Lords Sitting of 11 July 2003

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

Civil Contingencies
The Chairman of Committees (Lord Brabazon of Tara): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Commons message of yesterday be now considered, and that a committee of eleven Lords be appointed to join with the committee appointed by the Commons, to consider and report on any draft civil contingencies Bill presented to both Houses by a Minister of the Crown;
That, as proposed by the Committee of Selection, the Lords following be named of the committee:

L. Archer of Sandwell,

L. Bradshaw,

L. Brooke of Alverthorpe,

L. Condon,

L. Jordan,

L. King of Bridgwater,

L. Lucas,

L. Maginnis of Drumglass,

L. Marlesford,

B. Ramsay of Cartvale,

L. Roper;

That the committee have power to agree with the Commons in the appointment of a chairman;
That the committee have leave to report from time to time;
That the committee have power to appoint specialist advisers;
That the committee have power to adjourn from place to place within the United Kingdom;
That the reports of the committee from time to time shall be printed, notwithstanding any adjournment of the House;
That the committee do report on the draft Bill by the end of November 2003;
And that the committee do meet with the committee appointed by the Commons on Tuesday 15th July at half-past three o'clock in Committee Room G.—(The Chairman of Committees.)
Lord Marlesford: My Lords, I am to serve on the committee and want to draw attention to the fact that the time proposed in the Motion is not agreed. This is an interesting example of how the other place has not got its act together. The Members of your Lordships' House who have been nominated to the committee were nominated quite a long time ago and the other
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place did not nominate its members until extremely late. There was then a huge rush to try to fix a time and we have had four changes to the time. Frankly, if pre-legislative scrutiny is to mean something, it must be conducted efficiently and we must not be rushed by the inability of the other place to get its act together.
Lord Brabazon of Tara: My Lords, I am afraid that I cannot comment on what happens in the other place. I am aware that there was a very long period between noble Lords being appointed to the committee and House of Commons' Members being appointed. Fortunately, I have no control over what goes on in the other place.
On Question, Motion agreed to; and a message was ordered to be sent to the Commons to acquaint them therewith.

Mental Incapacity
The Chairman of Committees: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Commons message of yesterday be now considered, and that a committee of eight Lords be appointed to join with the committee appointed by the Commons, to consider and report on any draft mental incapacity Bill presented to both Houses by a Minister of the Crown;
That, as proposed by the Committee of Selection, the Lords following be named of the committee:

B. Barker,

L. Carter,

B. Fookes,

B. Knight of Collingtree,

B. McIntosh of Hudnall,

L. Pearson of Rannoch,

L. Rix,

B. Wilkins;

That the committee have power to agree with the Commons in the appointment of a chairman:
That the committee have leave to report from time to time;
That the committee have power to appoint specialist advisers;
That the committee have power to adjourn from place to place within the United Kingdom;
That the reports of the committee from time to time shall be printed, notwithstanding any adjournment of the House;
That the committee do report on the draft Bill by the end of November 2003;
And that the committee do meet with the committee appointed by the Commons on Tuesday 15th July at half-past three o'clock in Committee Room 5.—(The Chairman of Committees.)
On Question, Motion agreed to; and a message was ordered to be sent to the Commons to acquaint them therewith.

Electricity and Gas (Modification of Standard Conditions of Licences) Order 2003
11.8 a.m.
Lord Davies of Oldhamrose to move, That the draft order laid before the House on 12th June be approved [23rd Report from the Joint Committee].
The noble Lord said: My Lords, the Utilities Act 2000 modified the Electricity Act 1989 and the Gas Act 1986 to provide a matching process for the modification of standard conditions of gas and electricity licences in each Act. In order to commence the procedure for a licence modification using that process, the Gas and Electricity Markets Authority must first issue a notification stating what modification it proposes; its reasons for the proposal; and the effects. A period of not less than 28 days must be allowed for relevant licensees to register objections to the proposal. Any objections registered within the period must be considered by the authority.
If objections are registered, the authority may proceed to make the modification only under Section 11A(6)(b) of the Electricity Act 1989 or Section 23(7)(b) of the Gas Act 1986 if the proportion of relevant licensees who object to the modification and the proportion of relevant licensees weighted according to market share are less than the percentages prescribed by the order.
The purpose of the draft order that we are considering today is to prescribe those percentages and to determine how objections are to be weighted according to market share for each licence type. The percentages prescribed by this draft order for gas and electricity licensees are 20 per cent for the proportion of relevant licensees and 20 per cent for the proportion of relevant licensees weighted according to market share. That will permit sensible evolution of the standard licence conditions, but safeguard the position of licensees who may object to any particular proposal. The draft order also proposes measures to weight market share for each type of licence.
For electricity suppliers, it is proposed that market share should be defined by the number of metering points registered to each supplier; for electricity distributors, it is the number of metering points registered to all suppliers on the licensee's network. The measure for generators takes the average weekly registered capacity for each licensee in each four-week period for the preceding 12 months.
In the gas market, the market share for a supplier should be taken as the total number of consumers contracted to the supplier at the relevant time; for each gas shipper, it is the aggregated daily average of input and off-take on the national transmission system; and for gas transporters, it is the total volume of gas conveyed to the premises of consumers during the preceding 12-month period.
The key reference date for the measures is the day on which the authority issues the notification of a proposal to make a modification of a licence condition. The periods for calculation of the market
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shares have been proposed on the basis of the availability of data to the authority. We have taken care to use data that are reasonably available wherever possible, to avoid imposing any additional burdens on licensees to produce extra information for the exercise.
I am pleased to note that Ofgem issued a consultation paper on 3rd July that seeks views on its proposed guidance on the procedure. The consultation invites views on the procedures to be followed by Ofgem; the way in which relevant licensees may register their objection; how Ofgem proposes to calculate the market share; and proposals on how Ofgem should verify and publish the results of any voting process.
An important objective is to ensure that there is no undue delay in announcing the result of the process following the end of the period allowed for objections to be registered. Delay would mean uncertainty for licensees, which they would not welcome. That means that the data for market share determination must be collected for a period earlier than the notification period, otherwise there could he a delay of many weeks before the results of the process could be made known.
I hope that noble Lords will appreciate and support the balance that has been struck here. Of course, the process is not entirely new. A similar procedure has been in existence for gas licences, but the Utilities Act 2000 extended it to electricity as well as to gas licences. The procedure will provide a simpler approach to the modification of licences in the particular circumstances where there is widespread support for a measure. It will also ensure that changes that command widespread support are reflected in all licences, maintaining a level playing field for licensees. I commend the order to the House.
Moved, That the draft order laid before the House on 12th June be approved [23rd Report from the Joint Committee].—(Lord Davies of Oldham.)
Baroness Miller of Hendon: My Lords, I thank the Minister for his explanation of the order. It is a highly technical one, dealing with a highly technical subject. My honourable friend the Member for Blaby, told the 4th Standing Committee on Delegated Legislation in the other place that both he and his Oxford graduate researcher,
"didn't really understand the bureaucratic jargon and gobbledegook",
which is why I am most grateful to the Minister for explaining it so well. I cannot tell your Lordships with what relief I read those words in the Commons Hansard, and realised that it was not just me being obtuse.
However, thanks to both the Explanatory Notes provided by the department and the explanation given by the Minister in the committee of the other place, and indeed by the noble Lord today, I am able to echo the words of my honourable friend who said that,
"the order seems non-controversial".—[Official Report, Commons, 4th Standing Cttee on Delegated Legislation, 1/7/03; col. 5.]

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The purpose of this order is to ensure that the regulator can modify standard conditions in all licences without the need to deal with the individual licences one at a time. Following a consultation process, the Government decided that objections to any proposed conditions would have to constitute 20 per cent of the industries involved, following a very complex formula including weighting according to market share as well as by the number of objectors.
It is right to point out that British Gas, Transco and Powergen each have more than 20 per cent of the market. Does the Minister agree that this gives each of those concerns a veto over any proposed changes in the standard licences?
Subject to that one anxiety, we propose to follow the example of our colleagues in the other place and not oppose the making of this order.
Lord Ezra: My Lords, I, too, am grateful to the noble Lord for having explained so clearly this rather technical and complex proposition. I have two questions to ask him. First, are the calculations for the blocking minority generally acceptable to licence holders based on the responses to the consultation document? Was there not pressure to set the blocking minority at a lower figure than 20 per cent? Indeed, figures of 15 per cent or 10 per cent were mentioned. Why did the Government decide on the 20 per cent figure?
Secondly, what kind of modifications under the collective licence modifications procedure are likely to be proposed by Ofgem? Are these of a major nature? Are they likely to be frequent? If so, would that not introduce a disturbing element of uncertainty into the trade for gas and electricity? I would be obliged to the noble Lord if he could answer those questions.
Lord Davies of Oldham: My Lords, I am grateful to noble Lords for the response to the order, which has its technical aspects as the noble Baroness, Lady Miller, indicated. I have some sympathy with the views she expressed in terms of mastering the intricacies of the order. Let me see whether I can deal with the points that have been raised.
As the noble Baroness indicated, it would appear that licensees with a market share of more than 20 per cent have a veto on the issue, but the essence of the modification process is to permit necessary modifications only when there is a high degree of consensus. So, if a significant market player holding above 20 per cent objects, the authority would have to look at that matter again and choose another route. The whole concept behind the operation of the threshold is to guarantee that the major players are part of the consensus which gives effect to these provisions. I think, therefore, that the threshold is not too low. It raises the issue of veto but, on the other hand, the task is not manageable unless all major players are suitably on board with regard to the matter.
I recognise the point made by the noble Lord, Lord Ezra, about the blocking measure. As he knows only too well, so far as concerns gas it would have been
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lower. This common 20 per cent figure reflects both industries. Looking across the markets and seeing the degree of consolidation over recent years, it appears that we have the figure about right in terms of being fair should a number of licensees wish to object. If a significant share of licensees wish to object to the proposal, their objections must be taken into account. It is not necessary for a majority of licensees to object—whether by number or by market share—but a significant number or a significant player must object in order to frustrate any particular route chosen before there would be the necessity to adopt a different strategy altogether.
The noble Lord also asked me about the cut-off dates for consultation. As he will recognise, that is an issue of judgment again. He is right: the later the cut-off point, the more accurate the information will be and, therefore, the more accurately it will reflect the market. But, as I said in my introduction, we also need to give the industry the opportunity to respond in good time. We have specified in the order the necessary material that must be taken into account; we have a date for that somewhat in advance of the latest date to allow proper digestion of the implications by the industry for it adequately to respond. That is why that date has been chosen.
Lord Ezra: My Lords, I also asked what modifications Ofgem was likely to have in mind and how major and frequent they may be, because that could have a destabilising effect on trade.
Lord Davies of Oldham: My Lords, that question would require a substantial response to detail all possible objections; if I may, I shall attempt to syncopate and identify the main ones.
For gas suppliers, Ofgem will propose to remove the right to object for non-termination of contract, and to create a right to object on consumer response. For industrial and commercial suppliers, Ofgem will propose to remove the right to object for non-termination of contract and to create a right to object where that is in the contract with the customer.
Ofgem will propose that suppliers be obliged to participate in a new supply-point administration agreement to ensure that information about a meter is transferred efficiently between suppliers and their agents, thereby improving the customer transfer process. Ofgem envisages applying that to domestic suppliers, but would consider extending it to industrial and commercial suppliers in the light of consultation responses. Ofgem also proposes to limit the right of gas suppliers to block the right to object to a transfer for certain prepayment meter customers with an outstanding debt. The parallel change for electricity has just been agreed in the MRA process.
Those are the broad areas in which Ofgem may make modifications.
On Question, Motion agreed to.

