are "invariably exported" after the deferral period. That might indicate that the committee is, in some respects, failing in the purpose for which it was set up; namely, to protect for Britain items of,
"outstanding historical, aesthetic or scholarly importance"
that would otherwise have been exported. That would not be altogether fair, however, as the committee continues to perform an invaluable role both with regard to retaining less expensive items and in drawing museums' attention to important objects that they might otherwise not have known about.
We must have proper measures to enable us to prevent the few really major and expensive works of art from slipping through our fingers. Given the spiralling cost, allied to the relatively puny buying power of museums, the Government's current range of options for keeping exceptional items in this country is no longer adequate. A current example is Joshua Reynolds's "Portrait of Omai", which the Tate would passionately like to have in its collection. The export stop is due to run out next month, and the Tate has, so far, been unable to raise the £12.5 million required.
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There is a serious threat that the painting will be lost to Britain for ever. The Tate's director, Sir Nicholas Serota, revealed that, before the picture was sold at Sotheby's in November 2001, he had negotiated—and failed—to buy "Omai" in a deal that would have written off tax for the family selling it.
Whatever the details of the case, there is a strong argument for introducing more generous tax benefits to encourage private treaty sales and acceptance in lieu schemes. Such measures are designed as an incentive to encourage the sale and gift of works of art to galleries or museums by reducing the seller's capital gains tax. At present, the sweetener, or douceur, to encourage an owner to give or sell is 30 per cent, a reduction of 10 per cent on the usual 40 per cent capital gains tax. The committee's report draws attention to the fact that that is a less attractive incentive than it used to be because of lower tax rates and suggests amending it accordingly to make it a tempting option once more.
With the same aim in mind, and like the noble Lord, Lord Strabolgi, I should like to draw the Government's attention to the possible introduction of gift aid in kind, another tax option that would encourage the gift of art work to museums and galleries. It would do that by allowing a donor to deduct the "fair market value" of an item from his taxable income. It is designed to give an owner greater financial advantage than if he were to sell an item at auction, which is not the case at present. As things currently stand, items which are sold at auction have a far greater likelihood of being sold abroad.
Gift aid in kind exists in a number of countries, among them the United States, Ireland and Australia. Britain is rare in not having such a scheme. Introducing one would be a logical continuation of the Government's recent extension of income tax relief to include gifts of shares, land or building to charities, as illustrated in the Finance Act 2001, and would also go some way towards making up for our museums' practically non-existent purchasing power. For example, the Tate has less set aside for acquisitions now than it had 20 years ago; as the noble Lord, Lord Renfrew, mentioned, the British Museum's notional acquisition allocation is clown to £100,000; and the position of regional museums and galleries is even worse.
It is worth pointing out, however, that for a gift aid in kind scheme to have a successful take-up, it must be seen to have real advantages to the vendor. For example, in Australia tax relief under gift aid in kind can be spread over several years, while in Ireland it can be applied to any form of taxation—income, CGT or inheritance.
Ultimately, it is clear that our institutions can no longer afford to pay market prices for major masterpieces. Instead, through gift aid in kind and other schemes we must devise tax incentives which make it attractive for individuals to donate works of art to museums rather than selling them to the highest bidder. The extension of tax relief through gift aid in kind would do just that. I hope that the Government will seriously consider such a practical and desirable option.
3.52 p.m.
Lord Sheldon: My Lords, my noble friend Lord Strabolgi is right to introduce the debate today because a number of new factors are involved. The most important is the increasing value in and price charged for so many of the great works of art. We can deal with the more moderate charges, but we are threatened by the big ones. The noble Lord, Lord Renfrew, is right in saying that we have a breathing space in which to provide records of works of art. I notice that he was a member of the advisory panel, a position of great responsibility and interest. I am sure he is as worried as most of us about the way in which matters have developed.
The noble Lord, Lord Renfrew, made a valuable suggestion; that exports are halted for a period during which the identity of the purchaser should become known. That is important because we have a national interest in some items. We would have the opportunity of discovering where the work was going and how it was to be treated. The noble Lord also mentioned the derisory purchasing funds; he is right.
The noble Lord, Lord Freyberg, pointed out the present battle to save just a few works of art of exceptional interest and value. The noble Lord, Lord Strabolgi, is to be acknowledged for introducing a timely debate as the spiralling costs and our puny buying power take effect.
We have of course the Waverley criteria. They are broadly right, although one or two could be improved upon. First, we must ask whether the work of art is so closely connected with our history and national life that its departure would be a misfortune. That is an obvious question. We can all agree that it is a proper test to apply.
The second question is not so strong. Is the work of art of outstanding aesthetic importance? It is an essential question but other countries and purchasers may have legitimate claims which must be taken into account. It is not therefore such an absolute test.
The third question was mentioned by the noble Lord, Lord Beaumont. Is it of outstanding significance to the study of some particular branch of art, learning or history? Other countries may not only have claims, those claims may be superior in that respect. So we need to see the Waverley criteria as providing a little less certainty than applied previously.
I have no difficulty in defending the works of art we acquired in the past. We were fortunate in admiring those items and at the same time had the means to acquire them. There is often no link between the works of art we acquired from the past and the country, with its inhabitants, within the borders we see today. Those borders and populations have changed and appreciation of the works has changed. That appreciation was more limited in many countries. Our action saved many works of art to the benefit of everyone.
The United Kingdom's Export Reviewing Committee has warned us. The committee was set up to protect Britain's heritage by offering museums and
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galleries the chance to buy major art works which otherwise would have been exported. In its annual report, it states:
"Through a lack of funding, the system has failed totally to achieve this objective".
The latest figures confirm that although many of the less expensive items are successfully acquired by public collections, the very costly ones—the subject of today's debate—are those most under threat and are only occasionally saved. In 2001–02, export licences on 31 objects were deferred to allow the United Kingdom buyers to match the price. Of those, 14 were photographs by Lewis Carroll. The total value of those deferred items was £19 million. United Kingdom institutions succeeded in buying 20 of the objects, including 11 of the photographs, but those were worth just £3.1 million. The funds we have available are therefore wholly inadequate to deal with items coming on the market today.
Among the masterpieces which went abroad were Michelangelo's drawing "The Risen Christ", for £8.3 million to an American client of Munich dealer Katrin Bellinger; Parry's "Portrait of Sir Joseph Banks with Omai and Dr Solander", for £1.8 million to the National Gallery of Australia; and a pair of George III tables from Hagley Hall for £1.2 million to the dealer Mallett in New York. Two major items were saved: a pair of Italian paintings attributed to Hispanus which went to the Ashmolean Museum; and Barocci's drawing "Study for the Institutions of the Eucharist" to the Fitzwilliam Museum for £0.9 million.
The problem, as the reviewing committee points out, is that our institutions find it too difficult to raise the necessary funds for costly items which meet the Waverley criteria of importance. As the committee comments,
"Some might ask whether it is in fact worth the candle to retain the system, given the limited success in saving objects, notably the very expensive objects, which are now invariably exported after the deferral period. Such disillusionment is very understandable and will inevitably increase if steps are not taken to remedy the situation".
So unless we change the way in which we have been conducting our affairs we are going to see a loss of important parts of our national heritage as sales of works of art are likely to increase. There are new players on the international art-buying scene. This is partly due to the very large fortunes we have seen accumulated in recent years. A number of very wealthy persons have discovered an enthusiasm for works of art. I do not blame them for that—in fact, I congratulate them—but they have an effect. I welcome their interest but I hope that they turn their enthusiasm towards encouraging new artists, who could add to our artistic capital, and assisting galleries to purchase their work. In fairness, a few do so already. I hope to see this limited spirit emulated more widely.
The reviewing committee believes that the Government can help generally and argues for five reforms. Gift aid, which has recently been extended to gifts of shares and buildings, should be applicable to works of art and the tax treatment of private treaty sales, which is now much less attractive as a result of lower tax rates, should be increased.

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Ministers should assist and encourage the National Heritage Memorial Fund and the Heritage Lottery Fund to give preferential treatment to Waverley items threatened with export. Some members of the reviewing committee even felt that they should set aside a proportion of their money for such use, although the two funds have resisted calls to give priority to Waverley objects. The Government should also restore grant-in-aid to the National Heritage Memorial Fund to its earlier level of £12 million a year, up from the present £5 million. The use of special Exchequer grants for Waverley items should be reactivated "as a last resort". These grants were ended many years ago.
The noble Lord, Lord Renfrew, referred to the need to stop exports and to identify and display proposed purchases. We need to assist universities and museums with acquisitions. VAT exemption, which has been referred to, should be extended to include these institutions.
The Government's response to the problem of funding of Waverley items is likely to be given following the publication of the quinquennial review into the export reviewing committee and is expected soon.
What we need in the light of the limited resources we are bringing to the saving of works of art is the retention of important works where exchanges can be made. I have no objection to making exchanges in areas where we have a sufficiency of examples, some of which we can perhaps sell off. There are, however, areas where our national heritage is quite inadequate and we have gaps in our collections. We can perhaps deal in a sensible way with the areas where we have gaps and where we are well endowed.
The situation should not be described by the phrase "what we have we hold"—we are more enlightened than that. There is need to recognise the wishes of those who have made donations of artistic objects. People have genuinely made donations and expect them to be confirmed and to endure. They are entitled to have their intentions respected, if only to ensure that future donors can expect to see their wishes implemented and the conditions on which we accepted their donations honoured. That is an important aspect of our work.
Following recommendations from the reviewing committee, temporary bars were placed on the export of 34 objects, including paintings. Of these, 20 items, valued at £2.7 million, were purchased by institutions in the United Kingdom. The report of the reviewing committee comments on matters of policy regarding the operation of export control.
There are a number of aspects that go wider. For example, in Tibet there were 6,000 monasteries, almost all of which have been destroyed. Ninety-eight per cent of its works of art have been destroyed. The medical library of Lhasa—more than 1,000 years of uninterrupted history—has been destroyed. There is no record now of anything that was there. The Dalai Lama has declared again and again that he is delighted that the West buys Buddhist works because it is a
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means of retaining them. One should not forget that generally the source nations do not have the expertise, the structures, the laboratories, the museums or the scientists to care for, to restore, to publish and to exhibit the works found in their countries. We should be assisting countries such as Tibet. Our taking of some of those objects is no disadvantage to the countries or to the objects concerned.
It is most important that we should come to a turning point in our dealings with these matters. There was a similar period in 1977 when I was Financial Secretary to the Treasury. We were introducing a capital gains tax which would have had a most damaging effect on our heritage, country houses in particular. The situation was so serious that we felt that, however important the decisions we had made to introduce the new capital transfer tax, nothing was more important than the preservation of our heritage. So we changed the legislation to deal with that objective. This, incidentally, led to the emergence of the All-Party Parliamentary Arts and Heritage Group, of which I am currently the joint president.
We are now in a similar situation. The position is so dire that we have to look at matters we have never before considered. My noble friend Lady Blackstone is aware that we must reconsider the whole task of retaining important works of art. The difficulty that we have known for a long time has dramatically increased and a new response is inescapable.
4.6 p.m.
Lord Brooke of Sutton Mandeville: My Lords, it is a great pleasure to follow the noble Lord, Lord Sheldon, who has been a distinguished officer of the All-Party Parliamentary Arts and Heritage Group. I can recall seeing the Chinese warriors at Sian in his company more than 20 years ago, shortly after the archaeologists had discovered them.
I add one small footnote to his remarks about the monasteries in Tibet. As so often happens in human affairs, the Mongol invasion of Hungary in the 1340s was interrupted by news that the ruler had died in Mongolia. And so, having reached half-way across Hungary, the invaders retreated rapidly to ensure that they were present when the succession was determined. As a result, eastern Hungary has no medieval remains of any kind because the Mongols totally destroyed them, whereas western Hungary, with an extraordinary fault line down the middle, is well supplied.
It is a pleasure to congratulate the noble Lord, Lord Strabolgi, on creating the opportunity for the debate and on introducing it so ably. It is felicitous that we meet on the opening day of the stunning Titian exhibition at the National Gallery, which is adorned by the picture of the "Death of Actaeon", which is referred to in paragraph 52 of the report as one of the highlights of the Waverley era.
I should get my declaration of interests off my chest early in my speech as they relate to most of the matters I shall speak to. I am president both of the British Antique Dealers Association and the British Art

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Market Federation, interests which are separately inscribed in the register of interests. I am a patron of the Coram Foundation, the interests of which arise in paragraph 18 of the report, and, on a de minimis basis—nothing like as distinguished as my noble friend Lord Renfrew who serves on the board—I have been a life member of the National Art Collections Fund since 1975 and its recent long-serving chairman, Sir Nicholas Goodison, is my oldest friend.
I can add a small, poignant, personal footnote to the significant case in the report relating to the Charles Dodgson archive, the photographs, in that although he did not take a photograph of my paternal grandmother, he did write her a number of letters, the value of which, being a small girl, she did not appreciate. And so, in her own childhood, they were lost to what we might call the Lewis Carroll archive.
Escaping less early than I would wish from the personal impedimenta which we properly declare, it is a pleasure to move on to pay tribute to the great John Anderson, in his thin disguise as Viscount Waverley, as the fons et origo of the system of export control of works of art, the 50th anniversary of which we celebrate this year. He was a most distinguished public servant, and it is no surprise that the fruits of this particular aspect of his career should have stood the test of time so well.
The key index of that success is the balance he achieved between the sense on the part of the owners that they feel the system is broadly even-handed and the crucial support given to it by the UK art market itself. I shall return to this balance later, but I add to my tributes at this stage those who have served on the Waverley committee through the past half century and, indeed, those who have served them.
Before coming to the crux of the Quinquennial Review, however, perhaps I may address some of the issues that the present committee has highlighted in its report and to which other noble Lords have referred.
Paragraph 9 of the report alludes to the 8,700 licence applications in the particular year, covering 23,000 individual items, of which 10,000 were referred to the Department for Culture, Media and Sport's expert advisers. The latter, too, deserve praise. There is similar respect for the department's own Licensing Unit—I speak from within the trade—but there remains an undercurrent of unease about the overload on it, and the fact that when, for instance, in the case of visitors in this country, a rapid turn-round in a decision may be desirable, the overload can cause delays. This hazard is thrown into further focus by the effect of the strength of sterling on the EU's regulation on the export of cultural goods, where the need for countries outside the euro-zone to convert their limits into national currencies—the UK threshold, of course, fell at the start of 2002—has increased pressure on the Licensing Unit, because the number of applications grows as the threshold falls. The principle of a triennial review of the thresholds—this regulation was introduced during my time as a Minister at the former Department of National Heritage—has been honoured less scrupulously in Brussels than
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the Cabinet Office's admirable insistence on Quinquennial Reviews of non-departmental public bodies.
Secondly, I am happy to praise Ministers in the Department for Culture, Media and Sport under the present administrations for their success in increasing the level of in lieu gifts and I salute the Treasury's cooperation in that.
Thirdly, I strongly support the report's urging that the National Heritage Memorial Fund not only be retained as a supporter of last resort—which was central to its original heritage creation—but also that its funding be topped up to an annual level of £12 million. I am content to be criticised because that level fell during my period in office, although I can plead that those were the days when we did not know with precision how the relationship with the Heritage Lottery Fund would work out, since the lottery would be serving some of the same purposes.
I would also remark in support of the committee's present plea that, ironically, the National Heritage Memorial Fund lost out by being transferred into the new heritage department in 1992, since the latter was much smaller than the DoE from which it was transferred and thus the largess to the National Heritage Memorial Fund, which used to fall off the back of a DoE lorry at the end of the financial year, when those in the department were anxious to make sure that they had spent the money that the Treasury had allowed them, was necessarily much larger than can be derived from whatever smaller residue remained in the DNH or DCMS coffers at their year end.
I think that the National Heritage Memorial Fund was a great idea, and I praise my noble friend Lord St John of Fawsley for it. I hope that it both survives and thrives as an independent entity. It is crucial to the funding of the larger heritage applications for which deferral is granted.
Fourthly, and in the final analysis, the scheme's success is measured in terms of how many objects referred to the committee are saved. There is a rare example of the hazard of a non-split infinitive in paragraph 55 of the report, which states:
"The figures in our successive reports have shown that, through a lack of funding, the system has failed totally to achieve this objective".
A split infinitive would have indicated in that instance whether the failure was total or partial, although the context indicates that it was partial.
I felt constrained to look at the last decade's performance tables to see how my own two years of responsibility came out. They are, in fact, spread out over three years because I entered and left office in mid years. I am in the happy position to claim the two best years in the decade, but I must in all intellectual honesty acknowledge that the first of the three years—the year of transition when the Department of National Heritage was being set up—was comfortably the worst in the decade in this particular regard. Overall, therefore, my performance was perhaps an archdeacon's egg rather than a curate's one.

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Finally and fifthly, I support all the committee's recommendations in paragraph 56, most of which figured in its submission to the Quinquennial Review, except the third, to which the Heritage Lottery Fund also took exception. That said, I quote from paragraph 56:
"Ministers should either direct or at least actively encourage Trustees of the NHMF and the HLF to give preferential treatment to Waverley items. Some respondents advocated that a proportion of these funds should be specifically set aside for such purchases. We would, of course, support such a proposal".
My misgiving about this recommendation relates to its interference with the arm's length principle between the department and lottery distributors. The Labour Party in opposition was as anxious as the then Government to insist on additionality being precisely included in the National Lottery etc. Act and any increase in government's influence over the distributors is a slide backwards from that purity. I have still not got over hearing from Mr Frank Dobson about the New Opportunities Fund's cancer distributions in my constituency before I heard about them from the New Opportunities Fund, which suggested that he had had prior knowledge of what they would be.
I want in conclusion to dwell on the crucial conceptual issues that have surfaced in the Quinquennial Review, and I hark back to the balance to which I alluded earlier. The first relates to the prices quoted as being on offer from overseas buyers, often masked anonymously by Swiss or Liechtenstein companies. The representative of the British Art Market Federation on the review panel—the BAMF chairman, Mr Anthony Browne—made a constructive suggestion that affidavits should be required here relating to the evidence for these prices. I know that Mr Matthew Farrer, also on the panel, has made a valuable legal contribution to this potential solution.
There is the further issue of applicants being asked if they will accept a matching offer and saying that they will, but then withdrawing the application when a museum or gallery expresses an interest and has either raised the money or has certainly begun raising it. The suggested solution is the applicant signing a contract, subject, of course, to the views of Treasury Counsel and to ministerial endorsement.
The jury is still out on this issue. There is a dispute of sorts between those concerned about this and the art trade as to the precise number of abuses that occur. Certainly the art market is concerned that a system to prevent the limited abuses may complicate the system as a whole. There is a collateral issue about ministerial discretion being unfetterable until the end of the period of deferral that has been granted. Because the system being effective has in part derived from the art trade's support, I hope that the balance that has prevailed so far will lead to a balanced and proportionate resolution of this issue.
Such balance might be achieved by matching any contractual obligation, as suggested within the review, to a withdrawal of the Ridley Rules, so that the applicant can know where he is. If the outcome, whatever it may he, is to make the scheme less
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attractive to the art market, there is a risk of the support for the system receding. The market, which employs 40,000 people in this country, is already bruised in international trade by the European Union's determinations on droit de suite and VAT on art imports into the EU.
The Government have been very supportive—I say this with as much firmness as I can muster—of the market in these latter two matters, and I personally have considerable confidence that the Government will reach sensible conclusions on this issue too.
4.9 p.m.
Lord Armstrong of Ilminster: My Lords, perhaps I may intervene briefly in the gap and express my gratitude to the noble Lord, Lord Strabolgi, for introducing this Motion and raising this important subject in characteristically energetic terms.
I greatly regretted the fact that the noble Lord, Lord Beaumont of Whitley, wanted to exclude the Three Graces from the Waverley criteria, since I spent six months of my working life as chairman of the Victoria and Albert Museum raising the money to save them. So I do not accept his view.
We had the task of raising around £7.5 million. We did raise that sum—with much help from the National Heritage Memorial Fund, the National Art Collections Fund and the National Galleries of Scotland.
The day after the Victoria and Albert Museum acquired the Three Graces, I was walking through the museum to see how they had settled down in their new home. I was encouraged to see two elderly ladies, gazing with rapt adoration at the statues, and as I passed I heard one say to the other, "Aren't they beautiful? Worth every penny". That was 750 million pennies, my Lords.
The Victoria and Albert Museum was able to find £1.1 million towards the total, and no more, because of the limitations on funds available for purchase. At the beginning of my time as chairman, the government grant to the museum was earmarked three ways—for running costs, for building and maintenance and for purchases. The grant for purchases had remained at just over £1 million for many years at that time. Then, in a gesture of great magnanimity, the then Department of National Heritage—or it may have been its predecessor—decided to abolish the earmarking and liberate the whole of the grant for the trustees to use in whatever way they thought right. Unfortunately, when the grant was increased the next year, there was barely sufficient to cover running costs and building and maintenance, so we had no funds with which to increase the purchase grant. I suspect that that has remained the case. So for many years the museum's funds available for purchasing remained at the cash figure of £1.1 million at a time when art market prices were continuing to rise steeply.
It would be useful if the Minister could re-examine the possibility of increasing the funds available to the national museums for purchases as well as maintaining the necessary flow of funds for running costs and