Insolvency Act 1986 (Amendment) (Administrative Receivership and Urban Regeneration etc.) Order 2003
11.22 a.m.
Lord Davies of Oldham Lord Davies of Oldham rose to move, That the draft order laid before the House on 12th June be approved [23rd Report from the Joint Committee].
The noble Lord said: My Lords, I beg to move that the draft order laid before the House on 12th June be approved. It introduces changes to the corporate insolvency provisions of the Insolvency Act 1986 as inserted by the Enterprise Act 2002.
The corporate insolvency provisions of the Act are intended to facilitate the rescue of viable companies where practicable, or to achieve a better result for creditors as a whole than in an immediate winding-up. In order to achieve that objective, the Act streamlines the process of administration to make it fast, fair and focused on rescue and places a great, general prohibition on the appointment of an administrative receiver.
By generally prohibiting the appointment of an administrative receiver, the Government seek to shift the balance in favour of the new streamlined administration procedure, thereby ensuring that account is taken of the interests of all creditors—including small firms and other trade creditors whose claims are unsecured; whereas an administrative receiver has a duty principally to the holder of the charge appointing him.
However, the Government recognise that there are instances where the appointment of an administrative receiver is fundamental to the effective operation of a specific market or sector and not simply a device to facilitate the realisation of assets to satisfy the claim of a floating charge holder. Section 250 of the Act makes a number of exceptions to the prohibition of the right to appoint an administrative receiver to deal with such circumstances. The exceptions are in respect of capital markets, public private partnerships, utilities, project finance, financial markets and registered social landlords. The Act also provides for the insertion of additional exceptions through an order approved by resolution of each House of Parliament.
The draft order before us introduces two further exceptions to the prohibition; namely, an exception in respect of urban regeneration projects; and one in sectors where special administration regimes are in operation. I will deal with each new exception in turn.
On urban regeneration, government policy is to deliver an urban renaissance through a programme of change and development in towns and cities. That will be achieved only through engaging the private sector. In many locations, such as disadvantaged communities, the necessary development may be marginal or require public sector support. In those cases, funders place a high value on the right to step in to appoint administrative receivers in the event of failure. Without that right, the cost of finance is likely to rise, impacting on marginal projects and, therefore, undermining regeneration policy.
The Enterprise Act 2002 already includes exceptions from the prohibition on the appointment of an administrative receiver for very large projects where the expected level of debt is at least £50 million; and for private-public partnership projects involving step-in rights. However, the current exceptions do not cover smaller, purely private projects in disadvantaged areas, which the Government are keen to encourage. The draft order provides an exception for such projects, without which they are likely to be susceptible to increases in the cost of finance which, in turn, could undermine their viability.
For special administration regimes, the draft order introduces a further exception to the prohibition of the right to appoint an administrative receiver in respect of the water and transport sectors, where special administration regimes operate that draw on and amend the current administration provisions. Section 249 of the Enterprise Act saves the current administration provisions for such regimes and disapplies Section 248 of the Act, which inserts the new streamlined administration procedure contained in Schedule 16 into the Insolvency Act 1986.
Without creating that further exception. the holders of qualifying floating charges over companies for whom there are special administration regimes would no longer be able to enforce their security by appointing an administrative receiver. In addition, because of the disapplication of Section 248 to such schemes, they would be unable to take advantage of the new administration procedures. The exception will correct that lacuna and allow the holders of qualifying floating charges to continue to be able to enforce their security through the appointment of an administrative receiver, within the limitations set out in the special administration regimes for the sector concerned.
I commend the order to the House.
Moved, That the draft order laid before the House on 12th June be approved [23rd Report from the Joint Committee].—(Lord Davies of Oldham.)
11.28 a.m.
Baroness Miller of Hendon: My Lords, I shall be brief in supporting the confirmation of the order. I want to focus on its main objective, which is to prevent the holder of a floating charge from appointing an administrative receiver of a company. The fact is that the majority of such floating charges arc in favour of banks, and are often supplementary to a fixed charge over a specific property asset.
It is more difficult to enforce a mortgage than it is to appoint an administrative receiver, because such an appointment can be made at the stroke of a pen. Once appointed, an administrative receiver answers to those who appointed him and his primary duty is to realise assets to clear the debt secured by the floating charge, irrespective of any adverse—possibly fata—effects on the company. Perhaps the greatest number of complaints made to the Department of Trade and Industry relate to the activities of administrative receivers. Despite recent legislation, we still lack the full-blooded protective

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regime that exists under the United States' Chapter 11, but we are certainly getting closer, and this order amending the 1986 Act is a welcome step closer.
I do not often find myself quoting the Secretary of State for Trade and Industry with unqualified approval, but on the day that the Enterprise Bill was published, she wrote:
"The corporate insolvency law reform will restrict the use of Administrative Receivership, which tends to serve one creditor above all others. And fit the balance in favour of administration. This takes into account the interests of all creditors—secured and unsecured".
The regulatory impact assessment said that the new legislation will help,
"to rescue viable companies and if this is not possible, to produce a better return to creditors".
That means all creditors, not just the debenture holders. We applaud those objectives.
Before I sit down, perhaps I may take the opportunity, while I have the Minister's attention, to ask him if there is any hope in the not-too-distant future of there being a consolidating Act to bring the Insolvency Act into tidier form. At the moment, with all the amendments that have been made to it in the almost 20 years since it was first passed, it is difficult to check what the law is without access to a specialised law library, because the Act itself now resembles a patchwork quilt.
Lord Addington: My Lords, I, too, hope to be very quick—I shall try to avoid using the word "brief" and the many pitfalls that accompany it. Everyone seems to be in agreement on the issue. My noble friend Lord Sharman said that the administration is to proceed with speed, which is what we sought to do in the Bill when it was first brought before us. I think, therefore, that we can say that we are in favour of the order. The two exemptions, and the idea of protecting brownfield site development and public utilities, seem sensible.
I am afraid that there is not much detail on the second exemption. I would appreciate it if the noble Lord could tell us when we will get more technical information.
Lord Davies of Oldham: My Lords, I am grateful for the generally favourable reception of the order. I am somewhat overwhelmed by the fulsome commendation of the noble Baroness, Lady Miller. I am sure that the wires will be humming to the DTI on that commendation; if not, I shall make them hum. I would have hoped that the quote could have been in a wider context across the swathe of government policy for which the Secretary of State is responsible, but that is probably asking a bit much.
The noble Baroness asked whether company rescue would effectively be achieved. In the areas covered by the exceptions, the purpose of appointing an administrative receiver is to ensure that the company will continue to trade so that the provision of the public service is not interrupted and, in other cases, that the income stream from the company is maintained. That outcome is entirely in line with the
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aims of the Enterprise Act, which seeks to ensure that viable companies that face financial difficulty can be rescued and do not go to the wall. We are at one on the broad objectives. I recognise the noble Baroness's reservation on that point.
I also recognise the noble Baroness's rather fetching analogy of a patchwork quilt of legislation. Some of us regard such legislation as impenetrable thickets rather than patchwork quilts. However, we will do our best to try to make the picture more attractive and more meaningful, if only for the sake of Ministers defending orders at the Dispatch Box.
On Question, Motion agreed to.

National Minimum Wage Regulations 1999 (Amendment) Regulations 2003
11.33 a.m.
Lord Davies of Oldham Lord Davies of Oldham rose to move, That the draft regulations laid before the House on 19th June be approved [23rd Report .from the Joint Committee].
The noble Lord said: My Lords, I am proud to talk about the national minimum wage. Without doubt, it is one of this Government's finest achievements. As we all know, the Government faced some opposition when we introduced the national minimum wage in 1999. However, we were determined that the minimum wage should he a success and that it should not, as so many predicted, damage the economy or lead to increased unemployment for the very people we were trying to help.
We believe with justification that we have succeeded in that goal. The national minimum wage has made an enormous difference for more than a million low-paid workers in the United Kingdom and helped us to tackle the very low rates of pay that were so prevalent under the previous administration. There has been little or no evidence so far of any impact on the employment prospects of low-paid workers. That is why we are now in such a strong position, with the minimum wage widely recognised as an outstanding success and accepted on all sides as a permanent fixture of the British labour market.
In June of last year, the Government asked the independent Low Pay Commission to produce its fourth report on the minimum wage by the end of February 2003. The commission reported earlier this year, and the Government announced in March that we had accepted almost all the commission's recommendations.
The regulations that we are debating today do two things: they implement the increases to the adult and youth rates recommended by the commission in March, and they implement adjustments to the accommodation offset that have been agreed with the commission. I shall discuss each aspect in turn.
The first aspect is increases to the minimum wage rates. The commission was able to reflect on the first four years of operation of the minimum wage. It found little or no evidence so far of any impact on the employment

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prospects of the low paid and believed that all the signs were that the minimum wage could now be increased as a percentage of average earnings—benefiting more workers—without producing damaging economic effects.
The commission therefore recommended increasing the adult rate of the minimum wage from the present £4.20 to £4.50 in October 2003, and increasing the youth rate—paid to workers aged 18 to 21—from the present £3.60 to £3.80 in October 2003. Those increases are substantial. The increase proposed to the adult rate, for example, is around 7 per cent—around double the present rate of growth in average earnings and three times the rate of inflation. They would extend the coverage of the minimum wage substantially so that 1.3 million to 1.6 million low-paid workers should benefit from those increases.
The Government agree with the broad approach followed by the commission; namely, that the minimum wage should be increased to help the low paid while taking care not to damage their employment prospects. The commission has made clear that it believes the recommendations are affordable for business and will not have any significant effect on levels of employment. The Government therefore accept the rate increases proposed by the commission. Sections 2 and 3 of the regulations will introduce those increases with effect from 1st October.
The commission has also proposed further substantial increases in the rates, to take place in October 2004, to £4.85 for adult workers and £4.10 for workers on the youth rate. That would mean substantial increases in the minimum wage for a second successive year—around 8 per cent in the adult rate—and a further extension of the coverage of the minimum wage, so that around 1.7 million to 2.4 million workers should benefit from the 2004 increase.
However, the commission has also recommended that it should be invited to fine-tune the recommended 2004 upratings of the rates in early 2004, in the light of economic circumstances. We believe that that is eminently sensible and therefore the 2004 increases are not contained in these regulations. But I want to make it clear that the Government share the fundamental view of the commission; namely, that we are now in a position to make substantial increases to the minimum wage in successive years without producing damaging economic effects.
It may be helpful briefly to explain this complex aspect of the regulations relating to the accommodation offset. When an employer provides accommodation for a worker, it is the only benefit in kind that can be counted towards the minimum wage. However, an employer cannot charge whatever he likes for accommodation in order to reduce the worker's net pay because the regulations set limits on the value of accommodation that can be counted towards the minimum wage. That limit is known as the accommodation offset and it is presently set at 57p per hour worked or £3.25 for each
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day that accommodation is provided, whichever is the lower. The maximum possible accommodation offset is therefore £22.75 per week.
The commission recommended in its report that that two-tier system was unnecessarily complex and that the hourly and daily rates should be abolished and replaced by a weekly offset. It also recommended that the offset should be increased, in line with the increase in the adult minimum wage rate, to £24.40 per week.
The Government agreed to those recommendations in March. However, on further reflection, we have agreed with the commission that some slight adjustments in the area would be helpful. First, we have agreed that it would be more straightforward to have a daily rate rather than a weekly one, because that would make it more straightforward to calculate the offset where a worker is paid monthly rather than weekly or every four weeks. Secondly, we have agreed to increase the amount by a further lop per week to £24.50, because that figure is divisible by seven and gives a neat daily offset of £3.50. I hope that noble Lords will agree that the amendments—agreed with the commission—are sensible and entirely in line with the spirit of the commission's original recommendations. Section 4 of the regulations introduces those changes to the rules on the accommodation offset.
Finally, it may be helpful if I briefly explain the remaining provisions of the regulations. Regulation 6 contains a transitional provision, so that the changes to the rules on the accommodation offset will apply only to pay reference periods beginning on or after 1st October. Regulation 5 is a technical provision which will remove the need for further transitional provisions if the accommodation offset is increased in future years. Regulation 7 revokes previous provisions relating to the rates of the minimum wage and level of the accommodation offset. I commend the regulations to the House.
Moved, That the draft regulations laid before the House on 19th June be approved [23rd Report from the Joint Committee].—(Lord Davies of Oldham.)
Baroness Miller of Hendon: My Lords, I should like to repeat, in your Lordships' House, the warning given by my honourable friend the shadow Minister for Trade and Industry prior to the Budget:
"Rises above the rate of inflation inevitably add to the costs of many businesses at a time when the outlook for both jobs and investment in the private sector look increasingly poor".
The increase in the national minimum wage created by these regulations, and what I may describe as the staged increase planned for October 2004, are an additional burden on business on top of the increases in employers' national insurance contributions, the leap in the cost of employers' liability insurance and the ever increasing burden of regulatory compliance. In this context, when I talk about business, I mean small businesses, because larger businesses can absorb the increase in their overhead because of their size, and because they have a smaller proportion of lower-paid workers than the corner shop, for example. That is why we find the CBI describing the increase as,
"a sensible balance between prudence and boldness",