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maintenance so that the museums would have rather more money available with which to decide about purchases before having to call on the National Heritage Memorial Fund, the Heritage Lottery Fund, the National Art Collections Fund and all the people whose generosity keeps a scanty flow of treasures in the national museums.
4.22 p.m.
Viscount Falkland: My Lords, we are all grateful to the noble Lord, Lord Strabolgi, for giving us this opportunity this afternoon. Apart from repeating the congratulations on the noble Lord's age, I am so glad to see him looking so well. I know that he has had a period of poor health and he is back looking his shining best.
This is an elegant document, beautifully written and presented. So far as I can see, it contains no hyperbole or unnecessary understatement. I see no level playing fields or sustainability, and nobody has flagged anything up. I have enjoyed reading it and will continue to enjoy reading it.
The report makes one over-riding point, saying on page 2 that virtually all the really expensive items that come before the reviewing committee go abroad as a result of a lack of funds. Various noble Lords have echoed that view. In the light of that, it is worth saying that all is not gloomy. On page 15, a section headed, "The Future of the Waverley System and the Committee" draws attention to the fact that only a small proportion of items of high value have, over the last decade, been retained in this country, despite the admirable efforts of various bodies, including the Heritage Lottery Fund, the National Heritage Memorial Fund and the National Art Collections Fund. But there has been a sense of despondency and a fear that, because of its failure to save more of the high value items, the system is in some way threatened. As the report says, such disillusionment is understandable and will no doubt increase. It goes on to say that the existence of this well structured and well operated system encourages owners of works of art and their advisers to give serious consideration to the tax advantages of the acceptance in lieu and private treaty sales. It reminds galleries and other that they may have overlooked mechanisms that are available to them.
The report also says that it is particularly satisfying when an object returns to its original home. I hope that the House will bear with me if I give an example of the report's excellent prose. I congratulate whoever is responsible for the report's clever use of English. One passage refers to the two Georgian sphinxes, which I know quite well. I saw them when they were in Oxfordshire in Matthew Boulton's property, Soho House, outside Birmingham. They came up for sale and, happily, were returned to that location. They are admirable pieces of garden or park furniture. Let me demonstrate how good this report is in not only presenting information but subtly and effectively giving us some social history. It says on page 33:
"The sphinxes reflected an important facet of Matthew Boulton's discerning intellect and social aspirations, such sculpture being generally associated with the country seats of the
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nobility, rather than the residence of a manufacturer. Given the limited survival of such landscaped gardens, and particularly those that had been developed by the leading industrialists of this period, the sphinxes had wider significance in national terms, representing taste and aspirations ultimately derived from British aristocratic culture of the first half of the eighteenth century".
I challenge anyone to write as good a social and cultural history as that in one small volume. It says a great deal, and shows the quality of the work.
The report's tone deplores the fact that moneys are unavailable. However, all those who are responsible—and I include the Department for Culture, Media and Sport—for trying to increase the amount of moneys available for saving treasures in this country are to be congratulated. I have particular regard for the work of the former Secretary of State, Chris Smith, who, vis-à-vis his arguments with the Treasury, did incredibly good work. Getting the VAT removed from our national museums and galleries was a sterling effort and shows that you do not give up with the Treasury. I know that it is daunting, but it is the job of those involved to persevere without being too daunted. The department does sterling work but it can be dispiriting when there is a change of mind in Treasury circles.
Before I rose to speak, my noble friend Lord Russell came into the Chamber for a moment and asked me in a loud whisper whether manuscripts and documents were included in these discussions and debates. I assured him that they were. There were concerns about whether a remarkable document relating to Henry VIII's divorce would be retained in this country. I hope it will be. My noble friend asked me to draw to your Lordships' attention that there was a statutory obligation for documents that were to be removed from this country to be photocopied by the British Library. Surprisingly, a number of scholars do not realise that the reserve photocopy collection is available there. In his research my noble friend often looks at original documents and the Photostats. If documents are removed from this country, there is that backstop. I am very glad to see my noble friend back with us after some very sad domestic happenings in his life and I am happy to be able to put that point to your Lordships.
I have one or two questions for the noble Baroness. She has already been asked about the National Heritage Memorial Fund grant, which was sadly reduced from £12 million to £5 million under the previous administration. That fund has been pretty well depleted now. There is an expectation that it will be increased to £5 million in the near future. Is there any intention or ability to get the fund up to its former levels?
I asked a supplementary question about Exchequer grants the other day. They have not been used for 20 years, but it is within the remit of the reviewing committee to press for Exchequer grants. In situations of particular importance, an Exchequer grant might be appropriate and available. Will the noble Baroness enlighten me on that point?
Having praised the document so highly, I am slightly anxious about future publications. I would be sad if I was not able to enjoy further reports. I shall

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read this report again and again, but I hope there is no intention to amalgamate it with any other reports in future or to make savings in that regard. Other noble Lords would also be extremely concerned if that were the case.
Has the department given attention to the worrying issue of valuations? It is up to the department to make sure that valuations are genuine and not spurious. There are always rogues in every occupation and art dealers are not exempt from the temptations of overvaluing. A certain amount of shrewd detective work is needed by the department. It is interesting work that I would love to do. It is very important for the integrity of the whole business that, as far as possible, proper valuations are done so that there is no skulduggery afoot. I say no more than that.
My closing remarks have nothing to do with the debate, but I have a couple of minutes and my comments will not take that long. When one is talking about money, it is irritating to see that there is £3.5 billion of undistributed lottery funds. The department has been pressed about that. The Secretary of State gave an undertaking that the money would be distributed in quicker order. That has not happened and the money is accruing interest. I intend to come back to the issue in a Starred Question or in some other way. I do not expect the Minister to answer the point today, but it is very irritating to know that there are such large sums lying around waiting to be distributed when there are works of art here that, in the scheme of things, are worth modest amounts—even Raphaels, Michelangelo drawings or the Omai.
4.35 p.m.
Lord Luke: My Lords, this has been a most stimulating debate, as are most debates in this House on the arts. We are all most grateful to the noble Lord, Lord Strabolgi, for giving us the opportunity to discuss the subject. The noble Lord had the doubtful privilege of saying some kind things about me after my maiden speech in your Lordships' House six and a half years ago, since when we have frequently spoken in the same debates. I am delighted that the noble Lord has lost none of his eloquence and ability, particularly to make complex issues sound simple.
I must state an interest, in that I deal in watercolours, none of which has ever met the Waverley criteria or is likely to do so.
It is undoubtedly true that most of us who care about our heritage support the principle of retaining in this country as much as possible of the corpus of notable works of art that has existed here, off and on, for 400 years, largely as a result of the good taste and acquisitive nature of those in a position to spend significant sums of money, as our economy grew ever stronger over that period.
Through the years, the availability of these funds has generally coincided with the existence of poor economic conditions in most of Europe, particularly in the weak city states into which Italy was divided for so long. Hence, over many years, there was a strong buyer's market, which we exploited. I am glad to say
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that England has never been ransacked, even during the Civil War, when the King's collection was dispersed abroad. I believe that it is largely in the Prado Museum in Madrid. Every other country in Europe has been ransacked several times. The quantity of works of art of significant standard in this country has been and still is very great.
However, over the past 100 years the tables have been turned and there has been a strong seller's market in Britain, due to high and progressive capital taxation and the understandable desire of owners and trustees of great houses—and many not so great—to remain put and repair roofs. That situation in turn has coincided with the availability of funds from the enormous economic growth in America, Japan and the Gulf.
Although it is encouraging to look at the successes in retention in the past year in this admirable report—I thoroughly agree with the noble Viscount, Lord Falkland, on the excellence of the report—it is also salutary to look at the failures, all of which are due to insufficient funding. No really important item has been retained. We must ask whether time should be wasted in deferring export licences for works of art whose intrinsic market value puts them completely out of reach of any realistic hope of retention.
Unless there is some way of persuading the great and good to spend much greater amounts than is the case at present, I am afraid that we are indulging ourselves in a series of forlorn hopes. Tax changes, gift aid and douceur have all been mentioned as ways of raising funds. I look forward to hearing the Minister's comments on those and any other fiscal incentives suggested.
It is good also that the Waverley criteria are once again being reviewed, as what may have been right 50 years ago could be, sadly, out of date. Indeed, the system could be said never to have worked at all in its primary aim, which was, and still is, the retention of really important works of art. However, in what might be called its secondary aim, the retention of significant works of art, it has worked quite well. As so many noble Lords said, it is all to do with money. Truly enormous efforts have been made over the past 50 years, and are even now being made, to raise funds, but it is so often not enough to achieve retention.
My noble friend Lord Brooke has a great expertise in these matters. I associate myself particularly with his apt words congratulating all those concerned with Waverley through the years and also those concerned with the National Heritage Memorial Fund and the Heritage Lottery Fund. I also note his words concerning the undesirability of anonymous applicants for licences, which was mentioned also by my noble friend Lord Renfrew. I think that that is a very apt point.
I think that we must now look again fundamentally at the criteria. Is it right that we should try continually to buck the art market? Perhaps we should allow great art to be traded wherever world markets dictate. There is a case that we should make a real effort to retain a work of art only if it has a particularly British interest

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or connection. It is not as if there were not an enormous number of works of art in this country, representing virtually all countries and periods, still in private and particularly in public museums and art galleries and—sadly, and more significantly—in their cellars. Indeed, I should think that there is much to be said for spending any available funds to build extensions so that the viewing public can see what they have every right to see. We do not permit such museums and galleries to sell surplus stock, for obvious reasons. However, if those reasons were not there, and if such a procedure were allowed, it would surely transform the funding arrangements of museums and galleries and enable them to be at least self-sufficient.
I revert to the situation as at present. The noble Baroness has just issued an order deferring the export licence for Joseph Wright of Derby's great portrait of the Arkwright family. I agree with the comments of the noble Lord, Lord Beaumont of Whitley. It is a most important painting by a very important British artist, of one of the most important men in the Industrial Revolution. Surely there is a very strong case, from every point of view, for keeping that painting in Britain. We understand that the amount concerned is £1,200,000, a sum which must surely be attainable.
At the other end of the scale, however, is the exquisite Raphael, "The Madonna of the Pinks", something that any museum or art gallery curator would die for. We understand that the Getty has put in a large bid for it. It is undoubtedly one of the most important pictures in the world still in private hands. Yet, we have a wonderful selection of Raphaels in this country. We would have to raise between £32 million and £37 million to keep it here. Surely that is an example of another forlorn hope.
Surely the Henry VIII divorce treatise, mentioned by the noble Viscount, Lord Falkland, also should remain in this country. It is a priceless part of the story of that divorce and its very important effect on the religious history of this country. I hope that that will happen.
I tell my noble friend Lord Renfrew that we on these Benches concur that his Bill—Richard Allan's Bill in the House of Commons—is needed. We understand that there may be an opportunity for it to be debated in another place in early April. We very much hope that that is the case and that there will be an opportunity then to scrutinise the Bill properly. As I mentioned earlier, my noble friend said that, in his opinion, a work of art under deferral should and must be made available and visible to the general public—I agree with that—and that the buyer's name should be made known.
One could go on and on. I hope that I have made my point that, in effect, we as a nation can no longer afford to play in the premier league of the art market. We can, and must, stay in the first division. Like all noble Lords, I look forward to hearing the reply of the noble Baroness, Lady Blackstone.
4.46 p.m.
The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone): My Lords, I hugely welcome the opportunity provided by my noble friend Lord Strabolgi to pay tribute to the work of the Reviewing Committee on the Export of Works of Art. The report marks 50 years of the committee's life, an enormously important achievement which is to be celebrated this very evening. As the noble Viscount, Lord Falkland, said, the occasion has been marked by an extremely interesting and well-written report. I say to the noble Viscount that the committee gives great attention to the important issue of valuation. That is very much a part of its work.
Since 1952, the committee has used the Waverley criteria to advise Ministers whether time should be given to save an object from export because of its importance to the nation's culture. As the noble Lord, Lord Brooke of Sutton Mandeville, rightly said, the criteria have stood the test of time. The system we use is widely respected, balancing as it does the interests of owners, the art trade and public collections.
Several speakers—particularly the noble Lords, Lord Beaumont and Lord Luke—asked whether the Waverley criteria are still acceptable 50 years on. I think that the Waverley criteria recognise that it is not only objects produced in this country that can be of outstanding significance. Like the acceptance in lieu criteria, the Waverley criteria recognise the importance of the aesthetic worth of great works of art. I believe that that is right, and that we should not be entirely parochial in our approach, whatever position we might take on the Three Graces. The noble Lord, Lord Luke, thinks that we need to have a fundamental review of the criteria. I am afraid that I do not accept that.
As my noble friend Lord Strabolgi said, many items have been saved. Since 1952, 300 objects of all kinds—ranging from an Egyptian tomb relief, to the medieval Middleham Jewel, to photographs by Fox Talbot—representing the best of our heritage, have been saved. This achievement deserves our congratulations. I should like to thank all who have served on the reviewing committee in the past half century, and who have helped to make this possible.
Our art market has 25 per cent of the global total and is the second largest in the world. Its annual sales are worth nearly £4 billion. As such, it provides significant economic and cultural benefits to the UK, not least the provision of nearly 40,000 jobs. Our export controls do not distort that market, and do not interfere with owners' property rights by permanently prohibiting the export of works of art. The system is not so draconian that it leads to evasion. By comparison, other more prescriptive systems are less respected, and encourage illegal exports.
I do not agree entirely with the suggestions made by the noble Lord, Lord Beaumont, that we should make it illegal to export national heritage items. On previous occasions the suggestion of a list of national treasures that cannot be exported has been mooted and has always been rejected due to various disadvantages. It

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would distort our flourishing art market and probably interfere with the rights of owners to dispose of their property under the European Convention on Human Rights. It was last considered in detail by David Mellor when Secretary of State. He decided that it had far more disadvantages than advantages.
The consultation exercise that was part of the quinquennial review of the reviewing committee, and which spanned the full range of interests involved, has confirmed the widespread support for the fairness and balance of our export control system.
A number of noble Lords have mentioned funding issues. The committee itself suggests that the system has totally failed to achieve the objective of protecting our heritage through a lack of funding. That is an unnecessarily bleak judgment. In the past 10 years, half of all of the deferred items stayed in the UK, mainly in public collections, so they are accessible to the public to enjoy and to study, usually for free. It is as much for public institutions, or private individuals for that matter, to decide whether they want to purchase such objects, as it is for owners to decide whether to sell them. Of course, I accept that there is a problem in regard to the most expensive items.
Acquisitions of Waverley items draw on a variety of sources, some of them government funded. Since 1997–98, the Government have increased grant-in-aid to our national museums and galleries by over £60 million, a real increase of 17 per cent. Within those grants, they have the flexibility that they prefer to allocate their budget to meet their various priorities, including acquisitions. To the noble Lord, Lord Armstrong, I say that I believe that the system is accepted by the national museums and galleries. Purchases can also draw on self-generated income—currently around £100 million each year—and charitable donations, bequests, legacies and private sponsorship.
The Heritage Lottery Fund and the National Heritage Memorial Fund must balance requests for grants to buy Waverley items with other bids to support acquisitions and heritage projects. The reviewing committee report and the noble Lord, Lord Sheldon, ask that the Heritage Lottery Fund should give priority to the retention of Waverley items. There is a case for that, but there is also a strong case against it. I believe that a great many people would not accept the suggestion. I agree with the noble Lord, Lord Brooke of Sutton Mandeville, who said that the arm's length principle should apply.
Since 1995, the Heritage Lottery Fund and the National Heritage Memorial Fund have supported the purchase of 49 items out of the 90 deferred items with grants totalling £8.5 million. The NHMF operates as a fund of last resort, focusing on saving heritage that is under threat, including items that might be exported. I confirm to the noble Viscount, Lord Falkland, that the Government have increased grant-in-aid to the NHMF from £2 million in 1998–99 to £5 million in 2000–01 and have undertaken to maintain it at that level until 2006. Moreover, the money available for distribution to arts and heritage projects as a
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percentage of Lottery income has been guaranteed by Government at at least 16.6 per cent until 2009. Other important sources make valuable contributions to the purchase of export-stopped items, and in particular I pay tribute to the National Art Collections Fund, which has awarded £2.3 million since 1995.
To the noble Lord, Lord Strabolgi, I say that there is no current proposal to wind up the Heritage Lottery Fund or to reduce the proportion of Lottery funds given to the Heritage Lottery Fund. I cannot give a date for when the Lottery review will be complete, but I shall let the noble Lord know when that is clear.
This year there are many examples of objects being secured for communities that have a particular link with them, helped by vigorous local campaigns. Thomas Girtin's watercolour of Snowdonia was bought by the National Museums and Galleries of Wales. Birmingham Museums and Art Gallery bought a pair of carved sphinxes for Matthew Boulton's Soho house. The Kelso papers, a fascinating group of legal documents, have been returned to the Scottish Borders, and the archive of Walter Crane's designs was secured for Manchester, where he worked in the 1890s. Not only the London museums and galleries benefit.
I am especially keen that items acquired in that way should be distributed around the country. I am very pleased to note that, since the publication of the report, the National Museums and Galleries on Merseyside have purchased an astronomical clock made in Ormskirk in 1787, which will he placed on display shortly. It is fitting that it should join the museum's significant collection of clocks and watches made in the North West.
The future of some objects, including that clock, was still outstanding when the committee's report was published. We now have a fuller picture. Of the objects that I deferred from export on the committee's recommendation, 81 per cent remain in the UK, either as a result of purchase, or because their owners decided to keep them here. That cannot be seen as total failure.
In deciding whether an object meets one of the Waverley criteria, value is not an issue. It is quite possible for something of relatively low value to be of outstanding significance to a certain area of study, or to have an important connection with a particular region in the UK. Take, for example, a series of Middle Bronze Age axe heads from Dorset, now in Dorset County Museum, that were saved in 2001, none of which cost more than £300. They met the Waverley criteria, however, because of their archaeological significance for the study of cross-channel trade in the Middle Bronze Age.
As many speakers have said, it has always been the case that top quality works of art can reach dizzying values. That is truer today than in the past. Since the report's publication, I have placed temporary bars on Raphael's "The Madonna of the Pinks", valued at nearly £35 million, on Reynolds' "Portrait of Omai", valued at £12.5 million and on a drawing by Michelangelo, valued at £7.5 million. I did not extend the deferral period for the Michelangelo drawing, because no expressions of interest to purchase it were

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received. However, the National Gallery has applied to the Lottery and launched an appeal to buy the Raphael "Madonna" and the Tate Gallery hopes to acquire Reynolds' "Portrait of Omai".
The noble Lord, Lord Renfrew, has asked why the "Portrait of Omai" has not been made available for public display. That is a decision for the owner. However, it was taken into account when I decided upon the deferral period of nine months—longer than usual. This will provide a proper opportunity for fundraising, given the picture's unacceptable inaccessibility.
The noble Lord, Lord Sheldon, mentioned Parry's "Portrait of Sir Joseph Banks with Omai and Dr Solander", which he claimed had left the country. However, in fact, the export licence application has been withdrawn. If the owners want to export the work, they would have to reapply.
These cases certainly present a challenge for all the available sources of funding. In the case of the Raphael, the long-standing capital tax incentives offered by the private treaty system for a sale to a public collection may also be available to reduce considerably the sum which the National Gallery will need to match. But it will still be a lot of money. I wish it every success in its fundraising efforts.
The possibility of a special Exchequer grant has been raised. The noble Viscount, Lord Falkland, asked about that, not in relation to the Raphael in particular but more generally. But, as he said, this route has not been used since 1980. Moreover, any application would have to be considered in the context of other competing claims on the Government's Reserve, which is already heavily committed. Even when special Exchequer grants were occasionally made, they were never automatic, nor did they provide total funding for purchases. There has always been the expectation that institutions will raise some of the money themselves. When that route was last used there was no National Lottery. Of course, the Acceptance in Lieu Scheme—
Viscount Falkland: My Lords, I thank the noble Baroness for giving way. Was an application actually made for an Exchequer grant in the case of the Raphael or the Omai or has the reviewing committee given up?
Baroness Blackstone: My Lords, the reviewing committee does not make applications; it is for the gallery or museum that wishes to purchase a particular object of art to try to raise the money. I do not believe that an application has been made directly to the Treasury. As I said, an application has been made to the Lottery.
Of course, the Acceptance in Lieu Scheme brings pre-eminent objects into public ownership in lieu of inheritance tax. They are therefore saved for the nation before the point of export. Our sponsored galleries have acquired works in this way over the past five years with a tax value of almost £37 million. In the past
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year, for example, we announced the acceptance of works by Zoffany, Hogarth and Van Dyck, whose portrait of Sir William Killigrew was allocated to the Tate Gallery, and has been reunited there with the portrait of his wife. I am grateful to the noble Lord, Lord Brooke, for the remarks he made about the extra funding that is now available for the scheme.
Noble Lords have put forward some interesting ideas about how the tax system could be used further to support acquisitions and I am aware that different schemes are available in various countries overseas. However, in looking at any such proposals, we would need to be very clear that any schemes, for example to offset gifts against tax, could be justified in terms of the revenue forgone by the Exchequer. Moreover, they would need to be certain to bring about the donation of items of quality at reasonable value.
I believe that the noble Lord, Lord Renfrew, mentioned sales of works of art on the part of owners of historic houses to fund repairs. He and other noble Lords will probably be aware that my department has made a proposal to the Treasury as regards a scheme to help owners of historic houses to set the cost of their repairs against tax, provided that their houses are opened to the public.
The noble Lord, Lord Freyberg, mentioned the possibility of altering the rate of the douceur—the "sweetener" available to encourage owners to sell direct to an institution in this country. This is a suggestion that has been made before and in principle some flexibility in the douceur has long been available for private treaty sales but in practice has been very little used. We are, however, certainly ready to think about how it might be used rather more.
Since publication of the recommendations of the Culture Select Committee in July 2000 and the Illicit Trade Advisory Panel in December 2000, there has been progress on measures to combat the looting of archaeological sites and the unlawful trafficking in cultural property. As the noble Lords, Lord Renfrew and Lord Luke, said, we are disappointed that the Private Member's Bill, Dealing in Cultural Objects (Offences) Bill, which was introduced in another place on 7th February, was talked out. That was a useful measure which had all-party support. I certainly confirm the Government's strong support for it. Given their standard-setting role in the market for cultural objects, it is essential that museums should respond appropriately to the problems of the illicit trade. I believe that they are doing so.
The noble Lord, Lord Renfrew, also took up the committee's question about the export of archaeological artefacts from the UK without a licence, and I should be pleased for the advisory panel to examine that further.
I am running out of time but I believe that I have responded to most of the questions raised. I shall write to noble Lords to respond to any questions that I have not addressed. The noble Lord, Lord Brooke, mentioned the reviewing committee's quinquennial review. I expect the report of that review to reach me soon. Although it has taken rather longer than we