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while the Federation of Small Businesses—and it should know—complains that the increases,
"will be detrimental to a whole range of small businesses".
The British Chamber of Commerce says that,
"the Government is showing business where we stand on its priority list … to survive under this increase employers will slash costs wherever they can, including possibly a reduction in their workforce".
The Government justify their decision on the basis of the Fourth Report of the Low Pay Commission. Not only do the Government have business viability low on their priority list—as the British Chambers of Commerce complained in the passage I have just quoted—but the Low Pay Commission in its Fourth Report made the claim that:
"All the signs are that the National Minimum Wage can be increased without producing damaging economic effects".
Well, they would say that, wouldn't they? That is one of those pontifical statements that is impossible to prove. The fact is that the economy is in a dire declining state. The fact is that there are still large numbers of young people in some areas unable to get a job or get their feet on the first rung of the employment ladder.
The national minimum wage is, of course, here to stay, but there is a problem. The effect of the recommendations does not necessarily give rise to any confidence to small and medium-sized businesses that their essential interests are fully taken into account. Of course, the increase is welcomed by the TUC, albeit grudgingly, because although the increase is above the rate of inflation it still wants even more. By the way, think that there was a slip of the tongue at the beginning of the debate when the Minister introduced the regulations. I think he meant to say what I said about the increase being above the rate of inflation, but I think he said, "the wages are above the rate".
The TUC would like £5 an hour. The Government, conscious of their deteriorating relationship with the unions, and of the loss and threatened loss of financial support from some of them, will, no doubt, step by step, help them to realise that ambition, regardless of the consequences. The unions mostly deal with large businesses, such as those that are members of the CBI. Neither of those organisations seems to have grasped what is happening to the golden goose in the form of small and medium-sized businesses.
We on these Benches are not able to oppose the making of these regulations, nor do we wish to, but we do want to urge the Government, the Low Pay Commission and, indeed, the TUC and the CBI to take into account the back-breaking effect of the ever escalating costs on SMEs. That is still a problem. They are, after all, the main source of employment in Britain after the continuing disappearance of our manufacturing industry over which the present Government are presiding—I wrote "blithely presiding" in my speech, but I am sure that the Government do not mean to be blithely presiding. However, the truth is that manufacturing industry has a real problem and we definitely have to look after small and medium-sized businesses.
11.45 a.m.
Lord Addington: My Lords, the noble Baroness, Lady Miller of Hendon, told us that the TUC said that the increase was too little, small business employers said that it was too much and the CBI said that it was about right. One wonders whether the figures were more or less what the CBI had been expecting.
The main comments that noble Lords would expect from this party are ones that form our party policy. We feel that all those over the age of 16 should be brought into the scheme. I do not understand the idea that somebody younger doing the same job should receive a lower rate—but a little bit of politics is excusable, even on a Friday. Neither do we understand why the rate change is not made annually. An annual upgrade would probably remove some of the shock and the idea that people are not sure what is going to happen even if they have a reasonable idea. There should be an annual increase.
Do the Government have any figures on what they are doing about the illegal workers who come over to the UK and are paid incredibly small amounts, on East Anglian farms, for example, where great gangs are paid extremely low rates? If we need these workers, are we doing enough to inform them about their rights? What steps are the Government taking to make sure that people who are not paying proper rates are caught and punished for that activity?
We should bear in mind that, if this policy is supposed to ensure that we get decent work done at a decent level of pay, enforcement is a major consideration. Such behaviour also places an unfair burden on those employers who do play by the rules. I hope that the Government can give us some reassurance on those issues.
Lord Davies of Oldham: My Lords, I am grateful that neither Front Bench spokesman indicated that they intend to oppose the regulations. However, I can scarcely be grateful for the response of the noble Baroness, Lady Miller of Hendon, who treated us to an extraordinary perspective on the state the British economy. If she is going to say that the problems of the British economy that she identified are related to these regulations, the one critical fact that should be established is the impact upon employment. After all, what are the regulations about, if it is not that workers should be paid a proper rate?
The Opposition's dire forecasts have always been that this policy would lead to a significant rise in unemployment levels. Of course, although the noble Baroness indicated that the Opposition in the other place produced their normal doom and gloom perspective on the economy, she was not able to treat us to any such description of the current state of employment, because levels are very high. Levels of unemployment remain low despite the forecasts made by the Opposition that the introduction of the minimum wage would lead to substantial increases in unemployment.
I understand the Opposition's problems. They are also increasingly emphasising the problems of manufacturing industry against the downturn that we

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all recognise in the global economy and world trade. For an administration that presided over the collapse of our manufacturing industry in the 1980s and early 1990s, to talk about the present problem in similar terms is a trifle forward on their part. However, it is Friday, and we do not normally engage a great deal in politics, particularly when we have such a mild order before us. I shall confine myself predominantly to the specific points raised by the noble Baroness and the noble Lord.
I apologise if there was a slip of the tongue in my introduction. I meant to say that the forecast increase to be introduced in October is three times the present rate of inflation. That is the figure that I hoped to convey, and I am glad to have the opportunity to make that clear.
Are the increases too high? We are, as the noble Baroness said that we should be, concerned about the burdens on business. We have deliberately followed a partnership approach and been careful to consult business at all stages, to avoid unnecessary burdens. There are members of the Low Pay Commission who represent the interests of the small firms sector. The only burden on business that arises from the minimum wage is the cost of paying workers at a decent rate. The commission has found evidence that some companies are able to offset it through savings from reduced staff turnover and from improvements in productivity.
I hear what the noble Baroness says. She will also recognise that others have spoken differently about the effect of low pay. The Low Pay Commission is chaired by Adair Turner, a former director-general of the CBI, someone who is not unaware of the interests of business.
The noble Lord, Lord Addington, made a point about young workers. I hear what he says about the desirability of extending the provision. We are mindful of the fact that the group that falls outside the provisions can be subject to exploitation. That is an ever-present consideration, as is the noble Lord's other point about the degree of enforcement. It is difficult for the Government to take direct responsibility for the enforcement of minimum pay levels, given the substantial number of employers in the country and their relationship to the workforce.
Employers who are identified as having broken the law will be prosecuted accordingly, but the noble Lord will recognise that the only way in which employers can break the law is if the workers are complicit. As he said, some workers are so vulnerable that they are complicit in such a situation, and the abuse continues for some time because the workers have little leverage and may themselves be in a vulnerable position in relation to the laws of the land.
We are, of course, concerned to ensure that the minimum wage is enforced, but the noble Lord will recognise that there are bound to be sections of the economy in which it is more difficult than others. He identified a particular sector in which we know there has been abuse. I remember that, when that came to light a few years ago—prior to the introduction of the
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minimum wage—the increased publicity made sure that employers who were paying grossly exploitative rates changed their pattern of behaviour. Part of the work that we must do is expose grievous exploitation of workers.
The regulations advance substantially the interests of a large section of the low-paid workforce. That is why I commend them to the House.
On Question, Motion agreed to.

National Lottery (Funding of Endowments) Bill
11.54 a.m.
Lord Walpole: My Lords, I beg to move that this Bill be now read a second time. I shall give a little background to the Bill and explain why it is here today.
A Private Member's Bill with similar objectives to the present Bill was introduced in the other place by Dr Ian Gibson and supported by several Norfolk MPs, including, at that time, the noble Lord, Lord MacGregor of Pulham Market, who was a Member of that House during the previous Parliament. However, after the Committee stage, it fell, due to the general election.
Last year, I introduced the same Bill into your Lordships' House. After First Reading, I was asked by the Government to withdraw it and told that the Department for Culture, Media and Sport would re-draft it for us in a form that the Government could support. That has now been done, and those of us who were involved with the original Bill are grateful to the DCMS and are pleased with the result.
The Bill was taken through the other place by the honourable Member for Mid Norfolk, Mr Keith Simpson, who was lucky in the draw for Private Members' Bills. It went through all its stages in the other place unscathed and is here for its Second Reading.
Why is it the Norfolk Bill, and why does it have all-party support? What happened was that the Norfolk Millennium Trust for Carers, commonly known as We Care 2000, was set up in the millennium year to raise £1 million. From the interest on that capital, it could help many people in the area. It was advised that the community fund could not provide grant aid for a capital endowment fund, and thus it did not submit a formal application.
The appeal in Norfolk has so far raised £656,000, which has been invested. My notes were written yesterday, and they say—I am not sure what the effect of the decrease in the bank rate will be—that it was attracting 4.5 per cent. That is a creditable amount for an endowment. It has so far benefited some 250 people, and over £60,000 has been paid out in grants, without touching the capital. Grants were received from the National Lottery Community Fund at the time of the millennium for start-up costs. Recently, another £100,000, mainly for white goods, has been offered. That has not been taken up yet, but We Care is incredibly grateful for it. It has also received generous support from the Esmée Fairbairn Foundation, but it is important to

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emphasise that by far the largest proportion of the funds has been raised by appeals to and events run by local firms, individuals and organisations. The trust, we hope, will benefit, on average, some 200 people a year for many years to come.
The purpose of the Bill is to amend the National Lottery etc. Act 1993, as amended by the National Lottery Act 1998, expressly to provide that all distributors have the power to make grants to endowment funds. Current statute gives lottery distribution bodies the power to distribute money for meeting expenditure of the type specified in Section 22 of the National Lottery etc. Act 1993. It does not, however, define what is meant by meeting expenditure or contain any explicit reference to funding endowments.
The Bill would amend the sections of the National Lottery etc. Act 1993 that refer to meeting expenditure, to clarify that, in each case, it includes funds for endowments DCMS advises that distributors other than the Community Fund were able to fund endowments and that such grants have been made by some of the distributing bodies. Clause 1(9), therefore, would ensure that the Bill had retrospective effect.
The Bill would clarify the legal position of distributing bodies giving money to endowment funds, put the community fund on the same legal footing as other distributors in the area and assist charities such as We Care to manage their funds more effectively. Endowment funds can be a useful way of providing long-term revenue funding, particularly for voluntary sector bodies. They can enable bodies to plan strategically, with some certainty about the security of future funding and enable them to operate more effectively on behalf of their client groups. They can also provide credibility with potential third-party funders and partners because of the knowledge that core funding is guaranteed. Nevertheless, we must recognise that endowments require large sums to provide reasonable returns.
Of course, future income levels will vary with interest rates, as has happened in the past.
This is a permissive rather than a mandatory power for distributors which, ultimately, could determine how to treat applications for grants for endowment funds against other calls for lottery funding. Should the Bill be successful, the Minister's department intends to assist distributors in this matter by issuing guidance. A draft of the guide was placed in the Library. I hope that your Lordships have had an opportunity to read it.
A further issue is the regulatory cost of the Bill. As a permissive power, there would be no resulting regulatory cost to government, businesses or the voluntary sector. The measure is intended to assist charities within the sector, and other good causes, by enabling them to apply for lottery funds to help set up or augment their endowment funds and to manage their operations more effectively. While the power may result in additional calls on distributors' resources, ultimately it would be a policy decision for distributors on how to prioritise such applications against others for non-endowment grants. It would be
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a permissive and not a mandatory power. The Bill would act on all national lottery distributors' powers and therefore would be UK-wide. The policy for the lottery is a reserved issue, but I understand that earlier provisions of the Bill attracted support from the devolved administrations.
In conclusion, the benefits of the Bill will be to those charities which operate or are considering operating endowment funds. Indeed, it would be helpful to them as the Government will be issuing guidelines to indicate the advantages or otherwise of this method of funding. The powers are not mandatory but are permissive. I commend the Bill to the House where I hope that it will find support.
Moved, That the Bill be now read a second time.—(Lord Walpole.)
12.2 p.m.
Baroness Pitkeathley: My Lords, I should like to thank the noble Lord, Lord Walpole, for introducing the Bill. Your Lordships will not he surprised to know that I support anything which will benefit carers. I declare an interest as a former chief executive of Carers UK. But the Bill has a much wider implication than that. I therefore declare a further and perhaps more significant interest as chair of the largest of the good cause distributors from the lottery, the New Opportunities Fund. The NOF was set up in 1998 to distribute lottery money to disadvantaged individuals in communities in the areas of health, education and the environment. I support the Bill and welcome the proposal to extend to all distributors the powers which are currently enjoyed only by some.
As the New Opportunities Fund is to be merged in the near future with the community fund to create a new distributor which will have control over one-half of all the funding for good causes from the lottery, it is particularly appropriate that we are considering the proposal now so as to clarify the position regarding the new distributor. I emphasise that this small change is unlikely to skew the delivery of funds in disadvantageous ways for charities. I know that there have been some fears about that. Commitments to endowments are likely to apply to a small proportion only of lottery funding.
In order that we can understand some of the potential effects of the Bill, I think that the most helpful thing that I can do for your Lordships today is to give an example of how the New Opportunities Fund recently employed its power to use endowment funding. This is through our part of the fair shares programme, which is a joint programme with the community fund and is a pioneering scheme to invest £50 million for the benefit of disadvantaged communities. In particular, it is aimed at areas which have not so far received their fair share of lottery funding.
The fair share trust is an important step in lottery distribution. It will start to address the imbalance in areas which have a poor track record in accessing lottery funds and will help to build community capacity, enabling them to work up projects and prepare future—we hope successful—lottery bids. The

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programme represents a new concept in lottery distribution making money available over a much longer period. Endowments can run for up to 10 years. We must remember that the short-term nature of lottery funding and the difficulties of sustaining programmes are some of the most frequent criticisms. It can therefore have a much more sustained impact on disadvantage by boosting the capacity of communities to obtain and manage funding that meets the needs and priorities of that particular area.
It puts long-term funding into the hands of local communities so that they can make their own decisions about investment which will be of benefit to them. It links with the desire of the Department of Culture, Media and Sport, as recently expressed by the Secretary of State, to see decisions about lottery funding made as close to communities as possible. I hope that the legislation will enable many more such schemes to be set up. The New Opportunities Fund programme seeks to build capacity within communities, including support for community assets, planning and local regeneration. It also encourages local social and skills development to facilitate community engagement in local organisations and to promote job creation.
There is an emphasis in this endowment scheme on "liveability", enabling communities to improve their living environments, to make them healthier, greener, better designed, more welcoming and accessible to everyone. We believe that the programme will make a sustained impact on the ability of these communities to secure funding in the future from the lottery and other sources.
The allocations for each fair share area will be managed by local delivery agents which will, for the most part, be drawn from community foundations. I am very grateful for the support of the Community Foundation Network in this programme. The priorities for areas in England will be identified by local panels drawn together and facilitated by local delivery agents based on the information supplied by local strategic partnerships. Alternative delivery models are currently being negotiated for Scotland, Wales and Northern Ireland and, importantly, will ensure again that decisions are made locally by the communities which will benefit.
This is the first time that lottery money has been ring fenced for local communities over a 10-year period. The aim is that the approach of making a sustained investment over time will set a precedent for future lottery programmes. I hope that your Lordships will consider this Bill as a means of enabling other such schemes to develop for the benefit of local communities and individuals.
12.7 p.m.
Lord MacGregor of Pulham Market: My Lords, I, too, warmly support the Bill. Like the noble Lord, Lord Walpole, I have lived in Norfolk for nearly 30 years, having spent 27 years as Member of Parliament for South Norfolk. Your Lordships may have noticed that in the other place it was mainly
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Norfolk MPs who spoke in favour of this Bill. So I want to make it absolutely clear that this Bill is not just for Norfolk but, if it passes through this House, charities throughout the country will benefit. That has been emphasised by the fact that the Bill has not had all-party support only in Norfolk but all-party support nationally.
Why has there been such an emphasis on Norfolk? The reason is that the genesis of the Bill arose there. The noble Lord, Lord Walpole, described the splendid We Care appeal, with which I have been strongly linked since its outset, set up in advance of the millennium. Indeed, I have taken part in fund-raising activities, of which I remember one in particular. One of my hobbies is performing magic. By that I mean magic as a magician and magic of the mind. On one occasion, towards the end of my time in the other place, we had a fund-raising activity at which I performed the cabaret with a colleague from the other place. In one evening, we raised £11,500, which is the most that I have ever—if I can put it this way—"earned" in one night.
I have been a warm supporter of the appeal, but early on we discovered a problem. The appeal was designed to raise long-term funds, but on applying to the community fund—the appropriate fund for the appeal—for some reason that we have never been able to establish exactly—perhaps an oversight—the original legislation prevented the community fund from providing funds for endowment. Indeed, it was the only distributor unable to award grants to endowment funds. It was always assumed that the other lottery funds could and, indeed, in practice, they did. That was the anomaly which had to be addressed. Fortunately, Dr Ian Gibson, a Norfolk MP, won a place in the Private Member's Ballot, and he used the Bill to fulfil that place. Unfortunately, it was just before the general election, so the Bill ran out of time in the other place. Indeed, I had thought that my speech in the Budget debate was to be my last in the other place, but this Bill came forward very late and so it was to this measure that I made my last speech in support of it. Therefore I think that I have the unique distinction and pleasure of having been able to speak on it in both Houses of Parliament.
So the Bill ran out of time. The noble Lord, Lord Walpole, explained the rather niggling legal point which led to the Government being unable to support the Bill when it came forward last year. I am glad that the matter has been sorted out. Fortunately, the honourable Member for Mid Norfolk, Keith Simpson, won a place in the Private Member's Ballot this year and it is a tribute to the attachment we have in Norfolk to this Bill that the two Norfolk MPs who have won Private Member's Ballots have chosen this Bill.
I understand that at a party in Norfolk last night—in the counties we hold splendid summer parties attended by all the distinguished local leaders—while it would not be quite true to say that there was talk of nothing other than your Lordships' debate today, I understand that that was almost the case. That indicates the depth of local support for it.

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I wish to make three particular points. First, it goes without saying that this is a very worthy cause. The noble Lord, Lord Walpole, has pointed out how much has been raised already and I pay particular tribute to Mrs Paddy Seligman, who has been the magnificent leader of this appeal throughout, and to our local newspaper, the Eastern Daily Press, and to its editor, Peter Franzen, and deputy editor, James Ruddy, all of whom have strongly supported not only the cause but this Bill throughout.
I know that the Government now contribute through public funds towards helping carers, and of course the community fund has already assisted the We Care 2000 appeal in Norfolk, but not through an endowment fund. So although the charity has received support, the fact that 250 carers have also benefited through voluntary action in aid of a cause such as this demonstrates the important place for such appeals in the community at large.
My second point is brief. Apparently there is a brief retrospective element in the Bill. I have always opposed retrospective elements in any measure and as a Minister strongly fought against introducing them whenever they arose in Bills in the other place. However, I think I can take comfort here by saying that I do not think that it is really retrospective. It was always assumed that all the other lottery funds were able, through the legislation, to make contributions to endowment funds and indeed were doing so. I hope, therefore, that all that is being done here is an exercise in clarification rather than the application of the legislation retrospectively.
Thirdly, I turn to the concerns raised by a number of people about the difficulties that might arise on the ability to contribute to endowment funds because those funds will have to be up-front, which would mean that rather a bigger contribution would have to he made up-front than would be the case if it was just an annual contribution. While I recognise the point, it is important to recognise what has been said on this by the noble Lord, Lord Walpole: the powers in this Bill with regard to lottery funds are permissive rather than obligatory. Therefore it will be for the successor of the community fund to weigh up individually the pros and cons of each application, and I am glad that guidance has been given.
There is a real place for lottery funds to contribute to endowment funds because they guarantee continuity of the support system over a number of years. Indeed, that is precisely what the We Care 2000 fund is; it has been raising money for endowments, the income from which is now being applied annually. So in asking the community fund for endowment support, the trustees were acting entirely in accordance with the nature of their own charity. Therefore, as I have said, there is a place for lottery funds to contribute to endowment funds.
The final point I wish to make is that one of the important criteria is the integrity and good stewardship of the trustees of the funds to which endowment money might he given. I have to say that I think that so far the We Care 2000 trustees have demonstrated both in how
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they have used the funds and how they have invested the funds so very successfully and prudently that they are able to meet that guarantee of integrity and good stewardship.
I hope that this Bill will not run out of time, as did its predecessor. I hope also that it will not be subject to any more technical and legal difficulties, and accordingly that noble Lords will enable it to pass through swiftly.
12.14 p.m.
Lord Chorley: My Lords, I, too, warmly welcome this Bill. I congratulate my noble friend on introducing it and on the helpful way in which he has explained it to us. I hope that I may conclude from what he said that it will find favour with the Government. Certainly the noble Lord, Lord McIntosh, will not find it quite as demanding as the Communications Bill.
I am an enthusiast of endowment funding and I should like to see the relevant lottery distributors do rather more of it. I entirely accept that it raises difficult issues and I have, for example, no quarrel with the points made in the various papers provided by the Department for Culture, Media and Sport.
My interest in this subject stems from over 25 years of involvement with the National Trust as well as on-going involvements with numerous other organisations which have charitable status. The trust has always had the policy that it had to be satisfied that there would be sufficient endowment income to cover any operating deficit on properties that it was acquiring. This policy was sometimes observed more in the breach, especially during the 1950s and 1960s. This is not the time to go into the details, but coping with those on-going property deficits, including endless and sterile arguments with the Treasury over its so-called "Treasury" properties, was during my time a very major headache.
In the 1980s and 1990s, however, life was rather better thanks in large measure to the enlightened attitude of the then new NHMF and its redoubtable chairman, Lord Charteris. But for that, it would not have been possible for the trust to have taken on any large historic houses in the 1980s or the early 1990s. However, at that time they were NHMF endowments because the Heritage Lottery Fund had not yet been established. What will happen vis-à-vis the endowment with regard to the last major recent acquisition by the National Trust at Tyntesfield, which has been heavily supported by the NHMF and, I assume, the HLF, I do not know; I am not up to date on it.
Our sister body, the National Trust for Scotland, was similarly helped. I think that I am right in saying that it benefited from one of the first major grants made by the HLF and that some of that grant went towards endowing the Mar Lodge Estate, which was what it was for.
I believe that the reasons given to justify why the NHMF/HLF—the HLF is administered by the NHMF—gave endowment grants to the two trusts was because they were to be declared inalienable. That is, of course, an important consideration, but although the right of inalienability is unique to them, in the