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originally envisaged, I know that much valuable work has been done in looking at a number of difficult issues, including those concerning valuations and option agreements, which the noble Lord mentioned. I look forward to considering the recommendations.
In conclusion, I do not share the pessimism expressed by some noble Lords about the committee's report. The report shows quite clearly that the majority of Waverley items were saved for the nation last year, and found homes in museums and galleries all over the UK. Thanks to our support for free admission, they can now be seen, without charge, by an ever widening group of people. The system is seen as fair by those who use it, and is respected internationally.
I accept that the higher priced items present a big challenge, not least to the Lottery. Difficult decisions have to be made as to whether to fight to raise the money needed to match the high prices that great works of art fetch at auction. Sometimes wealthy institutions abroad will win out. But the system allows our flourishing international art market to operate, at the same time as giving a chance to raise sufficient funds to retain items in this country. We should preserve it and celebrate the many successes which it has made possible.
5.8 p.m.
Lord Strabolgi: My Lords, we have had a very good debate on this important subject. I should like to thank my noble friend the Minister for her very detailed and reasoned reply and also to offer my grateful thanks to all noble Lords who took part in the debate who gave us the benefit of their special knowledge. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Southern Africa
5.9 p.m.
The Earl of Sandwich The Earl of Sandwich rose to call attention to the international development targets in southern Africa; and to move for Papers.
The noble Earl said: My Lords, I thank all noble Lords who are to take part in the debate. I welcome the noble Baroness, Lady Amos, back to her place. I declare a voluntary interest as a trustee of Christian Aid and a supporter of Save the Children and CARE. I assure the noble Baroness that we are all here not only for the advice we may offer but because we share a continuing concern for Africa, and a concern that Africa deserves special attention and should not be left out of our efforts to meet the international development targets.
I shall start with a word of caution, however. Africa has officially entered a new dimension. It has embarked on a new "economic" partnership known as NePAD, designed to create the most favourable environment for African development. On paper, it has all the hallmarks of the democracy, good governance, civil society, human rights and
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transparency that will bring economic confidence and prosperity. It is supposed to encourage African solutions, too. It even has a mechanism for avoiding bureaucracy or a stultifying committee structure. All that is welcome.
For all that, NePAD is not yet an equal partnership. Without a much greater degree of participation by local people and non-governmental organisations as well as governments, it will not succeed. It will be a bare framework that looks like a cover for western aspirations, an over-ambitious exercise that could founder on too many promises and resolutions.
The noble Baroness may say that Africa needs time and new enterprise, and that things will change. Who could disagree with that? However, she might also recognise that African leaders may not be prepared to give that time if the demands and conditions of international financial institutions and donors prove too much for them. Zimbabwe is a case in point, although perhaps an extreme one. Aid conditionality is still present in NePAD; it merely has new disguises.
NePAD has to win over corporations as well as governments. The noble Baroness will certainly draw attention to the Africa Economic Summit in June, and the prospect of attracting more private sector business partners and inward investment into Africa. It is a devout wish that all that will happen but, with emergencies, world economic uncertainty and the imminence of war with Iraq, it seems hardly likely that it will.
This coming week, we are again preoccupied with the Middle East, and we forget what serious consequences war in Iraq could have for Africa. The whole east African coast down to Cape Town has traditional economic and cultural links with the Gulf. South Africa has several important trade agreements that could be in jeopardy. In the minds of most European politicians, Africa is expendable when it comes to European and north American strategic interests. That is another example of the West espousing aid and human rights in policy documents and conferences on one hand, while ignoring the real needs of developing countries on the other.
I return to the main question: have our governments set an impossible task in Africa in establishing the millennium development goals? That may be, but the object of the debate is not to knock those goals down. It is to ask what progress governments have made with the overall objective, which is the elimination of poverty, illiteracy and ill-health.
Two years ago, on 26th February, the Chancellor, Gordon Brown, and the International Development Secretary, Clare Short—as we must recognise, they have done an enormous amount to raise in government the issue of poverty—joined 14 NGOs, including Save the Children, Christian Aid and Oxfam, in a Westminster conference that placed child poverty squarely at the front of the Government's agenda. It also reaffirmed the millennium development goals. They are to ensure childrens education, health and protection from abuse and the evils of poverty, which we cannot tolerate in any society.
Next week those NGOs meet the Chancellor again to assess the progress made in reaching those targets. I know that the Government are committed to an expanding aid programme in Africa, but they have not yet convinced all the other Development Assistance Committee countries of the need to increase aid dramatically. At Monterrey, there was talk of doubling the annual ODA from 50 billion dollars to 100 billion dollars as a "finance facility" for the international development targets, and the Chancellor repeated that in an article in the Guardian last week. However, it will be a long haul. The EU expects to raise an extra 20 billion dollars a year by 2006, but the US plans to raise only 10 billion dollars. Much of that merely restores aid to its 1990 levels. Again, the key question for Africa is not about how much, but about what conditions will be attached to that facility.
Having seen the current research on the international development targets, although I accept that gains are being made in other continents, I do not believe that we are even going to meet education targets in southern Africa. Without education, I cannot see how Africa will have the necessary training and skills to reach any of the other targets. It would be easy for any government to plead emergencies as southern Africa's main reason for not reaching the targets, but I am sure that the noble Baroness will go beyond that assessment. I will mention those emergencies only briefly, as I am sure that others will do so in more depth.
HIV/AIDS, most of all, has cut a swathe through both human resources and genuine healthcare initiatives. The disease affects 16 million in southern Africa. It saps energy from skilled personnel in every profession and age group as much as from the general population. I know that the DfID is fully engaged in that emergency and have only one question for the noble Baroness today, of which I have given notice. In its 2002 departmental report, the FCO announced a management charter to protect its embassy and other staff affected by HIV/AIDS, especially in Africa. It is often through a generous interpretation of such practice that policy is most understood in the recipient countries, especially where it is a life and death matter.
In my experience with NGOs, however, I have occasionally seen harriers grow up between embassy nationals and local people. I expect that we have all seen examples of that. Will that policy extend to part-time local staff and partner health agencies? Will we show them that it is not only our own staff with whom we are concerned, but those working alongside them?
Another unforeseen emergency is the food crisis affecting 14 million in southern Africa. In some countries, that crisis is being contained through national mechanisms and rapid responses from the World Food Programme. In others, it is taking a daily toll of human life. The country suffering most in the region is Zimbabwe, for reasons of governance as well as natural disaster. I expect that other noble Lords will concentrate on the country. Having worked there briefly in the 1960s, I can only say that a beautiful
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country with a highly skilled and educated workforce is being held to ransom by a man who had held out so much promise to ordinary people.
If we can look beyond those emergencies, several countries in the region already have a brighter future. The first to mention are those recovering from decades of civil war—Angola and Mozambique. Angola has just signed its peace treaty and was the subject of a recent debate, and I visited Mozambique in December, 10 years after its own civil war ended in 1992.
Mozambique is one of those countries that seems to fulfil almost every criterion in the NePAD checklist, which is why it is a favourite with aid donors. It is post conflict, has stable government, is practising multiparty democracy and is attracting private investment. especially along the corridor to South Africa. It gained much credibility during the recent televised fraud and murder trial. It has a fair degree of civil society participation, and with encouragement from various embassies is making efforts to increase it.
Something has gone wrong, however. Mozambique does not yet show the results that people expect on the poverty scale. It has very poor communications, especially in terms of rural roads, and is still recovering from war and floods. Up to 17 per cent of its children may die of AIDS by 2010. Overall, its health services are overstretched. Its per capita GNP is well below the average. Like much of Africa, it simply needs much more investment in infrastructure, agriculture and services to give its rural population a chance of sustainable development. However, the world is not prepared to give that much support for agriculture. I recognise that the DIM is doing a lot for the port of Maputo and thus ultimately for export figures, but that is not directly assisting the poorest farmers when they have no means of getting their goods to market.
Debt relief of 2 billion dollars under the enhanced HIPC scheme, which amounts to a reduction of 70 per cent, may look generous from outside. Actually, it will leave Mozambique saddled with new debts in a few years' time. Christian Aid is calling for no less than full cancellation of its external bilateral and multilateral debt.
I have consulted the UN DP website and have looked down the checklist of millennium development goals for Mozambique. Out of the 10 targets listed, under the question, "Will the targets be met?", not one of them says, "yes". Five say "potentially", but five—including, critically, food, water, child mortality and even education—say "unlikely".
This is the star pupil, which will miss five critical targets. How are the other countries ever going to reach them at this rate of international commitment? Even the extreme poverty target, which potentially will be met, seems doubtful. It will, of course, require a more equal spread of investment than currently exists. For example, one single project—the 1.3 billion dollar Mozal aluminium smelter, which I visited in November—skews the overall export total. This structural inequality is the most fundamental flaw in the whole concept of averaging through the international development targets.
Mozambique, under its PRSP, or PARPA—the local name for it—has an interim target of reducing poverty by 30 per cent by 2010. But that would imply an annual economic growth rate of 8 per cent, which assumes very favourable conditions. Similarly, its debt sustainability is based on an almost unattainable export growth rate of 16 per cent in 2002–05 and 7 per cent thereafter. I have raised this question previously in the House. Such figures show how the international financial institutions can stretch statistics beyond credibility to show the most optimistic forecasts, leaving the country struggling to meet targets beyond its reach. I hope that the noble Baroness can at least assure me that the DfID will not make aid and debt relief conditional on such forecasts.
I turn now to the subject of' South Africa, which is, of course, the country in the region that offers the most promise with a GDP of 150 billion dollars—three times that of all the 13 other members of the Southern Africa Development Community combined. It is a key country in SADC and NePAD and a driving force of development through hosting the World Conference on Sustainability, racism summits and other conferences.
Having witnessed the 1994 elections on behalf of Christian Aid, I am proud of the ANC Government's achievements in certain sectors—notably their macroeconomic reforms through the GEAR strategy. And yet there is no sustained policy of poverty reduction, as there is in Mozambique. Unemployment is high, affecting at least 36 per cent of the economically active, including the informal sector. Although there is universal primary education, child mortality in South Africa is increasing.
As we all know, the AIDS campaign still needs political energy. I notice that Chief Buthelezi is making much political capital out of that at present. Inequality between the races has persisted, with only 26 per cent of blacks and 29 per cent of Asians having proper access to health services. compared with 78 per cent of whites. According to DfID's departmental strategy paper last year, it is,
"one of the most unequal countries in the world",
with poverty still concentrated in the former homelands. The legacy of apartheid has left scars that will take decades to heal, and it is right that we are giving priority to the poorest.
Finally, I shall mention briefly trade. By protecting our own food producers, we are forcing Africa to stay poor because it still depends on sending us unprocessed products and unstable commodities, such as coffee and sugar. The necessity of genuine agricultural trade concessions in Europe, which I know the noble Baroness, Lady Whitaker, will mention, is paramount. Unless we make progress on these vital concessions, we cannot expect to meet the international development targets since our aid efforts, improved as they are, will not be enough. My Lords, I beg to move for Papers.
5.24 p.m.
Lord Sawyer: My Lords, I thank the noble Earl for
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initiating this debate. His excellent speech reflected lifelong knowledge of, expertise in, and commitment to the continent. My contribution will be far less wide-ranging. I want to focus on South Africa and in particular on improving the economic performance of that country through the development of its workforce.
The DfID strategy rightly recognises the pivotal role that South Africa plays in the region and, indeed, the continent through both its economic strength and its political leadership. But South Africa still faces huge challenges as it addresses the legacy of apartheid.
The strategy also recognises that a key element in addressing poverty and inequality is the promotion of growth, jobs and equity. Growth in employment is a key to the reduction of poverty and inequality, but growth in employment is linked intrinsically to the level of skills in the workforce. Apartheid's legacy—in particular, the Bantu education programme—is the very low level of skills among much of the population. That hinders both employment growth and the competitiveness of South African companies.
The Department of Labour in Pretoria has developed a comprehensive national skills strategy designed to address the inequalities and lack of skills across the population. The strategy recognises that employers have an important role to play in improving the skills of the workforce. The key to that approach is to help employers to understand the business case for developing the skills of their people. All too often, as has happened in this country, employers have seen training and development as a burden and a cost. They do not see how training and development can raise the effectiveness, and often the loyalty, of the workforce. The lack of investment in skills development holds back the development of people, reinforces the inequalities of apartheid and stifles the economic growth of the country.
However, I am pleased to have the opportunity in this debate to draw noble Lords' attention to an important initiative, led from the United Kingdom, which is already making an important contribution to improving skills and competitiveness in South African enterprise and improving public sector reform.
For the past four years, I have served on the board of Investors in People UK. Many noble Lords will be familiar with that organisation. It has formed an important part of the skills and competitiveness programmes of successive governments in the UK under the sponsorship of the Department for Education and Skills since 1991. More than 30,000 organisations in the UK have benefited from Investors in People. I am delighted that we are now able to share this excellent approach to workforce development and our experience here with our colleagues in the South African Government. That brings benefit to individuals and, crucially, also helps to improve the competitiveness of organisations and, thus, the economy as a whole.
In developing its national skills strategy, the South African Department of Labour looked to learn from other countries' experience in developing its own

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solutions and approaches to workforce development. In doing so, it identified the Investors in People UK standard as the best example in the world of an employer-based skills development strategy.
We are frequently encouraged to look elsewhere for examples of effective policy and strategy. I am delighted to be able to say that the export of Investors in People to South Africa is an example of the UK leading and inspiring others. Incidentally, Investors in People has now been exported to more than 20 countries across Europe and beyond. It is the only people-management standard to have achieved international recognition anywhere in the world.
However, more important to this debate, since January 2001 Investors in People UK has worked with the Department of Labour to implement Investors in People in South Africa. Within a short time, a small team of dedicated and highly committed individuals has made enormous progress in raising awareness of the Investors in People programme and in involving employers and the workforce in tackling the skills development of their people.
In South Africa, Investors in People provides a framework that employers can use to improve the way they manage and develop their workforce. It has focused the employer on the importance and value of training and development, effective communication and good people management. If the organisations can demonstrate that they are meeting the requirements of the Investors in People standard, they receive recognition for that and become Investor in People organisations.
But Investors in People is much more than a business standard. It is a philosophy, a fundamental belief in the value that people can bring to organisations. At the heart of what organisations should be trying to achieve through good skills management is a shift in attitude among individuals, teams and companies that benefits the economy as a whole.
In the short time that the project has been running in South Africa a number of household names have become involved and committed to the principles of Investors in People. They include some of the largest employers in South Africa, such as BMW, Volkswagen, Old Mutual and South African Breweries. Equally importantly, there are many smaller organisations, for example, the Du Toit Farming Estate in Kromfontein, a rural farm in the Western Cape, which had a chronic skills shortage and where Investors in People was used to improve workforce development, communication and feedback from the workers and encourage a high degree of skills.
Last year I had the opportunity to go to South Africa to present the awards to companies, large, medium and small. I was thrilled by the excitement of workers who, never having had an opportunity previously to develop their skills, had gained such opportunity by taking part in this initiative. It was an important moment in my life.
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Just as important, the South African Government are demonstrating that they believe that Investors in People can play a role in developing the skills of their own employees. The DfID strategy rightly points out that to some extent the development of effective government policy and strategy is held back by lack of skills and experience of the civil service in Pretoria. While the Investors in People standard will not cure that problem immediately, it can help to make the process of improving skills and management much easier. The involvement of the Department of Labour, the Department for Public Service and Administration and the Department of Trade and Industry are all to the benefit of the economic development of this country.
Of course, it is important to acknowledge that we cannot simply take one approach from the UK and apply it to another country without understanding the context and relevant issues in that country. For example, in South Africa the standard has been adapted to ensure that employers are developing their people in line with legislation on equity. That will play an important role in ensuring that people who previously had no access to training or development now have that opportunity.
By 2005 the South African Government anticipate that over 500 organisations will have benefited from the new Investors in People programme, reaching a huge number of people employed in large and medium-sized companies and the public sector. That will be the platform for helping thousands of other smaller businesses and their workforces in South Africa.
I am pleased and honoured to have this opportunity to draw the attention of the House to this project and to the wider success of our UK standard of Investors in People that is working successfully in this developing nation. I would encourage the Minister to consider further the role that Investors in People can play in supporting the DfID strategy, not only in South Africa but beyond. I note that the DfID strategy does not at this stage include any reference to Investors in People. That is understandable because in the past it has been seen as simply a UK standard. However, now that it has been applied in other parts of the world, it would be good if this could be reflected and that the level of co-operation we have been able to establish with the South African Government were recognised and built on to make it an even more widely accepted and used international standard.
We have learnt much from our own approach and from sharing our experiences. It has been a cost-effective and beneficial means of supporting the development of the South African economy. I look forward to returning next year and seeing the smiling faces of workers who never before had the opportunity for proper training and development and being involved in a great expansion of skills and people development.
5.35 p.m.
Lord Griffiths of Fforestfach: My Lords, like the last

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speaker I too thank the noble Earl, Lord Sandwich, for introducing the debate. I was delighted to hear the enthusiasm of the noble Lord, Lord Sawyer, reporting on Investors in People. I must declare a potential, not actual, conflict of interest. A proposal I want to consider later could have a financial benefit for an institution with which I am closely involved in the City of London.
As mentioned by the noble Earl, the situation in Africa can only be described as really dire. Without repeating what has been said, I shall mention a few points. GDP per capita in the region throughout the nineties has declined by roughly half a percentage point. Twenty countries in sub-Saharan Africa are poorer now than they were in 1990. They count for more than half of the region's population. According to the UN, 200 million people are under-nourished. Malnutrition is a leading cause of the death of children under five.
In over one-third of the countries in sub-Saharan Africa, every other child is out of school. On present trends, which are improving slightly, Africa will not witness universal primary education until 2100. One in six children dies under the age of five. As has been mentioned, 25 million people in sub-Saharan Africa have HIV; 10 million children are orphaned by AIDS.
The conclusion of the UN and UNICEF is that,
"Africa saw some success stories during the 1990s but, on balance, the continent's record in moving towards the Millennium Development Goals has been inadequate, especially for the poor. Twenty-three sub-Saharan countries are failing in half or more of the goals; twelve do not have enough data to be assessed … With the exception of safe water, regional progress was less than one-tenth of the agreed target between 1990 and 2000."
I think we would all agree that that is a dire picture.
There are examples of success. One was given by the noble Earl—Mozambique. Uganda and Tanzania are others. In parts of the world with which I am more familiar, especially China, there has been spectacular success. In the light of that, surely the millennium goals are to be welcomed. They set clear targets which cover not only poverty but a whole range of indicators of social well-being. Sometimes those targets are attacked because they are arbitrary: 2015 is an arbitrary date. The period 1990–2015, 25 years, is again an arbitrary time period. However, I value the targets because they focus our attention on the urgency of the problem and the need for action now. Without those targets we would be less well off.
The danger today is that of indifference in developed countries. One may ask why the situation in sub-Saharan Africa is so dire. Partly, the reasons are external. They face, for example, a decline in the price of exports. Agricultural protection in both Europe and America is, frankly, a disgrace. It would be a tremendous boost in terms of trade and jobs to sub-Saharan Africa if agricultural protection was removed here, in other countries and in the US.
There are also internal factors. There have been weaknesses of domestic governance; misdirected policies; an investment climate which is not conducive to growth and productivity; and—dare one mention it?—there has been corruption. That is why the
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NePAD initiative is very important. Its principle is that Africa is saying that its development is an African responsibility and that it wishes to own it. Therefore, through peace, security and good governance, it can do something about it.
Furthermore, in the community of those interested in development—especially the World Bank—it has now become generally accepted that we cannot have real progress in reducing poverty in Africa unless the African economies themselves are prepared to strengthen the private sectors in their market economies and have private sector growth. For that to occur, one needs macroeconomic stability. There cannot be widely fluctuating budget deficits and inflation. One needs incentives to save for investment and for risk-taking and, in many countries, much clearer definitions of property rights and enforcement of contracts.
The conclusion of the World Bank, when surveying the whole area, was very interesting. It said:
"Clearly experience shows that the private market economy must be the engine of growth".
Therefore, I believe we should be urging countries in sub-Saharan Africa to strengthen their private sectors. That is absolutely critical for removing poverty. Frankly, even if all the economies in the region were to show considerable growth in the next decade or two, that would not solve the problem of clean water, primary education, better and new roads, or meet the targets of public health.
That is why we need a boost to official development aid. Some are very much opposed to it. It must be said that in the past official development aid has been wasted, abused and even stolen. However, without a major boost in official development aid as NePAD and African economies are prepared to strengthen their market economies, we shall never realise the millennium development goals. In that respect. I applaud an initiative by the Chancellor of the Exchequer, Gordon Brown, introduced at the end of his pre-Budget Report last November: namely, the international development financing facility. Noble Lords may think it extremely generous my saying that, because on some issues I have not found myself on the same side as the Chancellor. But in another place Michael Howard, in immediately responding to the Chancellor's Statement, said:
"I start on a note of consensus. I welcome what the Chancellor said in his closing remarks about the relief of global poverty. He said that he welcomed the support that that would receive from all quarters of the House, and he was absolutely right. We support those measures".—[Official Report, Commons, 27/11/02; col. 327.]
Basically, the Chancellor's proposal related to how one could get the extra £50 billion aid mentioned. Given the state of the world and individual economies, I cannot see that money coming from fresh aid. The Chancellor proposed that individual countries make a commitment not simply to give aid on an annual basis, but, for instance, for 15 years. Therefore, through the international capital markets, one could raise money by issuing bonds. Individual governments could then disperse that money as extra aid between now and 2015.

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At the very least, the proposal means that the time profile of aid would change. There would be a major frontloading of aid between now and 2015 and perhaps a reduction thereafter. Some would argue that as aid increased and visible improvement was evident, it would be highly likely that the level of aid itself would also increase.
I very much back the proposal. The part I find attractive—it may not appeal to all Members of the House—is the emphasis placed by the Treasury on conditionality. The aid must meet certain conditions. Each individual country that was part of this international development financing facility would be able to lay down conditions. The US has effectively already done so through its millennium challenge account. We have the opportunity to be very creative in how we approach the issue. We could involve the NGOs and the private sector more.
This is an ambitious proposal, but, given the dire nature of the situation in sub-Saharan Africa, nothing short of an imaginative gesture will tackle the problem. I believe therefore that we should support strongly the Chancellor's initiative.
5.46 p.m.
The Lord Bishop of Chelmsford: My Lords, I greatly welcome this timely debate initiated by the noble Earl, Lord Sandwich. The Church of England fully supports the Millennium Development Goals and is using them as a basis for its development and advocacy work. However, based on current trends, we are concerned, as other noble Lords have indicated, that most of these goals will not be reached in southern Africa by 2015.
To reverse the stagnation or increase in poverty, hunger, child malnutrition, HIV/AIDS prevalence, deforestation and degradation will, at the very minimum, require massive year-on-year investment in basic health and education services, sustaining rural livelihoods, and social and economic infrastructure. It will also require consistent and concentrated political commitment from governments and donors to prioritise poverty in their domestic and foreign aid spending, and a furthering and strengthening of participatory models of development.
Several avenues exist for mobilising the required investment and plugging the increasing outflow of resources from southern African countries. One is an increase in bilateral overseas development aid to the long promised 0.7 per cent of GDP by the Organisation for Economic Co-operation and Development countries with increasing expenditure on the poorest countries and not those that carry more strategic or political importance to donor countries. To that end, as has already been indicated, Christian Aid welcomes and supports the Chancellor's proposal for an international finance facility, which is intended to double the amount of developmental aid from OECD countries by 2015. It has grave concerns, however, that countries will have to continue to open up their markets indiscriminately as a condition for accessing more resources from this facility.
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Another avenue has to be the full cancellation of the external bilateral and multilateral debts, which date from the era of the oil crisis and structural adjustment policy lending, of Malawi, Mozambique, Zambia, Tanzania and Lesotho, especially debt owed to the World Bank and IMF.
There is also the non-reciprocal opening of European Union, north American and Asian markets to specially processed agricultural, textile and clothing exports from southern African countries, which would encourage more domestic and foreign investment and therefore growth.
Lastly, one could increase the terms of trade in southern African countries by setting a target for an end to agricultural subsidies in OECD countries that continue to distort global markets for many commodities.
As other noble Lords have stressed, we are all aware of the frightening escalation of HIV/AIDS and its devastating impact on households, communities and economies in southern Africa. That, and the prospect of another year of serious staple food shortages across the region, is plunging large numbers of southern Africans into ever deepening poverty, thus compromising future agricultural production and rural livelihoods. In the spirit of a global partnership, the donor community needs to scale up dramatically and immediately its development assistance to southern Africa.
I shall focus on two main concerns. The first is what the MDGs can achieve. We all recognise that the MDGs are an important symbolic expression of the mutual responsibility of rich and poor countries for creating a more equal world. That has inspired the World Bank and other lenders to commit to new models of development partnership, where aid recipient governments and citizens, instead of lenders and donors, are in charge of developing their vision and journey. Although initial evidence indicates that the mindsets, cultures, and political commitments of donors and aid-recipient governments are still steeped in old ways, it is at least a step in the right direction.
The MDGs are an important mobilising, advocacy and campaigning tool for citizens, parliamentarians and development activities in development countries to advocate increased bilateral donor spending in budget debates, debt cancellation, fairer trading policies and spending on policies, activities and facilities that will contribute to poverty reduction. The MDGs are also a powerful tool for advocating the coherence of international financial institutions policy conditionalities and international trade rules and agreements with the vision of the United Nations for a more equal, less divided world.
The MDGs can encourage output-orientated policy making and expenditure allocation in national and local budgets. The MDGs allow citizens and policy makers in developed and developing countries to assess progress towards eradicating poverty. The MDGs can be used by citizens in developing countries to press for political commitments by

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their governments to reduce poverty through policy reforms, institutional change and budget reallocations.
The MDGs can establish clear criteria for spending priorities in the donor community. The MDGs can achieve all those aims.
My second locus is global partnership for development. The goal to develop a global partnership for development will he realised only once donor governments and the institutions that they control—the IMF and World Bank—stop receiving debt service repayments from low-income countries on debts that have accumulated as a result of the 1980s debt crisis, and start working towards a mechanism that will guarantee sustainable debt levels in future.
For example, Mozambique, to which other noble Lords referred, Zambia, Tanzania and Lesotho will still pay more debt service to the international financial institutions, bilateral donors and commercial creditors in 2005 than they did in 2000. That clearly threatens the global partnership and those countries' ability to finance the interventions needed to achieve the MDGs. The Church of England's Public Affairs Unit has been calling on the IFIs, the DfID and the international community at large to measure debt sustainability against the resources needed to reach the millennium development goals in each country, and has called for a new debt relief mechanism.
The Public Affairs Unit has also urged the UK Government to increase their spending on HIV/AIDS by at least £750 million a year, to bring it in line with the UN call for a fivefold increase in global resources to win the fight against HIV/AIDS. That money should be channelled mostly through existing bilateral and multilateral aid mechanisms. Without massively scaled up funds to implement HIV/AIDS prevention programmes and to provide sufficient care to peoples and communities living with HIV/AIDS, as well as to invest in public services and economic sectors decimated by the epidemic, six out of the eight MDGs will not be met.
Finally, as was stressed by the noble Lord, Lord Griffiths, southern African governments themselves need to commit to a long-term investment in poverty reduction and to be held accountable for the resources that they manage on behalf of their countries. That will depend on visionary and dedicated political leadership committed to poverty reduction as a priority and to strong, well-resourced public institutions and mechanisms that can sustain and deliver basic services and thereby bring fresh hope to the southern African population.
5.57 p.m.
Lord Desai: My Lords, I owe an apology to your Lordships, especially the noble Earl, Lord Sandwich, for not being present when he opened the debate. The previous debate collapsed early and my calculations went awry.
I bring no special knowledge—I have done nothing practical all my life—but I can speak as an academic. Fifty years ago, we would have had a similar debate about not Africa but Asia. Fifty years ago, we were worried about starvation—famines—in China and India, that the growing mass of the Asian population would be unable to feed itself and that Asia might become a dangerous place.
I say that partly to illustrate that it is easy to be gloomy but things may change, and partly to pose a question about which I have been worrying quite a lot lately. How is it that, compared to the early 1960s, when we were much more optimistic about Africa, which had a much more favourable resource situation, and were much more pessimistic about Asia, today, 50 years on, we have reversed our regions of pessimism and optimism? We now regard Asia as something of a success—perhaps east Asia more than south Asia—and Africa as a dire problem. We must continually think about that, because there are lessons to be learnt for Africa from Asia's success that we have not yet learnt.
I have arrived at the conclusion that Asian governments, corrupt as they often are—they are not all democratic, either, although they are more so recently—have in some sense been more responsive to their people and less alienated from them than African governments. That is a generalisation and, as with all generalisations, one may point to particular exceptions. But neither a Mobutu nor a Bokassa regime has happened in Asia. The worst was Marcos. Corrupt as the Asian elite are, they do not salt away their money in Switzerland or France; they spend it at home. That shows not that they are not corrupt but that they are not alienated from their people, which is an important element of governance.
About 10 years ago, Basil Davidson wrote a book called The Black Man's Burden, in which he discussed the failure of African countries to make a success of nation state formation. It is a burden. The important aspect is not only what we call governance, but when the members of the political elite become responsive and not alienated from their own people. We need to look at how Asia has succeeded in that regard. Asia has multi-ethnic populations as in Malaysia; it has had a colonial experience; it has had all sorts of natural disasters; but it has managed.
From the 1970s to the 1990s there have been more civil and international wars and conflicts in Africa than in Asia. Somehow Asia escaped early and has not had a serious war since the 1970s. But southern Africa, in particular—Angola, Mozambique and other countries—has been through vicious wars. The international community has either stood by, in some senses, has aided or abetted in the wars, or has failed to solve them. Today, happily, apart from the sad case

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of Zimbabwe, there are few such situations. But the cessation of hostilities in Angola and Mozambique, in particular, and the removal of apartheid in South Africa have not yet led to positive fruits. Such changes take time. We must remember that much of southern Africa is in a post-conflict recovery situation, and development is difficult in those circumstances.
Many noble Lords referred to rural development, especially in agriculture. Asia had a green revolution that transformed the prospect of feeding people in India, China and throughout the continent. Such a revolution has not yet touched Africa. African agricultural productivity was, broadly, higher than that in Asia in the 1960s. Africa is now behind; its productivity has not grown, and, if anything, its agriculture has deteriorated.
Part of the answer lies in what the European Union and the USA have been doing. As many noble Lords pointed out, the European Union's agricultural policy does positive harm to African agriculture. I have been quoted as calling it a "crime against humanity", and I stand by that. The right reverend Prelate the Bishop of Oxford, who is present, will remember that we participated in a press conference at which we highlighted the example of Ghana. Ghana's tomato industry was encouraged; people said that it should have tomato-canning factories; but then Italians ruined the Ghanaian tomato industry by dumping their surplus tomatoes in the country. How can one have a growing agricultural industry in a country on which a very rich continent continually dumps its agricultural surplus because it has a horrid agricultural subsidy policy?
Apparently, the European Union will now protect its subsidies policy under the guise of an environmental issue. I have never heard anything more sickening than what the EU is doing in the WTO negotiations. But let us hope that the WTO negotiations on agricultural adjustment will be successful. Let us hope that the resistance to it will not be successful and that export subsidies will be cut. I know that the DfID and all my noble friends in the Government will try their hardest to reverse the EU's position and to make it a better behaved institution than at present. We should also urge our American friends to reduce their agricultural subsidies so that we do not do any more harm.
Do not give more aid; but do not do so much harm. If you give 50 billion dollars in aid and 500 billion dollars in agricultural subsidies, do not increase the aid, but reduce the 500 billion dollars of subsidies. I would not even mind if the saved money was kept. But the 500 billion dollars does enormous harm. Our stance ought to be much stronger. I wish that the anti-globalisation movement demonstrated against agricultural subsidies rather than against the WTO—but that is another story.
I believe that the essence of NePAD is right. I think that eventually African development will be solved by Africa. I am not optimistic about altruism as a driving force in societies. Economists tend not to trust altruism; they trust self-interest. If we can stop
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harming Africa, encourage trade with it, and encourage it to invest in rural development, perhaps the millennium development goals will not be realised by 2015, but at least we will be well on our way to doing so.
6.6 p.m.
Baroness Whitaker: My Lords, I add my congratulations to the noble Earl, Lord Sandwich, for initiating this timely debate and for the thoughtful and committed way in which he introduced it. As he says, the UN millennium development goals risk not being met in some countries of southern Africa. The goals deal with tasks for which aid in poor countries is necessary but not sufficient. Indeed, in the regions where the goals look as if they will be met, such as India and China, much more is going on than development assistance. There is significant investment in enhanced crops, for instance, such as GM cotton, which has achieved an 80 per cent increase in yield while cutting pesticide use by two thirds.
I want to mention some links between aid and the other essentials for reaching the goals; and to identify some of the gaps in the way that we look at the goals. Some of my examples go beyond southern Africa, but the principles are all the same. Although aid can create the basis, in terms of health, education, adequate water supply and so on, the engine for achieving development is the economy, fuelled by the nation's trade, its foreign direct investment, and, in many poor countries, the remittances of its emigrants. Fifty per cent of Lesotho's GNP is contributed by remittances. Let us not forget that benefit from economic migration.
Foreign direct investment has not been adequate in the poor countries of southern Africa. Indeed, the richest 20 per cent of the world's countries hog 68 per cent of foreign direct investment. That is hardly surprising. Investors will not come, no matter how cheap the labour rates, if there is not the basic national asset of a healthy, educated population. The millennium development goals rightly prioritise those. But other elements are also necessary: the good governance that rests on accountability, political stability, an effective state, transparent and honest financial transactions, as the noble Lord, Lord Griffiths, mentioned—those other national assets that are achieved in democracies with a strong civil society. There are some in southern Africa. They are, in effect, the creation of a local culture. They are inherently rights-based. But they are not explicit in the millennium development goals; we have to read them in. I am indebted to a very interesting new paper, Heaven or Hubris, in the latest Development Policy Review by Simon Maxwell, director of the Overseas Development Institute, for clarifying some of those issues. I add that, where rights-based goals have not been met and there is no democracy, in extreme poverty, there is the breeding ground for violent resentment, insecurity and eventually terror.
The Cotonou agreement was a good model for governance goals, although we have moved on from its trade policies to the Doha agenda. I ask my noble

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friend the Minister how Cotonou is working now. We should also applaud the ongoing march of NePAD—applause echoed by other noble Lords—which includes the goals of transparency and good governance on which my noble friend has worked so hard and about which my noble friend Lord Lea of Crondall will speak.
The critical path of development is also driven off-course by events that particularly deter foreign investment—war, drought and famine. The resulting huge displacement of people is additionally destabilising. Nearly three quarters of the world's refugees, far from coming to the West—least of all, the United Kingdom—are in developing countries. I saw the burden on the Côte d'Ivoire of Liberian refugees, when I was there just before the coup. Our Department for International Development does a great deal to minimise the tragic human consequences of events and help prevent them from recurring, giving well over £100 million of humanitarian aid bilaterally and through the EU. My right honourable friend the Chancellor's proposal for an international financing facility, described by the noble Lord, Lord Griffiths of Fforestfach, could lever up aid, so that we would be well on the way to meeting the goals.
There has been progress. Untying aid, as the Government did two years ago, has made UK aid, arguably, three times as effective, through enabling more appropriate technology and assisting local procurement. Would that our French and Japanese allies could bring themselves to do the same. Jubilee's research into the effects of the debt relief that my right honourable friend the Chancellor was instrumental in procuring shows large increases in spend on primary education. In 10 heavily indebted poor countries, including Cameroon, Malawi and Rwanda, education spend rose from a little over 900 million dollars—I am sorry that I have dropped into using dollars—in 1998 to 1.3 billion dollars in 2002, and health spending from 466 million dollars in 1998 to nearly 800 million dollars in 2003. Those are not huge amounts by our standards, by they go a long way in the rural areas of Africa.
Trade, the other part of the engine of development, is deeply undermined in southern Africa by the EU and the US approach to tariffs, as all noble Lords said. It is surely a bit rich for the USA to demand liberalisation abroad, while protecting its own vulnerable industries from fair competition from the developing world. The new and authoritative report of the Select Committee on Economic Affairs on globalisat ion says:
"developed countries' protectionism … with regard to agricultural and textile products in particular is wholly objectionable and unjustifiable".
Agricultural goods matter in particular because that is what developing countries mainly produce and because agricultural trade brings the surest economic growth for poor people.
I agree with Oxfam that there is need for care in doing away with protection for developing countries' own produce. As my noble friend Lord Desai implied, countries that recently emerged from poverty in Asia sheltered their local industries while they grew
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competitive. Surely, what we need is liberalisation on the part of the rich countries who can afford it and who claim to value fair competition, not least in the interest of their consumers, combined with managed and gradual progress from protection policies by poor countries, supported by credit and other facilities.
The noble Earl, Lord Sandwich, spoke tellingly about Mozambique. I would like to add one example from their sugar industry. Before its war, Mozambique was a very successful exporter of sugar. That was discouraged, incidentally, by the IMF for reasons best known to itself. But Mozambique picked up again and now produces well over 200,000 tonnes a year. It is produced at half the price of European beet sugar. Would not that help European consumers?
But Mozambique was allowed in 2001 to export only 8,000 tonnes to the EU and 12,000 to the US. Oxfam estimates that, even with a slightly rising quota, in 2004 Mozambique will have lost the chance to earn perhaps £108 million. I need hardly remind your Lordships that in Mozambique many people are poor beyond a European's worst nightmare. Three per cent of its population will starve without food aid. Your Lordships might like to know that European consumers and taxpayers pay £1.6 billion a year to fund European exports of sugar to undercut sugar from developing countries and that British Sugar's profit margin in 2001 was 21 per cent.
The WTO asked last week for the elimination of all export subsidies for farm goods over a 10-year period. The European Commission says that the proposal is "unbalanced" and inequitable. The stark truth is that the millennium development goals, on which much of the peace of the world depends—as well as the lives of millions of ordinary people—cannot be met in southern Africa unless farm trade is eased and market access made free. As today's Financial Times puts it,
"If the deadlock on agriculture is to be broken, the onus lies with the EU. Its farm subsidies are the world's biggest and most trade-disturbing and are matched by grotesque import harriers".
When we advocate market access for the exports of the developing world, we are talking about straightforward fair competition. But we are also talking about equality and about averting personal catastrophe for millions. It is truly a policy for the many not for the few. In response to those who say that Western governments must heed the objections of their farmers, we should recall the prospect of war and terror. If the countries of the European Union can drop their tariff barriers to prevent war among themselves in post-Second World War Europe, in our modern global world, we should do no less.
I ask my noble friend what the UK objectives in the European Commission and at the WTO meeting next month will be. How will our Government help developing country members raise their voices and determine the agenda? Farther ahead, can she promise that, at the ministerial WTO conference in Cancun in September, there will be priority for sorting out trade equity before dealing with new issues?
6.18 p.m.
The Earl of Listowel: My Lords, I too am grateful to my noble friend Lord Sandwich for tonight's debate. I am advised by Christian Aid that the greatest impediment to the achievement of the millennium development goals is the spread of HIV/AIDS. I will concentrate on how we might inhibit the spread of HIV/AIDS in Angola and ask the Minister whether she considers that Her Majesty's Government give sufficient priority to the issue.
Angola is of strategic importance in southern Africa because of its location and its diamond and oil wealth. All its regions—except Cabinda—are now at peace, after decades of civil war. Despite the challenge of resettling former combatants, displaced people and returning refugees, it has the potential in the longer term to be an engine for development in the region.
Mr Lukamba, secretary-general of UNITA and leader of the forces that fought against the ruling MPLA, recently made a historic visit to London. His calls for greater transparency and better provision for all excluded groups in Angola were, I think, welcomed by Her Majesty's Government. In his speech to an audience at Chatham House, the Royal Institute of International Affairs, he said:
"I also come to advocate dignity for the millions of displaced Angolans, the refugees, the demobilised soldiers from various armies, those with physical disabilities caused by the war, orphans, widows and the thousands of children who populate the streets with no support and subject to predators".
If no coherent strategy is developed to counter HIV/AIDS within Angola, there may be many more thousands of children populating those streets with no support and subject to predators.
In 2001, a group of parliamentarians met some of these children. Orlando was 12 and slept under a hot-dog stand near to the United Nations residence in Luanda. He was interested in football and basketball and we talked about that for some while. He would gather his food from the dustbins—chicken scraps or whatever else was available.
We spoke for some while before another boy interrupted us. This boy lived in the sewers nearby. He entered the street through a road drain. Previously, he had threatened a member of the UNICEF staff with a knife and torn that man's shirt as he had lunged at him with the knife. Orlando was intimidated by him, as we were.
If we fail to inform young Angolans about the dangers of unprotected sex and of other means to prevent HIV infection, the HIV/AIDS orphans may come to outnumber the Orlandos—those displaced by war—on the streets. Furthermore, there is the risk that these many thousands of uncared-for children may become a source of instability in Angola. Your Lordships may find the following extract from the Economist magazine of 30th November 2002, headed "Forty million orphans", of interest. I quote:
"In the rest of Africa, the big worry is orphans with guns. They are 'putty in the hands of warlords', says Hamish Young of UNICEF. Abandoned children know their lives are likely to be short, so they figure they may as well seek thrills while they can. Gangs or rebel armies can provide substitute families, while
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orphans can make attractively nihilistic recruits. Children as young as five fought in civil wars in Sierra Leone. Liberia, Congo and Uganda and have been responsible for many of the worst atrocities".
It was encouraging to learn from the Foreign and Commonwealth Office that the wife of President dos Santos, Mrs Anna Paula dos Santos, recently presented a three-hour television programme on the prevention of HIV/AIDS which, according to the World Health Organisation, gave a very strong and clear message to the viewers. However, I am advised that there is still no clear priority on the part of the government of Angola on countering HIV/AIDS. One understands why this should be so. The government of Angola face urgent demands to respond to the hunger of their people, to the need for resettlement, to rebuild the nation following the civil war and to prepare for elections.
Mr Van Dianem, vice-minister for health, spoke to Mr Baillil, the World Bank official responsible for HIV/AIDS in the autumn of last year. The vice-minister requested funding to provide retro-viral treatment to mothers to prevent their transmitting HIV/AIDS to their infants. The expense of such treatment would confine its use to four of Angola's regions. The World Bank representative urged a broader public health campaign which would impact on 80 per cent of those affected. The two parties, as I understand it, are still in discussion on the way ahead.
Perhaps I may detail a little further the effect of HIV/AIDS on a nation's development. HIV/AIDS orphans are more likely to lose both parents; both their parents are likely to share the contagion. In Africa, these children may well be taken into the extended family or wider community. Inevitably, then, they will normally stretch the resources of families already living in poverty. The same group of parliamentarians visited a family in which the mother was an aunt to children whose parents had died from HIV/AIDS and she had taken in the three children. We spoke to the eldest son, who was bright and lively and aspired to become a doctor. But one must be concerned at the additional strain on that family and any aspiration in that direction would be unlikely to be fulfilled.
Girls and boys are removed from school to assist their hard-pressed families or to care for parents who are suffering from AIDS-related diseases such as malaria and tuberculosis. Key workers appear particularly likely to become infected with HIV/AIDS, so infant and maternal mortality rates rise as lack of professional staff worsens. Angola, according to the UN, already has the second highest infant mortality rate in the world. I look forward to hearing from my noble friend Lord Chan on the situation for mothers and girls in southern Africa.
The same group of parliamentarians saw how effective a small local organisation of young people could be in promoting awareness of HIV/AIDS. In Lubango, a town in southern Angola, we visited the offices of Prazedor. In the local market, young people were speaking to young men about condom use. They were distributing literature and ribbons to cars and