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wider sense it is not a unique situation. Many other organisations acquire property of heritage quality for the long term. They, too, have operating deficits and thus could benefit from more endowment funding.
We all know of museums and galleries that get into major difficulties because of inadequate income, for whatever reasons, to cover running costs. So repairs and maintenance are skimped until surprise, surprise, some years later there is a major problem. Very often the HLF will step in with a major first-aid grant. Thank goodness it does so, but the crisis might have been avoided had there been some endowment income to ensure that an adequate annual maintenance programme was followed in the first place.
The concentration of grant-giving on capital projects—that is, one-off aiding—often means that those organisations bidding for a grant tend to underestimate the running costs consequences. After all, that is only human nature. So operating a splendid new facility, if that is what it is, may later bring an organisation to its knees, or at least cause it to wobble. A little support with running costs could make all the difference.
I am sure that the lottery fund distributors are aware of these dangers. For example, they have an excellent policy on large capital schemes involving grant-aid for professional support, thus ensuring that the project is soundly planned and budgeted and that any management weaknesses are identified. My experience suggests that this kind of preliminary support is hugely important in securing good projects. But I would also suggest that on occasion the appropriate way forward may be a judicious mix of capital and running costs support. I suspect that we tend to over-concentrate on capital projects and under-emphasise getting existing operations onto a well-founded footing.
However, we do not want—I certainly do not want—to be too prescriptive in this area. That would be quite wrong. It is therefore right that the Bill merely draws attention to endowment funding. It strikes the right balances and I hope that it will have a swift passage to the statute book.
I conclude by expressing my enormous enthusiasm and respect for the work of both the HLF and the Arts Council, the only two lottery distributors of which I have any experience. Their contribution to the quality of cultural life in this country is quite incalculable.
12.20 p.m.
Viscount Falkland: My Lords, the Bill, which we on these Benches wholeheartedly support, arrives against a background in this country of a culture of voluntary work; we have a considerable voluntary sector of long standing. Bearing that in mind, there is always a need for the long-term funding of projects and, in the light of that, a need for matching strategies, particularly for charities. In addition to capital grants there is a need for endowments to fulfil the projects they support.
The background to the Bill has been admirably stated by the noble Lord, Lord Walpole, who, as he explained, has inherited it from two Members of another place. As
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he said, in its present form it has had universal support. Its purpose is to enable prolonged and sustained funding for worthwhile projects. It will enable all lottery distributors—including the community fund—to give to charities in the voluntary sector to fund new endowments or to supplement those which already exist.
As has been mentioned, Section 23 of the 1993 Act specifies powers given to distributing bodies to meet expenditure, but there has been an inadequate definition of "expenditure"—or, indeed, any direct reference to the machinery of endowments. The Bill clarifies this area—in particular the term "meeting expenditure"—and how "meeting expenditure" inevitably involves the funding of endowments.
As the noble Lord, Lord MacGregor, among others, said, its genesis is East Anglian. The Eastern Daily Press campaign deserves a great deal of credit for the impetus to get the Bill on to the statute book. As I understand it from reading some of the remarks that have been made already—this perhaps reflects what I said about the voluntary sector—one in seven people in Norfolk are unpaid carers. The impact of the Bill on them will be considerable.
Long-term revenue funding, which allows strategic forward planning, will benefit from the Bill. In addition, the Bill will give security to third parties who give further funding and reassure them about the existence of core funding.
There are problems with endowments—we have debated in the House the problems relating to NESTA—which, to a large extent, rely on the fluctuation of interest rates. Tying-up capital up front necessarily means that there is less money for other projects. However, bearing in mind the remarks of the noble Lord, Lord MacGregor—I like the phrase that this is "permissive and not obligatory"—it is in the hands of those who distribute to make the right assessment.
As to the lottery in general, there will be quite a lot said about it in this House and in another place in the coming months. There has been a foreseeable levelling off—which always happens to lotteries—after an extremely successful start in this country. However, there has been a marked dropping-off in its popularity among those who play the lottery. In my view, that is entirely due to the questionable marketing strategies of the operator rather than anything to do with well-publicised disagreements with various causes; whether they are popular or unpopular does not make a great deal of difference. It may with the public generally, but not with those who play the lottery.
This is important to the Government when they wish to introduce new causes. One of their arguments is that members of the public—especially those who play the lottery—expect that the part of the money they put into the lottery which goes to good causes should go to the ones that they like. I am not sure that I agree with that but we shall have an opportunity to discuss it in future.
The changes in the Bill are for the better. They support long-term and worthwhile funding and I am sure that the public will share that view.
12.26 p.m.
Lord Glentoran: My Lords, I declare a significant interest: I have been a member of the Millennium Commission for about nine years since its inception. In that time I have chaired its internal audit committee, which I still do, and I co-chair its finance committee with Lord Dalkeith.
I thank the noble Lord, Lord Walpole, for introducing this Private Member's Bill, which I support. It was useful to hear from the noble Baroness, Lady Pitkeathley, who is in her place, about her experience in the use of endowments, particularly in regard to those who have so far had difficulty in accessing lottery funds. The commission has identified that Afro-Caribbean communities are particularly unable to access it because of a lack of leadership and cohesion. I am sure that many other areas could be identified but perhaps this is not the day to do so.
The Millennium Commission has set up a significant endowment policy of £100 million which will, it is to be hoped, continue ad infinitum the Millennium Bursary Fund. It may be of interest to your Lordships—I think I am right in saying this; I did not look it up before entering the Chamber—that the endowment fund which was set up at the time of "Albertropolis" in the Victorian era is still running and still funding adequately. However, that does not prove that endowment funds are a panacea to all kinds of difficulties.
I have spoken to the noble Lords, Lord McIntosh and Lord Walpole, about the fact that my concern lies in the detail. I have no argument with the Bill; I think it is excellent. I am delighted that it has been introduced and I am delighted to support it. However, with all due respect to my friends in the Department for Culture, Media and Sport—I call them friends, having worked with them for a long time—there are a number of failures in the guidelines to the Bill.
There are no policy directions at all. There is room for at least one policy direction in relation to efficiency. I could name a number of other areas but it is quite clear that, so far as concerns efficiency in the use of money, there are a number of significant traps that one can fall into with lottery funds. We fell into one when setting up the millennium bursary fund with an organisation called Un Ltd. What happens is that the endowment is set up and then grant-aided by the commission. As soon as that grant has been made, everybody expects the trustees to be paying out. Setting up an endowment and organisation on that scale requires a lot of cash upfront. We decided that we should fund them, on top of the endowment, a significant sum for the first year. That at least gives them the balance. They can draw down their income from the first year of operation without committing it, so it gives them a bit of a cushion. That is a little detail, but it is the sort of issue that could usefully be covered.
There is another comment in here which I believe to be incorrect. It says under the heading "Controls over endowment funds":
"Once the recipient has the funds they are theirs forever"
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I do not believe that to be true. It is my information that grants to endowments can be clawed back if there is a failure of contract. They can also be clawed back to enable the removal of trustees. I believe there are a number of areas in the small print which need attention.
Rather than talk about the detail, I ask the Minister if he will agree to ask his officials to have another look and spend a bit more time on the guidelines and possibly consider some policy directions on one or two key issues. I sincerely hope that the various millennium bodies are working together within the DCMS. I have spoken to the noble Baroness, Lady Pitkeathley, on this matter before. I would like to feel that Mr Ian Brack could be accessed. He is the brains behind the considerable amount of work over quite a few years that the commission put into getting this endowment up and running. It is not easily done; it takes a lot of care and one needs seriously competent professional people to be involved.
The other area which needs attention is that most endowments are part of charitable trusts. They then come under the Charity Commissioners, who have their own rules and regulations as to what can be done. There is a whole area of detail and small print—quite a lot of which should be in ordinary, everyday English—which should be put in the guidelines so that bodies which wish to use lottery funds or set up endowments with lottery funds are at least aware of the hazards and the dangers.
Having said that—and noble Lords may wonder why I am standing at this Dispatch Box. having worked so long at the DCMS under the present Government—I support the Bill.
12.33 p.m.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, I join all other speakers in congratulating the noble Lord, Lord Walpole, on bringing forward this Bill. I know it is not the first time he has brought it forward: appreciate that there were problems of legality and timing which caused difficulties before. However, I agree with those who have said they wish this Bill a speedy passage through Parliament.
The noble Lord has done very well to get such a well informed speakers' list today. We have had contributions from the New Opportunities Fund, the National Trust and the Millennium Commission, and have heard about caring and magic in Norfolk. This has been an excellent short debate. I pay tribute to those in Norfolk, particularly to the We Care 2000 appeal, which has set us out on this path.
It may be worth saying before I leave the subject of Norfolk that lottery distributing bodies have awarded grants of over £147 million to nearly 1,500 good causes in the region, including over £23 million from the community fund to charitable and voluntary sector bodies. The Millennium Trust has done marvellous work with unpaid carers who are unsung heroes and deserve our admiration and support. The Millennium

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Trust has now awarded two grants from the community fund—the most recent for an impressive £100,000. Since 1995, the community fund has given nearly 3,000 grants worth more than £200 million for carers to enable them to provide sustained health and social care to more than 16 million disabled, frail, long-term ill and socially isolated children and adults.
The need for this Bill is the unfortunate wording of existing lottery legislation which does not refer to the power of distributors to award grants to endowment funds. I do not think that was the intention at the time, but it was drafted wrongly and the Bill will be helpful not only in clarifying the legal position of all distributing bodies to fund endowments but also in helping charities to manage their funds in a more effective way.
The Bill also fits in well with our lottery funding review. Its decision document was published last week, saying that distributors should strive to be more responsive to the needs and priorities of local communities and other users by making it easier for charities to apply for grants.
I should confirm what was said by a number of speakers—this is a permissive and not a mandatory power. It is up to lottery distributors to determine whether to choose to award grants to endowment funds. Indeed, it is up to good causes to decide whether it is the appropriate funding for which to apply. Although some distributors have, acting on our advice, awarded grants to endowment funds in the past, they have not used that power frequently. There is no evidence that they will enormously expand endowment funding in the future. We do not think they will be flooded with applications for grants, but the power should clearly be available for those occasions.
We have given an undertaking to issue guidance to distributors on the factors that need to be taken into account in awarding grants to endowment funds. Before I leave the issue of guidance, I refer to the very helpful speech of the noble Lord, Lord Glentoran, who has problems with some of the content of the existing draft guidance. It is only draft guidance; it is there for amendment. I hear what he says about having at least one policy direction. I certainly hear what he says about the possibilities of clawback. He kindly offered the support of Ian Brack from the Millennium Commission, who has been working in this area. I can reassure the noble Lord that my officials have already spoken to Ian Brack on this subject and will continue to do so.
One of the existing controls over these funds is that grants to permanent endowments can be made only to registered charities. So the funds fall under charity law and the Charity Commission and the Attorney-General are ultimately responsible. If there is any misappropriation or mishandling, it will be a breach of the terms and conditions set by the distributors, but there could be a criminal offence which would involve the Charity Commission. If a charity ceases to exist, charity law requires that the remaining assets are
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applied for a similar charitable purpose and the distributors would then be involved with the Charity Commission.
There are other controls through the general principles of government accounting. lottery statute and my department's policy and financial directions to distributors. As public money, the general principles of government accounting must apply Section 26(3) of the National Lottery etc. Act 1993 gives the Secretary of State the power to issue financial directions to lottery distributors to secure the proper management and control of money paid to them, and they must comply with these. Those directions typically include giving a standard set of terms and conditions which must apply to any grant. They also cover what would happen in the event of a material change of purpose, ownership or recipient.
I hope I have reassured the House that we are not complacent about the need for controls or about our willingness to listen to further representations about the content of the guidance. It is the view of my department that the Bill is compatible with the European Convention on Human Rights. We have also, in collaboration with the noble Lord, Lord Walpole, prepared a regulatory impact assessment, which is available in the Library.
In conclusion, I welcome the Bill and congratulate the noble Lord on bringing it forward. I believe that it will clarify the powers of all distributors to fund endowments and give them a more secure funding base for their work. I am happy to offer the support of the Government for the Bill.
12.40 p.m.
Lord Walpole: My Lords, it has been a pleasure and a privilege to have been working with the Bill and its predecessors. I thank everyone who has spoken. I have been very impressed by their speeches. As the Minister said, the debate has attracted a wide range of people. I am grateful. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Budget (No. 2) (Northern Ireland) Order 2003
12.41 p.m.
The Lord President of the Council (Lord Williams of Mostyn)The Lord President of the Council (Lord Williams of Mostyn) rose to move, That the draft order laid before the House on 17th June he approved.
The noble and learned Lord said: My Lords, it is a matter of regret that this legislation is not being considered by the Northern Ireland Assembly. The main purpose of the draft order is to authorise the balance of the 2003–04 main estimates, which is in addition to the vote on account that was approved by Parliament in February. That vote amounted to approximately 45 per cent of the total voted provision for the 2002–03 financial year, enabling funds to continue to flow to public services until the main estimates could be presented.
The main estimates reflect the allocations announced on 11th December last year in the budget for the Northern Ireland departments, and follow closely the priorities and approach adopted by the Northern Ireland Executive in developing its draft budget in September 2002. The order also authorises excess amounts amounting to £6.3 million in respect of the 2001–02 financial year. This matter has been the subject of consideration by the Public Accounts Committee and its subsequent report concluded on 19th March this year that it saw no objection to the sums being provided by excess votes.
The balance of the 2003–04 main estimates amounts to £8 billion resources and £5 billion cash. When added to the vote on account, it will take the total amount authorised for 2003–04 to £13.2 billion resources and £9.2 billion cash. Considerable detail regarding the sums sought is set out in the documents supporting the 2003–04 main estimates and the statement of excess for 2001–02. Copies of these documents have been placed in the Library of the House. I shall of course be happy to respond in writing to any noble Lord who would wish to raise matters of detail. I beg to move.
Moved, That the draft order laid before the House on 17th June be approved.—(Lord Williams of Mostyn.)
Lord Glentoran: My Lords, I thank the noble and learned Lord for bringing this order before us. It would be remiss of me not to say that it is sad that it has to be debated here. We would all have preferred that it had been debated and dealt with in Stormont. The order has been well debated by the Northern Ireland Grand Committee in the other place. I am comforted by the fact that the distribution of the budget is based on the priorities and objectives of the Northern Ireland Executive that was in being in December. Indeed, we debated some of that in this House at that time. I have little to add, except to restate the fact that it would have been a considerably happier occasion were this order not before us today, having been passed in another place. Let us hope that by this time next year everything is up and running. We can he comforted by the fact that the distribution as laid out in the order has been agreed at least in draft and in principle by the members of the Assembly Executive. I support the order.
Baroness Harris of Richmond: My Lords, we on these Benches also welcome the order. I should like to make a few comments and ask the noble and learned Lord the Leader of the House a few questions.
The significant amounts of money being sought must lead to clear improvements in services for the people of Northern Ireland. Like the noble and learned Lord the Leader of the House and the noble Lord, Lord Glentoran, I am also disappointed that we are having to deal with the order here, because we would all have preferred it to have been dealt with by the Northern Ireland Assembly, where it would have received proper scrutiny by people on the spot, who know the needs of the communities there better than we do.
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The proposals to run services were put together by the former Northern Ireland Executive, so we welcome the continuing commitment of the Government to those proposals. There is a need to reform how priorities are set and money is spent, and I have had some small experience, as a former county councillor in a huge rural area, around reform of services to communities. I was also a former member of a health trust board. I was struck by a quotation by Mr Trimble that I picked up from the debate on the draft budget in another place in the Northern Ireland Grand Committee. He said that,
"it is vital for Departments to operate more effectively and with greater efficiency, as we will have increasing difficulty in financial terms in Northern Ireland unless we change how things are done.
The Administration could look forward to the future. but without major reform there will soon be huge problems. The expansion in public expenditure in the past two to three years allowed the Northern Ireland Executive to avoid having to make any awkward choices, but that expansion will not continue into the future. There is no alternative but to find more efficient ways of using the available resources and more efficient ways of doing things".—[Official Report, Commons Northern Ireland Grand Committee, 3/7/03; col. 28.]
I ask the noble and learned Lord the Leader of the House what departments are doing to demonstrate better efficiency and more effective use of significant amounts of extra money. Are proper outcomes for delivery of service established? How are day to day decisions affecting the lives of the people of Northern Ireland being made? How do departments determine their needs—is it a return to rule by civil servants?
The sooner that we can return to having an Assembly run by the people of Northern Ireland, who can determine their own future, the better it will be. In the meantime, we on these Benches support the budget order.
Lord Lyell: My Lords, perhaps I may, from the Back Benches, take one minute of your Lordships' time and thank the noble and learned Lord the Lord President for presenting this budget. I have mixed feelings. It used to be a pleasure many years ago when I would try to present these figures to your Lordships. Can the noble and learned Lord or the department confirm a matter relating to pages 4 and 10 of the order—schedule 2 and 3? Your Lordships will see that the first department listed in the sums granted in those schedules is the Department of Agriculture and Rural 'Development. I hope that the noble and learned Lord will be able to ensure, with all of his power and that of the Government, support for all of the measures set out in the Explanatory Memorandum. The noble and learned Lord, as well as the noble Lord, Lord Glentoran, and the noble Baroness, Lady Harris, are aware of the enormous importance of agricultural support, and all the activities that are listed in the schedules, to rural life in Northern Ireland. On a matter of detail, can the noble and learned Lord ensure that the take-up of all of the development grants is at a relevant level, since the value of the grants to the rural community is especially appreciated in Northern Ireland—particularly in County Fermanagh, County Tyrone and County Londonderry. It is enormously appreciated. From my experience many years ago, I certainly know