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passers-by in the streets. While doing so, these young Angolans were developing skills in book-keeping and management valuable for their future careers.
A senior diplomat from Mozambique recently advised me that we need to understand two things as we address HIV/AIDS in Africa. First, we need to understand the reluctance of adult Africans to speak about sexual matters with children and young people. Secondly, we need to understand the importance of small organisations working in the community of the kind I mentioned and to support them.
The gentleman's first point may help to explain some of the significant resistance to developing a robust, coherent, clear programme against HIV/AIDS in Angola. It may therefore be all the more important that HIV/AIDS prevention is given the greatest weight in discussions between Her Majesty's Government and Angola. However, I am advised that HIV/AIDS prevention seems to lack priority both in the UK's most recent strategy for Angola and the strategies of the European Union and the United Nations. I have not read these documents, but have received this advice from one of the NGOs working in the area.
Like other noble Lords, I pay tribute to the hard work that the Minister and her colleagues in government undertake in order to improve the outcome of the people in Africa. I conclude therefore by asking the Minister whether she is satisfied with the priority given to HIV/AIDS in Her Majesty's Government's plans for future engagement with Angola. Will she continue to press the Angola Government and the international community hard on this matter? There may be continued resistance because of what appears to be a cultural taboo on the subject—and for other reasons—but success appears to be vital to the achievements of the millennium development goals.
I have not given the Minister notice of those questions, and I shall be happy to receive a written reply if that would be more convenient. I look forward to her response.
6.28 p.m.
Lord Chan: My Lords, I add my congratulations and thanks to my noble friend Lord Sandwich on securing a debate that has an urgency now sadly obscured by political developments elsewhere in the world, particularly in the Middle East. As has been pointed out by other noble Lords, the Department for International Development has set crucial targets for southern Africa. The foremost of them is the reduction of poverty by half by 2015—the so-called millennium development goals which also have associated targets such as the provision of basic healthcare and universal access to primary education by the same date. They are essential to the welfare of poor people, particularly of women and children.
I will focus on the needs of women and children living in the five southern African countries of Botswana, Lesotho, Namibia, South Africa and Swaziland. I intend to ask the Minister how models of
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good practice funded by DfID in other developing countries may be implemented in southern Africa for improving the health of women and children.
As all noble Lords agree, the most important health problem in southern Africa, and in other countries of Africa, is HIV/AIDS. Recent ante-natal surveys of pregnant women by the UN AIDS department of the WHO revealed that between one in five and one in three South African women between the ages of 15 and 49 years—that is, those in the reproductive age range—are infected with the HIV virus. As the noble Earl, Lord Sandwich, said, some 60 million people in Africa have been infected with HIV.
This finding means that in the next 10 years some 5 to 7 million people in southern Africa will die during their prime years, leaving some 2 million orphaned children. I have gleaned this information from DfID's report on southern Africa of October 2002.
Poor people with HIV infection, eating inadequate food, lacking access to medical treatment and living in poor conditions are vulnerable to other opportunistic infections such as tuberculosis. Malaria is also endemic in southern Africa. A combination of HIV, TB and malaria kills millions of people, particularly in Africa.
Currently, 10 per cent of new HIV cases in southern Africa arise from mother to new-born baby transmission, an infection that can be reduced substantially if retroviral drugs are given to pregnant women. But these drugs are not available to many pregnant women in southern Africa. Instead, we read of advice being given—which we would give to women in western developed countries—that "If you have HIV, do not breast-feed your baby". If this kind of advice were followed in southern Africa it would almost certainly mean that the baby of an HIV-infected mother who was not breast-fed would die of diarrhoea.
Infection rates of HIV among girls between 15 and 19 years is alarmingly high. This reflects the low rate of condom use in sexual activity—yet another area of healthcare on which we need to focus.
But other hazards also cause premature deaths among pregnant women. The lack of access to antenatal services will lead to women dying from undiagnosed high blood pressure, anaemia and difficult births that require admission to hospital.
Treatment of tuberculosis in young adults and children can save lives. A BCG vaccination is particularly helpful in preventing tuberculosis in children. Malarial infection can be mitigated by giving children anti-malarial drugs as a preventive measure, and the doses required are much smaller than those needed for treatment.
In South Africa, the majority of poor people are black Africans. Only one in four has access to health services compared to eight in 10 white people.
Although the picture of poor health I have reported is very depressing, solutions to address them are available and have proved to be life-saving in poor countries, in Uganda and in Asia. We know that

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women with primary education are able to keep themselves and their children in better health than uneducated women. The best example of this success is in Kerala, a southern state of India, where the majority of people are poor but have health indicators similar to those in richer countries such as Thailand. The reason is clear. A woman who is educated makes good decisions about the care of her family, of her children and, particularly, of herself. One of DfID's targets is universal access to primary education. Girls in southern Africa must be made a priority group for such education.
Access to basic healthcare is denied to three out of four black Africans. Surely this is an area of service in which DfID should encourage African governments to invest and to work in partnership with NePAD, our own Government, the European Union and voluntary organisations and charities which have a track record in the successful transfer of skills in developing countries.
In the 1980s and early 1990s, DfID's predecessor encouraged British institutions to work in partnership with governments in developing countries. I was privileged to work with my colleagues in northern India on such a scheme. I spent about 10 years going to and from this country into the five poorest and most populated states of northern India to develop and improve basic services for pregnant women and babies. This process took between three to five years in the poorest state of all, Orissa—which had a problem with overwhelming floods only four years ago—but we were able to leave Orissa with local doctors, midwives and trained birth attendants to continue running a good-standard, sustainable service for poor people.
Even if we no longer want to engage in this kind of aid, we can encourage health teams from other countries, such as Thailand, to go to southern Africa to share their skills and their system for controlling the spread of HIV/AIDS. Thailand has been particularly commended by the WHO and other agencies for its successful control of the spread of HIV/AIDS.
I was privileged to take a team of doctors, nurses and managers from northern India to Thailand in 1992 to learn how HIV/AIDS was managed in the community in a developing country. The members of the team returned to India to implement what they had learnt in another developing country. I know that they have done well and are particularly satisfied with the sustainable pattern of management of this disease. Would this pattern of partnership be helpful in southern Africa? We will not know if we do not try it out. I await with interest the Minister's answer.
Medicines are expensive but they are essential for the treatment of people with infections. If products from western countries are too costly, why not buy generic drugs manufactured in Asian countries, such as India, where there is quality control of the drugs of companies based in this country?
We are all aware that the Government have done well in the area of overseas aid, but we need to work in more imaginative ways in partnership with our
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African colleagues. I have been in touch with people from southern Africa who are living in the United Kingdom. They have said that they will be delighted to return to work in their former countries to assist in establishing and developing health services for mothers and children, but as British citizens.
I look forward to the Minister's response. I have not given her notice of these questions but I hope that she will be able to comment on them.
6.39 p.m.
Lord Lea of Crondall: My Lords, I, too, congratulate the noble Earl, Lord Sandwich, on introducing this very important debate, even though I do not accept some of his key arguments. I shall come to that in a moment.
The main thrust of my remarks will be on the theme that G8 conditionality is now inescapable if the crisis in Africa is not to become chronic. The World Bank millennium development goals document refers to the problem of slow growth in the past decade, as the noble Lord, Lord Griffiths, pointed out; hence these dreadful figures, which are growing, of the number of people living in poverty. To halve poverty by 2015, African economies will need to grow at a rate of 7 per cent per annum.
I am an economist of sorts. One has to be reasonably numerate about these matters, and I challenge anyone to say that they disagree with that kind of figure. But how do we get from where we are now to that point—which is a necessary condition, and certainly not a sufficient condition, for solving the problem?
I wear a new hat these days as vice-chair of the new All-Party Parliamentary Group on Africa, which I helped to set up, together with Hugh Bayley, MP. Its terms of reference are to promote Africa—and, in particular, issues relating to NePAD—in Parliament. I wish to emphasise with all the power at my command that we have to put a very big number of eggs into the NePAD project. It is home grown in Africa. It is, to coin a phrase, the new agenda for the new Africa. It is relevant to the kind of challenges identified by the noble Lord, Lord Griffiths.
NePAD is in my view the most hopeful thing to have come out of Africa since the release of Nelson Mandela. I congratulate the British Government on their document, G8 Africa Action Plan: UK Implementation up to G8 Summit 2003—the Evian meeting at Lake Geneva this summer. Given that the meeting will take place in France, I hope that we shall have close relations with France in seeing what we can do to push the action plan forward. There are major problems—not so much between Britain and France, which it need hardly be said is the case, but in the peer review process.
The eight chapters of the NePAD document are important. I shall not list them all. The first deals with peace and security, and includes governance. All the chapters interconnect. We cannot cherry pick between them.

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Perhaps I may quote some of the GDP figures for the period 1990–2000. There were falls in the figures as follows: for Sudan, the figure of 1,355 dollars per head was down to 315; Liberia—614 down to 258; Angola—1,076 down to 588; Zimbabwe—8,767 down to 5,408. No one can doubt the major connection in those countries with conflict and poor governance.
I accept all the points made about the finance facility, and I congratulate all those involved. I agree substantially with the points made about the WTO and shall return to a couple of them in a moment. But it will not do to propose all those billions of euros in terms of trade liberalisation—which is true—as if they somehow represent more than half the agenda. Can we seriously think that all the other matters in the NePAD document are not essential; and is that not the agenda which is now reaching a crisis point before, we hope, it goes substantially forward?
Perhaps I may add a further comment on our relations with France, as the major ex-colonial powers in Africa in this regard. I have always had a special interest in Anglo-French relations and I congratulate the two governments on the joint projects since St Malo. I shall attend a conference in Paris in March on making the trade union role in NePAD work from the ground up. I shall take the opportunity to hold discussions with French parliamentarians—wearing my Anglo-French parliamentary hat as well as the Africa one—on what we can do together to promote breakthroughs in NePAD.
I draw attention to the fact that the communiqué at Le Touquet last week contained a substantial section on Franco-British relations and co-operation in Africa. Ranging from the French Diplomatic Office being part of the British High Commission in Freetown through to joint visits to the Great Lakes and so on, there is a substantial and hopeful new opportunity. From reading the front page of the document, you would not think so; but on reading the inside pages one sees that there is now a creative opportunity for the British and the French to work together on African questions. I did not realise until I read the document in detail how committed France is to NePAD.
Lord Desai: That is a surprise!
Lord Lea of Crondall: My Lords, let me give the noble Lord a figure. France remains the leading donor of bilateral aid to the African continent, having provided it with more than more than 4.5 billion euros in 2001. That is a great deal more than we provide. Unless someone can say that I have got the figure wrong, I think that it is about time we recognised that we are not going to be able to improve our joint commitment to delivery in terms of assistance in the new NePAD programme unless we work very closely with the French in NePAD and give a lead in the European Union. After all, it is about time that we and the French gave a lead on something in the European Union and I think that this is it. Britain and France have a great deal in common in this area.
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The countries which are the ringleaders in NePAD—I refer to Algeria, Egypt, Nigeria. Senegal and South Africa—have all experienced a long history of deep-rooted conflict inherited from or in association with colonialism and have been at the forefront of liberation struggles. It cannot be said that we do not have that kind of history in common. There is also the need work together to push forward the review process at Evian.
I take up a point made by my noble friend Lord Desai about why Asia has done better than Africa, and I relate it to the success story of Mauritius. Mauritius is the only country in the world which is part of the African Union and the Association of South-East Asian Nations. The noble Lord, Lord Desai, will be interested in this point. A group of senior UK economists—not necessarily from the Treasury, but not a million miles away—visited Mauritius 30 years ago and stated in their report that the country had no prospects. They said that arrangements should be made for a substantial part of the population to emigrate; that there would be no substantial prospect of raising living standards—indeed, the prospect was one of mass poverty. These were the best of the British economists at the time—and they got it about as wrong as it is possible to get it. I have written such reports myself, but one can get some of them wrong. Today, when we remind ourselves of that anecdote and ask what their secret was, they say that every African leader asks them that question when they go to Mauritius. The answer is not just hard work and adaptability—that is apple pie. It is ethnic peace, recognising the contributions of the Indians—whether Hindus, Muslims or Buddhists—the Creoles—the term used in Mauritius for people with a black African background—the Chinese, the French and the British. They speak both French and English in Mauritius. That rang a bell with me because of the brief period that I spent working in Uganda before Amin. All those ethnic groups were there, they worked well together, and the economy was successful at the time of the transition from the colonial era to independence.
I have one point of disagreement with the noble Earl, Lord Sandwich. We must have conditionality. We will not get right into the African societies on these points unless we recognise that our insistence will not be easy for African leaders. It will get through to African leaders only if it is conditional.
We are used to conditionality in Britain, in Europe and in the Balkans. It is about anti-corruption; it is forced on people initially and then they succeed. That is the case for conditionality. Peer review will work in Africa only if we can press some conditionality on it from the outside. It is a delicate balance, but that is the challenge we have to face.
6.52 p.m.
Baroness Northover: My Lords, I thank the noble Earl, Lord Sandwich, for introducing this very important debate. Debates such as this return our attention to the most pressing issues in the world today. It is too easy, when there are daily and hourly

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developments on the world stage, such as those in the crisis over Iraq, to focus on those alone, neglecting appalling problems elsewhere.
The international development targets are important reminders of where we should be heading, reminders of particular significance, especially when all efforts seem to little avail. Surely the noble Lord, Lord Griffiths, is right that such targets focus attention. Surely the right reverend Prelate the Bishop of Chelmsford is also right that they are important campaigning tools.
I would like to group the targets in a particular way. The aim to reduce by half the proportion of people living in extreme poverty by 2015 underlies all the other targets. It seems that a longer term aim has to be access to education and health services for all. These are surely the tools to achieve the first target. They are the key to increased prosperity. The noble Lord, Lord Chan, certainly made that crystal clear in his example from Kerala, India.
The most immediate aim for us must surely be to secure access to adequate food, reduce infant and maternal mortality and improve access to reproductive health services. Without these, we are simply abandoning whole swathes of men, women and children.
Other speakers have referred to some of the key issues. The noble Lord, Lord Griffiths, praised the Chancellor's initiative on how best to finance growth and development in the least developed countries. It is encouraging to see the cross-party approach on these issues. We need to ensure that strings are not attached to this in terms of opening markets. It is good to see the UK Government's approach, which contrasts with that of the United States Government in particular.
I have just returned from a parliamentary conference on the World Trade Organisation. Loud and clear came the message about removing European subsidies and opening our market. But a few voices from the least developed countries pointed out that their lack of infrastructure made them very vulnerable to other developing countries, such as those in Asia mentioned by the noble Lord, Lord Desai, if they were to open their barriers.
We must actively seek the removal of Europe's protectionism, but we must also ensure that moves towards free trade are moves towards fair trade, lest the least developed countries become poorer still.
Other speakers, especially the noble Earl, Lord Listowel, and the noble Lord, Lord Chan, have focused on the HIV/AIDS problem, and I should like to do so as well. The depths of poverty in southern Africa mean that when something goes wrong, it goes disastrously wrong. The situation was dire enough in southern Africa before HIV/AIDS loomed on the scene. The very nature of deprivation in southern Africa—malnourished people, lack of education, lack of healthcare systems, lack of communications, enormous disadvantages among women and girls, in particular—have all made this problem far worse than elsewhere in the world. It has spread like a forest fire,
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taking with it those who have no reserves to withstand further misfortune, in turn making the crisis even more profound.
As we have heard, in some southern African areas, one third of the population is infected by HIV/AIDS. Largely, those people are in what would have been considered to be their most economically productive years. The effects of that will be seen for decades to come, even if intervention were stepped up now. As Oxfam puts it:
"The HIV/AIDS pandemic is an unparalleled setback in human development".
The disease obviously adds to the burden on already overstretched health systems. It has had a disastrous effect on education. As the noble Earl, Lord Listowel, pointed out, it often forces families to take their children out of school, whether because of sickness, loss of income or to take care of sick family members. In each case, HIV/AIDS is creating costs that extend beyond children today to the children of tomorrow.
Women account for a large share of the population affected by HIV/AIDS. Over half of those infected with AIDS in Africa are women, as the noble Lord, Lord Chan, has explained. Almost everywhere, the burden of caring is borne disproportionately by women.
HIV/AIDS is the biggest single threat to the attainment of the millennium development goals. It is on a bigger scale, in terms of its effect, than anything else. The noble Earl, Lord Listowel, is absolutely right to say that the Government and the European Parliament must now fully recognise this. I know that the UK Government have greatly increased their budget in this respect.
Huge public health campaigns are clearly needed, and that needs political will, both in African countries and on the part of western countries. The United States has just stated that it will put an extra 15 billion dollars into AIDS prevention, but with a strand focusing on abstinence. Whatever we may think, this paternalistic approach simply does not help matters. It does not help when the United States cuts its contribution to the United Nations family planning association because of unacceptable pressure on the president from some of his own fundamentalists in the United States.
When an NGO tells me with pride just how many free condoms it provides in one southern African country, and we work out that that means one condom per male per year, we can see that preaching a message of safe sex is likely to fall on deaf ears.
I was delighted to read last week that a vaccine for one strain of HIV/AIDS was being trialled in Uganda. If it proves to be of value, it will be a major breakthrough. I trust that the Government will play their part in promoting such research.
Then there is the issue of TRIPS and agreement on the provision of drugs for the poorest countries. The World Trade Organisation's Doha declaration that the least developed countries could override patents and authorise the manufacture of cheap generic versions was a step forward. Again, the United States'

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block on that is deeply depressing. The failure of the current talks to move the issue forward is dreadfully predictable.
There has to be enormous concern at the delays and that the next round of WTO talks in Mexico in September will be hogged down with too many items on the agenda that remain unresolved from earlier discussions. It is a slow and frustrating process, while all the time people die in Africa.
I therefore welcome the Chancellor's statements reported in the Guardian yesterday. He said that,
"nobody can claim special privileges when people are dying unnecessarily".
I welcome his argument that the pharmaceutical industry must stop blocking the agreement to provide cheap medicines in developing countries.
James Morris, the UN special envoy for humanitarian needs in southern Africa, stated on 29th January in Johannesburg that,
"without a radical and urgent approach, which addresses the terrifying reality of the pandemic and how it is indelibly woven with chronic food shortages, even worse crises will stalk vulnerable people for generations to come".
As many speakers have explained this afternoon, the problems of southern Africa are dire and urgent. There is a temptation to focus elsewhere at the moment, with all that is happening in the Middle East. We owe it to those in the region not to lose sight of those wider problems, but the future stability of the world also depends on using the targets that we are debating today as something more than merely symbolic.
7.2 p.m.
Lord Howell of Guildford: My Lords, I join others in thanking the noble Earl, Lord Sandwich, for initiating the debate and giving us an opportunity to look at the serious and worrying scene in southern Africa. I shall concentrate my early remarks on the looming emergency across the region and then make a few remarks about longer-term development goals, in the context of the sobering figures that my noble friend Lord Griffiths mentioned of shrinking GDP per head in the region. There has been a long series of deteriorating figures over the years. The noble Lord, Lord Lea, also gave some chilling and precise figures of falling and diminishing incomes in those countries. Those comments alone should lead us all to wonder whether those who are advocating more of the same in aid policy have got it right and whether we should not think again, as the noble Lord, Lord Desai, rightly reminded us, about the whole development equation. I shall come to that in a moment.
The emergency is colossal. In December, our lively and robust International Development Secretary, Clare Short, wrote:
"it is not scaremongering to predict that within a few months the region could be experiencing a catastrophic humanitarian emergency".
That is just about upon us now. The Middle East has inevitably been mentioned. If the worst happens in Iraq—which I think is highly likely—we shall face a colossal humanitarian emergency there too, with
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1.5 million frightened refugees and starving people. The resources of humanitarian effort throughout the world will be strained to the limit.
All sides have correctly stated that the situation in southern Africa is deteriorating rapidly because of failing harvests and a reduction in crop yields, which have led to an immense food shortage. That has been heightened by the appalling drought and by the terrifying spread of many varieties of HIV/AIDS, mutating in a drug-resistant way, which is very hard to keep up with, as the noble Lord, Lord Chan, and the noble Earl, Lord Listowel, have reminded us. Problems are also caused by wicked policies by governments, which I shall come to later. All these factors have led to failed states and the pattern of child gangsterism—referred to by the noble Earl, Lord Listowel, and others—which fills our newspapers with appalling pictures of atrocities and horrors.
One can be too gloomy about that pattern. We must not forget that, while there are similarities in the crises affecting the countries of the region, there are also fundamental differences in their circumstances, which lead to complex problems in formulating effective aid packages. Amid the disasters and grimness there are real areas of success and hope here and there, but not nearly enough of them.
For example, most agricultural activity in Malawi is based around rural smallholdings producing a single harvest. It was never a prosperous country, but it was a happy one. I visited it many years ago. In recent years, adverse weather has produced much lower than expected crop yields, leading to the current food crisis. Along came the IMF, telling the Malawi Government to balance their budget by selling their grain stores, which they did. The result today is no grain, none being grown and growing starvation.
In Swaziland, the majority of food is imported while a quarter of the population require food aid. Zimbabwe used to be the great grain exporter of the area, but is now sucking in such grain resources as are available from around. We shall come to more of that in a moment. The situation is different in Zambia, in South Africa, in Angola and in many other countries. Each presents a tangle of problems and a tremendous challenge to our excellent aid administrators to respond effectively and in a targeted way.
We all agree that the unilateral assistance packages and the emergency aid provided by the British Government in recent years have been very diligently applied and have worked well. They have not solved the problems, but they have worked well within the inevitable limits. The relationship with nongovernmental organisations in the recipient countries has often been slightly uneasy, but effective, providing real support to some of the poorest people in southern Africa.
On top of that, this country has a huge role in influencing what aid is given by the international community as a whole and how it works. We have had some powerful and useful contributions on that this evening. I am advised that the appeal of the United Nations World Food Programme, which has been

1197
trying its best to stem the tide of starvation in Zimbabwe, is currently only 50 per cent funded and will run out of food for the region in the next couple of months. If I am wrong about that or if there is something to be done about it, I am sure that the Minister, who keeps close to these things, will tell us.
Meanwhile, other programmes, such as those for essential drugs or the means to access water, are funded at even lower levels. I have already mentioned the difficulty that the nature of the drugs needed changes with the mutating nature of HIV. We need to hear what action the Government are proposing over and above all the excellent things they are doing to encourage other nations to participate in funding these international programmes.
Many of your Lordships, including the noble Lord, Lord Lea of Crondall, have wisely mentioned politics and the emphasis on good governance. Much of the current crisis, which involves 14 million people starving in the region, is due to the drought and the spread of AIDS, as we have all said. However, it has to be accepted that government policy in several of the affected countries is making the situation much worse, delivering a lethal brew of corruption, restriction and disincentive to prevent the process of prosperity and wealth creation going forward and raising living standards.
My attention was drawn to the case of Swaziland, where the cost of food aid is 19 million dollars annually, yet it was recently reported that the government had opted to spend 45 million dollars on the purchase of a jet for the king. I do not know whether that is true, but it sounds a terribly familiar sort of story.
Then we come to the disastrous land reform policies in Zimbabwe. Perhaps the original intention was good and even just, but the handling has been deeply unjust and has contributed to intense food shortage, leading to reduced food yield from less efficient smallholdings. There were no plantings in the autumn, so the worst may be yet to come, compounded by the spread of AIDS from the displacement of farm workers, and compounded again by the politicisation of food distribution by the ZAN U/PF thugs who give food only to those who say they support them politically.
That is a very grim and very urgent scene. Clearly, we have to ask why it is that we reach these humanitarian crises with dreary regularity and how we can change the more fundamental situation to make them less likely to occur. The obvious answers are the ones that noble Lords mentioned time and again: access to decent health facilities and access to at least primary education. I declare an interest. I am involved with the Langalanga Scholarship Fund and the Harambe School Fund, in East Africa, which are trying to bring primary and indeed secondary education to ever more children. I am sure that there are many other small voluntary funded efforts in that direction. However, that is not enough.
The truth is that the development and aid relationship on which we have all relied for decades, and the easy equation of "more aid will need more
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development", is now being seriously rethought and requestioned worldwide. The Japanese—the world's biggest donors of aid—are beginning to wonder whether they have been doing the right thing. The USA has long questioned whether volumes of aid and the percentages by which everyone set so much store are actually going to deliver development and eliminate poverty. The work of questioning people such as Hernandez de Soto are coming to the fore. He is arguing that we need to make even the simplest and smallest investment in the tiniest business worthwhile at a micro level—which of course requires guaranteed property rights so that no bully will come along and take what one has saved or set up, as my noble friend Lord Griffiths rightly emphasised, and of course requires good government and a basic structure of the rule of law, without which no development will take place and a great deal of outside finance development will simply be destroyed before our eyes.
I hope that this new thinking can help in a way that traditional aid policy has clearly and obviously failed to do in Africa. I hope that it will be reflected in NePAD. I hope that it will be reflected in the opening of markets. The CAP in Europe is a protectionist disgrace, as the right reverend Prelate the Bishop of Chelmsford, the noble Earl, Lord Sandwich, and the noble Lord, Lord Lea, rightly mentioned. If we can mobilise this new thinking which triggers the nature of development—which comes from the bottom up and is not solved solely by outside aid, although that has its targeted tasks to fulfil—and triggers the wealth-creation process that comes through individual incentives, markets and the growth of business and investment, then it just may be possible that we will cease having to meet these unending humanitarian crises, such as the one that now confronts southern Africa. Meanwhile, people are dying in very large numbers, and emergency action is once again required on a colossal scale.
7.14 p.m.
Baroness Amos: My Lords, I thank the noble Earl, Lord Sandwich, for introducing what has been a characteristically well-informed and constructive debate. His commitment to these issues is well known in this House.
I shall start, if I may, by saying that I do not entirely agree with noble Lords who have said that the interest in Africa is declining and that the issue is falling off our agenda. We have been working hard to ensure that issues of concern to Africa remain at the top of the G8 agenda, as they will be at the June summit in Evian. We continue to work to bring about peace and security. We saw major improvements in Angola last year. We saw an agreement signed with respect to the DRC in December 2002. That conflict drew in seven other countries in the region. We are now working to put in place a transitional government in the DRC. That will have enormous implications for development on the continent. We are seeing some movement in the peace process in Sudan. On education, we have seen the World Bank put in place a fast-tracking facility to help

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some countries to meet the millennium development goals. This type of debate is important in maintaining that interest.
In September 2000, the United Nations Millennium Assembly agreed a set of targets to improve the condition in which the vast majority of the people of this planet live. While in Europe and North America we can spend an average of 75 dollars per day on food and shelter, 1.6 billion people in other parts of the world survive on the equivalent of less than one dollar a day. Life expectancy in 13 countries has fallen below 45 years while it continues to increase above 70 years in developed countries. Some 60 per cent of African children do not have access to even basic education. The AIDS pandemic, which many noble Lords mentioned, is posing a widespread and fundamental threat to human development.
The millennium development goals build on work done over the past 10 years to analyse the priority issues that the world needs to tackle to reduce poverty in the world. They are quantified targets covering education, health, income, water and sanitation and the environment. The deadlines are realistic—although we need the political will to achieve them—and reflect the extensive knowledge that we now have about what works and what does not work in development. The Government's 1997 White Paper, with its focus on the elimination of world poverty, set out our policy absolutely clearly. We talked in that document about the need to achieve what were then called the international development targets. Therefore, the Government have been committed to these issues since we first came into power.
I should like to put the debate in context. I agree with the noble Lord, Lord Howell, that southern Africa is a diverse region. The noble Lord, Lord Griffiths, spoke of the dire situation in Africa. Although two of the countries, Malawi and Mozambique, mentioned by the noble Earl, Lord Sandwich, are among the 12 poorest countries in the world, another three, South Africa, Botswana and Namibia, are among the most prosperous countries in sub-Saharan Africa. As the noble Earl, Lord Sandwich, noted, South Africa itself has a GDP three times as big as its 13 neighbours in the Southern African Development Community put together. A few countries have had long periods of political stability, but most have suffered from conflict ranging from civil war to repression and difficult transitions to democracy. Some are shining examples of the progress that can be made; others have not yet completed that journey.
The noble Baroness, Lady Northover, spoke of the importance of food security, and the noble Lord, Lord Howell, of the humanitarian crisis in southern Africa. More than 14 million people have needed help from the international community. In Zimbabwe, more than half the population is receiving food aid. The UK alone is providing food for almost 1.5 million children there every day. The international response to the crisis has prevented famine and kept thousands alive through the present hungry season in the region. I tell
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the noble Lord that we are now confident that we should be able to maintain adequate supplies until the harvest in April.
The combination of poor governance, high HIV/AIDS prevalence rates and less predictable weather patterns could send the region into a downward spiral from which it would be hard to recover. That would obviously damage all our efforts, particularly those of the people in the countries concerned, to improve their lives and to achieve the goals we have for their development.
The noble Lord, Lord Howell, mentioned Malawi and the sale of the grain reserve. It is not true that the IMF told the government to sell their grain reserves. The suggested level of reserves for Malawi is 60,000 tonnes and the reserves had reached 250,000 tonnes, so donors and the government agreed that some of those reserves could be sold. In the process of sale, all the reserves were sold and the anti-corruption bureau has investigated those sales and a further independent audit is under way. The situation went wrong between the agreement made between donors and the government and the sale itself. We have been supporting major input programmes, for example, seeds. That has successfully led to a second winter maize crop.
In addition to the humanitarian crisis, the region faces some specific development challenges. About 36 million people, one-third of the total regional population, live on less than a dollar a day for all their needs. Growth rates are not yet high enough to lift enough people out of poverty and to meet the goal of halving the proportion of people living in abject poverty by 2015.
There is better progress in ensuring universal basic education, but some countries, such as Mozambique, are slipping back. Healthcare services are skeletal and worsening in too many cases and it will be difficult to meet the targets for reducing child mortality and improving maternal health in many of the countries of the region. That point was raised by the noble Lord, Lord Chan, and the noble Baroness, Lady Northover.
As many noble Lords have commented, the agenda is made immeasurably more difficult by HIV/AIDS. Infection rates in southern Africa are the highest in the world: at or above 20 per cent in seven of the countries, and as high as 36 per cent in Botswana. That compares with an average infection rate of less than 9 per cent for all of sub-Saharan Africa, and just over 1 per cent for the world as a whole.
The noble Baroness, Lady Northover, spoke of the cost of HIV/AIDS for the region. The impact will be immense. Life expectancy is falling rapidly. In Botswana, life expectancy would have been 71 but is now just over 40. If infection rates continue as they are, by 2010 it is likely to be just 29. Unlike most other epidemics, those affected are not the weakest and most infirm but the strongest and those most needed for the economic development of the countries in southern Africa. There will be significant falls in GDP because of the loss of contributions from those who are incapacitated or who have died from HIV/AIDS, and

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because of the extra burden that others will need to bear. Progress against all of the millennium development goals will be set back. The ability of those countries to provide basic education is being hit. Last year in Zambia 1,400 teachers died of AIDS. In Zimbabwe, there are now about 3,000 AIDS-related deaths per week, many of those the health workers most needed to tackle the disease.
The noble Earl, Lord Listowel, is right to say that the number of AIDS orphans is rising. UK Government assistance on HIV/AIDS is taking place in a number of areas. Noble Lords will know that we have worked tirelessly in a number of areas. We have contributed over 200 million dollars over five years to the global health fund. Part of our bilateral agreements with countries like Uganda, South Africa and Mozambique includes raising awareness and working with the leadership on HIV/AIDS issues. In Uganda prevalence rates have been brought down from 14 per cent to 8 per cent. We are working hard to improve the health sector and to build capacity which is absolutely critical if drugs like anti-retrovirals, for example, are to work. We are contributing to work to find a vaccine through the International AIDS Vaccine Initiative.
My right honourable friend the Secretary of State for International Development chaired a working party that looked at access to medicines last year. We are now seeking support from our G8 and other colleagues to take recommendations forward on that work. We are also working in the area of reproductive health and sexually transmitted diseases. Until we move from a humanitarian to a bilateral programme in Angola we shall not be conducting specific work on HIV/AIDS although we contribute through international mechanisms. The noble Lord, Lord Chan, is absolutely right about the link between education and health. Uganda has nearly trebled the number of children in primary schools and it is one of the countries that has managed to bring down the infection rate of HIV/AIDS.
Enrolment in Malawi has increased by 70 per cent and DfID has doubled its spending on basic education, health and water in Africa since 1997. I agree with the noble Lord, Lord Chan, about the importance of partnership and of sharing a model of good practice.
The noble Earl, Lord Sandwich, asked about our policies. The FCO, DfID and the British Council have a joint management policy to assist locally engaged members of staff affected by HIV/AIDS. I shall happily write to the noble Lord with more details of that policy. However, it does not extend to our partner organisations.
This year, we shall be developing an Africa-wide strategy on HIV/AIDS: focusing on the prevention of new infections with emphasis on young people, high risk groups and mother-to-child transmission; mitigating impact, treatment and care, especially for orphans and vulnerable children; and promoting political advocacy and strategies for poor governance in countries in conflict.
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The scale of such challenges could lead to despair, but we can reverse the downward trend: we can cut poverty; we can increase life expectancy; and we can rebuild communities. To do that we must be strategic in our approach. We must back the efforts of the countries themselves in terms of sustainable development, we must learn from past experience, and we must be prepared for long-term engagement. Our starting point is the universal commitment to the MDGs, but we also recognise the crucial role of the state and the private sector in promoting social and economic development, as well as the importance of good political and economic governance.
The right reverend Prelate the Bishop of Chelmsford spoke about aid effectiveness. My right honourable friend the Secretary of State for International Development has worked tirelessly to improve the effectiveness of our aid and has worked with others on a clear reform agenda in regard to aid effectiveness. More effective use of aid means moving away from funding a proliferation of projects to backing poverty reduction strategies drawn up by developing countries themselves.
Reform agendas drawn up locally are more successful than those imposed from outside. We need to work with those governments committed to reform and committed to putting money into social sectors like health and education. We look more at building the capacity of local institutions to deliver services and to respond to the needs of the poor. That means putting finances directly into government budgets so helping to fund rapid improvements in health, education, water and other services that contribute to poverty reduction. We are working on developing long-term development partnerships in a number of countries in Africa and working to develop multi-donor facilities in others.
The noble Lord, Lord Griffiths, spoke of the need to encourage growth. I agree with him about the need for macro-economic stability, retention of savings in country and other issues, including clearer definitions of property rights and enforcement of contracts, all of which are about creating the right kind of enabling environment to attract investment.
My noble friend Lord Desai compared development in Asia, where MDGs are likely to be met, with Africa where in many areas development is going backwards. My noble friend touched on issues of corruption and conflict in an area where 20 per cent of sub-Saharan Africa's population live in countries where there is conflict or where conflict is ending. He also mentioned the importance of rural development and made a powerful argument for reform of the EU common agricultural policy. Noble Lords will be aware that the UK has been at the forefront of calls for the reform of the common agricultural policy.
The noble Earl, Lord Sandwich, the right reverend Prelate, the noble Lord, Lord Griffiths, the noble Baroness, Lady Northover, and my noble friend Lady Whitaker all mentioned the importance of trade which is an essential building block for development. It must be a key engine of growth for developing countries,

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with agricultural trade of central importance. The Government's objective in Doha, and through the WTO, is to secure significant liberalisation of trade in agriculture. Halving protectionist measures by both developed and developing countries could result in gains for developing countries of 150 billion dollars per year. That is three times present levels of aid.
Conditionality was raised by the noble Earl, Lord Sandwich, and my noble friend Lord Lea. Conditionality in the form of "one-size-fits-all" prescriptions imposed on developing countries is gone from our agenda. Our focus is on developing relationships between donors and African countries based on mutual accountability. But conditions agreed between us that reflect the international consensus on what works in development are still crucial. They allow donors to account for their contributions; they allow people in developing countries to hold their own governments to account in tackling poverty; and they hold developing country governments accountable for their own commitment to reform. At the core of NePAD—the New Partnership for Africa's Development—is the concept of peer review. I accept that NePAD requires greater participation. That is something I am sure will grow as the NePAD concept becomes known across the continent. I shall write to my noble friend Lady Whitaker on the Cotonou Agreement as time is short.
Another part of our strategy concerns the G8 Africa Action Plan. The G8 plan sets out specific G8 actions in a number of areas which will help Africa's development. At the next G8 summit in France—I assure my noble friend Lord Lea that President Chirac has made Africa a priority—we shall be considering water, transparency and access to medicines as well as monitoring implementation of the action plan. Noble Lords will wish to know that the UK is the only G8 country to have published a national action plan setting out the steps we intend to take to meet our commitments in the Africa action plan.
A number of noble Lords mentioned the recent proposal by the Chancellor and my right honourable friend the Secretary of State for International Development for an international finance facility. The aim of the proposal is to provide additional financing to help to meet the millennium development goals. It would seek to raise the amount of development assistance from just over 50 billion dollars a year today to 100 billion dollars a year in the years to 2015 by establishing a bond facility financed by long-term commitments of aid. The Government are discussing that proposal with other donors because we need to bring others on board.
The noble Earl, Lord Sandwich, and my noble friend Lord Sawyer mentioned South Africa. The stark inequality that is apartheid's legacy has left us with two South Africas. One has levels of poverty on a par with the poorest African countries; the other has levels of prosperity the envy of developed countries. Skills and sophisticated organisational management will be central to South Africa's efforts to bridge that divide. Continued economic competitiveness is vital as South African businesses bring in previously excluded
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communities. Effective public administration is essential in refocusing South Africa's public services to reach the majority of people excluded in the past. I welcome the work that Investors In People is doing to contribute to that process. I say to my noble friend that I worked with the South African Department of Labour in 1995 on issues of employment equity which also links in to the issues related to Investors In People.
Before I conclude I say a few brief words on the heavily indebted poor countries initiative. I agree that donors and the international financial institutions need to look further at debt sustainability. It is clear that some beneficiary countries of HIPC have already been hit by falling commodity prices pushing them back into unsustainable levels of debt. I also agree that we must maintain the link between debt relief and the millennium development goals. The UK Government will again take a leading role in pressing for an outcome that delivers benefits for poor countries. At last year's G8 meeting, an additional 1 billion dollars was agreed to help those countries reaching HIPC completion point with unsustainable levels of debt.
In conclusion, the millennium development goals agreed by the entire international community two years ago give us a positive agenda which all governments are accountable for. Southern Africa faces huge challenges in meeting these goals, not least because of the levels of HIV/AIDS in he region. But it also has huge resources and, in many of the countries, strong leadership. The Government, along with other donors, have developed a strategic, long-term approach to support this and other regions. With that support, I believe that southern Africa could make real progress in cutting poverty, increasing growth and turning around the prospects for poor communities in their countries. Progress in southern Africa would boost prospects for all of Africa and help to push Africa back on track towards meeting the millennium development goals—something that we should all like to see made a reality.
7.36 p.m.
The Earl of Sandwich: My Lords, I congratulate the Minister on achieving the target of a 20-minute speech as we have covered an enormous range of issues in the debate. I apologise for raising such a wide question, but it at least elicited distinguished contributions from all noble Lords who spoke. I sincerely thank everyone who took part in the debate.
It has not been an entirely serious debate. I saw the spectre of the late Lord Bauer sitting somewhere near the noble Lord, Lord Desai. I thought that he might have said, "I told you so", and made the debate even more lively than it was. It had nice moments. For instance, the noble Lord, Lord Lea, in the context of the recent EU summit, gave us a new vision of the Anglo-French partnership which we all look forward to seeing back on track.
The noble Earl, Lord Listowel, always brings us down to earth and reminds us that there are real people involved and seriously large numbers of deaths due to

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AIDS and other emergencies. On that note, I again thank everyone who has taken part in the debate. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Child Support (Miscellaneous Amendments) Regulations 2003
7.37 p.m.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham)The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham) rose to move, That the draft regulations laid before the House on 9th January be approved [6th Report from the Joint Committee].
The noble Baroness said: My Lords, as my right honourable friend the Secretary of State for Work and Pensions announced in the other place on 27th January, the new child support scheme will be launched on 3rd March. This means that parents whose child maintenance liability starts on or after 3rd March will have it calculated under the new rules, as will some existing cases which will convert to the new scheme early—a point on which I can elaborate fully if your Lordships are at all interested. The commencement order giving that effect has now been made. I am sure that your Lordships will join me in welcoming this development in the Government's plans to provide a simpler and more effective child support system.
I turn to the business before us today. We have before us amendments to eight sets of regulations which relate to the operation of the current and the new child support schemes. We also have some amendments to the transitional regulations which govern the conversion of cases from the current scheme to the new scheme. I apologise for the somewhat obscure language which makes sense only if one sees them as amendments to regulations amending existing regulations amending existing layers of legislation. They are necessary to update provisions for the new scheme as the world has moved on since we originally made the regulations. Examples of this are the amendments which relate to the new tax credits. Many of the amendments made by regulations relate to the introduction of new tax credits from April 2003. The treatment of working tax credit and child tax credit for income purposes in child support is covered in Regulations 6 and 8. Those provisions for working tax credit largely carry forward the existing rules for the working families' and disabled person's tax credits.
For the child tax credit the rules are slightly different, because it is support paid to the main carer throughout periods of work and non-work. In the current scheme, it is ignored when assessing either parent's "assessable income". However, in the assessment of the non-resident parent's "protected income", any award of child tax credit counts fully. In the new scheme, payment of child tax credit to the nonresident parent or his new partner will count towards his income. That is our best effort at a direct read-across, and I think that it is a pretty tight fit. It ensures
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that the personal choice of a couple as to who should receive the child tax credit for the family will make no difference to child support liability.
Regulation 2 makes a straightforward amendment to update the collection and enforcement regulations which relate to the current and new child support schemes. It carries forward the provisions in existence for working families' tax credit. It ensures that when a deduction from earnings order is in force, payment of child support maintenance is taken from the earnings, rather than any working tax credit paid to the employee through their wage. That policy is entirely a practical measure. The protected income calculation takes into account the circumstances of the household. It is right therefore that working tax credit is.fully taken into account.
In the "assessable income calculation", working tax credit is taken into account only where the nonresident parent is the main earner.
Lord Higgins: My Lords, as always on such highly complex matters, the noble Baroness is tending to read from a prepared script. Very often we find that if she expresses matters in her own words, they are more comprehensible. So far as Regulation 2 is concerned, what exactly will happen?
Baroness Hollis of Heigham: My Lords, Regulation 2 means that working tax credit is not treated as earnings for the deduction of direct earnings orders. Say that Brian gets a wage of £150 a week and gets a top-up, for whatever reason, of working tax credit of a further £50. He is due to pay £30 child support. That is taken from his earnings, not from his tax credit. That is what Regulation 2 achieves. It is an entirely practical measure.
The two measures taken together are intended to help to strike the right balance between the important work incentive of getting regular maintenance to parents with care and ensuring that non-resident parents can afford their maintenance liability. It would be exceedingly rare that the maintenance liability due to be deducted from the wage packet would not be wholly covered by the earnings in payment. That is the point that I was making. The amendment that Regulation 2 effects ensures that there can be no confusion on that point.
One could just conceive, for example, that someone might work for 16 hours a week, in which case their tax credits might be higher than their earnings. There could be such rare cases in relation to earnings and maintenance, but they are quite hard to envisage. Someone with a war pension, for example, for a condition that did not prevent them from working might be in that situation, or someone with fairly high tax credits because of the number of children in a second family.
Noble Lords will notice that Regulations 5 and 7 amend the regulations that cover the current and new child support schemes. We are continuing to make explicit the rules that protect the interests of disabled children. Recognising the particular vulnerability of