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the department's efficiency in spending that money and above all in ensuring that the value for money achieved is of the highest order.
Perhaps on another day and outside your Lordships' House one might be able to have a word or two with Mr Trimble. However, I am very grateful to the noble and learned Lord the Lord President and to your Lordships for allowing me one minute.
Lord Williams of Mostyn: My Lords, I am very grateful to those of your Lordships who have spoken. If I may, I will deal first with the questions from the noble Lord, Lord Lyell, on agriculture. He is quite right in stressing the critical, central importance of agriculture to the Northern Ireland economy, which I think is very often overlooked by those of us—I am not looking at the noble Lord, Lord Glentoran—who do not live in Northern Ireland.
I can, I think, give some comfort to the noble Lord, Lord Lyell. A very significant part of the DARD estimate will in fact directly benefit farmers. Some £173 million is for subsidy payments direct to farmers under the CAP, a very substantial sum in the context that we are discussing. There is also, to take up his other point, £13 million for agri-environmental schemes. In the "Resources Other Current" section, there is an allocation of £22 million for animal disease compensation and £18 million for agri-environmental schemes. So I think that I am able to please even a chartered accountant, which is a first for me.
As regards the general point made by the noble Lord, Lord Glentoran, and the noble Baroness, Lady Harris. I could not agree more. I do hope that I shall not be in this position next year. I think that that is the very firm view of all sections of this House.
On the noble Baroness's specific questions, she quite rightly deals with the question of reform of spending plans. I am happy to be able to assure her that every Northern Ireland department has produced and published a reform plan for service improvement; she is quite right. So it is not in fact rule by civil servants. Of course more Ministers from the House of Commons have been active and engaged on Northern Ireland affairs since the Assembly was unfortunately suspended. The noble Baroness also specifically mentioned outcomes. There will be performance targets in the form of public service agreements. So it is another significant advance.
Obviously we would prefer that the day-to-day decisions were made by the Executive and the Assembly, but I think that we are moving forward in the direction which the noble Baroness indicated. I am grateful for her questions because they have given me the opportunity to give that public reassurance. I commend the order to the House.
On Question, Motion agreed to.

Representation of the People (Form of Canvass) (Northern Ireland) Regulations 2003
12.52 p.m.
Lord Williams of Mostyn Lord Williams of Mostyn rose to move, That the draft regulations laid before the House on 13th June be approved [23rd Report from the Joint committee].
The noble and learned Lord said: My Lords, every year an annual canvass is conducted to ascertain those entitled to vote in Northern Ireland. These regulations, if your Lordships agree, will prescribe a new form of words to the annual canvass form which allows for the addition of prospective electors as a result of the Treaty of Athens introducing the 10 new states into the EU which comes into force on 1st May 2004. That means that citizens of those states who are resident and qualified to vote in Northern Ireland may be registered as voters in local government elections.
The regulations introduce a new form of words relating to the two forms of register—the full and the edited—including the possibility of applying to be excluded from the edited register. The opportunity has been taken to improve the layout of the canvass form: we hope to make it clearer and easier to understand. There had been some criticism of the previous layout. Your Lordships will have seen that, later in today's proceedings, separate regulations are being introduced for England and Wales and Scotland. Also being introduced separately, as a UK-wide measure, are franchise regulations which allow citizens of acceding states to register prior to 1st May when those states, as I said, formally join the EU. They will then be on the register and able to vote in the European elections in 2004. I beg to move.
Moved, That the draft regulations laid before the House on 13th June be approved [23rd Report from the Joint Committed].—(Lord Williams of Mostyn.)
Lord Glentoran: My Lords, I thank the noble and learned Lord the Lord President for bringing this order forward. I took a moment or two to read some of the Hansard reports of the consideration of the draft regulations in another place, in the Eighth Standing Committee on Delegated Legislation. I am going to be a little naughty, my Lords. I picked up in the report that Lady Hermon, in col. 005, was taking quite a lot of kudos for another place for having improved the legislation as regards electoral fraud. I feel that the noble and learned Lord the Minister and Leader of this House, along with your Lordships, played an equally if not greater part in improving that legislation. I am not very often competitive with another place, but I feel on this occasion that it is perhaps worth while putting a marker down. I hope that your Lordships will agree.
As for Lady Hermon's complaints and suggestions that the electoral registration form was hard to read and so on, I have a copy in front of me—I thank

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officials for giving it to me this morning—and it does seem to me to be a pretty clear document. I have little or no hesitation at all in supporting the order.
Lord Rennard: My Lords, the order is obviously necessary and therefore welcome. We understand the need to make provision for citizens of the European Union accession states to be on the register in anticipation of their membership of the European Union. They will then be entitled to vote in local and European elections. Like the noble Lord, Lord Glentoran, I find the form rather simple. I think that it is rather a better form than the one that we used to have and rather better than those which for many years confronted those of us who work in the electoral process. I think that this issue is of considerable importance. The form must be simple if the register is to be accurate.
I also welcome some of the innovations on the form, in particular that there is now to be an opportunity to register to vote without having one's address so widely published. This extra element of discretion is very important in a small number of cases, perhaps where there has been an issue of domestic violence or someone is seeking to avoid an abusive partner. People in such cases will not wish to lose their right to vote but wish to preserve some discretion in the number of those who know where they live. However, I also believe that the form is effective in not encouraging the wholesale withdrawal of names and addresses. I believe that it is phrased just right. It shows that the option exists for those who do not wish to be in the main published register. However, it is still legitimate for many organisations other than political parties to approach people after obtaining their name and address, which they often find in the voting register. From our side, this order is wholly welcome.
Lord Williams of Mostyn: My Lords, I am very grateful. In particular, I agree with the comments of the noble Lord, Lord Rennard. Northern Ireland is a small community and one needs to have the appropriate balance between a safeguard of the individual in some of the circumstances the noble Lord identified and the wider public interest in knowing in a transparent way about how elections are conducted. As for the comment of the noble Lord, Lord Glentoran, that he was going to be a bit naughty, he and I are, I think, content to look for our reward hereafter if not necessarily in this world. I commend the regulations to the House.
On Question, Motion agreed to.

Representation of the People (Form of Canvass) (England and Wales) Regulations 2003
12.58 p.m.
Lord Filkin Lord Filkin rose to move, That the draft regulations laid before the House on 9th June be approved [22nd Report from, the Joint Committee].
The noble Lord said: My Lords, with the permission of the House I shall speak both to this order and to the Scottish order. Such economy may be of assistance to the House.
The purpose of the regulations, as I expect has already been well covered under the Northern Ireland regulations by my noble and learned friend the Lord President, is essentially to prescribe the form which electoral registration officers should use for the annual canvass of electors which takes place each autumn. The regulations are necessary to ensure that we fulfil our obligations in relation to the voting rights of citizens of member states of the EU who are resident here. These directives give nationals of member states of the European Union the right to vote and stand as candidates in elections to the European Parliament and in local elections. As the House knows. 10 new states are expected to join the European Union on 1st May 2004. We need therefore to ensure that citizens of those states who live here are able to benefit from these voting rights provisions.
The regulations we are considering prescribe a new form of canvass for the annual canvass which allows nationals of accession states who live here to be added to the electoral register. Because the accession states do not formally join the EU until 1st May 2004. there would be no time under the current law to enable nationals of those states to be registered as electors between then and the date of the election, on 10th June 2004. Of course, had the timing been different—for instance, if the states had acceded on 1st September this year—then these regulations would not have been needed.
Citizens of accession states would have been entitled, as full EU members, to register in the same way as French and German citizens can do now. As it is, however, given the timing, special provision is needed to permit their names to he included on the register in advance of membership. So should—as we expect—the member states accede by 1st May, those people would then be in a position, if they were resident here and had registered, to vote in the local elections. We have already provided a legal framework to allow for this in regulations that came into force for the whole of the United Kingdom on 9th July 2003, and those regulations modified the current legislation for this purpose.
We believe that the regulations are fully compatible with the ECHR and the canvass form itself is largely based on the existing form and is, I hope, self-explanatory. The regulations ensure that we are fulfilling our obligations to citizens of accession states who live here by allowing them to register so that they can vote after their countries accede on 1st May 2004. I commend the regulations to the House. I beg to move.
Moved, That the draft regulations laid before the House on 9th June be approved [22nd Report from the Joint Committee].—(Lord Filkin.)
Baroness Hanham: My Lords, as with the previous regulations relating to Northern Ireland, which fall within the same scope, we fully support these proposals.