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families who care for disabled children, the amendments update the existing provisions. They specify that, as now, no reduction of benefit may be made when a parent with care refuses to co-operate with the CSA without satisfying the good cause test if he or she is in receipt of the disabled child element in child tax credit.
To take account of parents with special circumstances, a system of departures from the standard maintenance formula exists in the current scheme. It is being replaced by a system of variations in the new scheme. Both schemes are broadly similar in effect, as the award of a departure or variation alters a non-resident parent's maintenance liability either up or down, but some of the grounds on which they are awarded are different. For example, with regard to the "special expenses", the new variations scheme focuses only on those costs related to the child.
To put it in my words, the new scheme does not allow any consideration of, for example, housing costs or travel-to-work costs to come into effect. Again, if noble Lords wished, I could seek to develop the distinction between departures and variations in the new scheme. Clearly, what we are trying to do is narrow it as tightly as possible, so that only in exceptional circumstances associated with a child will there be any alteration in the maintenance liability.
The amendments made by Regulation 4 to the departure regulations and Regulation 10 to the variation regulations—the first is the current scheme, the second the new scheme—replace references to the existing tax credits with the new tax credits from the date on which they are introduced.
I shall move on to the amendments that are not related to the new tax credits. They are mostly technical. In Regulation 6, we are making provision for the new "Supporting People" payments, which were previously part of the housing benefit scheme, to be disregarded. The amendments also allow us to change the name of the invalid care allowance to carers' allowance, which has already been welcomed by noble Lords.
Regulation 3 makes changes to new scheme regulations relating to effective dates for supersessions. In that context, the effective date means the date from which liability is changed. "Supersession" is the term used when one decision is replaced by another. Regulation 3 adds two new supersession provisions. The first provides for cases where a qualifying child leaves the parent with care's household but other qualifying children remain. They may have grown up or moved in with the NRP. The second covers cases where the parent with care has another qualifying child with the same non-resident parent, usually under circumstances in which there has been a temporary reconciliation. To my surprise, there are rather more of those than I had previously thought practically possible.
Regulation 7 makes changes to the maintenance calculation procedure regulations, some of which are consequential on the introduction of new tax credits to which I referred earlier. It also makes a number of
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clarifying changes to the regulations that provide for cases arising in the period immediately before and after the launch of the new scheme. It shall not go over them in detail, although I am happy to have a go if noble Lords wish, but I shall simply mention a couple of the more important changes.
Regulation 7(7)(a) adds two new paragraphs, paragraphs (1B) and (1C), to Regulation 31 of the maintenance calculation procedure regulations, with which I am sure that noble Lords are familiar. The paragraphs make transitional arrangements for cases where there is more than one application for child support and the applications straddle the date on which the new scheme is introduced. Paragraph (1B) provides for the circumstances in which the new Schedule 3 to the maintenance calculation procedure regulations will apply. The schedule determines with which of the applications we should proceed—in other words, which has priority. Paragraph (1C) has the effect that if the "effective date" of the application is before 3rd March, the case will proceed as an application for the current scheme. If it is on or after 3rd March, the case will proceed as a new scheme maintenance calculation.
In Regulation 9, we are making some further amendments to the transitional regulations. The changes are to ensure that the provisions work as we intend. For example, they clarify the regulations to ensure that existing cases linked to new scheme applications for maintenance will immediately convert to the new scheme. It is vital that the old-scheme case converts to the new scheme to prevent the non-resident parent being faced with a maintenance liability that he could never afford to pay.
I think that that is rather important, so it may be worth adding a gloss to it. There may be a case of an NRP, a parent with care and one child in that relationship. As a current case, they stay in the system until all existing cases go over to the new scheme. After 3rd March, let us suppose that the parent with care has a new relationship with someone else and has a new child. That means that there will be an assessment for the new child under the new scheme, simultaneous with an assessment under the old scheme for the existing child. Put the two together and someone might well be asked to pay far more than they are able to afford or than they should pay. Therefore, that becomes a linked case. The existing case goes over the borderline. The existing parent with care's maintenance is recalculated as though it were a new case, so that the NRP pays one maintenance for the two separate children. If necessary, phasing will take place to ensure that the existing parent with care does not find too much of a financial change in her circumstances.
Noble Lords may not think that that happens all that often, but something like 20 per cent of cases might be linked cases. A family tree for one new case showed that 29 other cases in the current system were affected. In consequence, all came over the line. Noble Lords will see why the provision is in place, but it

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means that there is not the clean, tidy line between existing and new cases that one might otherwise have expected.
The regulations before the House today underpin our commitment to ensuring that child support works for both parents and children. I am satisfied that they are compatible with the European Convention on Human Rights.
To summarise, I suggest that seven of the 10 regulations either incorporate the existing treatment of incomes and bring them forward into the new scheme or replace existing working families' tax credits with new credits. That leaves three regulations which either are not technical or do not involve rewording but have some policy substance to them.
One is Regulation 3, which adds new supersession provisions. If there is a change in family circumstances and a qualifying child leaves the household, that will have implications for the assessment. The second is Regulation 6, whereby the policy changes introduce "supporting people" payments and the renaming of "invalid care allowance" to "carers' allowance".
The third regulation of substance, which again is technically drafted in complex ways, is Regulation 9. It deals with the issue of linked cases, whereby people move from the current to the new scheme by virtue of either partner—the parent with care or the NRP—entering a new relationship. Alternatively, it deals with issues of phasing and changes in circumstances. I give way to the noble Lord.
Lord Higgins: My Lords, the noble Baroness referred to a "linked" case. Is that a case where an individual—either with or without care—has other relationships? In effect, does it link what one might call a "serial" partner?
Baroness Hollis of Heigham: My Lords, that is exactly right. It is where either the parent with care or, for the purposes of calculation of maintenance, the non-resident parent—usually the father—has an existing maintenance liability under the current scheme and enters a new relationship after 3rd March. As a result, his maintenance liability must be recalculated.
However, we are not trying to charge him with two liabilities which run simultaneously—one under the old scheme and one under the new. Under the old scheme, he might pay, say, 30 per cent of his income; under the new scheme, he might be required to pay 15 per cent. If the two were put together, that would clearly be an unreasonable amount. The linked case is the current parent with care, who must be treated for assessment purposes as though she were a new case. Therefore, the NRP's maintenance can be recalculated for both children in both relationships and equitably divided. Thus, the noble Lord is right; the linked case is where there are a number of serial relationships. Usually that occurs with the NRP but sometimes it may involve the parent with care.
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As I said, there are three regulations with policy substance. If noble Lords wish, I shall be happy to expand on any of those points. Apart from that, I hope that your Lordships will be willing to support the regulations, which I commend to the House. I beg to move.
Moved, That the draft regulations laid before the House on 9th January be approved [6th Report from the Joint Committee].—(Baroness Hollis of Heigham.)
Lord Higgins: My Lords, the noble Baroness and I have debated the child support situation over a number of years. We are extremely grateful for her expertise in explaining what these regulations do. Anyone who listens to this debate will be inclined to believe that the issue is unbelievably technical and dull. However, we must remember that, underneath it all, lie very strong emotions.
I remember that when the Child Support Agency was first introduced, I invited a number of constituents to speak to me. About 70 turned up and I was struck by the sheer bitterness shown on occasion by the individuals concerned. For example, where a man had remarried or changed partners, the incumbent partner was determined that the previous partner and the children of that first relationship should not receive anything. Therefore, we must take on board that these are very emotional matters.
On the other side of the coin, I well remember how some individuals unjustifiably suffered considerable stress and trauma because of the difficulties of administration. Therefore, these are more than simply technical matters; they have a real human content.
Having said that, one aspect of the matter is of concern. We are told that this will be a simpler system. Of course, over a long period it may become a simpler system—the so-called "new" system is certainly simpler than the old. But the old system will continue. On top of the old system, which is very complicated, and the new system, which is almost as complicated—or at any rate somewhat less complicated—we have a transitional arrangement, which itself is immensely complicated. Therefore, it will be some time before the simplification takes effect. Perhaps the noble Baroness will tell us at what stage she believes the transition will be completed. My understanding is that it may take four or five years or even more.
Baroness Hollis of Heigham: My Lords, when the noble Lord refers to "transition", does he mean phasing or does he mean the move from A-day to C-day?
Lord Higgins: My Lords, I am not sure that I caught the noble Baroness's last expression. I am saying that we have an old system and a new system. As I understand it, a large number of people will remain on the old system and will gradually be moved to the new system. If I have that wrong, no doubt the noble Baroness will be able to explain the situation.
However, I consider there to be a real problem. In changing from one system to another, people may find that they would have been far better off on either the

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earlier or the new system. That point has been raised at various stages during the debate. Therefore, people who want to move from the old to the new system because they believe that they will be better off may well feel for a considerable time that they have been unjustly treated. Rather ironically, that is so except in the example mentioned explicitly by the noble Baroness; that is, where people shift from one system to another because the individual concerned has had a series of relationships. Therefore, the issue involves real problems.
My other point, and the reason why my right honourable friend Mr Willetts in another place expressed some relief when the Statement was made by the Minister on 27th January, is that these changes have been long delayed. I believe that they were originally promised to take place in October 2001. The date then changed to April 2002 and then, before the change occurred, in the March before that, they were delayed indefinitely. Therefore, as I understand it, at least we now have a firm date—namely, March—for people to enter the new system. However, as I said earlier, we do not know—no doubt the noble Baroness can help us—how long the two systems will continue side by side with people feeling that they would prefer to be on the new system rather than the old or, in a few cases, the other way about.
To exacerbate the complexity of the matter, one basic problem has been with the IT side where the computer system has not proved satisfactory. As I understand from the Minister's Statement on 27th January, additional costs will be incurred. Perhaps the noble Baroness can tell us the calculated total cost of the computer system and, in particular, how much extra burden has fallen on the taxpayer as a result of what I understand was a negotiated settlement between the provider of the IT system and the Government.
Clearly, as there was a negotiated settlement, to some extent it was felt that the problem was due to the company and, to some extent, that it was due to the Government. In particular, I believe that the problem was felt to be due to the changing of the specification because of the underlying changes with regard to the tax credits scheme.
Of course, much of the problem arises from the Chancellor of the Exchequer's obsession with tax credits. I shall not go over again all the debates that we had about the changes in terminology relating to different kinds of tax credits, some of which were abolished before they had even been introduced. But an extraordinary amount of jargon is involved and it confuses the situation significantly.
In particular, the noble Baroness said that in future, instead of what used to be called departures from the normal specification of the case, we shall move to a system of variations. I am not in the least clear about why we have to change the jargon from one thing to another. Perhaps again the noble Baroness can explain why that is so. The idea that individuals will understand what officials are talking about when they say, "You have a system of variation" whereas they
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used to say it was about departure, particularly if they are changing from the old system to the new, is worrying.
I intervened at an early stage in the speech of the noble Baroness with regard to Regulation 2. There was an extremely good debate, if I may presume to say, in the First Standing Committee in another place on 3rd February which to some extent dealt with this problem. I wonder whether I might have the attention of the noble Baroness because I want to understand this. On that date the Minister stated:
"The amendment made by regulation 2 is part of the delicate balance between ensuring that a non-resident parent complies with his child maintenance obligations, and that work pays. The amendment made by it to the collection and enforcement regulations relates to both the current and the new schemes. Working tax credit will be paid directly to an employee along with their wage. The amendment provides that the employer cannot deduct child support maintenance from working tax credit under a deductions from earnings order. It must be deducted from earnings".—[Official Report, Commons First Standing Committee on Delegated Legislation, 3/2/03; col. 4.]
The noble Baroness, expressing this in her own words in response to my intervention, gave an example which, strangely enough, arithmetically was the same as the one I was trying to work out; namely, that of someone who has £150 per week earnings and £50 per week top-up. As I understand it, the regulation states that if that person has an attachment of earnings order, it has to come off the earnings and not off the top-up. As the noble Baroness knows, I am a simple soul in these matters. I have problems in understanding whether there is really any difference.
At the end of the week the individual concerned receives £200 and has an attachment of earnings order. The employer who has the sad responsibility of dealing with such matters as regards both the attachment of earnings order and the top-up is told, "You must not take it off the top-up; you must take it off the earnings". However, at the end of the week or, more accurately, by the weekend, the situation is no different. If the attachment of earnings order is for £20, it does not matter much to the individual. It is purely—I do not know what is the expression—an illusory regulation to say that it must come off the earnings rather than the top-up and that if one makes the regulation, in some miraculous way the incentive of the individual to work is somehow preserved even though by the weekend the amount he receives is precisely the same. I should be grateful if the noble Baroness could clarify that particular point.
As regards the overall situation, the argument is that as a result of the changes the department will be able to spend more time on enforcement—that is to say, on collection of the money from the individual responsible for paying the maintenance rather than on making the calculations although, as I said, the two systems plus the transition arrangements will all happen at the same time. Can the Minister tell the House how much is expected to be received at the end of the day, or rather how much is expected to be paid in maintenance as the scheme develops over the period? Can she also tell the House—we have debated this matter on previous occasions—how much of the

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maintenance has now effectively been written off? It became apparent under the old scheme that some of the maintenance was never going to be paid.
The system seems arbitrary in as much as some people will be on the old system and some on the new system. I do not want to delay the House too long. However, it is important to get these points on the record. In the course of the debate in another place on 3rd February the Minister, rather oddly, perhaps, said that he would write to the other Members of the Committee about various points he had not clarified in his speeches. Were those letters made generally available? I have not been able to find them. It would be helpful to people outside, the various voluntary bodies and so forth, in trying to understand this matter to know whether such letters are available at present and if not whether there is some way of making them so.
I believe that in some sense we are making progress. I expect to a significant extent that that is as a result of the interest which the noble Baroness has long taken in this matter. Clearly, it will be far more complex in the immediate future. It would be nice to know when we hope to find that everyone is on the new system. Perhaps by that time it will be rather like New College, Oxford, which is a long way in the future. I fear for those who have irate constituents returning from the Child Support Agency to their constituency interview nights where individual Members of Parliament are asked to explain what all this is about. Fortunately, I shall not be in that situation. That is something from which for the moment at any rate I have escaped. However, I believe we need to spell this out. We are grateful to the Minister for doing so and no doubt for the further elucidation she will manage to achieve in replying.
8 p.m.
Earl Russell: My Lords, the noble Lord, Lord Higgins, asked why it was necessary to change the jargon. One of the minor pleasures of research was discovering the original meaning of the word "jargon". It is the French for a cypher key. I found an ambassador, newly appointed, complaining,
"Vous m'avez envoyé le chiffre, mais pas encore le jargon".
We need a new jargon because we have a new cipher. We have a new system of child support and a new system of tax credit. So the Minister has the job of putting together a jigsaw and fitting the pieces together. It reminds me of those infuriating small-piece jigsaws where the pieces were almost too small to see and on which I used to break my nails and ruin my temper when I was about six. That is in the nature of the case.
A question is raised regarding our present system of legislation: are we attempting—as I have argued in the past—to legislate in too much detail for a series of human conditions which, as the Minister has illustrated in several of her remarks about repartnering and so on, are not simple enough to be reduced into the general series of rules to which we try to reduce them?
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Human beings have the infuriating habit of remaining individual and not behaving in the way expected of them. That particularly struck me when reading Regulation 3, which incidentally is a wonderful example of what I shall in future regard as "the Higgins principle"—that when the Minister explains the provision herself it is a great deal simpler than it ever is in the legislation as drafted. I look at paragraph 5 of the Explanatory Memorandum. I shall not quote the regulations because even in such informed company, they are very nearly impenetrable. It states:
"Regulation 3 inserts two new provisions which, in specific circumstances, provide for setting effective dates of supersessions in the new scheme. The first is where one or more of the qualifying children leave the person with care to whom the existing calculation relates, but other qualifying children remain with that person with care. The previous calculation will be superseded to take account of the departed qualifying child from the first day of the maintenance period in which the person with care ceased to have care of the qualifying child".
It is a little like the question with which the Sadducees tempted Christ about the woman who had remarried many times. They asked:
"Now, in the resurrection whose wife will the woman be?"
Christ was able to avoid answering the question. The Minister is I am afraid perhaps not in so happy a position.
I understand what these regulations intend, but they call into question a point I have been raising from the very beginning of the CSA legislation: whether it is always a correct assumption that there is one parent with care and one parent without care.
I remember one of the happiest families I have ever known. The four children were from four separate combinations of parents. They were as happy as the day is long. In those circumstances it could be very difficult to decide exactly who is the primary carer and at which date one ceased to be and the other became so. It is perhaps better to lay down principles on which these matters can be approached without attempting to provide for every detail, when we know perfectly well that if we tried to do so we should fail.
The point has already been raised about disabled children not being disentitled to benefit. That is a crumb from the Treasury's table and all crumbs from that table must at all times be welcomed. God knows there are not very many of them. I take the Minister's perfectly logical point about extra costs. The costs of disability are a good deal higher than they are often reckoned to be. But it raises the question: under what circumstances and to what extent should people he disentitled to benefits? It also raises the question whether there should be a lesser or no disentitlement.
In that context, I ask the Minister to keep an eye on a case in which Mr Justice Collins gave judgment today regarding deprivation of benefits for asylum seekers. I shall not ask her to comment in detail: I am in no position to do so myself. The judgment is only a few hours old and the transcript is not yet available. I understand that an issue in that case was at what level of destitution does disentitlement create inhuman or degrading treatment under Article 3 of the European

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Convention on Human Rights? It appears to be the prevailing level of opinion among lawyers that there are some levels of destitution above which it does and some below which it does not. Lawyers have yet to decide what these are.
I hope that the Department for Work and Pensions will follow the progress of that discussion with some care because if it does it may save itself some cost in litigation, which I am sure would be welcome to everyone concerned.
My honourable friend Mr Webb, when he discussed the regulations in another place, was concerned about the provision that the tax credit goes to the higher earner, because he thought that that created a perverse incentive for the wife to keep down her earnings so as to receive the tax credit. There may be a problem in that area. I appreciate that anomalies are likely to arise in all circumstances. I should like the Minister to be prepared to repeat the words of the late Lord Whitelaw: "I am investigating alternative anomalies".
There are also considerable problems concerning the transition. I respect the way in which those have been approached—on the whole, in a logical and humane way. Whether it will succeed in solving the problems is another matter. The operation that has been attempted is immensely complicated. Although I admire the good will with which most of it has been done and the care that has been put into it, I do not think that we have heard the last of it. I doubt whether the Minister does either.
Baroness Hollis of Heigham: My Lords, I am sure that the last point raised by the noble Earl is correct, if only because child support interfaces with a full array of benefit structures and tax credits. As those change, so must taxes. But behind that is an issue of simplicity. Sometimes we mistake that, because we are moving to a simpler system, the computer system must be simple. It is not. It is precisely because the parent with care will for the first time, if he or she is on benefit, be receiving up to £10 of maintenance paid that there must be an active interface with the IS/JSA system—which currently does not exist. That is one reason for the complexity of the IT system, despite the simplicity of the structure.
To illustrate that point, I was amusing myself this afternoon—your Lordships may think that I ought to have better things to do—by considering the current system of assessment. Currently, to assess an NRP's contribution, one must go through the following steps. First, one must work out family income, then the maintenance requirement, then net income, then exempt income, then assessable income, then protected income, then disposable income and, finally, the child support liability. Those are eight steps that, after the original calculation of income, involve about 39 lines of financial calculation.
Under the new system, one works out family income, net income—after deducting pensions and the like—and then calculates liability. Those are three steps and, after, one has assessed family income, eight lines of calculation. From eight steps to three; from 39
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financial calculations down to eight. I rest my case. It is precisely that complexity that baffles both parents with care and NRPs about how the calculations have been arrived at and whether they are accurate and that. unfortunately, can produce errors in calculation, and so on.
I suggest to the noble Earl, Lord Russell, and the noble Lord, Lord Higgins, that under the new system it will be possible to work out everyone's calculations for child support in about 37 seconds flat, based on a ready reckoner table that will be easily available. It will be a simple and straightforward calculation.
Lord Higgins: My Lords, I am grateful to the noble Baroness. I understand her point. That would be true if we were proposing immediately to transfer from the old to the new system for all the people who are currently entangled in the scheme. But, as I understand it, that is not the case. It may be that the case of the first kind that she described will continue to have to be made for a long time. Perhaps I have misunderstood, but that appears to be the case.
Baroness Hollis of Heigham: Yes, my Lords, I think that there is a profound misunderstanding that also occurred during the debate in another place because of the use of the words "transitional" and "phasing" and uncertainty about their exact meaning.
On how long it will take, the reason that we have broken introduction into A-day, for new cases, and C-day, representing conversion for existing cases, is precisely so that we do not try to achieve a big bang. We know that if we try to do so, we can be pretty sure that the computer system will produce major inconvenience. We are trying to introduce a learning loop so that the new cases that trickle in—well, not so much trickle, but come in—month by month, will give us a learning period before the bulk migration of existing cases.
We are not precise about when that will be; we will go to C-day when we are confident that A-day is working well; but the original planning assumption was of a period of about a year. In about a year's time, if the IT system is working well, if the Secretary of State is persuaded that we do not need further delay, and so on, we should be ready to bring existing cases over to the new system, at which point there will be only one system.
However—and this is where phasing comes in—a minority of non-resident parents, especially those who have high housing costs that are being extracted from the formula, may experience significant alterations in their liability. Given that, we think that it would be unreasonable if we were suddenly to ask them to pay all that in one year, when their wage increases might be insufficient to cope with it.
So we are phasing in the move from a current liability to a new liability in increments of £2.50 for amounts of under £100 a week, £5 for those of 100 to £400 a week, and £10 for those of over £400 a week. Therefore, if a parent's liability is increasing, he can cope and plan for it. Equally, if the liability is