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A couple of questions arise. Based on previous experience of the registration of European nationals, is there any idea of the percentage of people who sign up for registration? The general experience of those who go round canvassing at elections is that, on the whole, ignorance is sublime for anyone from another state within the European Union. More often than not, such people are not signed up and do not know that they can vote, particularly as regards local elections; and they are dubious as to whether they can vote in European elections.
While the registration form is fine, the promotional material to encourage people to enter their names on the register is very poor. That follows on from the general feeling that the canvass for registration does not always scoop all the problems. I know that most local authorities make big efforts to ensure that people are on the electoral register, but sometimes an even greater effort is required. Does the Minister have an idea of the level of turnout or representation for those from other EU states; and what extra efforts can be made, particularly in regard to some of the accession countries, where people will be new to the European Union and to democracy in the way that we understand it? What efforts will be made to encourage them to put their names on the voting register? Those remarks apply to the regulations for England and Wales and for Scotland. I shall not speak to the Scottish order.
Lord Rennard: My Lords, again, the regulations are obviously necessary, and therefore welcome. I, too, think that the registration forms are relatively simple; and that helps the process. Comparing the form with that for Northern Ireland leads me to look forward to a time when, having moved to individual registration in England, Scotland and Wales, which already exists in Northern Ireland, perhaps before too long we shall move to a point where the registration process can be completed entirely over the Internet as opposed to having paper-based systems. But that is for the future.
I have one technical question on the process. I am wondering how those with access to the voting register would know from the register whether people are from EU accession states. Will that be marked in some way? We should be wrong to treat them as being on a list of voters perhaps even before their country's accession is complete. Their names will appear on the electoral register as though they are entitled to vote, but perhaps the member state will not yet have joined the Union. Will the entries on the register be coded in some way; and, if so, could that be on a national basis, so that for each register the basis on which such people were included could be readily understood?
I should not, for example, like to see nationalities coded on the register. That could be quite dangerous. But the situation will be different for each of the accession states. I wonder how that might be indicated if, for example, a Hungarian citizen was on the register in anticipation of entitlement to vote in local and European elections and a local election occurred before Hungary joined the European Union. How
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should we then know whether the person was entitled to vote? I should be grateful if the Minister would address that issue.
Lord Filkin: My Lords, I thank both the noble Baroness and the noble Lord on the Front Benches opposite for their support for the regulations. It is appreciated.
The noble Baroness, Lady Hanham, asked whether we knew the percentage of people who sign up. The short answer is no. One clearly has some understanding of the number who do sign up; the problem is knowing exactly who is on the base. I suppose that the census may start to give us some indication of that in that it asks people to declare their country of origin, which might be a pointer. Let me reflect on whether there is anything further that we can add to that.
The thrust of the noble Baroness's question was important; namely, how we try to ensure that people who are eligible to vote actually register, and actually vote. Every household will receive a form explaining what EU citizens should do. We must make sure, in addition, that it is explicit as regards potential future citizens of member states of the EU, not merely the current ones. In addition, the Electoral Commission will be publicising the new right for citizens of accession states as part of its publicity processes.
On the wider level, that is part of the responsibilities that one would expect electoral registration officers to have particularly in mind this year in terms of how they seek to obtain a full register, and to promote the importance of registering and voting. I agree with the noble Baroness on that point.
The question of electronic registration raised by the noble Lord, Lord Rennard, is an important one for the future. It is part of our general thrust that we should move towards allowing electronic access to government functions as far as possible. I shall reflect as to what extent that is the current plan and write to the noble Lord if that is of interest to him.
As regards the issue of the full register, as the noble Lord well knows, the full register is available only to political parties and only within the confines of their work for canvassing and not for divulging wider than that. Clearly, the full register has in some way to carry an indication that the person is from an accession state; otherwise, the electoral registration officer will not be in a position to identify who is not, should he need to act on that. I should expect that the entry would not divulge a person's full nationality, but I do not know. I shall see whether we can be specific on that point and shall write to the noble Lord. I take his point. I am certain that it would not be possible to identify on the public register that someone was, for example, a Pole. Without being too prone to fears about xenophobia, one would have some worries about that.
With regard to the noble Lord's final question, if country X did not join the European Union and complete all the processes by 1st May, there is a facility in place for the Government to inform electoral registration officers formally of that fact and for them

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to be able to delete names from the register of those eligible to vote in the June local government elections so that they are not eligible voters. That has been planned for, as the House would expect. I commend the regulations to the House.
On Question, Motion agreed to.

Representation of the People (Form of Canvass) (Scotland) Regulations 2003
1.7 p.m.
Lord Filkin Lord Filkin: My Lords, I have covered what I wish to say on these regulations in my previous remarks. I beg to move.
Moved, That the draft regulations laid before the House on 9th June be approved [22nd Report from the Joint Committee].—(Lord Filkin.)
On Question, Motion agreed to.

Contracting Out (Functions in relation to the Management of Crown Lands) Order 2003
1.8 p.m.
Lord Evans of Temple Guiting Lord Evans of Temple Guiting rose to move, That the draft order laid before the House on 11th June be approved [22nd Report from the Joint Committee].
The noble Lord said: My Lords, the purpose of this order is to correct an error made in an order in 1998. I am satisfied that the draft order is compatible with convention rights.
The draft order is made under Section 69 of the Deregulation and Contracting Out Act 1994, which allows a Minister to authorise another person to exercise the Minister's statutory responsibilities. The responsibilities are those of the Secretary of State for Culture, Media and Sport and for the management of the historic Royal Palaces and Royal Parks.
The draft order extends authorisation approved by your Lordships' House in the Contracting Out (Functions in relation to the Management of Crown Lands) Order 1998. The 1998 order allowed the Secretary of State to contract with the Historic Royal Palaces Trust to manage the Historic Royal Palaces. I can assure the House that this draft order does not allow the contracting out of additional responsibilities. It puts right an error, made at the time of the 1998 order, which only recently came to light.
The draft order allows the Secretary of State to contract out the responsibilities for the management of Hampton Court gardens, green and road and Hampton Court park and Kensington Gardens. The 1998 order authorised the contracting out of responsibilities under Section 21 of the Crown Lands Act 1851. Unfortunately, powers to manage the gardens, green and park at Hampton Court and Kensington Gardens are contained in Section 22 of the
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1851 Act. The 1998 order should have made reference to Sections 21 and 22 of the 1851 Act, and the draft order will put right that error.
The Secretary of State entered into a contract with the Historic Royal Palaces Trust on 1st April 1998 whereby the charity would manage all the unoccupied Royal Palaces, including the gardens, green and park at Hampton Court. I can confirm to the House that the 1998 arrangements work very well. The right decision was made in 1998 to pass day-to-day management of the unoccupied palace to a body of expert and experienced trustees. The unoccupied Royal Palaces have been maintained and presented to the highest standards, consistent with their status and architectural and historic importance.
The visitor experience has been further enhanced by several improvements and innovations with absolutely no compromise on standards and no over-commercialisation. Since 1998, HRP has invested £41 million in the conservation of the palaces and their contents. The state of conservation is better than at any time in the past. This success is due to the commitment of the trustees and a very dedicated staff.
Therefore, the draft order does no more than put right an administrative error made in 1998. It confirms Parliament's authorisation for the Secretary of State to contract with HRP to manage the gardens, green and park at Hampton Court and parts of Kensington Gardens which are currently looked after by HRP. HRP will continue to manage and present those areas to the highest standards. I commend the order to your Lordships. I beg to move.
Moved, That the draft order laid before the (louse on 11th June be approved [22nd Report from the Joint Committee].—(Lord Evans of Temple Guiting.)
Baroness Hanham: My Lords, I thank the Minister for his explanation of the order. It seems just a little careless to have ignored places such as Hampton Court and Kensington Gardens—I declare an interest as living very close to Kensington Gardens—when the original order was made. However, the order begs one or two questions, and I should be grateful if the Minister could answer them for me.
I am not certain what is the base of the contracting arrangements. Presumably, there are financial implications in these contracts and arrangements. Therefore, was the extra work involved in including Hampton Court and Kensington Gardens taken into account in the original contract or is it additional? And, consequently, does recompense need to be made to the trust for the years when it carried out that work, apparently without either contractual or, indeed, monetary liabilities?
Secondly, was the contract ultra vires in terms of the properties that we have mentioned? If the work was carried out without a contract, what is the legal position?

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Thirdly, what is the length of the contract? Is it now a perpetual contract, devolved by the Minister to the trust, or will these properties fall within a certain time period for the duration of the contract? I should be grateful if the Minister could respond to those points.
Lord Addington: My Lords, I shall not take up too much of the House's time on this issue. It is rather reassuring to hear that the Government can make this degree of mistake. I feel rather more relaxed about all the drafting errors that I have made when tabling amendments. However, does the order mean that, not only has the work been done, which I took to be the situation, but that it will now be done on a proper legal basis? And has it been assured for the future? Those are the only questions that I believe are relevant following the very good introductory set of questions put forward by the noble Baroness. I hope that the Minister can give us an assurance because, if the answer to my questions is "yes", I do not believe that there will be anything else to worry about.
Lord Evans of Temple Guiting: My Lords, the answer to the first question posed by the noble Baroness, Lady Hanham, is that there is no recompense to the trust and HRP is not asking for any recompense. The question whether the arrangement was ultra vires was raised when the order was spoken to in another place. The answer was that it is not and there is absolutely no problem in that respect. Finally, this matter has now been devolved by the Minister to the trust and there is no time limit.
I can give the noble Lord, Lord Addington, the assurance that he seeks. If this is the only mistake that the Government have made in the past two years, that is absolutely brilliant.
Baroness Hanham: My Lords, I have a further question to ask out of pure ignorance. Is it correct that the historic buildings trust was set up in order to take on these properties? Otherwise, "contracting out" would be rather an odd term to use if the matter were devolved. Possibly the body is now legitimately responsible for all those properties. The second question arising from that is whether there is then never any need to re-contract or re-tender.
Lord Evans of Temple Guiting: My Lords, with regard to her first question, the noble Baroness is right. The body was set up for this specific purpose. There is a maximum 10-year limit to contract under a contracting-out order.
On Question, Motion agreed to.

Greater London Authority Elections (Election Addresses) Order 2003
1.18 p.m.
Lord Evans of Temple Guiting Lord Evans of Temple Guiting rose to move, That the draft order laid before the House on 18th June be approved [23rd Report from the Joint Committee].
The noble Lord said: My Lords, I am moving this Motion on behalf of my noble friend Lord Rooker. The purpose of the order is to provide London's voters with information which will help them to make an informed choice at future GLA elections. It entitles candidates at future London mayoral elections to have an election address included in a booklet, which will be delivered to every elector in London. The order seeks to achieve that in a way that is fair to candidates and cost-effective for taxpayers.
Noble Lords will remember that the issue of a free mailshot was a topic of some controversy in the run-up to the first GLA elections. At that time, the Government listened to the arguments of noble Lords and amended the Greater London Authority Act to provide, at the first GLA elections, for the publication and free delivery of a booklet containing election addresses prepared by the mayoral candidates. Parliament also provided an order-making power for the Secretary of State to make arrangements for the publication and delivery of candidates' election addresses at future GLA elections. This new order exercises that power.
As noble Lords will have seen from the draft order, the proposed arrangements for future ordinary GLA elections are largely a repeat of those that were made for the first elections. I shall begin by running through those parts of the proposals that are the same as for the 2000 elections.
As before, each mayoral candidate will be entitled to have an election address included in a booklet that will be produced by the Greater London returning officer and delivered to every elector in Greater London. If there are 15 or fewer mayoral candidates, each will be entitled to an election address covering up to two A5 sides, but if there are 16 or more candidates that drops to one A5 side each. As at the first election, a candidate's election address can contain only information relating to the election. Candidates may not include advertising, material included with a view to commercial gain, or any indecent, offensive or obscene material. Nor will they be able to include material which, if published, would be contrary to the criminal law. Finally, the election addresses must comply with the necessary printing requirements. But within those basic requirements candidates have a good deal of freedom to design their election addresses as they wish.
As before, the Greater London returning officer must exclude from the booklet any election addresses that do not comply with the rules on content or form and any addresses that come from candidates who have not made their contribution towards printing costs. That brings me on to costs.
The funding arrangements are also the same as in 2000. Each mayoral candidate wishing to have an address included will have to contribute £10,000 towards the costs of printing the booklet. It is very unlikely that those contributions will exceed the total printing costs of the booklet, but if there is a surplus the Greater London returning officer has to divide the

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excess equally between the candidates and return it to them. Delivery of the booklet will be free to candidates; it will be at the GLA's expense.
It is too early yet for the Greater London returning officer to be able to make firm estimates of the costs to the GLA of printing and delivering the booklet for the 2004 GLA elections. But his current estimate is that the total cost will be about £1.3 million, which is the same amount as the Government spent on the booklet in 2000. The estimate breaks down as a GLA spend of around £600,000 on publication and £700,000 on delivery. As I have said, those arrangements are largely the same as the ones that were made for the 2000 election. However, there are a few updates and changes to the arrangements, and it may help if I explain those in turn.
The first update will give consistency between the provisions and the arrangements that have been made for election addresses at local mayoral elections. The draft order says that mayoral candidates must not include in their election addresses material referring to other candidates. That prohibition is intended to ensure that candidates use the election address for its proper purpose—to promote themselves as candidates. It should not stop candidates from referring in their election addresses to political parties or to particular policies or issues.
There are also two changes that arise from recommendations made by the Electoral Commission. In the 2000 booklet, candidates' election addresses appeared in alphabetical order by surname. The commission has expressed a concern that candidates with surnames at the beginning of the alphabet may benefit unfairly from that and so the order provides that, in future, election addresses should appear in an order determined by lot.
Secondly, we considered carefully whether future election booklets should include election addresses from Assembly as well as mayoral candidates. There are so many Assembly candidates—there were 222 in the 2000 election—that including them all would make the booklet very lengthy and rather impractical for voters to read. It would also be more complicated and expensive for the Greater London returning officer to produce.
However, we accept that voters may find it useful to receive some information about Assembly candidates. For that reason we are taking forward an alternative approach, which was suggested by the Electoral Commission. Unlike the first booklet, future election address booklets will have to include lists of the names, constituency and candidate descriptions for all of the candidates for the Greater London Assembly. It will also include a list of all the mayoral candidates, including anyone who does not have an election address in the booklet.
The final update reflects changes to the postal market that were brought about in the Postal Services Act 2000. At the 2000 elections the booklet had to be delivered by the Post Office, and so had to comply with the Post Office regulations governing indecent, obscene and offensive material. However, the new
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order allows for delivery of the booklet by organisations other than the Post Office and the responsibility for vetting the booklet is transferred to the Greater London returning officer.
Finally, I can confirm that, in my view, the provisions of the order are compatible with convention rights under the European Convention on Human Rights. As I have explained, the order simply repeats and, where necessary, updates the arrangements that were made for the election addresses at the first GLA elections. I beg to move.
Moved, That the draft order laid before the House on 18th June be approved [23rd Report from the Joint Committee].—(Lord Evans of Temple Guiting.)
Baroness Hanham: My Lords, I had thought that I would simply thank the Minister and sit down because, as the Minister says, the order covers exactly what Parliament, in this House, decreed for the Greater London Assembly last time. However, what had escaped me was the nonsense—if I may so suggest—about listing the candidates according to some kind of lottery. I cannot understand the Electoral Commission's reasoning for that. If it is thought that people will read only the names beginning with the letter A and that they will not read through to the Ws, they will not fiddle around through a booklet trying to find the one candidate about whom they want to read who is buried somewhere in the middle with no direction as to where. I find that extraordinarily curious.
Arising from that, will the Assembly members, who will appear at the back, be listed in alphabetical order or will names be taken out of a bran tub to decide in which order they should appear? I really believe that the Minister should employ some common sense and suggest to the Electoral Commission that it rethinks that point.
My second question arises from whose imprint is on this publication. Does each candidate have to have an imprint or is it presumed that it is printed and published by the Greater London returning officer? The noble Lord, Lord Rennard, will probably be able to answer that in a flash. It must concern election expenses and how they are allocated. Half of this is paid for by the candidates, but a great deal of it is paid for by the council taxpayers in London. It is an academic question, but I would be interested in the answer.
Lord Rennard: My Lords, I could not let this occasion pass without referring to the great battle in this Chamber four years ago on the issue of Greater London mayoral candidates and their election addresses. It was interesting to hear the Minister advocating the case for the booklet and the importance of the communication, against which, four years ago, some of his predecessors fought long and hard. I was particularly interested in his observation that four years ago the cost of the operation was approximately £1.3 million, against the estimate for this time around.

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His predecessors suggested to me then that it would cost about £28 million. I feel somewhat vindicated by what he has said.
I note that the Minister in another place spoke of how the Government had listened to the arguments of your Lordships. I recall that they listened rather more to the assertion made by myself and the late Lord MacKay of Ardbrecknish that, if the Government would not allow the candidates to use Freepost, we would hold up the elections. We felt that it was an important issue for democracy that the communication was made by the candidates directly to the voters. So I very much welcome this order and that we are again pursuing the agreement that we made four years ago. In particular, I welcome the fact that we are retaining the feature that it will be delivered to each individual elector in London—some of us felt that that was very necessary four years ago—rather than it being delivered one per household. We know of so many houses in London with multi-occupation that it would be quite inadequate simply to address one to each household.
The method of delivery is important and requires a little more scrutiny. I assume that the GLRO—the Greater London Returning Officer—will be required to ensure that delivery by any organisation other than the Post Office would at least be to a standard that we would expect from the Post Office. Those with experience of delivery by commercial organisations will know that those organisations often fall far short of the standards expected of the Post Office and, very regrettably for our democracy, the Post Office itself has often fallen far short of what we would expect as regards its responsibilities in delivering election addresses.
On the issue of accessibility of election addresses, I particularly welcome the provision that the GLRO "may" make these available in Braille, large type or audio versions. Others have argued that this "must" be the case rather than "may". I see, however, some practical difficulties in relation just to the booklet and suggest that there are other ways that this might be done to the same effect rather better. There could be one or two A5 pages within the booklet with a number of photographs. Perhaps the candidate may prefer to have five photographs and few words, but translated into Braille that would look as though they had little to say. Other candidates may prefer to have many words and few photographs. Similar issues arise in relation to large type and audio versions.
All political parties by way of good practice for all elections should make versions of their election addresses and manifestos available in Braille, large type and audio. My suggestion is—and I hope the order may allow this—that the GLRO should say that, rather than simply being confined to making the A5 versions available in Braille, large type or audio, perhaps a prescribed form of words—say 200 words—which might fill the average A5 sheet, should be made available by each candidate which could then be made available in Braille and large type. Each candidate would be invited to make perhaps a 30 seconds or a one-minute contribution on audio tape that could be
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made generally available. That would be a more effective way of making the messages more accessible than simply saying that the election addresses may be provided by the GLRO in this way.
I sound a small note of regret on the booklet. Four years ago we reached a compromise to say that this would be available for the mayoral candidates but not for the candidates for the Greater London Assembly. That is regrettable when we consider that in the Scottish Parliament and in the Welsh Assembly each of the candidates for the list and for the individual constituencies is entitled to rather more than this booklet—indeed to equivalent election entitlements as were afforded to candidates to the Westminster Parliament. Therefore, I think that in future we should think of doing that.
I note that the Government have said in response to consultation, that there may be 200 candidates for the GLA and that the addresses could not be covered in one booklet. However, it seems to me that in this day and age 14 editions of a booklet could be produced allowing candidates for an individual assembly area to have their say. Perhaps the candidates at the top of the list should be featured with rather more prominence than simply being listed with their parties.
We are all concerned with diminishing turnouts in elections. Making more information available of this nature would be good in partially addressing the problem of lack of voter information, leading to such poor turnouts. It is a particularly welcome and excellent idea that the booklet may be on the Internet. I hope that that will become the form for many more of these things in the future. If we were to extend the facility to the candidates for the Greater London Assembly it may also be a cheap way for them to gain a little more publicity. They will not have as much as an A5 sheet themselves, but a small number of words and a reference to a website which they themselves establish would at least enable some voters to gain more information about them.
I raise an issue as perhaps a suggestion for the GLRO, who no doubt will read the debate in due course. It seems to me that this is a matter for his discretion. A way to save costs on this operation would be for delivery of the booklets to be combined with the delivery of the poll card for the election. I have made that suggestion a number of times. I think it would be a considerable saving to the public purse and a more efficient way of ensuring the distribution of these booklets. Perhaps the poll card could be printed in such a size that the voter's name and address appears in the window of an envelope and the booklet is enclosed in that envelope. Such a facility would produce a net saving.
On the issue of references to other candidates, it seems to me that not just in London—where perhaps we might say that the incumbent mayoral candidate may be a person of some controversy—but in almost any election, a candidate may seek to try and make his case by drawing a contrast with incumbents or with other candidates. It unduly restricts a political process to deny a candidate the opportunity to refer to any other candidate.

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The Minister said that of course candidates could refer to particular policies and issues. But some of these policies and issues are known to be those of particular candidates. It seems to be very difficult to say that a candidate could not, for example say, "I think the Mayor is wrong on his policy on a particular issue", or perhaps Simon Hughes, for example, might say, "I think the choice is between myself, Simon Hughes, and Ken Livingstone, the incumbent mayor". I cannot see why we should be so restrictive in this booklet when we are not in other candidate election addresses. It would be healthy for the debate if candidates were able to do that.
On a very technical issue, of course someone may be a candidate for the assembly and a candidate for the mayor. As I read the current regulations, a mayoral candidate producing the booklet could not refer to himself if he was also standing for the assembly, as a number of candidates did on the previous occasion. So I think that perhaps there is a case for looking again at this over-prescriptive rule about the election addresses.
Finally—and without wishing to pre-empt the role of the Minister—the noble Baroness asked questions about the imprint and the cost. As with the last time around, the £10,000 costs would have to appear in the individual's electoral expense returns. Imprint legislation has changed in the past four years. But, as in 1999, each candidate's agent would have to have a statement on his own individual item, accepting responsibility for that in order to protect the GLRO in case perhaps there was something defamatory contained within it. It may be perfectly acceptable for the GLRO to act as the publisher for the entire booklet, but he or she would be wise to insist that each candidate had his own publisher for each part of the publication. I am grateful to the Minister for his contribution and I look forward to his responses on a number of these issues.
Lord Evans of Temple Guiting: My Lords, the noble Baroness, Lady Hanham, does not like the fact that the candidates will not be listed in alphabetic order, but will be taken by lot. It reminds me of when I was a publisher. We would sometimes leave out the index of a hook in the hope that people would read the entire book rather than looking themselves or their friends up in the index. I am afraid that it did not really work.
It may be of help if I read out what the Electoral Commission said on this matter. It said:
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"Our concern about alphabetical ordering of the election addresses is that there may be some benefit that accrues to those candidates happening to appear earlier in the booklet by virtue of their surname. This could arise for example where an undecided elector is not motivated to read through all the election addresses and merely reads through the first few. Accordingly, we would recommend that the amendment of draft article 8.1 to provide for the order of the election addresses be determined by lot, drawn by the returning officer as soon as reasonably practicable after the close of nominations".
I can see from the expression on the face of the noble Baroness that she is not convinced by the argument, but that is the reason why it is being done.
Baroness Hanham: My Lords, is that going to be the same with the ballot paper?
Lord Evans of Temple Guiting: My Lords, no, it is not.
I move to a number of issues raised by the noble Lord, Lord Rennard. First, many of his points were of great interest, but they were directed, as he said, to the Greater London Returning Officer. We will make sure that he quickly has a copy of Hansard to read, because he may wish to consider these points.
The noble Lord made an important point about postal delivery. We absolutely agree with him about the importance of entirely reliable, brilliant delivery systems. I assure him that we would not go to anyone who could not guarantee a service as reliable and effective as the Post Office.
He also raised the question of Braille and large print. It will be for candidates to choose the content of their addresses and how that may be rendered in Braille and large print, if they wish. The GLRO does not determine content but facilitates its reproduction and distribution. The noble Lord did not ask what happens if the candidate wants to write in a language other than English, as he may in one or two boroughs. Again, that is entirely up to the candidate, who may have English and another language.
He made a point about references to other candidates. There is an argument on his side and one on the other side. Perhaps the candidate should determine himself or herself to the public by what he or she stands for, rather than by saying that he or she does not like what another candidate stands for. That is how it will be.
The noble Lord raised a number of interesting points that we shall draw to the attention of the GLRO. I commend the order to the House.
On Question, Motion agreed to.
House adjourned at eighteen minutes before two o'clock.