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decreasing so that the parent with care loses money, she can cope, too. In other words, we will move from A-day to C-day when we feel that the situation is ready, but our original planning assumption, which I mentioned when we debated the Bill, was around a year. Once we have done that, and everybody is in the new system, we will phase by steps the financial adjustment so that people are not suddenly hit with a very large sum with which they cannot cope. There was some confusion when the matter was discussed in another place. I am sorry about that.
I have already mentioned that a complex computer system operates behind a simple front-of-house system. The noble Lord, Lord Higgins, asked about the additional costs. They have increased from £427 million to £456 million—an increase of about 7 per cent. I do not think that the noble Lord will regard that as an unreasonable increase in cost, given the extra time.
The noble Lord, Lord Higgins, pressed me about variations, asking why we need to move from departures to variations. First, variations are much more narrowly focused than departures. One of the reasons for complexity now is that, in the effort to be fair under the previous government—I did not necessarily disagree at the time, so it is not a party political point—more and more considerations were brought into effect, which altered the maintenance liability. They were called departures, enabling the original assessment to be altered. We are stripping those out and introducing a simple system in which the only alterations will be child-focused. At present, for example, travel-to-work costs are taken into account, but the care of an elderly relative is not. Why, under the old system, do we prioritise some costs over others? Under the future scheme, we seek on average a lower liability, leaving more money in people's pockets to prioritise as they see fit. It will be up to them to weigh travel-to-work costs against the cost of care for an elderly person. We will not say that one cost matters and the other does not; nor will we recognise one in the formula and not the other.
The reason why we need different words is not just that they cover different aspects—I could enlarge on what they do precisely—but because the two schemes will run together during the interim year between A-day and C-day, with departures under the current system and variations under the new. We need to have different language or jargon, as the noble Lord said.
The noble Lord, Lord Higgins, is right that Regulation 2 merely clarifies beyond doubt where the deduction is made, because it could result in occasional irregularities. It is a minor clarification. I do not think that we should place much emphasis on that trivial point, but I will be happy to enlarge on it if the noble Lord wishes.
Lord Higgins: My Lords, as I understand it, that is not the Government's argument. They say that if you do not do it in the way proposed—namely, insist that the amount is knocked off earnings rather than from the top-up—there is somehow a disincentive to work.
Baroness Hollis of Heigham: My Lords, I shall enlarge on the point. The noble Lord has argued that working tax credit, and family credit before it, was regarded as a benefit as opposed to earnings. One of the propositions behind the new tax credits is that they are not vulnerable to sanctions or deductions. For example, leftover money from the Social Fund would not be deducted against them, but against earnings. We are trying to protect that distinction so that any liability for maintenance falls on earnings. We do not expect problems, but we are making it clear beyond doubt.
The noble Lord raised a major point. He asked how much we expect to obtain under the new system. At present, the cash case compliance on the existing system runs between 70 and 75 per cent. It is less for self-employed and slightly more for people in the disciplined services—soldiers, police, and so on. I am afraid that we cannot get any further under the existing system. We are achieving 52 to 54 per cent full compliance. The rest is half partial compliance and half no compliance. We cannot push the system any more. For example, taking housing costs into account, there are 49 different types of mortgages. Quite junior staff must be aware of every change in any mortgage to recalculate the appropriate maintenance to see whether it makes a difference to liability or whether it breaches the tolerance rules. The system is collapsing under its own complexity, and every time that we tried to make it fairer, we made it more complex.
I hope that, once the scheme is bedded in and has settled down—that may be five years on, when phasing is complete—we will get compliance of 85 per cent or more. We cannot get much beyond 90 per cent, simply because some NRPs have died, some have gone abroad, some are untraceable and some have changed identity. I hope that we will do better in getting money to poorer children.
The noble Lord asked how much had been written off. The amount of real maintenance that has been lost—as opposed to the punitive interim maintenance assessments, which were nominal—is about £1.5 billion, of which £0.5 billion ought to be collectable. The noble Lord also asked about the letters. I think that the delay may have been caused by delays in receiving Hansard or by the House of Commons' half-term break. I am not sure about that, but I will ensure that the letters that need to be written also come to the Library of this House and to Front-Bench spokesmen, whether or not they have already gone to the Commons. I apologise if that has given rise to any difficulties in preparing for tonight.
The noble Earl, Lord Russell, made a point about tailoring things to suit individuals. We have argued the point before. I prefer to have a lower assessment, giving people more money in their pocket and allowing

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them to make their own decisions and be treated as moral adults. I hope that those on the Liberal Benches will one day come to support us in that position.
The noble Earl also asked about sanctions. I take his point about Mr Justice Collins. Any legal decision that reflects on what counts as an adequate basic level of provision will be of interest to the department, and we will keep the position under review. The sanction regime affects few lone parents. More importantly, I hope that, with the maintenance disregard of up to £10 a week that lone parents will keep, such parents will, for the first time, have a real interest in co-operating with the agency. At the moment, for a lone parent, the CSA represents all hassle, no cash and debt collection that is not always efficient. In future, such parents will see up to £10 going to their child. The child will know that its father is investing in its financial life. For that money to flow regularly, the lone parent will need to maintain relations that are as cordial as possible—sometimes in difficult circumstances—with the nonresident parent. If that happens, the child will be the beneficiary, financial and emotional. We are using gentle encouragement to try to ensure that, although the parents may have broken up, the child will remain in touch with both parents.
The noble Earl, Lord Russell, asked about a point that was made in another place by his colleague Professor Webb. We are trying to prevent any manipulation of income within a household such that the moneys that should go to the first family are reduced because of virements or switches of tax credits within the family. I am sure that most people will not engage in such fraudulent behaviour, but, as the noble Lord, Lord Higgins, said, there is great bitterness left over from the CSA. CSA staff have been the lightning conductor between conflicting and, often, hostile versions of events.
I pay tribute to the staff. They have been extraordinarily professional and have made huge improvements in the past couple of years. MPs regularly tell me that the number of complaints has reduced. However, the system is imploding on itself. If we are to get money to children, strengthen child support and tackle child poverty, we must get the new system working as quickly and decently as we can. I hope that your Lordships will accept the regulations as part of that move.
On Question, Motion agreed to.

Proceeds of Crime Act 2002 (Investigations in England, Wales and Northern Ireland: Code of Practice) Order 2003
8.30 p.m.
Lord Bassam of Brighton Lord Bassam of Brighton rose to move, That the draft order laid before the House on 16th January be approved [8th Report from the Joint Committee].
The noble Lord said: My Lords, in moving the Proceeds of Crime Act 2002 (Investigations in England, Wales and Northern Ireland: Code of
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Practice) Order 2003, I wish to speak to the other orders in the name of my noble friend Lord Filkin. I shall speak to the orders together, starting with that regarding the code of practice, then that regarding disclosure information and finally that regarding exemptions for civil recovery. All the orders to be debated today were laid before this House on 26th January. They were debated in another place on 3rd February and formally approved there on 5th February.
I begin with the first order relating to the code of practice. I hope that your Lordships have had the opportunity to study the explanatory memorandum and the draft code of practice. Your Lordships will recall that the Proceeds of Crime Act contains a comprehensive package of measures designed to make the recovery of unlawfully held assets more effective. These include a consolidation of existing powers and new powers of investigation into the extent and whereabouts of the proceeds of crime.
There are five investigation powers. Production orders and search and seizure warrants, both of which exist in current legislation; disclosure orders; customer information orders; and account monitoring orders. Section 377 of the Act requires the Secretary of State to prepare and publish a code of practice for use by those exercising powers under Chapter 2 of Part 8 in England, Wales and Northern Ireland. There are separate powers of investigation for Scotland set out in Chapter 3 of Part 8, and Section 410 requires a separate code to be issued by Scottish Ministers.
The powers of investigation contained in Part 8 of the Act are fairly intrusive and go beyond what is permissible in present legislation in respect of investigations into the proceeds of crime. The Government believe that such powers are none the less fully justified since without them it is unlikely that either the director of the new Assets Recovery Agency or law enforcement will be able to make any substantial improvement in the field of asset recovery. The Government are aware that investigation schemes in other legislation have related codes of practice to ensure a measure of control and consistency as to how the relevant powers are used in practice.
This draft code is drawn heavily from these established precedents. The code is intended to ensure best practice by those operating the powers of investigation within the Act and an assurance that the use of the powers will be proportionate to those people and organisations likely to be affected by the Act, notably the financial industry.
An initial draft of the code was published for public consultation on 11th October and the consultation period ended on 3rd January. Interested groups have had three months to comment on the draft code. We have revised the code in the light of the many comments received. A summary of the responses to the draft code and our comments are in the Library.
The introductory part of the code provides a general overview of the provisions appropriate officers need to follow. It provides best practice for appropriate officers in regard to making applications for and the

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serving of warrants and orders. It outlines the procedures and for the retention of documents and information.
Financial investigators should now seek to obtain internal authority before making an application for an investigation order. This will ensure that senior officers will have a measure of control over the number of applications and will become aware of any intelligence arising from investigations.
The disclosure order was the subject of debate during the Bill's passage; in particular, Section 357(4)(a) which allows questioning "at once" without an interviewee receiving any prior legal advice. This concern was one of the reasons that the provision of a code of practice was introduced. Paragraphs 141 to 144 of the code provide an assumption that a person will have access to advice if required. The code also provides safeguards regarding questioning people who are without any legal advice.
The disclosure order section sets out the best practice for conducting an interview and recording and storage of the tape after interview. The code provides a detailed step-by-step guide for appropriate officers to follow when carrying out investigation powers under Part 8. It is intended to be easily understood. The code will form part of the training for financial investigators provided by the Assets Recovery Agency.
Due to the nature of the draft order, I have spoken more to the draft code rather than to the order itself. The only further point specifically on the order is that it brings the code of practice into operation on 24th February 2003. My honourable friend the Parliamentary Under-Secretary of State has signed a commencement order bringing Part 8 into force on that date. It is also the happy date when the Assets Recovery Agency will become operational.
I now turn to the draft Proceeds of Crime Act 2002 (Disclosure of Information) Order 2003. The order adds to the list of persons who may disclose information to the director and adds to the list of purposes for which the director will be able to disclose information.
It will be essential that the director has access to relevant information held by other bodies if she is to carry out her functions effectively. Section 436 achieves this by allowing certain specified persons, known as "permitted persons", to disclose information to the director. These people would not otherwise have the power to disclose to the director.
It was made clear during the passage of the Act that the list of permitted persons in subsection (5) was not definitive. In the course of carrying out her functions the director is likely to come across others from whom she may wish to request information. That is why, under subsection (6), the Secretary of State will have the power to designate additional permitted persons by order. Subsection (7) narrows the designation power to specific functions of a public nature. This would be important if, when designating as a
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permitted person someone with a wide remit, only certain functions justified designation. It would help to ensure that the power of disclosure was proportionate.
Although the agency will not become operational until 24th February, we have already identified a number of additional persons who will have a need to disclose information to the director. Each permitted person designated by the order holds information which may be relevant to the director's functions. Disclosure will be permissive rather than mandatory and no one will be forced to disclose information to the director under these provisions.
I now turn to Article 3 of the order, which covers the disclosure of information by the director. The background is as follows. The director requires statutory authority to enable her to disclose information. Section 438 provides that authority and gives the director the power to disclose information for certain specified purposes, subject to restrictions that are also set out in the section. The director will have the power to disclose information to any person or body for any of the purposes set out in subsection (1)(a) to (i). Subsection (9) gives the Secretary of State the power to add to the list.
Article 3 adds two purposes for which the director will be able to disclose information. The first is in relation to protecting public health, to allow the director to disclose information relating to illicit supplies of medicinal products. The second is to enable and assist the Financial Services Authority to exercise any of its functions, to allow the director to disclose information that might be relevant to the FSA's regulatory function. This should assist other bodies to whom the information will be disclosed in the exercise of their functions. Overall, the order will help the director to exercise her functions more effectively.
Part 10 of the Proceeds of Crime Act will come into force on 24th February.
Finally, I turn to the draft Proceeds of Crime Act 2002 (Exemptions from Civil Recovery) Order 2003. The order will prevent certain specified property being subject to civil recovery by the director or Scottish Ministers.
The background to the order is as follows. The civil recovery powers in the Act enable the enforcement authority to bring proceedings to recover property that is or represents property obtained through unlawful conduct. The Act contains certain exemptions to the civil recovery scheme—for example, in Section 308. Their general purpose, and the purpose of the order, is to ensure that the civil recovery scheme is both proportionate and fair.
Although Section 308 provides exemptions in respect of a number of specific criminal provisions, the Act does not make provision in relation to the wider powers of the criminal courts to make orders for the disposal of property.
Section 309 provides that certain property is not recoverable or associated property if it is prescribed by order or disposed of in pursuance of a prescribed enactment. Where property is prescribed by the order, or where property is disposed of under an enactment

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prescribed by the order, then anyone who receives the property will be able to hold it or deal with it without the risk of civil recovery proceedings being brought.
Part 1 of the order lists prescribed property. The only property we intend to prescribe at present is property which is forfeited under the various powers of Customs and Excise. Part 2 lists prescribed enactments. Where property is disposed of under one of these enactments it will cease to be recoverable.
There are two main policies behind the property and enactments prescribed. First, we have excluded property disposed of under legislation that provides for the forfeiture of property in criminal proceedings to the police or other public bodies. This is because it would cause administrative difficulties if those buying or otherwise using forfeited property could not be sure that they had good title to that property. Secondly, we have excluded property where other proceedings have already played a proprietary or restitutionary role. In such circumstances, the job of civil recovery has already been done and there is no need for civil recovery to take away the property.
The list of property and enactments is a result of a consultation exercise with other government departments. We are continuing to discuss the issue and anticipate that further orders will be needed as further exemptions come to light and the Assets Recovery Agency gains experience of operating the civil recovery scheme.
A commencement order has been signed to bring the civil recovery provisions of Part 5 into force on 24th February. Subject to your Lordships' approval, the order will be brought into force on that date.
I trust that noble Lords have followed my detailed explanation. I commend the orders to the House. I beg to move.
Moved, That the draft order laid before the House on 16th January be approved [8th Report from the Joint Committee].—(Lord Bassam of Brighton.)
Viscount Bridgeman: My Lords, I thank the Minister for his comprehensive explanation of the three orders—which are designed to give teeth to the Proceeds of Crime Act and which we generally support.
I have some brief questions. The first relates to the reference to further orders. As always, we should like to see these reduced to a minimum—that is, consolidated as far as possible. Secondly—an associated question—can the Minister inform us as to why these were not included on the face of the Bill?
Turning first to the disclosure of information order, the director has very wide powers. Again, the bodies from which he can seek information, as the Minister inferred, will need refinement. I note that the disclosed information is restricted to a criminal investigation, the safeguarding of national security and the carrying out of his functions.
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Turning to the investigations order, will the Minister give an indication as to how the code of practice differs from PACE? I gather that it follows PACE in many respects. What responses did the Home Office receive from the consultation practice? I have a question about the record that the appropriate officer must keep. Will that record be full enough; and should it include more of the information on which the application is being made? Should a record also be made of unsuccessful applications for these warrants and orders?
My final question on this aspect of the order relates to the seize and sift powers. PACE was designed to make the seizing and sifting powers easier for the police. Will the Minister give an idea of what reasonable time is required before the property that has been seized and searched can be returned? The suspicion test is similar to powers under PACE, but not quite the same. We should like elucidation on that point.
I turn finally to the order dealing with exemptions from civil proceedings. This clearly makes sense. Again, I note from the Explanatory Memorandum that there was a trawl of government departments. I repeat my request that these orders are consolidated as much as possible, so that the House is not burdened with several piecemeal orders of that kind. This is a workmanlike provision to give effect to the Act and in that respect we welcome it.
8.44 p.m.
Lord Thomas of Gresford: My Lords, we welcome the publication of the draft code. The code of practice, under Section 377 of the Act, was brought into being to ensure that the various persons specified complied with the code and that failure to comply with any provision would be commented on in court, presumably in the same way as happens under PACE. The document seems very lengthy but I suppose that if one put all the PACE codes together, one would end up with something of a similar length.
There are certain emphases in the document that we very much welcome, particularly in paragraph 10, where it is recognised that the powers of investigation involve significant interference with the privacy of those whose premises are searched and that the appropriate officers should consider at every stage whether the necessary objectives could be achieved by a less intrusive means. It has been my experience over the years that agencies other than the police tend to be rather more difficult to deal with in areas such as this. It is right that the emphasis should be placed at the beginning of the code.
We also welcome the provisions to which the Minister referred concerning financial and legal advice. Those are set out fully and are absolutely unexceptional. Although we would query one or two matters of detail, with which I will not weary the Minister at the moment, it seems that a considerable amount of work has been done on them and that there has been appropriate consultation. We welcome them.

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One matter arises under the disclosure of information order. The schedule refers to functions exercised by the Secretary of State for the purposes of,
"the prevention, detection, investigation or prosecution of offences relating to a social security matter"
and
"checking the accuracy of any benefit, payment or advantage in a social security matter".
The explanatory memorandum accompanying the document says that the provision is there to provide information on benefit fraud. We would welcome an assurance that these powers will be used only to pursue claims in respect of organised benefit fraud and not to pursue individuals who claim benefit for themselves to which they are not entitled—the mundane, run-of-the-mill sort of case that appears before magistrates courts. We hope that these powers will not be exercised in pursuit of trivial matters.
We welcome the third order, which is in accordance with the Act. I have nothing to ask about it.
Lord Bassam of Brighton: My Lords, I am grateful to the noble Viscount and the noble Lord for their comments and their generous support for what is generally agreed to be a workmanlike piece of legislation and a practical and sensible series of orders that have followed therefrom.
The noble Viscount, Lord Bridgeman, was, I suppose, making a plea that we should not use and abuse the secondary legislation process to put something in place that had not been anticipated at the outset. The answer to that is simple and straightforward: of course we cannot anticipate every set of circumstances. One will always require secondary legislation for additional flexibility. When we are framing legislation, we obviously try to anticipate everything that we can, but we will endeavour to keep to an absolute minimum the number of orders that we have to bring forward to give flesh to the bones.
The noble Viscount asked in what respect the code differed from PACE. The only major difference is that of investigation into the proceeds of crime rather than actual offences. The record of proceeding closely follows that set out in PACE. There are many similarities and they follow the general structure.
We carried out a thorough consultation, the fruits of which have been properly put into the Library of the House. I am sure that the noble Viscount can access
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them if he wants. I hope he finds that exercise helpful. It would be wrong and perhaps not the best use of parliamentary time to go into the detail of that consultation at the Dispatch Box this evening.
The noble Viscount raised points about unsuccessful applications and whether the time for the return of property was reasonable. I cannot advise him on those points this evening. I am happy to ensure that we provide him with the information that he has requested. We intend to ensure that we do not unnecessarily inconvenience those who are affected. We shall endeavour to ensure that any property or proceeds are responded to or produced in reasonable time. I am happy to provide more detail on that.
Finally, we will ensure that further orders are kept to a minimum. Further candidates for designation by orders are likely to come to light as the agency gains experience. There will be full consultation on those and we shall ensure that all necessary parties are informed and advised.
I hope that answers the core points that have been raised. I am grateful for the support that has been expressed.
On Question, Motion agreed to.

Proceeds of Crime Act 2002 (Disclosure of Information) Order 2003
Lord Bassam of Brighton: My Lords, on behalf of my noble friend Lord Filkin, I beg to move.
Moved, That the draft order laid before the House on 16th January be approved [8th Report from the Joint Committee].—(Lord Bassam of Brighton.)
On Question, Motion agreed to.

Proceeds of Crime Act 2002 (Exemptions from Civil Recovery) Order 2003
Lord Bassam of Brighton: My Lords, on behalf of my noble friend Lord Filkin, I beg to move.
Moved, That the draft order laid before the House on 22nd January be approved [8th Report from the Joint Committee].—(Lord Bassam of Brighton.)
On Question, Motion agreed to.
House adjourned at seven minutes before nine o'clock.